EAST WEST

INSTITUTE OF TECHNOLOGY

DEPARTMENT
OF
MBA & RESEARCH CENTRE

INDUSTRIAL RELATIONS & LEGISLATONS

Subject Code: 22MBAHR304
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Prof. Sanjana G
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Module-1
Introduction – Industrial Relation: Definitions, Scope, Objectives, Types, Characteristics,
Importance, approaches of Industrial Relations, Model of Industrial relations, Recent
Trends in Industrial Relations, Managing IR Changes. The Participants of Industrial
Relation Activities.

Background of Industrial Relations – Definition

Concept of Industrial Relations

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

Meaning of Industrial Relations

It is the relationship between employees and management in the day-to-day working of an
industry.
The concept of industrial relations means the relationship between employees and the
management in the day-to-day working of the industry.

Industrial relations is a “set of functional interdependence involving”

- Historical
- Economic
- Social
- Psychological
- Demographic
- Technological
- Occupational
- Political and legal variables

Definitions Used to Analyze Industrial Relations-Approaches Used to Define Industrial

Relations
(1) Institutional-based definitions:
Industrial relations are the sum of institutions and institutional processes that establish and
administer the rules regulating workplace relations.

(2) Social Psychology-based definitions:

Industrial relations are the sum of social psychological interactions between individuals

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(3) Class-based definitions:

Industrial relations are the sum of institutions, interactions and processes that are a product of
wider social and economic influences, in particular the class divisions of contemporary
capitalism. Definitions that seek to include all matters contained in the first three definitions
within other terms

(4) Human Resource Management:

Contracts of employment (involving trade unions, worker collectives, labor courts and
government agencies), as well as management of conflict arising out of the personal
interactions of individuals in the workplace, are part of labor management functions
( i.e. recruitment, selection, training, development, performance management, and so on)

(5) Employment Relations (or Employee Relations):

Contracts of employment (involving trade unions, worker collectives, labor courts and
government agencies), as well as the management of conflict arising out of the personal
interactions of individuals in the workplace, are equal parts of workplace relations, together
with the normal functions of Human Resource Management.

Definition of Industrial Relations

Industrial relations encompasses

The processes of regulation and control over workplace relations, the organization of tasks,
and the relations between employers and their representatives, and employees and their
representatives, and is the sum of economic, social and political interactions in workplaces
where employees provide manual and mental labor in exchange for rewards allotted by
employers, as well as the institutions established for the purpose of governing workplace
relations‟ --(Gospel & Palmer).

Characteristics of Industrial Relations (IR)

 Industrial relations are outcome of employment relationship in an industry

 IR develops the skills of co-operation with each other
 IR creates rules to maintain harmonious relation
 Government is involved in forming the rules, laws, awards etc
 Employers, employees and government are responsible for IR

Scope of IR
Industrial relations may, thus, be defined as the relations and interactions in the industr y
particularly between the labor and management as a result of their composite attitudes
and approaches in regard to the management
 Relationship among employees, between employees and their superiors or
managers.
 Collective relations between trade unions and management. It is called union -
management relations .
 Collective relations among trade unions, employers‘ associations and
government.

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Objectives of IR
 To promote and develop congenial labor management relations
 To enhance wages and other benefits
 To regulate production by minimizing conflicts
 To socialize industries
 To provide an opportunity to workers in decision making
 To improve workers strength
 To encourage and develop trade union
 To avoid industrial conflict
 To extend and maintain industrial democracy

Importance of IR

 Uninterrupted Production

It is the most important benefit of industrial relations.

It ensures continuity of production.
It provides continuous employment to all.
Optimum use of available resources in order to gain maximum possible production.
Continuous flow of income for all.

 Reduction in Industrial Dispute

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 include strikes, lockouts, gheraos and grievances.
It promotes industrial peace with cordial industrial relations; disputes can be settled through
co-operation

 High morale Industrial relation improves the morale of employees

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

 Mental revolution
Effective Industrial Relations brings mental revolution among employees which bring
complete overhaul in the outlook of employees.
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 & 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 Provisions

Industrial relations enable essential use of certain labor laws in order to protect and promote
the welfare of employees and safeguards interests of all parties against unfair means or
practices.

Approaches to Industrial Relations

The three popular approaches to industrial relation are as follows:

1. Unitary Approach

2. Pluralistic Approach

3. Marxist Approach.

Like other behavioral subjects, both the scenario of IR and factors affecting it are perceived

differently by different behavioral 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.

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

an effective human resource strategy. Based on these perceptions, the behavioral theorists

have developed some approaches to explain the IR dynamics.

1. Unitary Approach:
Unitarism
Assumptions about workplace relations
- Management and employees share common interest
- One source of legitimate authority (management)

Assumptions about workplace conflict

- Inevitable, aberration, destructive, to be avoided
- caused by poor management, dissidents, agitators or poor communication

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Assumptions about trade unions

- A competing and illegitimate source of authority
- An unwarranted intrusion in the workplace
- create conflict where none would otherwise exist

Assumptions about collective bargaining

- creates and institutionalizes unnecessary divisions of interest
- serves to generate workplace conflict rather than resolve it

The unitary perspective is based on the assumptions that the organization is, or if it is not,
then it should be, an integrated group of people with a single authority / loyalty structure and
a set of common values, interests and objectives shared by all members of the organization.

According to Farnham and Pimlott put it, there is no conflict between the interests of those
supplying capital to the enterprises and their managerial representatives, and those
contributing their aims of productions, profits and pay in which everyone in the organization
has a stake.
This has two important implications: Conflict (i.e. the expression of employee dissatisfaction
and differences with management) is perceived as an irrational activity. Trade Unions are
regarded as intrusions into the organization from outside which compete with management
for the loyalty of employees.

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. Unitary
approach is criticized 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-1960‘s and early 1970‘s in England. Later, this approach was

developed by me British scholars in particular by A. Fox the approach perceives that

organization is a coalition of competing interest groups mediated by the management. At

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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

organization. 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.

Pluralist
Assumptions about workplace relations
- Managers and employees have different objectives
- Multiple sources of legitimate authority
Assumptions about workplace conflict
- Inevitable, caused by different opinions and values, benefit to an organization
- avoid by accepting trade unions, include in decision-making

Assumptions about the workplace role of trade unions

- Not the cause of conflict
- are expression of diverse workplace interests that always exist
- a legitimate part of workplace relations
Assumptions about the role of collective bargaining
- Deals with problems on a collective basis
- Most efficient means for institutionalizing employment rules
- Fairer outcomes by balancing employee and management power

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This perspective is based on the assumption that the organization is composed of individuals
who coalesce into a variety of distinct sectional groups, each with its own interest, objectives
and leadership (either formal or informal).

According to Fox, „give rise to complex of tensions and competing claims which have to be

managed in the interests of maintaining a viable collaborative structure‘.

3. Marxist Approach:
Like pluralists, Marxists also view conflict between labor 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., labor. The main objective of capitalists has been to

improve productivity by paying minimum wages to labor. Labor 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 labor-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 labor

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 practiced in communist bloc. Hence the

scope of Marxist approach remains limited to the countries based on socialism.

Marxist
Assumptions about workplace relations
- reflects a wider class conflict between capital and labor
- reflects coercion of working class into dominant capitalist values
Assumptions about workplace conflict
- Inevitable: capital seeks to reduce costs, workers seek fairer price for labor
- will only cease by revolutionary change in distribution of property and wealth

Assumptions about trade unions

- should raise revolutionary consciousness of workers

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- should not limit action to improving material lot of workers

- Union leaders who accommodate management betray the workers
Assumptions about collective bargaining
- Merely offers temporary accommodations
- leaves important managerial powers in tact
The radical perspective is also known as the Marxist perspective, concentrates on the nature
of the society surrounding the organization.

According to Hyman, ―the production system is privately owned; profit is the key influence
on company policy; and control over production is enforced downwards by the owner‘s
managerial agents.‖

The Marxist general theory of society argues that:

1. Class (group) conflict is the source of societal change-without such conflict the society
would stagnate;
2. Class conflict arises primarily from the disparity in the distribution of, and access to,
economic power within the society – the principal disparity being between those who own
capital and those who supply their labor;

3. Social and political conflict in whatever form is merely an expression of the underlying

economic conflict within the society.

Types of IR
 Labour relations i.e., relations between union- management (also known as
labour management relations);
 Group relations i.e., relations between various groups of workmen i.e.,
workmen, supervisors, technical persons, etc.
 Employer-employee relations i.e., relations between the management and
employees. It denotes all management employer relations except the union-
management relations;
 Community or Public relations i.e., relations between the industry and the
society.

Models of IR

Dunlop‘s Industrial Relations System Model- Four Interrelated Elements:

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 Actors
 Shared Ideology
 Contexts
 Rules

1. Actors
a) Specialized government agencies.
b) Management, non-managerial employees and their representatives.

2. Shared Ideology:
a) Beliefs within the system which not only define the role of each actor or groups
of actors but also define the view that they have of the role of other actors in the
system. If the view is compatible-stable IR system and other wise.
b) Set of ideas and beliefs held by the actors.
c) Helps to bind or integrate the system together.

3. Contexts

Influence and constraints on the decisions of the actors which emanate from other parts
of society, such as technology, market, budgetary and the locus of power in the society.

4. Rules
a) Procedural
b) Substantive
c) Distributive
d) The regulatory framework developed by a range of process and presented in
variety of forms which expresses the terms and nature of the employment
relationship.

Criticisms of the Dunlop Model:

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(i) Descriptive

(ii) Lacks ability to predict outcomes/ relationships

(iii) Underestimates importance of power and conflict in employment relationship

(iv) Static.

(v) Cannot explain rapid decrease in unionization especially in the U.S.

Craig‟s Industrial Relations System Model:

(i) Adds an actor- end user

(ii) Elements from the external environment converted into outputs

(iii) Series of conversion mechanisms

(iv) Outputs flow back into the environment through a feedback loop

External Inputs:

(i) Legal Subsystem

(ii) Economics Subsystem

(iii) Ecological Subsystem

(iv) Political Subsystem

(v) Socio-cultural Subsystem

Internal Inputs:

(i) Goals- Sought by actors

(ii) Strategies- Processes developed and implemented to achieve goals

(iii) Power- The ability to make another actor agree to your terms

Three Main Participants in Industrial Relations

Basically there are two parties in the employment relationship, i.e., the labour and the
management. Over the years, the Government has come to play a major role in industrial

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relations and they have established legal and non-legal measures for cordial industrial
relations in the country.

These three parties of industrial relations interact with the environment that prevails in
the industry at any time. Good industrial relations are the outcome of-

(a) Healthy labor management relations,

(b) Existence of industrial peace and settlement of all disputes in such a manner that
there are no strikes or lockouts and

(c) Labor participation in industry which is referred as Industrial democracy.

We can have three parties or participants or actors in an industrial unit

1. The workers and their unions,

2. Employees and their associations, and

3. Government.

Workers and their Unions

The total work plays an important role in industrial relations. The total work includes
working age, educational background, family background, Psychological factors, social
background, culture, skills, attitude towards other work, etc. Workers organization
prominently in trade union activities.

The main purpose of trade unions is to protect the workers economic interest through
collective bargaining and by bringing pressure on management through economic and
political practices. Trade union factors include leadership, financial, activities, etc.

Managers and their Associations

The prominent role is of work group, the differences in their sizes, constitutions and the
degree of specialization they press upon. Of course, there is the necessary provision for
mutual communications for the structure of status and authority and for such other
organization as trade unions and employer‘s associations.

Government
Government plays a balancing role as a custodian of the nation; government exerts its
influence on industrial relations through its labor policy, industrial relations policy,
implementing labor laws, the process of conciliation and adjudication by playing the role
of a mediator, etc. It tries to regulate the activities and behavior of both employee‘s
organizations and employer organizations.

Strategic Issues in labor relations

 Developing Healthy Labor-Management Relations

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 Maintaining Industrial Peace

 Developing Industrial Democracy

Recent trends in Industrial Relations

 Labor Reforms
The State Intervention policy of the government has mostly worked in favor of the labor
to give them protection and collective bargaining. The industrial policies were designed
to regulate the actions of the labor and capital and providing judicial solutions to
industrial disputes.

The government of India has resorted to „soft‟ labor reforms in the form of:

i. Disinvesting instead of privatization.

ii. Liberalizing labour inspection systems.

iii. Amending trade union laws.

iv. Reducing interest rates on provident fund.

v. Special concessions to units in Special Economic Zones (SEZs).

vi. Different inspection authorities for units in SEZs.

vii. Simplify procedures with respect to annual returns, maintenance of registers and so
on.

viii. Declaring units in SEZs as ‗public utility services‘ to make strikes more difficult.

 Judicial Trends

From the era of ‗social justice‘, ‗distributive justice‘ and ‗discriminative justice‘, where
the judiciary was busy in giving many landmark, judgments for protecting the interest of
workers. The trend has been reversed with the advent of liberalization and globalization,
where our industries have to compete with the multinationals.

Judiciary has realized that our labor and trade unions have been over protected. They
have started taking more realistic stand on the issues relating to industries, keeping in
view the existing social norms and international practices.

There are number of examples of judicial judgments in which employers and workers
have been happy or unhappy.

Judgments which Make Employers Happy:

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i. Strike is not a fundamental right.

ii. Ruling that a strike has not only to be legal, but also justified; application of the norm
of no work on pay in the case of strikes and for those who do union wo rk as against
company work.

iii. Imposition of fine on trade union leaders for indulging in arson, loss of company
property etc.

iv. Restrictions on protest demonstration, political bandhs, etc.

v. Decision that in the case of accidents by a bus or lorry, the compensation payable to
the victims should be recovered from the earning of drivers.

Judgments which Make Workers Happy:

i. Striking off of the contents of service conditions and standing orders in matters like
treating unauthorized absence for over a week as abandonment of employment.

ii. Requirement of a notice of change when the Voluntary Retirement Scheme is

introduced because work done by more people will now be required to be done by fewer
people.

iii. Regularisation of casual/contract labour. Absorption organisation labour as regular

when the system of contract labour is abolished.

iv. Ruling of the Supreme Court that the service of employees in an organisation cannot
be terminated arbitrarily and abruptly by giving notice of one or three months o r pay in
lieu of notice.

v. Abolition of child labour in hazardous industries.

 Trade Unions Nexus

In government and public sectors, workforce is shrinking due to non-filling of regular

posts and introduction of Voluntary Retirement Scheme (VRS). New employment
opportunities are declining in organized public sector industries. In the private sector,
particularly in service and software sector, the new, young and female workers do not
generally align to any trade unions.

The bargaining power of trade unions has been weakened earlier. IRS was mainly
concerned with trade unions, management and the government. But now the consumers
and community are also a part of dynamic Industrial Relations System (IRS).

 Collective Bargaining

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In IRS, collective bargaining constitutes one of the most important mechanism of rule-
making acceptable to both the employers as well as the workers.

Few emerging trends in the collective bargaining process are:

I. Level of collective bargaining is shrinking day by day.

II. In public enterprises, the government has withdrawn the budgetary support for
expenditure arising out of collective bargaining.

III. In private enterprises, there has been decentralizing tendencies. The enterprise -
level bargaining has become the dominant even in industries like cotton, silk,
plantations in the regions of Mumbai, Coimbatore etc.

IV. The managerial objectives expected to be achieved through collective bargaining

have also shown dominance in terms of reduction in labor costs, increased
productivity, increase in work time, reduction of regular staff strength through
VRS, stress on high quality and so on.

V. Trade unions have also shown cooperation especially in crisis situations caused
by external environment. They do agree on introduction of new work
measurement systems, flexi working, changes in work practices, introduction of
technological changes etc.

 Labor-Management Conflicts

The globalization has brought significant changes in the labor market and the industrial
relations system. Both the actors (management and workers) have exerted respective
pressures on the government to introduce concrete actions favoring their interests. The
government has responded to protect the dominant political interests while announcing
labor reforms.

However, the conducive and peaceful industrial environment supported the employers to
introductive both ‗hard‘ (like lockouts, closure, antiunion measures) and ‗soft‘ (like
idleness pay, VRS) measures to achieve dynamism and weaken union power. The trade
unions have also re-directed their attention to the hitherto neglected workers in the
unorganized sector to create a ‗more inclusive‘ union movement.

Few more emerging trends in this issue are:

i. There have been less strikes, lockouts and less man days lost due to strikes.

ii. Workers are more educated and do not believe in violent activities.

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iii. Workers have shown responsibilities in cut-throat competition and are aware of their
rights, thus leading to decline in strikes.

iv. Employees also avoid lockouts because decline in production even for hours lead to
heavy losses to them.

 Managerial Strategies

The economic reforms have toned down industrial conflicts, due to shift in the relative
bargaining power in favor of capital. The employers devised various managerial
strategies to achieve labor flexibility, weaken labor power, more control over production
process, reduction in regular workers via VRS, transfers, multi-tasking, freeze in
employment, increased use of contract labor, subcontracting etc., on both public as well
as private enterprises.

 Government Strategies

In the positive direction, to boost the industrial harmony and economic activity, the
government has adopted two strategies namely disinvestment and deregulation, which
are expected to be mutually beneficial for the workers as well as the management.

How to manage IR changes?

 Meet all the team members

 Promote constant communication

 Encourage feedback

 Emphasize employees value

 Establish boundaries

 Incorporate values

 Remain present

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Important Questions:

1. What are Industrial Relations?

2. What is the scope of Industrial Relations?

3. What are the types of Industrial Relations?

4. Explain the different Approaches of Industrial Relation.

5. Explain the different assumptions behind the three approaches.

6. Explain the Dunlop‘s Model of Industrial Relationship system.

7. Explain the recent trends in Industrial Relations.

********

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Module-2
Evolution of Labor Legislation in India - History of Labor Legislation in India, Objectives
of Labor Legislation, Types of Labor Legislations in India, Constitutional Provisions for
the Protection of Labor Workforce in India, Rights of Woman Workers; The Present
Labor Laws and Codes. Concept and steps of Grievance, Need for a Grievance Redressal
procedure, Legislative aspects of the grievance redressal procedure in India, Model of
Grievance redressal Procedure.

Labour Legislation

This is an important area which has a great impact on the industrial relations system. It
had been instrumental in shaping the course of industrial relations in India.

The setting up of international labour organization gave an impetus to the consideration

of welfare & working conditions of the workers all over the world and also led to the
growth of labour laws. Some of the other factors which gave impetus to development of
labour laws in India were: The Swaraj Movement (1921-24) & the appointment of the
Royal Commission on Labour in 1929.

History of Labour Legislation in India

Labour legislations in India have a history of over 125 years. Beginning with the
Apprentice Act, passed in 1850, to enable children bought up in orphanages to find
employment when they come of age. Several labour laws covering all the aspects of
Industrial employment have been passed.

In India, all laws emanate from the constitution of India. Under the constitution, labour
is a concurrent subject, i.e.; both the central & state governments can enact labour
legislations, with the clause that the state legislature cannot enact a law which is
repugnant to the central law.

The Apprentice Act of 1850, was followed by the factories act of 1881 and the first state
act was the Bombay Trade Dispute (and conciliation) Act, 1934, followed by the
Bombay Industrial Disputes Act 1938, which amended during the war years. This was
replaced by the BIR Act, 1946.

The Central Government at this time introduced the Industrial Employment Act, 1946. In
1947, the government replaced the Trade Dispute Act, which was later modified. This
law is the main instrument for government intervention in industrial disputes.

After Independence, many laws concerning social security and regulation of labour
employment were enacted, such as ESI Act 1948, EPF & Miscellaneous Provision Act,
1952, Payment of Gratuity Act 1972, Equal remuneration Act 1976, etc.

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Profile of Labour Legislation in India

Disputes processing and

Standard and norms Welfare and amenities
rights of parties
legislation legislation
legislation
Collective matters:
Central Act

Factory Act Maternity Benefits Act Industrial Dispute Act

Employees State Insurance Sales Promotion Employees

Shop & Establishment Act
Act Act

Workmen‘s Compensation
Mines Act Payment of Bonus Act
Act

State Act

Employees Provident Fund Bombay Industrial

Plantation Labour Act
Act Relations Act

Maharashtra Act for

Prevention of Unfair
Indian Merchants Shipping
Gratuity Act Labour Practices and
Act
Compulsory Recognition of
Trade Unions
Individual matters:
Central Act
Industrial Employees
Standing Orders Act and
Minimum Wages Act Model Standing Orders
governing contract of
employment

Payment of Wages Act

Indian Trade Union Act

Definition of Labour Legislation

Labour Legislation is a ‗body of law formed for the working class of people to provide
them with legal rights, and also restrict them with rules and regulations.‘

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Labour law is a contract of employment and it shall be formed where a person (the
employees) agrees, directly or indirectly, to perform work for and under the authority of
another (the employer) for a definite or indefinite period or piece w ork in return for
wages (salary/remuneration).

According to V.V. Giri industrial legislation is ―A provision for equitable distribution

of Profits and benefits emerging from industry between industrialists and workers and
affording protection to the workers against harmful effects to their health and safety.‖

The history of labor laws in India can be divided into 4 Phases:

1850-1914: Gradual amendments were introduced to the factory legislation

1919-1938: Covers the time when working-class politics began to take shape

After the Second World War and up until the mid-1970‘s: the period of rapid labor
agitation and political changes

1974 onwards: marked by the introduction of legislation

Objectives of Labor Legislation

(1) Establishment of justice- Social, Political and Economic

(2) Provision of opportunities to all workers, irrespective of caste, creed, religion, beliefs, for
the development of their personality.

(3) Protection of weaker section in the community.

(4) Maintenance of Industrial Peace.

(5) Creation of conditions for economic growth.

(6) Protection and improvement of labor standards.

(7) Protect workers from exploitation:

(8) Guarantee right of workmen to combine and form association or unions.

(9) Ensure right of workmen to bargain collectively for the betterment of their service
conditions.

Types of Labor Legislations in India

 Protective Labor Legislation

The legislations whose primary purpose is to protect minimum labour standards and
improve working conditions are protective labour legislations. Legislations laying

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down the minimum labour standards in the area of work, safety, employment of
women and children and also the manner of wage payment come under this category
are:

 The Factories Act 1948

The Factories Act, 1948 is a social legislation which has been enacted for
occupational safety, health and welfare of workers at work places. The objective
of the Act is to regulate the conditions of work in manufacturing establishments
coming within the definition of the term 'factory' as used in the Act. In 1833 the
Government passed a Factory Act to improve conditions for children working in
factories. Young children were working very long hours in workplaces where
conditions were often terrible.

 The Mines Act 1952

The Mines Act, 1952 contains provisions for measures relating to the health,
safety, and welfare of workers in the coal, metalliferous and oil mines. The Act
prescribes the duties of the owner to manage mines / mining operation and the
health, safety in mines.
An Act to amend and consolidate the law relating to the regulation of labor and
safety in mines.

 The Plantation Labour Act 1951

The Plantations Labor Act was enacted in 1951 to provide for the welfare of
plantation labor by regulating the conditions of work in plantations. The Act
covers the entire country except the State of Jammu & Kashmir.

 Regulative Labor Legislation

The Legislations whose primary purpose is to regulate the relations between employers
and employees and to provide for methods and manners for setting industrial disputes are
Regulative Legislations. These laws also regulate the relationships between workers and
trade unions, the rights and obligation of the organizations of employers and workers, as
well as their mutual relationships.

The laws under this category are as follows:

 The Trade Union Act 1926

An Act to provide for the registration of Trade Unions and in certain respects to
define the law relating to registered Trade Unions. Every registered Trade Union shall
be a body corporate by the name under which it is registered, and shall have perpetual
succession and a common seal with power to acquire and hold both movable and
immovable property and to contract, and shall by the said name sue and be sued.

 The Industrial Disputes Act 1947

The act was drafted to make provision for the investigation and settlement of
industrial disputes and to secure industrial peace and harmony by providing
mechanisms and procedures for the investigation and settlement of industrial disputes
by conciliation, arbitration and adjudication which is provided under the statute.

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Besides the Industrial Disputes Act, in December 1947, an industrial conference was
held in India, where an appeal was made to labor and management in the form of an
Industrial harmony.

 The Industrial Employment (Standing Orders) Act 1946

a) The act provides protection to the workmen with regard to conditions of
employment
b) To bring harmonious relation between employers and workmen
c) The preamble of the act says that objective of the act is to require employers to
define working conditions and to make these conditions known to the
workmen
d) Accordingly uniform standing orders have to be provided for these related
matters

 Social Security Legislation

The Legislations which intend to provide social security benefits to workmen during
certain contingencies of life are Social Security Legislations. Though this legislations
may cover other classes of citizens also, their primary goal has been to protect their
workers.

The laws under this category are as follows:

 The Workmen‘s Compensation Act 1923

 The Employees State Insurance Act 1948
 The Coal Miners Provident Fund and Miscellaneous Provision Act 1948
 The Employees Provident Fund and Miscellaneous Provision Act 1952
 The Maternity Benefit Act 1961
 The Payment of Gratuity Act 1972

 Welfare legislation

The legislations which aim at promoting the general welfare of the workers and improve
their living conditions are welfare legislations. Such laws carry the term ―Welfare‖ in
their titles.

The laws under this category are as follows:

 Mica Mines Labour Welfare Fund Act 1946

 Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines labour Welfare
Fund Act 1976
 Beedi Workers Welfare Fund Act 1976

All of these laws provide for the funds which are spent on improving the general welfare
of workers including housing, medical, educational and recreational facilities.

Constitutional Provisions for the Protection of Labor Workforce in India

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Under the constitution of India, Labor is a subject in the concurrent list where both the
Central & State governments are competent to enact legislation subject to certain matters
being reserved for the Centre.

In other words the set of rules or laws that comes under a country‘s constitution.

The legislations can be categorized as follows:

1) Labor laws enacted by the Central Government, where the Central Government has the
sole responsibility for enforcement.

2) Labor laws enacted by Central Government and enforced both by Central and State
Governments.

3) Labor laws enacted by Central Government and enforced by the State Governments.

4) Labor laws enacted and enforced by the various State Governments which apply to
respective States.

The Constitution of India provides detailed provisions for the rights of the citizens and also
lays down the Directive Principles of State Policy which set an aim to which the activities of
the state are to be guided

Directive Principle of State Policy

The Constitution of India also directs the State to promote the welfare of laborers and to
secure for them just and humane conditions of work. The Directive Principles of State Policy
contained in Part IV of the Constitution provide for the protection of workers‘ interests and
rights.

Article 39 of the Constitution outlines various principles, such as the right to work, just and
humane conditions of work, equal pay for equal work, and protection against unemployment
and exploitation.

Article 39(a) directs the State to ensure that the citizens, men, and women equally have the
right to an adequate means of livelihood. Article 39(b) directs the State to ensure that there is
no concentration of wealth and means of production in a few hands, thereby promoting a
more equitable distribution of resources.

Article 38 and 41 of the Constitution highlight the state‘s duty to promote social justice and
ensure the well-being of workers.

These Directive Principles provide:

a) for securing the health and strength of employees, men and women
b) that the tender age of children are not abused

c) that citizens are not forced by economic necessity to enter avocations unsuited to their
age or strength
d) just and humane conditions of work and maternity relief are provided

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e) That the Government shall take steps, by suitable legislation or in any other way, to
secure the participation of employee in the management of undertakings,
establishments or other organizations engaged in any industry.

Constitutional provisions for labor rights

Right to equality (Article 14)

Article 14 of the constitution guarantees the right to equality before the law and equal
protection of laws to all citizens, including workers. The said provision guarantees that
employees are treated fairly without bias in all employment related matters and are not
subjected to discrimination on the basis of race, religion, caste, gender, or any other
factor.

In the case of Randhir Singh, Union of India (1982), the supreme court of India held that
the principle of equal pay for equal work is a constitutional right.

Right to Freedom (Article 19)

Article 19 guarantees certain freedoms, such as the freedom of speech and expression,
assembly, and association, which are necessary for labor rights. This provision empowers
workers to form trade unions and engage in collective bargaining to protect their interests and
improve their working conditions.

Right to Life and Personal Liberty (Article 21)

The Indian Constitution guarantees the Right to Life and Personal Liberty, which has been
interpreted by the judiciary to include the right to work with dignity and in a safe and healthy
environment.

In the case of Charan Lal Sahu, Union of India (1990), the Supreme Court of India held that
the right to health and safety at the workplace is a fundamental right of workers. The court
emphasized that any violation of this right can be challenged under Article 32 of the
Constitution, which guarantees the right to constitutional remedies.

Right against Exploitation (Article 23 and 24)

Article 23 prohibits trafficking and forced labor, and Article 24 prohibits the employment of
children below the age of 14 in any hazardous industry. These provisions seek to protect
workers‘ rights to safe and healthy working conditions and to stop the exploitation of
workers, especially vulnerable groups like children and trafficked individuals.

The Supreme Court worked with the State of Uttar Pradesh to ban the use of child labor in the
carpet industry, issue government assistance orders banning child labor under the age of 14,
and grant children access to offices for education and health The state was further ordered by
the court to take action to end bonded labor and make sure that no one is forced or exploited
to work.

Rights of Woman Workers

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Woman workers in India are mostly employed in the Organized Sector. Therefore, the trade
unions, which initially represented mostly organized workmen, did not pay much attention to
female labor. It is only recently that some national trade union centers in India have
announced that if their affiliates send nominations for representation at various decision-
making levels in the union hierarchy without a woman member in the panel, they will not
consider the panel.

Union membership and union leadership amongst women is higher in some occupations than
in others. In the garment industry, the proportion of women to the total members could be
about 70%. In plantations, hospitals, hotels, telecommunication, public service and
anganwadis, women occupy positions as joint secretary/secretary. In teaching and nursing
they hold even higher positions.

Rights for women workers in India

 Right to equal remuneration and opportunities

The Equal Remuneration Act, 1976, provides for equal remuneration of men and
women workers for work of the same and similar nature. The statute also prohibits
discrimination of women workers in recruitment, promotions, training and other
employment conditions.

 Right to harassment free work environment

The Harassment of Women at Workplace (Prevention, Prohibition and Redressal)

Act, 2013 was introduced to provide a safe working environment for women at the
workplace, whether or not employees. An employer is required to set up an internal
committee to receive and redress harassment complaints in a time bound and
confidential manner. Employers are also mandated to carry out regular training for
the employees on the subject.

 Maternity benefit and protection of employment

The Maternity Benefit Act, 1961 entitles eligible women employees to up to twenty-
six weeks of paid maternity leave, which makes it one of the most generous maternity
benefit laws in the world. This legislation also allows twelve weeks of paid maternity
leave to surrogate mothers and to women who adopt a child below three months of
age. Additionally, women employees are eligible to paid leave in case of illness

arising out of pregnancy or delivery, premature birth, miscarriage, and medical

termination of pregnancy.

 Health and safety

The Factories Act, 1948, mandates employers to take necessary health, safety and
welfare measures for women employees. These include providing separate
washrooms, changing rooms and lockers for women employees, and following special
security and other protocols to engage female employees during night- time hours.

 Mandatory board representation

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The Companies Act, 2013, requires certain classes of companies to have at least one
woman director on its board. This is to ensure that women are represented at the
highest levels of decision- making in a company. It is the responsibility of every
employer to ensure that women are given their due rights in the workplace. By being
aware of and adhering to the requirements of various labor and employment
legislations, employers can foster a positive workplace that values gender equality and
diversity.

 Right at workplace

At places, with more than 30 female workers, providing facilities for care and feeding
of children is mandatory. Further, the Supreme Court and the Govt. had put in to
ensure the safety of women at workplaces.

 Right to dignity and decency

Dignity and decency are women‘s personal jewels. Anybody who tries to snatch and
disrobe her modesty is considered a sinner and law very well entails its
punishment. Every woman has the right to live in dignity, free of fear, coercion,
violence and discrimination. Law very well respects women‘s dignity and modesty.
The criminal law provides for the punishments for offences committed against
women.

The Four New Labor Laws

 Code on wages

The Code on Wages Bill was passed by the Parliament in 2019. The Wages Code
seeks to regulate wage and bonus payments in all employments where any industry,
business, trade or manufacture is carried out.

This code replaces the following laws:

i. Minimum Wages Act, 1948

The Minimum Wages Act, 1948, safeguards the interests of the workers as they are
vulnerable to exploitation due to illiteracy and lack of bargaining power and binds the

Employers to pay the minimum wages to the workers as fixed under the statute for the
work performed during a given period.

ii. Payment of Wages Act, 1936

The Payment of Wages Act of 1936 governs how wages are paid to employees (direct
and indirect). The statute is intended to protect employees from unlawful employer
deductions and/or unjustifiable salary delays.

iii. Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965 provides for a minimum bonus of 8.33 percent of
wages. The salary limited fixed for eligibility purposes is Rs.3, 500 per month and the

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payment is subject to the stipulation that the bonus payable to employees drawing
wages or salary not exceeded to Rs.10, 000 per month.

iv. Equal Remuneration Act, 1976

An Act to provide for the payment of equal remuneration to men and women workers
and for the prevention of discrimination, on the ground of sex, against women in the
matter of employment and for matters connected therewith or incidental thereto

 Code on social security

The definition of employees has been widened to include inter-state migrant workers,
construction workers, film industry workers and platform workers. The gratuity
period for working journalists has been reduced from 5 years to 3 years. There is a
provision for the central government to decrease or defer the employer‘s or
employee‘s contribution towards the PF or ESI for up to 3 months in the event of a
pandemic, national disaster or an epidemic.

 Industrial relation code

The Industrial Employment (Standing Orders) Act, 1946 had made it mandatory for
employers of industrial establishments with 100 or more workers to define the
conditions of employment and rules of conduct for workmen, by way of standing
orders/services rules and to inform the workers of the same clearly. With the
increased threshold, it becomes more flexible and easier to hire and fire thus leading
to increased employment according to the government. Employees are prohibited
from going on strike without giving a 60-day notice. Employees are also prohibited
from going on strike during the pendency of proceedings before a Tribunal or a
National Industrial Tribunal.

 Occupational Safety, Health & Working Conditions code (OSHWC)

The Code expands the definition of a factory as a premise where at least 20 workers
work for a process with power and 40 workers for a process without power. The Code
removes the manpower limit on hazardous working conditions and makes the
application of the Code obligatory for contractors recruiting 50 or more workers
(earlier it was 20).

CONCEPT AND STEPS OF GRIEVANCES

Meaning of Employee Grievance

Employee grievance refers to the discontentment of an employee with the corporate and its
management. A company or employer is expected to provide an employee with a safe
working environment, clear knowledge of job responsibilities, adequate compensation,
respect etc. However, employee grievance is caused when there is a gap between what the
employee expects and what he receives from the employer.

Types of Employee Grievances

 Pay and benefits

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As an employer, you've probably had at least one member of your staff come to you to
express that they're unhappy with what you're paying them. Employee has to make sure
that they have a pay and benefit policy.

 Bullying

It's inevitable that members of staff in your workplace just won't get on. But that doesn't
mean you should allow workplace bullying or harassment. You must have a zero
tolerance policy. Ensure that you give everyone your anti-harassment and anti-bullying
policies, and always email any updates or revisions.

 Work conditions
 Cleanliness on the office floors or in the kitchen.
 Desk etiquette.
 Bathroom conditions.
 Health and safety hazards.
 Temperatures in the workplace.

 Workload

You can often find a link between grievances about their heavy workload, and pay and
benefits issues that staff raise. Typical situations that cause problems with employees are:

 Increasing your employee's workload when another employee leaves, rather than
finding a replacement.
 Increasing an employee's workload because you've made other staff redundant to cut
costs.

Why Grievances?

Grievances may occur for a variety of reason

 Economic
Wage Fixation, wage computation, overtime, bonus etc. Employees feel they are
getting less than they ought to get.
 Work Environment
Poor working conditions, Defective equipment and machinery, tools, materials, etc.
 Supervision
Disposition of the boss towards the employee. Perceived notions of favoritism,
nepotism, bias etc.
 Work Group
Strained relations or incompatibility with peers. Feeling of ostracisation and
victimization.
 Work Organization
Rigid and unfair rules, too much or too less work responsibility, lack of
recognition, etc.

Key Features of a good grievance-handling Procedure

 Fairness

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It is needed not only to be just, but also to keep the procedure viable, for if employees
develop the belief that the procedure is only a sham, then its value will be lost, and other
means sought to deal with the grievances.

 Facilities for representation

Representation, e.g. by a shop steward, can be of help to the individual employee who
lacks the confidence or experience to take on the management single-handedly. However,
there is also the risk that the presence of the representative produces a defensive
management attitude, affected by a number of other issues on which the manager and the
shop steward maybe at loggerheads.

 Procedural steps

Steps should be limited to three. There is no value in having more just because there are
more levels in the management hierarchy. This will only lengthen the time taken to deal
with matters and will soon bring the procedure into disrepute.

 Promptness

It is needed to avoid the bitterness and frustration that can come from delay. When an
employee goes into procedure, it is like pulling the communication cord in the train. The
action is not taken lightly and it is in anticipation of a swift resolution.

Causes of Grievance

 Wages, Incentives
 Job Classifications
 Foreman/Supervisor
 Disciplinary Measures
 Promotions
 Transfer/Night Shift
 Safety And Health Measures
 Non Availability Of Materials
 Violation Of Contracts
 Improper Job Assignment
 Work Conditions

Grievance Redressal
A grievance redressal system is a process to address employee grievances, and it can be
defined as a mechanism that enables employees to communicate their concerns to
management. The grievance redressal system helps in resolving employees‘ grievances in
a formal manner which may be between an employee to employee or either between
employee and management.

For an organization to function effectively, it is important that the employees are satisfied
and happy about their job. Upon dissatisfaction with the response they receive, they can go
higher up the chain until they finally reach someone who will listen to them.

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Employee Grievance Procedure

While no two companies have to have the same grievance procedure, here is a general guide
to how they go.

Step 01: The employee makes a formal, written complaint

A company may provide a form (online or on paper), or the employee may write something
up on email or freehand. Regardless, grievances are formal complaints and are generally
written. An employee can present a verbal complaint, but then the HR person/supervisor
would write down the employee‘s statement, creating a formal document.

This document will be the guiding document throughout the procedure. While the employee
will (most likely) be interviewed as part of later steps, the employee should include as much
information as possible including names and dates (approximate dates should be accepted.)

Step 02: Once the employee files the grievance, a formal investigation begins

If the employee complaint is an inaccurate paycheck, a call to payroll, and a look at the
timecards can often resolve the issue within minutes. If the claim is that a senior manager has
been a lengthy investigation with many interviews, viewing of security films, auditing emails,
etc., can all be part of the investigation. Some investigations can be handled directly by the
supervisor or the HR person tasked with the job, while others may require an outside expert.

Step 03: The investigator writes a conclusion

This may be a black and white situation – for instance, with unpaid overtime, finding
unprocessed time cards definitively show that the employee is right. With a case of
discrimination or harassment, the conclusion can be in the gray area. You may find that the
employee‘s coworkers used racial epithets in a fight with the complainant.

Step 04: A mediator can be called in

This is often the case when the grievance procedure is dictated in a union or other contract.
The mediator works with both the employee and the business to come to a conclusion. In
some cases, the company may have no formal conclusion before meeting with the mediator.
In this case, both sides present their case to the mediator, and the mediator helps them find a
solution. In the case of a union contract, the union often represents the employee in formal
grievance procedures. In mediation, the union representative (and possibly lawyer) would
accompany the employee and plead their case.

Step 05: There are consequences

Whether there is a formal agreement made during mediation or the investigator makes a
formal recommendation that the company accepts, the company and employee take some
action. It can be a simple action, or someone can lose their job.

Step 06: If the employee is not satisfied

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There is no contract prohibiting a court case (some contracts require mediation to be the final
word), the employee can take his grievance to the courts.
Employee Grievance procedure 3 important principles of grievance settlement are

1. Settlement at the lowest level

2. Settlement as expeditiously (speedily and efficiently) as possible
3. Settlement to the satisfaction of the aggrieved

Settlement of grievances at 3 levels

1. Immediate supervisor(reply within 2 days)

2. Departmental/factory head(reply within 3 days)
3. Grievance committee(within 7 days)
4. Else, appeal for further voluntary arbitration

Legislative aspects of the grievance redressal procedure in India

Legal Framework

Sec. 9C of Industrial Disputes Act, 1947 (inserted in 1982), provides for the setting up of
Grievance settlement Authority in every establishment where 50 or more workmen are
employed, for settlement of industrial dispute connected with an individual workmen. In
terms of the said section, where an individual dispute connected with an individual workman
arises, a workman or any trade union of workmen of which such workmen is a member; refer
the dispute to the Grievance Settlement Authority provided for the employer.

In Indian industry, adequate attention has not been paid to the settlement of grievance.
Legislative framework deals only indirectly with the redressal of individual grievance. At
present, there are three legislation dealing with grievance of employee working in industries.

They are:

 The Industrial Employment (standing orders) Act 1946.

 The Factories Act 1948.
 The Industrial Disputes Act 1947.

The Industrial Employment (standing orders) Act 1946

Requires that every establishment employing 100 or more workers should frame standing
orders. These should contain, among other things, a provision for redressal of grievance of
workers against unfair treatment and wrongful exactions by employer or his agents.

The Factories Act 1948

The Factories Act 1948 provides for the appointment of a welfare officer in every factory
ordinarily employing 500 or more workers. These welfare officers also look after complaints
and grievance of workers. However, these provisions are not useful due to the dual role
which these officers are called upon to play.

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The Industrial Disputes Act 1947

The employer in relation to every industrial establishment in which fifty or more workmen
are employed shall provide a grievance settlement authority. When an industrial dispute
connected with an individual workman arises in an establishment referred to above, a
workman or any trade union of the workman of which such workman is a member may refer
such dispute to the grievance settlement authority for settlement. In India, a Model Grievance
Procedure was adopted by the Indian Labor Conference in its 16th session held in 1958.

Model of Grievance redressal Procedure.

It is suggested by the National Commission on Labor involves six successive time-bound

steps, each leading to the next, in case of dissatisfaction. The aggrieved worker in the first
instance will approach the foreman and tell him of his grievances, orally. The supervisor has
to provide an answer within 48 hours. In the event of the supervisor not giving an answer or
the answer not being acceptable to the workers, the worker goes to the next step. At this
stage, the worker (either alone or accompanied by his departmental representatives)
approaches the head of department who has to give an answer within three days. If the
department head fails to give an answer or if the worker is not satisfied with his answer, the
worker may appeal to the grievance committee, consisting of the representative of the
employer and employee.

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 An aggrieved employee shall first present his grievance verbally in person to the
officer designated by the management for his purpose. An answer shall be given
to him within 8 hours of the presentation of the complaint.
 If the worker is not satisfied with the decision of this officer or fails to receive an
answer within the stipulated period, he shall in person or by his departmental
representative, if required, present his grievance to the head of the department
designated by the management for this purpose and he will get the answer within
3 days of the presentation of his grievance.
 If the decision of the departmental head is unsatisfactory, the aggrieved worker
may request the forwarding of his grievance to the grievance committee, which
shall make its recommendations to the management within 7 days of t he worker‘s
request. The final decision of the management shall be communicated to the
worker within the stipulated period (3 days) by the personnel officer.
 A revision of his grievance can be done if the decision is not satisfactory. The
management shall communicate its decision within a week.
 If no agreement is possible the union and the management may refer the
grievance to voluntary arbitration within a week from the date of receipt by the
worker of the management‘s decision.

Important Questions:

1) What are the important sources of Grievances?

2) Mention the various forms of Grievances.

3) What is wages as per the Payment of Wages Act, 1936?

4) Define Grievance.

5) What are the different approaches to grievance machinery?

6) With the help of Model explain Grievance procedure.

7) Explain the rights of women workers.

8) Define Labor legislations.

9) What are the objectives of Labor Legislations?

10) Explain the types of Labor Legislation.

11) Explain the Constitutional Provision For Labor Rights.

12) Explain the Four new Labor Laws.

*********

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Module-3
Collective bargaining: Concept – function and Importance – principles and forms of
Collective bargaining, importance of Collective Bargaining, Process of Collective
Bargaining, Negotiation, form of negotiation Workers‘ Discipline Management, causes of
indiscipline, disciplinary Action - service rules, misconduct, investigation of allegations,
showcase notice, charge sheet, domestic enquiry, Report of findings, punishments to be
imposed. Workers participation In Management.

Introduction
Collective bargaining is a procedure by which the terms and conditions of workers are
regulated by agreements between their bargaining agents and employers. Sidney and Beatrice
Webb were the first to use the term ―collective bargaining in 1891.
Subsequently, Samual Gompers, the President of America, Federation of Labor in USA,
considered collective bargaining ‗as the most important tool for determining the terms and
conditions of employments. Gradually, the term came to be used extensively not only by the
trade unionists and employers, but also by the government agencies, academicians and others.
It has become a very important institution in the realm of industrial relations and volumes of
literature on the subject have come up all over the world.

What is the concept of Collective Bargaining?

There are three concepts of collective bargaining with different emphasis and street, namely

 Marketing Concept
The marketing concept views collective bargaining as the means by which labor is bought
and sold in the market place. In this context, collective bargaining is perceived as an
economic and an exchange relationship. This concept focuses on the substantive content of
collective agreement on the pay hours of work, and fringe benefits, which are mutually
agreed between the employers and trade union representatives on behalf of their members.

 Governmental Concept
The governmental concept of collective bargaining, on the other hand, regards the institution
as constitutional union representatives. Here collective bargaining is seen as a political and
power relationship.

 Industrial Relations or Managerial concept

In this concept collective bargaining view the institution as a participative decision-making
between the employees and employers, on matters in which both the parties have vital
interest. There are three approaches in industrial concept.

a. Unilateral
In this approach, employer alone decides the terms and conditions of employment. This is
known as Individual Bargaining.

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b. Bilateral
In bilateral approach, the Employer and Worker negotiate with each other. When workmen/
their associations and their representatives, negotiate with one another. It is known as
bipartite collective bargaining.
c. Tripartite
In Tripartite Approach, besides the two main parties, a third party also intervenes to facilitate
settlement.

Define Collective Bargaining.

According to Stevens, ― as a social-control technique for reflecting and transmitting the

basic power relationships which underline the conflict of interests in an industrial system.

According to Flanders, ― collective bargaining is joint administration synonymous with

joint management.

According to Harbison, ―a process of accommodation between two institutions, which have

both – command and conflicting interests.

According to ILO, ―as negotiations about working conditions and terms of employment
between an employer and one or a group of employees or one or more employees‗
organizations, on the one hand, and one or more representative of workers‗ organizations, on
the other, with a view to reaching an agreement.

State the Functions of Collective Bargaining.

Collective bargaining plays an important role in preventing industrial disputes, settling these
disputes and maintaining industrial peace by performing the following functions:
 Increase the economic strength of employees and management.
 Establish uniform conditions of employment.
 Secure a prompt and fair redressed of grievances.
 Lay down fair rates of wages and other norms of working conditions.
 Achieve an efficient functioning of the organization.
 Promote the stability and prosperity of the company.
 It provides a method of the regulation of the conditions of employment of those who
are directly concerned about them.
 It creates new and varied procedures for the solution of the problems as and when
they arise – problems which vex industrial relations; and its form can be adjusted to
meet new situations.
 It provides a flexible means for the adjustment of wages and employment conditions
to economic and technological changes in the industry, as a result of which the
changes for conflicts are reduced.
 As a vehicle of industrial peace, collective bargaining is the most important and
significant aspect of labor-management relations, and extends the democratic
principle from the political to the industrial field.
 It builds up a system of industrial jurisprudence by introducing civil rights in the
industry. In other words, it ensures that the management is conducted by rules rather
than by arbitrary decisions.

Importance of Collective Bargaining

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It protects the individual employee against the arbitrary actions of management in case of
favoritism and victimization. International Confederation of free trade unions has its
objectives in Collective Bargaining as follows:

 To establish Union recognition as an authority in work place.

 To raise workers standard of living and win a better share in company‘s profit.
 To express in practical terms, the workers desire to be treated with due respect, and to
achieve democratic participation in decisions affecting their working conditions.
 To establish orderly practices for sharing in these decisions and to settle disputes this
may arise in day to day life of the company.
 To achieve broad general objectives such as defending and promoting the workers
interests.

Principles of Collective Bargaining

For Management
 Should think of realistic principles and policies for labour regulations.
 The recognitions of a trade union to represent the problems is more essential. If there
are more than one union, the management can recognize on which is having the
support of majority of workers.
 Management should follow a policy of goodwill, and cooperation in collective
bargaining rather than an indifferent attitude towards the union.
 Managements need not wait for trade union to represent their grievances for
settlement.
 Management can voluntarily take measures to settle the grievances. Managements
should give due consideration to social and economic conditions of workers in
collective bargaining.

For unions

 Unions should avoid undemocratic practices.
 Unions have to recognize their duties to the management also before emphasizing
their demands.
 Unions have to consider the benefits to all workers rather than a section of workers.
 Strike lock-outs should be resorted to, only as a last measure. As far as possible they
have to be avoided by compromise and discussion.
 The success of collective bargaining is based on certain principles.

These principles are to be followed by the employers and unions.

 Both the management and union should analyse the alternatives to arrive at the best
solution.
 There must be mutual respect on both the parties. The management should respect the
unions and the unions should recognize the importance of management.
 Both the union and management must have good faith and confidence in discussion
and arriving at a solution.
 Collective bargaining required effective leadership on both sides, on the union side
and management side to moderate discussions and create confidence.
 In collective bargaining both the union and management should observe the laws and
regulations in practice in arriving at a solution.
 In all negotiations, the labour should be given due consideration – in wage fixation, in
working conditions, bonus etc.

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Discuss the Various Types of Collective Bargaining

Four distinct type of bargaining have evolved over time, namely conjunctive, cooperative,
productivity and composite bargaining. These are discussed below.
 Conjunctive / distributive bargaining
 The parties try to maximize their respective gains
 They try to settle economic issues such as wages, benefits, bonus, etc., through zero
sum game (where my gain is your loss and your gain is my loss).
 Union negotiates for maximum wages.
 Management wants to yield as little as possible – while getting things done through
workers.

 Cooperative bargaining
 When companies are hit by recession, they cannot offer the kind of wages and
benefits demanded by workers.
 Both parties realize the importance of surviving in such difficult times and are willing
to negotiate the terms of employment in a flexible way.
 Eg. TELCO, ASHOK LEYLAND resorted to cooperative bargaining.

 Productivity bargaining
 In this method, worker‘s wages and benefits are linked to productivity.
 A standard productivity index is finalized through negotiations initially.
 Management gains control over workplace relations and is able to tighten the norms
still further in future negotiations.

 Composite Bargaining
 It is alleged by workers that productivity bargaining agreements have increased their
workload.
 In this method, labor bargains for wages as usual but goes a step further demanding
equity in matters relating to work norms, employment levels, manning standards they
ensure the workload of workers does not increase, this helps to maintain a status quo
as far as employment level is concerned.

Process of collective Bargaining

There are two stages in collective bargaining
1. The negotiation stage and
2. The stage of contract administration

1. Negotiation
a. Identification of Problem
The nature of the problem influences the whole process whether the problem is very
important that is to be discussed immediately or it can be postponed for some other
convenient time, whether the problem is minor that it can be solved with the other
party‗s acceptance on its presentation and does not need to involve the long process of
collective bargaining process etc.
b. Collection of Data

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Both labor and management initially spend considerable time colleting relevant data
relating to
 Grievances,
 Disciplinary actions,
 Transfers and promotions,
 Lay-offs,
 Overtime,
 Former agreement copying
o Wages.
o Benefits,
o Working conditions and
o Current economic forecasts,
o Cost of living trends,
o Wage rate in a region across various
 Occupations,
 Competitive terms offered by rivals in the field etc.
c. Selection of Negotiators
The success of collective bargaining depends on the skills and knowledge of the
negotiators.
Effective negotiators should have a
 Working knowledge of trade unions principles,
 Operations,
 Economics,
 Psychology and
 Labour laws.
Timing is important. Effective speaking debating skills are essential.
d. Preparing for negotiations
When it becomes necessary to solve the problem through collective bargaining
process, both the parties prepare themselves for negotiations.
e. Negotiations of agreement
Usually, there will be chief negotiator who is from the management side. He directs
over the process.
The chief negotiator presents the problem, its intensity and nature and the views of
both the parties.
When a solution is reached at, it is put on the paper, taking concerned legislations into
consideration.
Both the parties concerned, sign the agreement which, in turn, becomes a binding
contract for both the parties.

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2. Contract Administration
Implementation of the contract is as important as making a contract. Management
usually distributes the printed contract, its terms and conditions throughout the
organization. The union takes steps to see that all the workers understand the contract
and implement it.

Briefly describe the Prerequisites of Collective Bargaining.

1. Strong, independent and well-organized unions.
2. Recognition of the union as bargaining agents.
3. Willingness to adopt a “Give and Take” approach.
4. Favorable political climate.
5. Mutual trust and good faith.
6. Absence of unfair labor practices.
7. A problem-solving approach rather than a fire-fighting approach.
8. The success of collective bargaining is directly linked with the strength of the parties.
The strength of the parties on the power to strike or declare lock-outs, financial
position and market situation and other imperatives.
9. Bargaining power of both parties to be equal for contributively consultation between
them i.e. union management.
10. Both to accept the principle of free consultation and free enterprise for advancement
of public interest.

Negotiations

Negotiation is a dialogue between two or more people or parties intended to reach a mutually
beneficial outcome, resolve points of difference, to gain advantage for an individual or
collective, or to craft outcomes to satisfy various interests.

Negotiation occurs in business, non-profit organizations, and government branches, legal

proceedings, among nations and in personal situations such as marriage, divorce, parenting,
and everyday life. The study of the subject is called negotiation theory Professional
negotiators are often specialized, such as union negotiators, leverage buyout negotiators,
peace negotiators, hostage negotiators, or may work under other titles, such as diplomats,
legislators or brokers.

Types of Negotiations

Distributive negotiation
Distributive negotiation is also sometimes called positional or hard-bargaining negotiation. It
tends to approach negotiation on the model of haggling in a market. In a distributive
negotiation, each side often adopts an extreme position, knowing that it will not be accepted,
and then employs a combination of guile, bluffing, and brinkmanship in order to cede as little
as possible before reaching a deal. Distributive bargainers conceive of negotiation as a
process of distributing a fixed amount of value.
The term distributive implies that there is a finite amount of the thing being distributed or
divided among the people involved. Sometimes this type of negotiation is referred to as the
distribution of a "fixed pie." There is only so much to go around, but the proportion to be

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distributed is variable. Distributive negotiation is also sometimes called win-lose because of

the assumption that one person's gain results in another person's loss. A distributive
negotiation often involves people who have never had a previous interactive relationship, nor
are they likely to do so again in the near future. Simple everyday examples would be buying a
car or a house.

Integrative negotiation
Integrative negotiation is also sometimes called interest-based or principled negotiation. It is
a set of techniques that attempts to improve the quality and likelihood of negotiated
agreement by providing an alternative to traditional distributive negotiation techniques.
While distributive negotiation assumes there is a fixed amount of value (a "fixed pie") to be
divided between the parties, integrative negotiation often attempts to create value in the
course of the negotiation ("expand the pie"). It focuses on the underlying interests of the
parties rather than their arbitrary starting positions, approaches negotiation as a shared
problem rather than a personalized battle, and insists upon adherence to objective, principled
criteria as the basis for agreement.
Integrative negotiation often involves a higher degree of trust and the forming of a
relationship. It can also involve creative problem-solving that aims to achieve mutual gains. It
is also sometimes called win-win negotiation. (Win-win game).

Problem solving attitude

When things get uncomfortable during negotiations, sometimes our tendency is to dig in our
heels and hold on to our position. That can be completely appropriate at times – the challenge
is to do it in a way that is professional and consistent with your organization‗s values. A
problem solving attitude can help.
A problem solving attitude doesn‗t mean that you give in or instantly compromise every time
a Manager disagree with the client. What it means is that a Manager demonstrate open
mindedness. In other words, a Manager consistently let them know that he is open to hearing
about different ways to approach the situation and reach a mutually acceptable solution.

Techniques of negotiation
1. Share information.
We often approach negotiation being very guarded and wary of showing our cards.
Yet, while we believe this is a smart approach, it has a negative impact on our
outcomes and inhibits trust. As Grant points out, people tend to be matchers and
―follow the norm of reciprocity, responding in kind to how we treat them‖. If we want
to be trusted, we must first offer it.

Studies have shown that revealing some information, even when it‗s unrelated to the
negotiation, increases the outcome. You don‗t have to put all of your cards on the
table at the outset. Simply putting something of yourself out there your hobbies,
personal concerns, or hopes can set a positive tone that‗s conducive to gaining
agreement.

2. Rank orders your priorities.

Typically when we negotiate, we know what our key issues are, and we sequence
them. For example, if we‗re trying to close a new client, we might say that the price is
most important, and if we don‗t agree, there‗s no use to continue.

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Grant recommends another approach called rank ordering. His research shows that
you are able to achieve better outcomes by ranking and leaving all the issues on the
table and being transparent about it. That way both parties can compare their rankings
and determine what the full set of options really are.

In the above example, perhaps a Manager could make trade-offs in scope or travel
requirements if the client can‗t get to a Manager Price.

3. Go in knowing your target price and your walkaway terms.

Galinsky calls your walkaway price (or terms) your reservation price. Your target
price is what you‗re hoping for. Often we go into negotiations with one or the other –
or let our partner start the bidding. This puts us at a huge disadvantage.

It‗s critical to do the research ahead of time here. You need your research to be based
on firm data, as not only will it provide more confidence and power to you, but it also
reduces the chance that you‗ll throw something crazy out there. By knowing your own
range, it will help you make better decisions in the moment, and be clear about your
limits.

4. Make the first offer.

This is one piece of advice that clearly defies conventional wisdom. In negotiations,
information is often equated with power. We believe it‗s best to extract as much as
possible from the other person before tipping our own hand.

Grant and Galinsky both agree that the research is clear on this point: people who
make first offers get better terms that are closer to their target price. The reason is the
psychological principle of anchoring. Whatever the first number is on the table, both
parties begin to work around it. It sets the stage.

Often we are reluctant to go first because we may be way off, and disengage the other
party. But Galinksy notes that this does not play out in the research. He said that most
people make first offers that aren‗t aggressive enough.

There‗s a reason we have the adage, ―you get what you pay for.‖ Higher prices make
the buyer focus on the positives, while lower ones invite focus on the downsides. In
other words, we find data that supports this anchor. (Consider real estate: a high-
priced home makes us look at all the desirable qualities, while a below-market
offering brings up a bad location or needed repairs.)

Galinsky says that ideally the best first offer is one that‗s just outside your partner‗s
reservation price, but not so far that they have sticker shock.

5. Don‟t counter too low.

If you aren‗t able to make the first offer, then you need to also protect yourself against
the anchoring effect. Caution: most people go too low, too quickly. Your counter
should be based on the same information you would have used if you‗d made the first
offer, Galinsky says.

You may also want to consider re-anchoring, as Grant puts it. Let the other person
know that their offer is way off, and go back in with a new reset. It also may be

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helpful to call out what you‗re observing to redirect the conversation, i.e. you may be
trying to test my thinking with that first offer, but here‗s more of what I had in mind.

6. Counter offers make both parties more satisfied.

Every buyer wants to feel that they got a good deal; every seller wants to feel as if
they drove a hard bargain. Parties are most satisfied on both fronts if there was some
back and forth. This may come as a surprise if you‗re someone who abhors
negotiation.

Galinsky even advises that you shouldn‗t take the first offer, even if it meets your
needs. By going back and asking for concessions you can ensure that you got the best
deal, and increase your partner‗s satisfaction as well. More satisfied partners are more
likely to work harder and be more committed to the end result, which is the ideal
outcome from the start.

Negotiation process-Stages of Negotiation

In order to achieve a desirable outcome, it may be useful to follow a structured approach to

negotiation. For example, in a work situation a meeting may need to be arranged in which all
parties involved can come together.

The process of negotiation includes the following stages:

 Preparation
 Discussion
 Clarification of goals
 Negotiate towards a Win-Win outcome
 Agreement
 Implementation of a course of action

Essential skills for negotiation

Interpersonal Skills
Good interpersonal skills are essential for effective negotiations, both in formal situations and
in less formal or one-to-one negotiations.

These skills include:

 Effective verbal communication.
 See our pages: Verbal Communication and Effective Speaking.
 Listening.
 We provide a lot of advice to help you improve your listening skills, see our page
Active Listening.
 Reducing misunderstandings is a key part of effective negotiation.
 See our pages: Reflection, Clarification and The Ladder of Inference for more
information. Rapport Building.
 Build stronger working relationships based on mutual respect. See our pages:
Building Rapport and How to be Polite.
 Problem Solving.
 See our section on effective Problem Solving.

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 Decision Making. Learn some simple techniques to help you make better decisions,
see our section: Decision Making.
 Assertiveness.
 Assertiveness is an essential skill for successful negotiation. See our page:
Assertiveness Techniques for more information.
 Dealing with Difficult Situations.

Discipline Management

Meaning of Discipline
 Discipline refers to a condition or attitude among employees with respect to rules and
regulations of an organization.
 Discipline refers to the orderliness in working and behavior.

Objectives of Discipline
 To obtain a willing acceptance of the rules, regulations
 To impart an element of certainty
 To develop the spirit of tolerance and adjustments
 To give and seek direction and responsibility
 To create an atmosphere of respect
 To increase the working efficiency and morale of the employees

Employee Discipline Management

Discipline is the orderly conduct by an employee in an expected manner. It is the force

or fear of a force that deters an individual or a group from doing things that are
detrimental to the accomplishment of group objectives.
In other words, discipline is the orderly conduct by the members of an organization who
adhere to its rules and regulations because they desire to cooperate harmoniously in
forwarding the end which the group has in view.

Causes of Indiscipline
 Lack of Proper Leadership
 Lack of Supervision
 Violation of Rights of Employees
 Absence of Grievance Settlement Machinery
 Employer‘s Attitude
 Lack of Communication
 Lack of Proper Promotional Policy
 Lack of Proper Rules and Regulations
 Divide and Rule Policy
 Divide and Rule Policy

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Disciplinary Action

Disciplinary action means responding to an employee's misconduct, unsatisfactory

performance, and breaking of rules at work. It aims to correct the behavior, not punish them.
Employees may receive a verbal or written reprimand, but employers may adopt other actions
to correct behavior.
It‘s up to the employee‘s supervisors and managers to determine when disciplinary action
should be taken. While managerial staff can be more lenient with minor violations (e.g.,
forgetting to respond to an important email), it is critical that they promptly address severe
incidents such as no-call no-shows, harassment, or misconduct toward customers.
Employers and their supervisory personnel must also be fair and consistent when
administering disciplinary action. When determining when to take action and what
consequences to administer, managers should consider the nature of the violation, the
employee‘s disciplinary history, and their experience.

Right to take Disciplinary Action

Right to take Disciplinary action emanates from employer-employee relationship and is
regulated by contract of employment, standing order of the company (for workers) or conduct
and discipline (appeal) rules (supervisory staff) of the organization. Promptness in
disciplinary cases is essential. It has to be ascertained which disciplinary rules are applicable
to the delinquent employee, for taking action.

Approaches to discipline
1. Positive Approach
To be effective, disciplinary action should emphasize correcting the problem rather than
punishing the offender. It should maintain the employee's dignity and self-respect. It should
provide for increasingly serious steps if the problem is not resolved, and it should ultimately
result in a change in the employee's behavior and performance.
Like traditional approaches, the positive discipline approach involves a number of formal
steps that increase in seriousness. But unlike punitive disciplinary systems, the positive
approach emphasizes reminders of expected performance — not warnings or reprimands for
misconduct.
Step 1: Oral Reminder
Step 2: Written Reminder
Step 3: Decision-Making Leave

2. Progressive discipline
It is an employee disciplinary system that provides a graduated range of responses to
employee performance or conduct problems. Disciplinary measures range from mild to
severe, depending on the nature and frequency of the problem. For example, an informal
coaching session might be appropriate for an employee who is tardy or violates a minor work
rule, while a more serious intervention -- or even termination -- might be called for if an
employee commits serious misconduct or doesn't improve a performance problem after
receiving several opportunities to do so. Most large companies use some form of progressive
discipline, although they don't necessarily call it by that name. Whether they are referred to as
positive discipline programs, performance improvement plans, corrective action procedures,
or some other title, these systems are all similar at their core, although they might vary in the
details. All are based on the principle that the company's disciplinary response should be
appropriate and proportionate to the employee's conduct.

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3. Red Hot stove Rule

The "Hot-Stove Rule" of Douglas McGregor gives a good illustration of how to impose
disciplinary action without generating resentment. This rule draws an analogy between
touching a hot stove, and undergoing discipline. When you touch a hot stove, your discipline
is immediate, with warning, consistent, and impersonal.
These four characteristics, according to McGregor, as applied to discipline are self-serving
and may be explained as follows:
 When you touch the Hot stove, you burn your hand. The burn was immediate. Will
you blame the hot stove for burning your hand? Immediately, you understand the
cause and effect of the offense. The discipline was directed against the act not against
anybody else. You get angry with yourself, but you know it was your fault. You get
angry with the hot stove too, but not for long as you know it was not its fault. You
learn your lesson quickly.
 You had warning as you knew the stove was red hot and you knew what would
happen to you if you touched it. You knew the rules and regulations previously issued
to you by the company prescribing the penalty for violation of any particular rule so
you cannot claim you were not given a previous warning.
 The discipline was consistent. Every time you touch the hot stove you get burned.
Consistency in the administration of disciplinary action is essential. Excessive
leniency as well as too much harshness creates not only dissatisfaction but also
resentment.
 The discipline was impersonal. Whoever touches the hot stove gets burned, no
matter who he is. Furthermore, he gets burned not because of who he is, but because
he touched the hot stove. The discipline is directed against the act, not against the
person. After disciplinary action has been applied, the supervisor should take the
normal attitude toward the employee.

4. Judicial Approach to Discipline in India

Judicial Approach to Discipline in India
A Positive Approach to Employee Discipline Traditionally, methods for maintaining
discipline have been punitive in nature. The relatively new concept of a non-punitive positive
discipline system is winning increasing acceptance among many employers. The purpose of
this method is to enable employees to truly confront their performance or attendance
problems and take responsibility for their actions. To be effective, disciplinary action should
emphasize correcting the problem rather than punishing the offender. It should maintain the
employee's dignity and self-respect. It should provide for increasingly serious steps if the
problem is not resolved, and it should ultimately result in a change in the employee's
behavior and performance. Like traditional approaches, the positive discipline approach
involves a number of formal steps that increase in seriousness. But unlike punitive
disciplinary systems, the positive approach emphasizes reminders of expected performance
— not warnings or reprimands for misconduct.

Essentials of a good disciplinary system

To avoid conflict and lawsuits, managers must administer discipline properly.

1. Rules and Performance criteria
2. Documentation of the facts
3. Consistent response to rule violations
4. Training of supervisors
5. Prompt action

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6. Impersonal discipline
7. Reasonable penalty
8. Follow-up

Principles of a Natural Justice

 The employee must be indicated about the charge against him
 The employee must be given a chance for defense
 The enquiry must be fair and impartial
 The evidence should be put forward in front of the employee
 Punishment should be appropriate with the misconduct

Misconduct
Model standing orders specify the terms and conditions which govern day-to-day employer-
employee relationship, infringement of which could result in a charge of misconduct.
The standing orders provide the management with a basis for taking disciplinary action
against employees in an organization. This is necessary if the enterprise is to function at all.
The Act defines the term ‗misconduct‘ and examples are provided in the model standing
orders. In very general terms, an action or types of behavior can be defined as misconduct.
The other examples of misconduct are, go-slow, ―which is a strike on the job, covert sabotage
affected by a conscientious withdrawal of efficiency.‖

Investigations of allegations
The purpose of administrative investigations is to investigate allegations of misconduct
committed by personnel of an organization.
On the appointed date and time fixed for the enquiry, the following persons should be present
apart from the enquiry officer.
 Presenting Officer
He is the person who will lead the case from the management‘s side by producing
witnesses and relevant documentary evidence in support of the charge. He may
himself be a witness, in which case, he is the first person to be examined.
 Delinquent Employee
No enquiry can be said to have been held as per procedure in the absence of the
charge sheeted employee. If, however, he refused to take part in the enquiry after
presenting himself or when he does not report for the enquiry despite receiving the
notice sent to him, the enquiry may proceed ex-parte, provided in the notice of the
enquiry a specific mention to that effect had been made.
 Representative of the delinquent employee
If the delinquent employee responds to the charge sheet or makes a subsequent
request that he should be allowed to take a knowledgeable co-worker of his choice to
assist him in the enquiry.
 The procedure of enquiry
At the commencement of the enquiry, if the delinquent employee is present, the
enquiry officer should record the date, time and place of enquiry, names of the
persons present and obtain their signatures on the order sheet.
 Read out and explain the charges
 Explain to the delinquent employee concerned
 Witness in the support of charges
 Charge sheeted workman is to be given by the opportunity
 The delinquent employee should be asked to produce his own witness one by
one

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 The concerned witness should sign on each page of his statement.

 Ex-parte enquiry
On the day od fixed for the enquiry, the delinquent employee does not turn up, an ex-
parte enquiry may be held by following the usual procedure. In such an enquiry, the
presenting officer has to lead the evidence against the charge sheeted workmen. The
enquiry officer, by putting questions to the witness, can come to a reasonable
conclusion about validity or otherwise of charges.
 The enquiry report
After the enquiry is over the enquiry officer makes an appreciation of the evidence on
record and comes to his conclusion. If there is no corroborative evidence on a
particular point, the enquiry officer has to give his own reasons for accepting or
rejecting the evidence of such a witness.

Notice of Enquiry
The enquiry should be normally held within a reasonable time of receiving the explanation.
Proper and sufficient advance notice should be given indicating the date, time and venue of
the enquiry and name of the enquiry officer, so that the workman can prepare his case.
In certain cases, the following steps maybe observed:
1. Issue of show cause notice
2. Consideration of explanation and
3. Issue of charge sheet and notice of enquiry
While framing the notice, care should be taken not to make a statement which would indicate
that the workman‘s case has been prejudged. E.g. statement that the explanation submitted
was false etc. should not be made.

Charge Sheet
As soon as misconduct is observed and confirmed through preliminary investigation a
manager should frame a charge sheet which contains charges or a description of misconduct,
and an explanation should be asked for. A manager has to be very careful in framing the
charge sheet because if the punishment awarded is not in consonance with the charges.
The following points should be considered while framing the charge-sheet:
 It should be properly worded and loose language should not be used.
 While stating the offence, date, time and place of its commission and all other
relevant details should be given.
 If in a firm, standing orders are in force, then the wording of charges should be in
consonance with the wording in the standing orders.
 The proposed punishment may be mentioned.
 It should call upon the worker to submit an explanation in writing within a specified
time or date.
 The charge-sheet should be issued under the signature of the disciplinary authority
and not of the enquiry officer.
 The charge sheet should be properly served.

Domestic Enquiry

‗Domestic Inquiry‘ is an investigation done by the employer in case of a dispute between an

employee and the aforementioned employer. It usually happens in cases where the employee
has been accused of misconduct and is now challenging the decision of the employer. It is
important to understand that domestic inquiry is simply an evidence-gathering process. It

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does not provide the final verdict. It simply collects the evidence and catalogues them and
presents them as reports in front of the senior management or whoever is administering the
judgment in the case. As the inquiry is done by the employer, the employee is also allowed to
have his friends or union be a part of the inquiry committee. However, the handling of
evidence will be done by the people appointed by the company only.

Report of Findings

At the conclusion of the enquiry proceedings, by applying his mind to all the facts that
emerged at the enquiry, the enquiry officer should decide as to whether the charges made are
valid or not along with the reasons for his findings. He may or may not recommend
punishment. As far as possible he should refrain from awarding punishment and leave it to
the decision of the appropriate authority. The enquiry report is submitted to the disciplinary
authority. Before he takes a decision on the findings of the enquiry officer, he is required to
furnish a copy of the enquiry officer‘s report to the concerned employee. If he agrees with the
findings of the enquiry officer, after considering the gravity of the misconduct and the past
record of the delinquent employee equitable treatment with precedents of action taken, etc. he
may pass an order on the quantum of punishment after recording his reasons for the same in
writing.

Punishment to be imposed

This management task and punishment awarded should be based on the findings of the
enquiry and past record of the employee. The gravity of misconduct should be taken into
account. After a decision is taken regarding punishment, it should be communicated to the
concerned workman as expeditiously as possible.

Different types of punishment resulting from various types of omission or misconduct are as
follows:

 Oral warnings
 Written warnings
 Loss of privileges and fines
 Punitive suspension
 Withholding of increments
 Demotion
 Termination

Workers Participation in Management

Introduction

Participative management is also referred to as workers participation in management. The

concept of workers participation in management is considered as a mechanism where workers
have a say in the decision-making process of an enterprise formally. The concept of Quality
Circles (QC) provides informal involvement of employees in the decision=making and
implementation process.

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Definition

According to Davis, ―‖it is a mental and emotional involvement of a person in a group

situation which encourages him to contribute to goals and share responsibilities in them.‖
Within the orbit of this definition, a continuum of men management relationship can be
conceived:

Workers control Joint Management Joint Consultation

Work Place Consultation Management Supremacy.

Objectives of Workers Participation in Management

 To promote increased productivity for the advantage of the organization, workers and
society at large;
 To provide a better understanding to employees about their role and place in the
process of attainment of organizational goals;
 To satisfy the workers social and esteem needs;
 To strengthen labor management co-operation and thus maintaining industrial peace
and harmony.
 To develop social education for effective solidarity among the working community
and for aping latent human resources.
 An ideological point of view to develop self-management in industry.
 An instrument for improving efficiency of the company and establishing harmonious
industrial relations.
 To build the most dynamic human resources
 To build the nation through entrepreneurship and economic development.

Forms of WPM

 The forms of WPM vary from industry to industry and from country to country.
 The important forms are:
 Labor-Management Consultation and Co-operation
 Joint Consultation and Model of Participation (U.K)
 Union-Management Co-operation (USA)
 Co-determination Scheme (West Germany)
 Joint Management Plan
 Joint Decision-Making Model
 Workers Control Model
 Self-Management or Auto Management Scheme.

The forms of Workers Participation Management in India are:

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 Works Committee

The Industrial Disputes Act, 1949, provides for the setting up of work committees as a
scheme of workers participation in management which consists of representative of
employers and employees.

The act provides for these bodies in every undertaking employing 100 or more workmen.

Objectives

 To promote measures for maintaining harmonious relations in the work place

 To sort out differences of opinion in respect of matters of common interest to
employers and employees.

The Bombay Industrial Relations Act, 1946, also provides for these bodies, but under the
provisions of this Act, the can be set up only in units which have arecognised union and they
are called joint committees.

Functions

These work committees / joint committees are consultative bodies.

Their functions include

Discussion of conditions of work like

 Lighting
 Ventilation
 Temperature
 Sanitation etc.,

Amenities like

 Water supply for drinking purposes,

 Provision of canteens,
 Medical services,
 Safe working conditions,
 Administration of welfare funds
 Educational and recreational activities
 Encouragement of thrift and savings.
 Joint Management Councils

The Second Five Year Plan recommended the setting up of joint councils of management
consisting of representatives of workers and the management. The Government of India
deputed a study group (1957) to study the schemes of worker‗s participation in management
in countries like UK, France, Belgium and Yugoslavia.

The report of the study group was considered by the Indian Labour Conference (ILC) in its
15th session in 1957 and it made certain recommendations:

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 The workers participation in management schemes should be set up in selected

undertakings on a voluntary basis.
 A sub-committee consisting of representatives of employers, workers and government
should be set up for considering the details of workers participation in management
schemes.

Objectives

The objectives of Joint Management Councils are as follows:

 To increase the association of employers and employees thereby promoting cordial

industrial relations;
 To improve the operational efficiency of the workers;
 To provide welfare facilities to them;
 To educate workers so that they are well equipped to participate in these schemes; and
 To satisfy the psychological needs of workers.

 Joint Councils

The Joint Management Councils for the whole unit and its membership remains confined to
those who are actually engaged in the organizations. The tenure of the joint councils is for
two years. The Chief Executive of the unit becomes its Chairman. Workers members of the
council nominate the Vice Chairman.

The Joint Council appoints the Secretary who is responsible for discharging the functions of
the council.

The joint councils will meet once in four months, but the periodicity of the meeting varies
from unit to unit, it may be once in a month, quarter etc.

The decisions taken at the joint council meetings are by the process of consensus and the
management shall implement the decisions within one month. The scheme was implemented
by the major units of the Central and State Governments.

Objectives

The objectives of JMC are as follows:

 To increase the association of employers and employees, thereby promoting cordial

industrial relations.
 To improve the operational efficiency of the workers.
 To provide welfare facilities to them.
 To educate workers so that they are well prepared to participate in these schemes and
 To satisfy the psychological needs of workers.

A tripartite sub-committee was set up as per the recommendations of Indian Labour

Conference which laid down certain criteria for selection of enterprises where the JMCs
could be introduced. They are:

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 The unit must have 500 or more employees;

 It should have a fair record of industrial relations;
 It should have a well-organized trade union;
 The management and the workers should agree to establish JMCs;
 Employers (in case of private sector) should be members of the leading Employers
Organization;
 Trade unions should be affiliated to one of the central federations.

 Shop Councils.

The shop council represents each department or a shop in a unit. Each shop council will
consist of an equal number of representatives of employers and workers. The employer
representatives will be nominated by the management and must consist of persons from
within the unit concerned.

The workers representative will be from among the workers of the department or shop
concerned.

The number of members of each council may be determined by the employers in consultation
with the recognized union.

The total number of members, however, may not generally exceed twelve.

The decision of the shop council is to be taken on the basis of consensus but not by voting.

Management of the shop councils meets at least once in a month. Management nominates the
Chairman at least once in a month. Management nominates the Chairman of the shop council
whereas workers members of the council elect the vice-Chairman of the council.

What are the various interpretations of workers participation?

There are five interpretations of participation. They are:

 Informative Participation
 Consultative Participation
 Associative Participation
 Administrative Participation and
 Decisive Participation.

Informative Participation

It refers to sharing of information with workers regarding

 economic position of the firm,

 state of the market,
 production and sales program
 work methods,
 balance sheet,

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 Expansion plans etc.

Here the workers have no right to scrutinize the information provided by management.

Consultative Participation

This involves a higher degree of sharing of views of the workers and giving them a chance to
express their views on various issues concerning

 Work
 Workplace
 Working conditions
 Market standing,
 Financial status, etc.

Here the joint council of workers and management works as an advisory body only.
Management may or may not accept the suggestions.

Associative Participation

Here the council is not purely advisory. The management is under a moral obligation to
accept and implement the unanimous decisions of the council.

Administrative Participation

Here there is a greater degree of sharing authority and responsibility of managerial work,
allowing workers a little more autonomy in exercising administrative and supervisory powers
in respect of welfare, safety, benefits, rewards, etc.

Decisive Participation

This is the highest form of participation where decisions are taken jointly on matters relating
to production, safety, welfare, etc.

Reasons for the Limited Success of Workers‟ Participation in Management

Despite the positive attitudes of both the parties about the conceptual framework of
participation management, the arrangements of the participative management in public sector
units have so far failed to deliver the goods. It is felt the existing system is not conducive to
inherent constraints due to –

 The inherent conflict between employees and management;

 The general belief that the workers are inferior to management;
 The fact that the system is management dominated and due to and
 The view that managers are averse to share responsibility.

Suggestions for the Success of Workers‟ Participation in Management

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The following are the prerequisites for the successful functioning of the schemes of workers
participation in management. Managements, trade unions and the workers should be
concerned with these prerequisites:

1. There should be mutual trust and faith among all the parties concerned.
2. There should be progressive management in the enterprise and should recognise its
obligations and responsibilities towards workers and trade unions.
3. There should be strong, democratic and representative unions which should represent
the causes of workers without neglecting the management‗s interest.
4. There should be closely and mutually formulated objectives for participation by trade
unions and the management.
5. All parties concerned towards participative management should feel that they should
participate at all levels.
6. There should be effective communication between workers and management and
effective consultation of the workers by the management.
7. Both the parties should develop a favorable attitude towards the schemes of
participative management.
8. Management and Government should provide training to all the parties concerned to
prepare them for participative management.
9. Both the parties of anticipative management should be conscious of the benefits of the
schemes.

Important Questions

1. Elucidate process of collective bargaining.

2. Brief the characteristics of Red Hot Stove Rule.
3. Briefly explain the different types of negotiations.
4. Discuss the different technique of negotiations.
5. Elucidate on different stages of collective bargaining process.
6. Bring out the essential conditions for the success of collective bargaining.
7. Write a note on WPM.
8. Explain the principles of collective bargaining.
9. Explain the concepts of CB.
10. Elucidate the causes of indiscipline.

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Module-4
Introduction to Employee Relation, meaning and significance of employee relation in
industry, Advantages and limitations of maintaining employee relations through unions.
Legal provisions to maintain employee relation- works committee, conciliation, board of
conciliation, voluntary arbitration, and adjudication.

Introduction to Employee Relation

‗Employee relations‘ is a term that has become commonly used only in relatively recent years
to indicate a particular area of subject matter. Prior to this it is likely that you would have
found the term ‗industrial relations‘ in more common use. The question of whether there are
genuine differences attached to the meanings and uses of these two terms forms part of the
discussion in this first module. Also we examine briefly the issues of the nature of the
employment relationship, whether it is characterized by conflict or consensus, the
significance of perspective and the relevance of expectations, interests and the notion of a
psychological contract. You are also introduced to the questions of what constitutes good
industrial or employee relations, what quality means, what it looks like and, perhaps even
more relevant, whether we can actually measure it in any meaningful sense.

The relevance of perspective to that debate is also illustrated. Finally in this first module, we
introduce the notion of an industrial relations system and its limitations as a theory of
industrial relations, and, in this context, outline a framework that centers upon the
employment relationship and also provides an explanation for the structure and contents of
this book.

Meaning of Employee Relation

Employee relations refer to an organization's efforts to maintain positive relationships with

employees. The goals of good employee relations include inspiring employee loyalty,
increasing engagement, reducing turnover, and creating a positive company culture.

The main purpose of employee relations is to foster and improve a positive relationship
among employees and an employer (or coworkers, work, the company as a whole, etc.). This
is intended to increase employee retention and productivity for the company and to encourage
a sense of community.

Definition of Employee Relation

Blyton and Turnbull, discuss this in explaining why they have chosen to use the term
‗employee‘ as opposed to ‗industrial‘. They begin by arguing that they see no hard and fast
distinction between the two, the difference being in the tendency of each to focus the subject
inside different boundaries, but in reviewing various contributions to the debate they do state
some of the more common views.

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They point out those industrial relations:

 became inevitably associated with trade unions, collective bargaining and industrial
action;
 Had too strong a tendency to view the world of work as synonymous with the heavy
extractive and manufacturing sectors of employment, sectors that were dominated by
male manual workers working full-time and that are now in decline in nearly all
developed economies.

Significance of Employee Relation

1. More effective workplace communication – Fostering the relationship between

employers and employees encourages open communication throughout the
organization on a wide scale basis and at a personal level. This allows employees to
better understand expectations, goals, and objectives and how their contributions
make a difference.
2. Less workplace conflict – Stronger relations between management and teams creates
an atmosphere that encourages dialogue and honest conversations that can resolve
issues before they turn into a controversy. When disputes do occur, having a platform
for addressing them ensures that employees are heard and makes conflict resolution
swift and effective.
3. Higher employee morale and loyalty – Viewing employees as partners in a
relationship shows them respect and appreciation. When employees feel a positive
connection to their employer, they are empowered to be more satisfied and productive
in their jobs. A work environment with high morale keeps people more content and
dedicated to their employer.
4. Better reputation as an employer – Employees who feel valued at work will speak
highly of their employer to others. Companies with strong employee relations often
have a better reputation among potential employees, customers, investors, and other
stakeholders. That can lead to increased business opportunities for the organization.
5. Lower employee turnover – Employees who have a good relationship with their
employer will tend to focus more on the positive aspects of their job, making them
less restless and prone to searching out other opportunities. This allows the
organization to retain valuable, productive employees longer and reduce turnover
6. Improved organizational performance – Keeping employees content and motivated
is a crucial factor in overall organizational performance. When workers feel
connected to their employer and are thriving in their roles, they become more
productive and inspired to contribute toward the long-term success of the business.

Advantages of Employee Relations

 Less Conflict

Knowing how to approach each of your employees and how they react to various situations
makes it easier to understand the best way to broach a potentially difficult situation. A strong
employee-employer relationship means that you have likely already been through enough

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conflict together to understand how either party reacts to different situations. It could also
mean that you have learned enough about each other to know how to handle each other in
these situations.

 Better Employee Engagement

Employees yearn for recognition, and they need to know that their efforts are being noticed.
Building a strong employee-employer relationship requires the employer to know exactly
what their employees are doing and how well they are doing it. This lets the employee know
that the employer is aware of their contribution.

 Reduced Attrition

Happier employees feel that they have a personal connection with their employers, which
means that they are likely to stay in the organizations longer. A major benefit of cultivating a
meaningful and strong employee-employer relationship is that employees learn to trust you,
and you learn to trust them.

 Better Understanding of Skillset

Here is another great benefit of having a strong employee-employer relationship, you know
your people, so you know what their skills are and what they are capable of. This means that
you know how to put the team together for the project. You also know what kind of projects
you can take on. Understanding who is capable of what kind of work precisely, takes time.
When you hire someone, you hope they always give their best. However, once you‘ve built a
good relationship with someone, you know how much effort they will actually put into their
jobs.
 Open Communication

While you don‘t necessarily want your employees hugging you or jabbing you in your side
with their elbows, you do want to have a pretty free atmosphere. It definitely shouldn‘t be
that the entire floor goes silent when the boss walks in. Create a healthy employee-employer
relationship so that your employees can talk freely to you. This could be about how they
think the process can be improved or how they feel about the work they do. This also means
that you can communicate openly with your employees and give them your honest feedback.
 Equality

In many cases, employers only spend time with their immediate subordinates. This could
mean that you are partial to their views and don‘t necessarily take the time to listen to all your
other employees. A good employee-employer relationship means that you are linked to
everyone who works for you. This means that no one gets special treatment, and everyone
has access to you.
 Loyalty

A strong employee-employer relationship fosters loyalty, employees who understand their

employer and who feel understood are likely to be more loyal. Taking the time to network
with your employees and understanding them helps them feel that they can always come to

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you for anything. This means that you always have their back. If you can make them feel that,
then rest assured that they will always have your back.

 Easier to Create Employee Development Plans

Creating development plans to improve your workforce is essential. However, creating

effective development plans can be a nightmare. Different people in the team likely need
different approaches and development plans. This involves extremely impersonal surveys and
questionnaires.
 Flatten the Hierarchy

When employees feel like they have become a vital part of the organization and have become
a part of a family, they naturally take on more responsibility and ownership. This implies that
they don‘t necessarily feel like employees, but like stakeholders who are executing a
particular task in order to further the interests of ‗THEIR‟ organization.
 Increased Productivity

At the end of the day, a good employee-employer relationship produces all the above-
mentioned. When you‘ve checked all these boxes, it leads to a better work environment and
ultimately higher rates of productivity.

Disadvantages of Employee Relations

 Conflict Management

Disputes between employees, or between an employee and business owner, are situations that
can occur frequently. One of the biggest issues can be how the two parties talk to each other,
or whether they talk at all. If there is not an easy way for the two parties to communicate and
have their issues heard, the conflict can turn into something much worse. This can result in
poor company morale or the termination of a team member.

 Pay disputes

Many issues can result around pay day with disputes over the number of hours worked, or
overtime claims that you don‘t think are accurate. To reduce the possibility of employees
disputing their payments, consider self-service timekeeping software that allows employees
to clock in and out from their smart devices. Providing employees with an efficient method of
keeping track of and managing their own schedules could be the answer.

 Safety in the Workplace

It‘s every business owner‘s worst nightmare to have an injury or accident happen to one of
their employees while they are at work. Promoting safety in the workplace should be a top
priority of every business owner, regardless of the industry they are in, which includes
making sure all proper safety equipment is used and that the right security measures are put in
place.

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 Annual Leave Disputes

Consider HRIS management software that helps you create a legal and transparent leave
policy that leaves no room for dispute, such as Breathe HR. This type of software provides
(among many other things) self-service holiday requests for employees and easy holiday
calculation and tracking for your business.

 Poor Communication

Effective communication in the workplace is essential. When you fail to communicate

properly, you create the conditions for misunderstandings and conflicts. Poor communication,
especially between managers and employees, can be disastrous. Healthy communication
channels allow everyone in the company to synchronize their goals and support each other
with real-time feedback. Communication also helps build trust.

 Unclear Contract Terms

Another reason for disputes between employers and employees is a mismatched

understanding of contract terms. Generally, businesses hire legal experts to write contracts
and work agreements that protect their interests. Not all employees understand legal jargon or
take the time to scrutinize the contract they sign, so they find themselves disadvantaged later.
Another common scenario is the employer not respecting contract terms regarding salary,
vacation time, or benefits, which can result in a breach of contract. So, it is important for an
employee to calculate prorated salary in Singapore.

 Conflicting Standards

Conflicting standards is another thing that can severely damage employer-employee relations.
People have different ways of achieving the same goal. At the same time, some see their
methods and practices as the best. Thus, they may fail to see why someone else does things
differently. An employer may dislike how an employee gets the job done. An employee may
dislike how perfectionist their employer is.

 Unfair Division of Work

Another thing that can severe damage employer-employee relation is Division of Work.
Working in a fair work environment is very important for employees. Responsibilities should
always correlate with experience and pay. Unfair division of work can be a major source of
Damage Employer-Employee Relations, affecting employee engagement and motivation. A
manager or business owner who isn‘t careful about this aspect will cause unnecessary
conflict.

 Harassment and discrimination

In today's world, every employee has the right to work in a safe and respectful environment, free
from any form of harassment and discrimination. Unfortunately, issues related to gender, race,
religion, age, and other personal characteristics still persist in many workplaces, causing employees
to feel uncomfortable, demotivated, and undervalued.

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 Poor employee working conditions

Employees complain about unsafe employee working conditions, including inadequate staffing
levels, broken equipment, and insufficient training.

Legal provisions to maintain employee relation

 Works committee

As a part of the Industrial Disputes Act, 1947, several organizations are expected to follow a
set of rules and regulations. One of these sections states that the company should form a
works committee. However, forming it or the works committee procedure is unclear.

Need for Works Committee

This committee looks after maintaining a healthy relationship between the employer and the
employees through the collective efforts of both parties. It also aims at improving industrial
peace and works on matters involving general peace and work-related issues.

 Conciliation

Conciliation is a voluntary process in which a professional facilitator assists employers and

employees to resolve disputes when their own unassisted efforts have not succeeded. The
process can be described as a facilitated search for agreement between disputing parties.

How does it work?

The Workplace Relations Commission assigns a conciliator, known as an Industrial Relations
Officer (IRO), who acts as an independent, impartial chairperson in discussions and
negotiations teams. The task of the IRO is to assist the parties in their efforts to reach a
mutually acceptable settlement to their dispute.

Who can use the service?

The service is available to all employees and employers except those specifically excluded by
law. However, even in these cases the service may be made available on an ad hoc basis
where all parties request assistance and where such facilitation can be accommodated.

Types of dispute can be referred to conciliation

 Claims for improvements in pay or conditions of employment

 Disciplinary cases
 Grading issues
 Disputes arising from proposed changes to the way work is done
 Company restructuring

Who can use the service?

The service is available to all employees and employers except those specifically excluded by
law. However, even in these cases the service may be made available on an ad hoc basis
where all parties request assistance and where such facilitation can be accommodated.

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Who is the Conciliator?

The conciliator - Industrial Relations Officer (IRO) - is an officer of the Workplace Relations
Commission. All IROs come from an independent public service background. They are
trained and experienced experts in mediation and conciliation techniques.

Who controls the conciliation process?

The employer and employee representatives retain control of the issues in dispute during the
conciliation process. The Workplace Relations Commission never imposes an outcome on
them. Settlement of a dispute is an outcome that the parties themselves voluntarily decide.
Likewise, where the parties do not resolve their dispute at conciliation, that is also their
decision.

How do I begin a conciliation process?

The process of conciliation begins when one or all disputing parties writes to the Workplace
Relations Commission requesting assistance in resolving their industrial relations dispute.
The Commission responds positively to such requests and contacts all parties in order to
confirm that they wish to attend at conciliation. Arrangements for conciliation meetings are
finalized only when all parties confirm their willingness to participate in the process.

Outcomes from conciliation

There are two possible outcomes to the conciliation process - resolution of the dispute, or
continuing disagreement

A settlement occurs either when the parties themselves reach a mutually acceptable
agreement in conciliation or where they accept a proposal for settlement that the IRO has put
to them. The IRO will, usually, only make a proposal when s/he is satisfied that the
negotiating teams will recommend its acceptance. The IRO does not impose a proposal on the
parties. The IRO may also adjourn the proceedings to allow the parties consider their
positions

 Board of conciliation
 A board consist of an independent chairman and two or four other members,
representing the parties to the dispute.
 The board conduct conciliation proceedings in same as the conciliation officer.
 The board is however expected to submit report within two months of the date on
which the dispute was referred.

Arbitration

 The term arbitration refers to the settlement of industrial dispute between the two
parties by means of a decision of an impartial body when efforts at conciliation have
failed.
 In conciliation, the wishes or point of view of the parties are very important and an
agreement is arrived at in accordance with their wishes.
 Voluntary arbitration
 Thus in this the arbitrator is appointed by both the parties through mutual consent.
 The arbitrator acts when the dispute is referred to him.

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 In order to promote arbitration, GOI constitute National Arbitration promotion

Board in 1967.

The main ingredients of Voluntary arbitration are:

 The industrial dispute must exist.

 The agreement must be in writing.
 The reference to voluntary arbitration must be made before a dispute has been
referred to under sec 10 to a labor court, Tribunal or national tribunal.
 The name of the arbitrator must be specified
 The arbitrator must investigate the dispute & submit to the appropriate govt the
arbitration award signed by the arbitrator.

Differences between Arbitration & Conciliation

 Adjudication
 Adjudication involves intervention in the dispute by a third party appointed by the
govt for the purpose of deciding the nature of final settlements.
 When the govt gets a report of the failure of conciliation, it has to decide whether it
would be appropriate to refer the dispute to adjudication
 The trade union cannot rely only on collective bargaining for the protection of the
interest of the workers.

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 Therefore the need for the intervention by the govt is felt. This, the govt does by
making references of dispute to the adjudication machinery.

Types of Adjudication

 When the govt gets a report of the failure of conciliation proceedings, it has to decide
whether it would be appropriate to refer the dispute to arbitration.
 The reference of dispute to adjudication is at the discretion of the govt.
 When both the parties, of their own accord, agree to refer the dispute to adjudication,
it is obligatory on the part of the govt to make a reference.
 On the other hand, when reference is made to adjudication by the govt without the
consent of either or both the parties to the dispute, it is known as compulsory
adjudication

Three-tier system of Adjudication

The industrial dispute act 1947 provides for a three-tier system of adjudication:

a. Labor court (state and central govt)

b. Industrial Tribunals (state and central govt)

c. National Tribunals (only by Central govt)

NATIONAL TRIBUNAL

 Involving questions of national importance

 Which are of such a nature industries of more than state are interested, affected by the
disputes
 To hold adjudication proceedings expeditiously
 To submit the award on the conclusion of proceedings

INDUSTRIAL TRIBUNAL

 Matters with new demands give rise to industrial dispute which affect the working of
a company is referred to the industrial tribunal
 It is a quasi-judicial body It must serve notice to the parties
 To hold adjudication proceedings expeditiously
 To submit the award on the conclusion of proceedings
 The award shall be in writing and shall be signed by its presiding officer

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Module-5
Factory Act 1948, Contract labor Act (Regulation and Abolition)Act 1970, The Payment of
Wages Act, 1936 – the Minimum Wages Act, 1948.

FACTORIES ACT, 1948

Introduction

The first Factories Act in India was passed in 1881. It was designed primarily to protect
children and to provide for some health and safety measures. It was followed by new Acts in
1891, 1911, 1922 and 1934. The Act of 1934 was passed to implement the recommendations
of the Royal Commission on Labor in India and the conventions of the ILO. The Factories
Act, 1948 came into force on the 1st day of April, 1949. Its subject to regulate the conditions
of work in manufacturing establishments which come within the defining of the term factory
as used in this Act.

What is Factory?

According to Sec. 2(m), factory means any premises including the precincts thereof –

 Whereon 10 or more workers are working or were working on any day of the
preceding 12 months, and in any part of which a manufacturing process is being
carried on with the aid of power, or is ordinarily so carried on, or
 Whereon 20 or more workers are working or were working on any day of the
preceding 12 months, and in any part of which a manufacturing process is being
carried on without the aid of power, or is ordinarily so carried on The term factory
does not include a mine subject to the operation of Indian Mines Act, 1952 or a
mobile unit belonging to the armed forces of the Union, a railway running shed or is
hotel, restaurant or eating place.

Definitions

Adult [Sec. 2(a)]. An adult means a person who has completed his 18th year of age.

Adolescent [Sec. 2(b)]. An adolescent means a person who has completed his 15th year of
age but has not completed his 18th year.

Child [Sec. 2(c)]. A child means a person who has not completed his 15th year of age.

Competent Person [Sec. 2(ca)]. Competent person, in relation to any provision of the Act,
means a person or an institution recognized as such by the Chief Inspector. The recognition
must be for the purposes of carrying out tests, examinations and inspections required to be
done in a factory under the provisions of the Act. This recognition must be given having
regard to

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1. the qualifications and experience of the person and the facilities available at his
disposal; or
2. the qualifications and experience of the person, employed in such institution and
facilities available therin with regard to the conduct of such test, examinations and
inspections.

It may be noted that more than one person or institution may be recognized as competent
persons in relation to a factory

Hazardous Process [Sec.2(cb)]. It means any process of activity in relation to an industry

specified in the First Schedule where, unless, special care is taken, raw material used therein
or the intermediate or finished products, by-products, wastes or effluents thereof would –

a. Cause material impairment to the health of the persons engaged in or connected

therewith,
b. Result in the pollution of general environment. The State Government may, by
notification in the Official Gazette, amend the First Schedule by way of addition,
omission or variation of any industry specified in the First Schedule.

Discuss the rules regarding approval, licensing and registration of factories with special
reference to notice by occupier as required by the Factories Act, 1948 before starting a
factory and occupying the same.

The State Government is empowered under Sec. 6 to make rules requiring

 the submission of plans,

 and approval,
 Licensing and registration of factories.

The effect of Sec. 6 is that before a site is used for a factory previous permission in writing of
the State Government or of the Chief Inspector has to be obtained.

Application for Permission

 Under Sec.6, the State Government may makes rules requiring the submission of
plans of factories to Chief Inspector or the State Government.
 Sec. 6 further requires the previous permission in writing to be obtained for the site on
which the factory is to be situated and for the construction or extension of the factory.
 An application of such permission may be made to the State Government or Chief
Inspector, along with the duly certified plans and specifications.

Presumption of permission if nothing is heard within 3 months

 If on an application to the State Government or the Chief Inspector for permission

accompanied by plans and specification of a factory, nothing is heard within 3
months, the permission is deemed to be granted [Sec.6(2)]

Appeal

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 Where a State Govt. refuses to grant permission to the site, construction or extension
of a factory or to the registration and licensing of a factory, the applicant may within
30 days of the date of such refusal appeal to the Central Govt.
 Where a Chief Inspector refuses to grant such permission, the applicant may, within
30 days of refusal, appeal to the State Government [Sec. 6(3)].

State the provisions of the Factories Act, 1948 with regard to health, safety and welfare
of the workers.

Introduction

The Act makes detailed provisions in regard to various matters relating to health, safety and
welfare of the workers. These provisions impose upon the occupiers or managers certain
obligations

a. To protect workers, unwary as well as negligent, from accidents.

b. To secure for them in employment, conditions conducive to their health, safety and
welfare.

Health

Chapter III (Sec. 11 to 20) of the Act deals with the provisions ensuring the health of the
workers in the conditions under which work is carried on in factories. These provisions are as
follows:

1. Cleanliness (Sec.11)
 Factory to kept clean and free from effluvia and dirt.
 Effective means of drainage.
 Use of disinfectants etc., painting and varnishing
2. Disposal of wastes and effluents (Sec. 12)
 Treatment of wastes and effluents and their disposal, [Sec.12(1)].
 Rules by the State Government prescribing arrangements, [Sec. 12(2)].
3. Ventilation and Temperature (Sec. 13)
 Maintenance of adequate ventilation and temperature. Effective and suitable
provision shall be made in every factory for securing and maintaining in every
workroom
 Adequate ventilation by the circulation of fresh air, and
 Such a temperature as will secure to workers therein reasonable conditions of
comfort and prevent injury to health.
 Process producing high temperature to be separated [Sec.13(1)].
 Standard of adequate ventilation and temperature to be prescribed and
provision of measuring instruments [Sec.13(2)].
 Prescription of measures by the State Government to reduce temperatures
[Sec. 13(3)].
 Services of notice by the Chief Inspector on the occupier to adopt measures
for reduction of temperatures [Sec.13(4)].

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4. Dust and fume (Sec. 14)

 Measures to prevention of accumulation of dust and fume [Sec.14(1)].

 Exhaust for internal combustion engine [Sec. 14(2)].

5. Artificial humidification (Sec.15)

 Prescription of standards of humidification – ventilation and cooling of air.

[Sec.15(1)].
 Water used for artificial humidification to be clean [Sec.15(2)].

6. Overcrowding (Sec.16)

 Overcrowding injurious to health of workers to be avoided. [Sec.16(1)].

 9.9/ 14.2 cubic meters of space per workers [Sec. 16(2)].
 Notice of maximum of workers to be employed in a workroom [Sec. 16(3)].

7. Lighting (Sec. 17)

 Sufficient and suitable lighting in every part of factory [Sec. 17(1)]

 Glazed windows and skylights to be kept clean [Sec. 17(2)]
 Measures for prevention of glare and formation of shadows [Sec. 17(3)].
 Prescriptions of standards of sufficient and suitable lighting [Sec. 17(4)].

8. Drinking Water (Sec. 18)

 Suitable points for wholesome drinking water [Sec. 18(1)].

 Drinking points to legibly marked and to be away from urinal, latrine, etc
[Sec. 18(2)].
 Cooling of drinking water where more than 250 workers employed [Sec.
18(3)].

Safety

The safety provision are absolute and obligatory in their character and the occupier of every
factory is bound to follow them. They are contained in Chapter IV (Secs. 21 to 41):

1. Fencing of machinery (Sec.22)

a. Dangerous part of every machinery to be securely fenced. Machineries covered by

Sec.21. The following machineries are covered by Sec. 21, viz.,

 Every moving part of a prime mover, and every fly-wheel connected to a prime
mover, whether the prime mover or fly-wheel is in the engine house or not;
 The headrace and tailrace of every water-wheel and water turbine;
 Any part of a stock-bar which projects beyond the headstock of a lathe;
 Every part of an electric generator, a motor or rotary convertor;

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 Every part of transmission machinery; and vi. Every dangerous part of any other
machinery [Sec. 21(1)].

2. Work on near machinery in motion (Sec.22)

a. Examination of machinery in motion by a trained adult male worker

 Such examination shall be made only by a specially trained adult male worker
wearing tight fitting clothing.
 The clothing supplied by the occupier
 The name of the person so engage shall be entered in the prescribed register.
 Further he shall be furnished with a certificate of his appointment [Sec.22(1)]

b. Restriction of women and young person‟s [Sec. 22(a)]

3. Employment of Young persons on dangerous machines (sec.23)

a. Restriction on young persons to work on dangerous machines.

 He has been fully instructed as to the dangers arising in connection with the machine
and the precautions to be observed
 He has received sufficient training to work on the machine [Sec. 23(1)]

b. Machines dangerous for young persons to be specified by the State Government [Sec.
23(2)].

4. Striking gear and devices for cutting off power (Sec.24)

a. Suitable striking gear to be provided, maintained and used [Sec.24(1)].

b. Locking device to prevent accidental starting of transmission machinery [Sec.24(3)].

5. Self-acting machines (Sec.25)

a. Transferring part not allowed to run within a distance of 45 centimeters from any fixed
structure.

6. Casing of new machinery (Sec.26)

a. Casing to prevent danger [Sec. 26(1)].

b. Penalty

 If anyone sells or lets on hire either directly or as an agent, any machine which does
not comply with the provisions of Sec. 26, he shall be punishable with imprisonment
up to 3 months or with fine up to Rs. 500 or with both [Sec. 26(2)].

7. Prohibition of employment of women and children near cotton-openers (Sec.27)

8. Lifting machines, chains, ropes and lifting tackles (Sec. 29)

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a. Cranes and lifting machines, etc. to be of good construction and to be examined once in
every 12 months [Sec.29(1)(a)].

b. Cranes and lifting machiners not to be loaded beyound safe working load [Sec.29(1)(b)].

c. Crance not to approach within 6 metres of a place where any person is employed or
working [Sec.29(1)(c)].

9. Revolving machinery (Sec. 30)

a. Notice of maximum safe working speed of grindstone or abrasive wheel, etc. to be kept
near machine [Sec.30(1)].

b. Speeds not to be exceeded [Sec. 30(2)].

10. Pressure Plant (Sec.31)

a. Safe working pressure not to be exceeded [Sec.31(1)].

b. Rule-making power of the State Government providing for examination and exemption
[Sec. 31(@)].

11. Protection of eyes (Sec.35)

12. Precautions against dangerous fumes (Sec.36)

a. Prohibition on entry into any chamber, tank, vat, pit, pipe etc. where any gas, fume etc. is
present. [Sec.36(1)].

b. Practicable measures to be taken for removal of gas, fume, etc. [Sec.36(2)].

13. Precautions regarding the use of portable electric light (Sec.36-A)

a. No portable electric light or any other electric appliance of voltage exceeding 24 volts shall
be permitted for use inside any chamber, tank, vat, pit, flue or other confined space in a
factory, unless adequate safety devices are provided.

14. Precautions against explosive or inflammable dust, gas, etc. (Sec. 37)

a. Practicable measures to prevent explosion on ignition of gas, fume etc.

 Effective enclosure of the plant or machinery used in the process,

 Removal or prevention of the accumulation of such dust, gas, fume or vapour,
 Exclusion or effective enclosure of all possible sources of ignition [Sec.37(1)].

b. Provision of chokes, vents, etc. [Sec.37(2)].

c. Special measures where explosive or inflammable gas or vapor is under pressure greater
than atmospheric pressure [Sec. 37(3)].

15. Precautions in cas of fire (Sec. 38)

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a. Practicable measures to prevent outbreak of fire and its spread [Sec.38(1)].

b. Familiarity of workers with means of escape [Sec.38(2)].

c. Rule-making power of the State Government [Sec.38(3)].

d. Additional measures [Sec.38(4)].

Welfare Measures

Chapter V (Secs. 42 to 50) of the Act deals with facilities for the welfare of workers. The
various provisions in this regard are as follows:

1. Washing facilities (Sec.42) – In every factory

a. Adequate and suitable facilities shall be provided and maintained for the use of the workers
therein; and

b. Such facilities shall be conveniently accessible and shall be kept clean.

2. Facilities for storing and drying clothing (Sec.43)

3. Facilities for sitting (Sec.44)

a. Provision of sitting arrangement for workers obliged to work in a standing position

[Sec.44(1)].

b. Provision of seating arrangement for workers doing work which can be done in a sitting
position [Sec.44(2)].

c. Exemption [Sec.44(3)].

4. First-aid appliances (Sec.45)

a. At least one first-aid box with prescribed contents for every 150 workers [Sec.45(1)].

b. First-aid box to have prescribed contents [Sec.45(2)].

c. First-aid box to be in the charge of responsible person [Sec.45(3)].

d. Ambulance room in a factory employing more than 500 workers [Sec.45(4)].

5. Canteens (Sec.46)

a. Canteen in factory employing more than 256 workers – the State Government may make
rules.

b. Provisions in rules. The rules made by the State Government as to canteens may provide
for

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 The date by which canteen shall be provided,

 The standards in respect of construction, accommodation, furniture and other
equipment of the canteen, iii. The foodstuffs to be served therein and the charges
which may be made thereof,
 The constitution of a managing committee for the canteen and representation of the
workers in the management of canteen and representation of the workers in the
management of the canteen,
 The items of expenditure in the running of the canteen
 The delegation to the Chief Inspector, subject to such conditions as may prescribed, of
the power to make rules under Clause [Sec.46(2)].

6. Shelters, rest rooms and lunch rooms (Sec.47)

a. Provision for shelters, rest rooms, lunch rooms in factories employing more than 150
workers [Sec.47(1)].

b. Shelters etc. to be sufficiently lighted, ventilated and cooled [Sec.47(2)].

7. Creches (Sec.48)

a. Provision of crèches in factories employing more than 30 women workers [Sec.48(1)].

b. Crèches to be adequately lighted and ventilated and to be under the charge of trained
women [Sec.48(2)].

c. Prescription of rules by the State Government [Sec.48(3)].

8. Welfare officers (Sec.49)

a. Employment of welfare officers in factories employing 500 or more workers [Sec.49(1)].

b. Duties, qualifications and conditions of service to be prescribed by the State Government

[Sec.49(2)].

PENALTIES AND PROCEDURE

Secs. 92 to 106 provide for penalties for certain offences and procedural matters. The
Amendment Act of 1987 has considerably enhanced these penalties so that they serve as a
deterrent for the commission of offences.

General penalty for offences [Sec.92]

If in any factory there is any contravention of any of the provisions of the Act or of any rules
made thereunder, the occupier and manager of the factory shall each be guilty of an offence
and punishable with imprisonment for a term up to 2 years or with fine up to Rs. 100000 or
with both.

Enhanced penalty after conviction (Sec.94)

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If any person who has been convicted of any offence punishable under Sec. 92 is againg
guilty of an offence involving a contravention of the same provision, he shall be punishable
on a subsequent conviction with imprisonment for a term which may extend to 3 years or
with fine which shall not be less than Rs. 10000 but which may extend to Rs. 200000 or with
both.

Cognizance of offences [Sec.105]

Appeals [Sec.107]

Display of notices [Sec.108]

Returns [Sec.110]

Restriction on disclosure of information [Sec.118-A(2)].

CONTRACT LABOR ACT 1970

SCOPE AND COVERAGE

It extends to whole of India and applies to every establishment in which twenty or more
workmen are employed

A worker is considered as contract labor when he is hired for the work by or through a
contractor with or without the knowledge of his principal employer

A contractor is a person who undertakes to produce a given result for an establishment

through labor, or who supply contract labor for the work of an establishment and include sub
–contractors

ADVISORY BOARDS

Central and state governments have to set up an advisory board consists of members from
industry, contractors, workers Industry, contractors nominees should be equal to workers
nominees.

REGISTRATION OF ESTABLISHMENT

Principal employer has to register the industry with the registration officer of the government

PROHIBITION OF EMPLOYMENT OF CONTRACT LABOR

Government can prohibit the employment of contract labor, if

1. The work is necessary for the industry

2. The work is of sufficient duration

3. The work can be done through regular workers

4. The industry is capable of employing regular workers

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LICENSING OF CONTRACTORS

Every contractor has to obtain a license from the government to employ contract labor

WELFARE AND HEALTH OF CONTRACT LABOR

Sufficient supply of drinking water

Washing facilities

First-aid box

One or more canteens for work of more than 6 months/100 workers

PAYMENT OF WAGES

The contractor is responsible for making regular and timely payment of wages.

Payment is to be made in the presence of an authorized representative of the principal

employer

If the contractor does not make any payment, principal employer will make payment and
recover the amount from the contractor.

PENALTIES

The act provides for imprisonment for a term of three months for contraventions of the act

INSPECTOR AND RULES

Inspectors are appointed to ensure the implementation of the act

Registration and license of industry, contractors

Provide health and welfare for labor

Maintain records and cooperation with inspectors for inspection

Sending reports to government

Exhibit the rules in the workplace

Rights of contract labor

For claiming good work conditions and other benefits Representation in the advisory board

Regulation and prohibition act

This was declared by the parliament on 23rd December, 1986.

It includes Prohibition of employment of children in certain occupations and processes.

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No child shall be employed or permitted to work in any of the occupations which are
hazardous by its nature.

OBJECT: To prohibit the engagement of children in certain employment‗s and to regulate

the conditions of work or children in certain other employment‗s

DEFINITION: Child: Child means a person who has not completed his fourteen years of
age.

APPLICABILITY: In extends to the whole of India

WEEKLY HOLIDAY: Every child shall be allowed in each week a holiday of one whole
day.

HOURS AND PERIOD OF WORK: The period of work on each day shall not exceed three
hours and no child shall work for more than three hours before he has had an interval for rest
for at least one hour.

No child shall be permitted or required to work between 7 P.m. and 8 a.m.  No child shall
be required or permitted to work overtime.

PROHIBITION OF EMPLOYMENT OF CHILDREN IN CERTAIN OCCUPATIONS

AND PROCESSES

1. Transport of passengers, goods; or mails by railway

2. Cinder picking, clearing of an ash pit or building operation in the railway premise.

3. Work in a catering establishment at a railway station, involving the movement of vendor or

any other employee of the establishment from one platform to another or into or out of a
moving train.

4. Work relating to the construction of railway station or with any other work where such
work is done in close proximity to or between the railway lines.

5. The port authority within the limits of any port.

6. Work relating to selling of crackers and fireworks in shops with temporary licenses

7. Abattoirs/slaughter Houses

8. Automobile workshops and garages.

9. Foundries

10. Handling of taxies or inflammable substance or explosives

11. Handloom and power loom industry

12. Mines (Underground and under water) and collieries 13. Plastic units and Fiber glass
workshop

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PENALITIES:

 Section-3 shall be punishable with imprisonment which shall not be less than three
months which may extend to one year or with fine which shall not be less than ten
thousand rupees but which may extend to twenty thousand rupees or with both.
Section (3) shall be punishable with imprisonment for a term which shall not be less
than six months but which may extend to two years.
 Any other violations under the Act shall be punishable with simple imprisonment,
which may extend to one month or with fine, which may extend to ten thousand
rupees or with both.

Conclusion

The social malady of child labor can be brought under control, if each individual takes
responsibility of reporting about anyone employing a child below the age of 14years.

Thus, instead of ignoring on should find out about reporting child labor and how such
children can actually be saved.

Child labor can be controlled if the government functions effectively with the support of the
public.

Payment of Wages Act, 1936

Objectives of the act

 To ensure regularity of the payment

 To ensure payment in legal terms
 Preventing arbitrary deductions
 Restricting employers to impose fines
 Providing remedy to the workers

SCOPE AND APPLICABILITY

 It applies to the whole of India

 It mainly applies to the workers of industries, factories
 It was also extended to the employees of railways, mining, transport, printing press
and other establishments

The act was amended in 1937,1940,1957,1962,1964,1967,1976,1982 to make it more

comprehensive

IMPORTANT DEFINITIONS

Establishment- means motor transport, air transport,dock,jetty, plantation, construction,

building roads, bridges, canals,water ,electric supply and so on

Wages- all remuneration expressed in terms of money,be payable to a person employed in

respect of his employment.

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RESPONSIBILITY FOR PAYMENT OF WAGES

 Every employer is responsible for the payment of wages to persons employed by him
 Employer may be called as manager, Managing Director, CEO, Chairman
 In case of contract labor, contractor pays the wages to the labor

FIXATION OF WAGE PERIOD

 The period of wage fixation shall not exceed one month

 Time for wage payment
 Wages must be paid before the expiry of the seventh day after the last wage period in
case of factory, industrial establishment workers
 Wages must be paid before the expiry of the tenth day after the last wage period in
case of other workers
 For terminated employees wages should be paid before the expiry of second working
day
 All wages must be paid on a working day

MODE OF PAYMENT OF WAGES

 By cash (coins or currency notes)

 By cheque
 By crediting to the bank account of the employee

AUTHORISED DEDUCTIONS FROM WAGES

 Withholding increment/promotion based on less efficiency

 Demotion to a lower post
 Suspension
 Fines

FINES

 An employee can be fined for his acts which are specified by the government
 The fine list must be exhibited in the work place
 The worker should know the reason for fine
 Fine cannot be imposed to a person of age less than 15 years
 Fine cannot be recovered in installments of after the expiry of 6 months  Fine should
be imposed on the day of act
 All fines should be recorded in the register
 Fine cannot exceed 3 paise in a rupee of the wages payable

DEDUCTIONS FOR ABSENCE FROM THE DUTY

Absence from the duty means ―absence from the place where the employed person is required
to work‖

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Workers though present in the work place and carrying out strikes are considered as
absentees and proportionate salary can be deducted.

The Minimum Wages Act, 1948

Introduction to the act

The aim of any legislation is to protect workers Indian labor is by and large is illiterate and
not organized to protect them in our Developing country, exploitation of workers is common
Hence, and there was a need for the act to protect workers from exploitation.

OBJECT AND SCOPE

To secure the welfare of the workers in a competitive market by providing for a minimum
limit of wages in certain employments

To prevent the exploitation of workers

To fix minimum wages which the employer must pay to workers

Concept of minimum wages

Wages means all remuneration capable of being expressed in terms of money, if the terms of
employment were fulfilled, be payable to a person employed in respect of his employment
which includes house rent allowance

Minimum wages is not defined in the act, as it is literally impossible to pay uniform wages
for all industries throughout the country, on account of different conditions and locations of
industries.

WAGES DOES NOT INCLUDE

 Any house accommodation, supply of light, water

 Provident fund
 Traveling allowance
 Special expenses regarding the work  Gratuity

LIVING WAGE

Appropriate wages for the normal needs of the average employee who lives in a civilized
society

Living wage must provide essentials such as food, shelter, clothing, comforts like children
education, protection against ill health, essential social needs, old age needs.

APPLICABILITY OF THE ACT

 It extends to whole of India

 It came to force from March 15th 1948
 It was amended in 1954, 1957,1961,1982,1983,1987,1990,1993

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FIXING HOURS OF WORK

 A working day should include one or more specified intervals

 Working hours shall be nine hours
 Normally Sunday is the rest day
 But any other day can also be a rest day accordingly
 Extra wages for work more than specified hours-overtime wages
 Wages for two or more classes of work should be paid

AUTHORITIES UNDER THE ACT-Inspectors

 Factory inspector is empowered to examine the records of wages paid to the

employees
 Government is empowered to make rules to regulate the procedure of carrying out the
act
 Claims by the employees are decided in the court regarding deductions
 Recovery of amount can be done by the court regarding fines
 Claims
 For less payment than minimum wages
 Payment for work on rest days
 Overtime wages
 Any other claims
 Claims are decided by labor officer or Compensation commissioner

Penalties

 An employer who pays less than the minimum wages may be punished
 With 6 months jail or Rs 500/- or both
 An employer who does not maintain the records properly is punishable to a fine of Rs
500/
 Power to make rules
 Appropriate government has power to make/amend rules related with the minimum
wages act

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Module 6

Industrial Dispute Act 1947, Trade Union act 1926. Employee State Insurance Act 1948,
Employee Compensation Act 1923, Maternity Benefit Act 1961, Employee provident Fund
and Miscellaneous Provisions Act 1952 , Gratuity Act 1972, Bonus Act 1965.

THE TRADE UNIONS ACT, 1926

Origin and Growth

A trade union, in common parlance, means an association of workers in a particular craft or

industry. In a legal sense, it means an association formed primarily for the purpose of
regulating

 the relations between workmen and employers or

 the relations between workmen and workmen or
 the relations between employers and employers

According to L.J. Hanson, ―a trade union is essentially an organization of the workers. Its
main function is to enable the workers to act together, the individual by himself being in a
weak bargaining position to negotiate with employers.‖

Objectives of Trade Union

i) Workers right to organize, and

ii) Their right to press their demands collectively and to go on strike if their demands are not
accepted. The establishment in 1919 of the ILO had its influence on the growth of unions in
India. The formation in 1920 of the All India Federation, namely, the All India Trade Union
Congress, was the result of these urges. The passing of the Trade Union Act, 1926 gave
formal recognition to the workers right to organize.

Law Relating to Trade Unions

The law relating to the registration of trade unions and certain other matters is contained in
the Trade Union Act, 1926.

The Act was passed to regulate

(a) conditions governing the registration of trade unions;

(b) obligations imposed upon a registered trade union; and

(c) rights and liabilities of registered trade unions.

The act came into force on 1st June, 1927 [Sec. 1(3)].

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Definitions

Trade Dispute [Sec.2(g)]. It means any dispute –

(a) between employers and workmen, or

(b) between workmen and workmen, or

(c) between employers and employer, which is connected with

 the employment or non-employment, or

 the terms of employment, or
 the conditions of labor, of any person. Workmen means all persons employed in trade
or industry whether or not in the employment of the employer with whom the trade
dispute arises.

Trade Union [Sec.2(h)].

It means any combination, whether temporary or permanent, formed –

(A) Primarily for the purpose of regulating the relations:

 Between workmen and employers, or

 Between workmen and workmen, or
 Between employers and employer, or

(B) For imposing restrictive conditions on the conduct of any trade or business.

(C) It includes any federation 2 or more trade unions.

Registered Trade Union [Sec.2]. it means a trade union registered under the Act.

Rules of Trade Union [Sec.6]

The provisions of the Act and its rules provide for the following matters, namely:

(a) The name of the trade union;

(b) The whole of its objects;

(c) The whole of the purposes for which the general funds of the trade union shall be
applicable under Sec.15;

(d) The maintenance of a list of the members of the trade union;

(e) The admission of ordinary members who shall be persons actually engage or employed in
the industry;

(f) The payment of a subscription by the members of the trade union shall not be less than 25
paise per month per member;

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(g) The conditions under which any members shall be entitled to any benefit assured by the
rules and conditions under which fines may be imposed on the members;

(h) The appointment of members of the executive and other office bearers;

(i) The safe custody of the funds of the trade union;

Power to call for further particulars and to require alteration of name [Sec.7]

Registration [Sec.8]

The Registrar. Or being satisfied that the trade union has complied will all the requirements
of this Act in regard to registration, shall register the trade union.

He shall register the trade union by entering in a register, to be maintained in such form as
may be prescribed.

Certificate of Registration [Sec.9] The Registrar, on registering a trade union under Sec. 8,
shall issue a certificate of registration in the prescribed form.

The certificate shall be conclusive, evidence that the trade union has been duly registered
under the Act.

Employees‟ State Insurance (ESI) Act, 1948,

THE EMPLOYEES‟ STATE INSURANCE ACT, 1948

The Act is a piece of social security legislation conceived as a means of extinction of the
evils of the society, namely, want, disease, dirt, ignorance and indigence. The Act confers
benefit on employees against sickness, maternity and other disabilities.

Defintions

Employment Injury [Sec.2(8)]. It means a personal injury to an employee caused by

accident, or an occupational disease arising out of and in the course of his employment, being
an insurable employment, whether the accident occurs or the occupational disease is
contracted within or outside the territorial limits of India.

Exempted Employee [Sec.2(10)]. Exempted Employee means an employee who is not liable
under the Act to pay the employee‗s contribution.

Wages [Sec. 2(22)].

It means all remuneration paid or payable in cash to an employee, if the terms of the contract
of employment, express or implied, were fulfilled.

It is necessary that 3 conditions must be satisfied before any payment can be said to be
included in wages.

First, it must be remuneration;

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Secondly, such remuneration must be paid or payable in cash to the employee;

Thirdly, such remuneration must be paid or payable if the terms of the contract of
employment, express or implied, were fulfilled.

What is included in “wages‟?

Wages includes any payment to an employee in respect of any period of –

 authorized leave,
 lock-out or strike which is not illegal, or
 lay-off, and
 other additional remuneration

What is not included in „wages‟?

Wages does not include –

(a) any contribution paid by the employer to any pension fund or provident fund under this
Act ;

(b) any travelling allowance or value of any travelling concession ;

(c) any sum paid to the person employed to defray special expenses entailed on him by the
nature of his employment ; or

(d) any gratuity payable on discharge.

What are the different types of benefits provided by the Employees‟ State Insurance
Act, 1948?

The Act provides for 6 types of benefits to which the insured persons, their dependents or
certain other persons are entitled. These benefits are as follows :

1. Sickness benefit. (Sec.49)

2. Maternity benefit. [Secs. 46(1) (b) and 50 and Rule 56]

3. Disablement benefit. [Secs. 46 (1) ©, 51, 51 – A to 51 – D, 52 – A, 53 to 55 and 57].

4. Dependents‘ benefit. [Sec. 56(1) (d), 52 and 55-A and Rule 58]

5. Medical benefit. [Secs. 46 (1) (e), 46 (2) and 56 to 59 and Rules 60 and 61]

6. Funeral expenses. [Sec. 46 (1) (f) and Rule 59]

General Provisions regarding benefits

1. Benefits not assignable or attachable (Sec. 60)

2. Bar of benefits under other enactments (Sec. 61)

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3. Cash benefit not commutable (Sec. 62)

4. Benefit not receivable in certain cases

5. Observance of certain conditions on receipt of sickness or disablement benefit (Sec. 64)

6. Benefits not be combined (Sec. 65)

Maternity Benefit Act 1961

Introduction

 Maternity disables a woman worker from undertaking any work during few weeks
before and after child birth
 Many employers used to terminate the services of women workers because of the
same reason
 Hence to protect women workers from termination , a legislation was required

SCOPE

 The act applies to every establishment of factory, mine, plantation, shop and
establishment
 However with the approval of central government, state government may extend the
act to industrial, commercial, agricultural sectors

Rate and duration of maternity benefit

 At the rate of daily wages for the period of her absence

 The period of absence is 12 weeks
 6 weeks before the delivery and 6 weeks after the delivery
 When a woman dies during the period, benefit is payable upto the date of her death
 When a woman dies during the child birth or immediately after the child birth, benefit
is payable for the entire period
 If the child also dies during the period, benefit is payable upto the day of death

Benefit in certain cases

Every woman is entitled to the benefit even in factories where ESI act is applicable until she
becomes qualified to claim maternity benefit under ESI act

Claim and payment of maternity benefit

 A woman has to fill the application by mentioning all the details , and nominates a
person to receive the benefit during her absence before 6 weeks of the expected date
of delivery
 If she fails to give the notice before, she can give the notice after the delivery also
 The amount should be paid in advance

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Leave for miscarriage

 Miscarriage, medical termination of pregnancy(MTP)

 A woman can avail the facility following the day of miscarriage or MTP
 Facility is 6 weeks paid leave
 Proof is required by an authorized doctor

Leave for illness due to pregnancy, delivery and others

 Suffering from illness arising out of pregnancy, delivery, premature birth of a child,
miscarriage.
 Can avail a leave of 1 month in addition to the period allowed
 Proof is required by an authorized doctor

Deductions from wages

 Deduction from wages not allowed in case of

 Non-arduous nature of work assigned to her
 Nursing breaks

Nursing breaks

 Every woman who returns to a duty after delivery is to be allowed in the course of her
daily work can avail this benefit
 Two breaks for prescribed duration until the child attains an age of 15 months
 Nursing breaks are in addition to the normal rest breaks

Employee provident Fund and Miscellaneous Provisions Act 1952

What is meant by EPF?

The EPF is a scheme intended to help employees from both private and non-pensionable
public sectors save a fraction of their salary every month in a saving scheme, to be used in an
event that the employee is temporarily or no longer fit to work or at retirement. Since this
scheme is mandatory for all employers, most employees benefit out of this scheme.

Object

 The scheme of provident funds, as a social security measure, is meant to induce

employees to save a portion from their present earnings for a rainy day.
 The object of the EPF and Miscellaneous Provisions Act, 1952 it to provide for the
institution of provident funds and family pension and deposit-linked insurance
schemes for employees in factories and other establishments.
 The acts were brought into force from November, 1952.
 Initially the Act applied to industries engaged in the manufacture of cement,
cigarettes, electrical, mechanical or general engineering products, iron and steel, paper
and textiles.

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Contribution of Employee

12% of the Pay

Pay includes basic wages with dearness allowance, retaining allowance (if any), cash value of
food concession, and also on Leave Encashment

Retaining allowance means allowance payable for the time being to an employee of any
factory or other establishment during any period in which the establishment is not working,
for retaining his service.

Type of Advance from PF accumulations

 Purchase dwelling site

 Construction of a dwelling house
 Completing construction of the house
 Buy a dwelling house /Flat from Agency
 Purchasing a newly constructed/old dwelling house or flat from an individual
 Purchasing house/flat from a promoter
 Additional Loan -alterations/improvements
 Further housing withdrawal
 Repayment housing loan
 Withdrawal on 54 Years or within 1 year before actual retirement
 Closure or lockout/non-receipt of wages for a continuous period of 2 months etc.
 Further advance in case of closure or lock-out of establishment/ factory for more than
6 months
 Advance for illness of member and his family
 For marriage, or post matriculation education
 Property damaged by a nature calamity
 If Members affected by cut in the supply of electricity
 Member physically handicapped

Family means

For Provident Fund (PF)

 In the case of a male member, his wife, his children, whether married or unmarried,
his dependent parents and his deceased son‗s widow and children;
 In the case of a female member, her husband, her children, whether married or
unmarried, her dependent parents, her husband‗s, dependent parents, her deceased
son‘s widow and children

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Gratuity Act 1972

Payment of Gratuity Act 1972

State the object and scope of the Payment of Gratuity Act, 1972.

The objects of the Payment of Gratuity Act, 1972 are mentioned below-

1. To provide for a Scheme for the payment of Gratuity to employees.

2. To provide for matters connected with or incidental to the Scheme for payment of Gratuity.

3. To provide retiring benefits to employees who have rendered continuous services to his
employer and thereby contributed to his prosperity.

4. To define the principles of payment of gratuity according to the prescribed formula.

5. To provide machinery for the employment of liability for payment of gratuity.

Explain the scope and application of the act.

Under the Section 1 (3) of the Payment of Gratuity Act, 1972, this act can be applied to –

i) every factory, mine, oil-field, plantation, port and railway company

ii) every shope or establishment within the meaning of any law for the time being in force in
relation to shope and establishments in a state in which ten or more persons are employed, or
were employed, on any day of the proceeding twelve months.

iii) Such other establishment, or class of establishment in which ten or more employees are
employed, or were employed on any day of the proceeding twelve months, as the Central
Government may, by notification specify in this behalf.

According to the Section 1(3-A), a shop or establishment to which this Act has become
applicable shall continue to be governed by this Act notwithstanding that the number of
persons employed therein at any time after it has become so applicable falls below ten.

Out of the above provisions it can be understood that the Act is wide enough to bring within
its scope the whole organized sector of industry as well as commerce.

Of course, this Act cannot be applied to

i) Apprentices and

ii) as per Section 2 (e), persons who hold civil posts under central Government or a State
Government and are governed by any other Act or rules providing for the payment of
gratuity. Under Section 5 of this Act, the central Government is empowered to exempt any
shop or establishment covered by this Act from the provisions of the Act, if its employees are
in receipt of gratuity or pensioner benefits not less favorable than the benefits provided under
this Act.

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Provisions regarding payment of gratuity act, 1972

i) Provisions relating to the payment of gratuity

Under sections 4 and 7 of the Act

a) On his superannuation, or

b) On his retirement or resignation

c) On his death or disablement due to accident or disease.

Under Section 7(1) a person who is eligible for payment of gratuity under this Act or any
person authorized in writing, to act on his behalf shall send a written application to the
employer with in such time and in such form as may be prescribed , for payment of such
gratuity

Under [sec 4(3)] The maximum amount of gratuity payable to an employee shall not exceed
1000000/- rupees.

Deduction of gratuity

[Sec 4(6) (a)]

Whose services have been terminated for any act, willful omission or negligence causing any
damage or loss to, or destruction of, property belonging to employer, shall be forfeited to the
extent of the damage or loss so caused.

Gratuity of employee wholly or partially lose in case of

[Sec 4(6) (b)]

 If the services of such employee have been terminated for his riotous or disorderly
conduct or any other violence on his part or
 If the services of such employee have been terminated for any act which constitutes
an offence involving moral turpitude, provided that such offence is committed by him
in the course of his employment.

Payment of Gratuity is not applicable to employee who has been dismissed from the service
for the reason of indiscipline or misconduct.

Nominations [Sec 6]

 Every employer who completed one year of service can choose one or more nominees
for payment of gratuity.
 On the employee choice gratuity payable to him can be disturbed amongst the
nominees
 If employee has family members before making nomination, Nominees should be
from his family members only.

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 If the employee has no family members before making nomination, Nominees can be
any other person who he likes.
 Nominees as the other persons become in valid if the employee acquires family
members in future time.
 Employee can make changes in nominees.
 Change of name of nominees should be intimated to employer by employee.

Determination of the Amount of Gratuity. [Sec 7]

 Any person who is eligible for payment of gratuity should write an application to his
employer within certain time.
 The employer should arrange to pay the amount of gratuity within 30 days from the
date it becomes payable to the person to whom the gratuity is payable.
 If there is any dispute in payment of gratuity, employer should deposit the gratuity
payable amount with controlling authority until the dispute is settled by him.
 Once the dispute is settled by the controlling authority, the deposited amount with him
will be paid to employee.
 Any person in dispute is not satisfied with decision order made by controlling
authority, within 60 days from the date of order by controlling authority, appeal to the
appropriate govt or the appellate authority.
 For admitting the appeal by the employer to the appellate authority, employer should
deposit the amount equal to the amount of gratuity with the appellate authority.

Payment of Bonus act, 1965

Bonus definition

 An award in cash or its equivalent by an employer to its employee other than the
regular wages, out of the profits earned.
 This accomplishment is not the requirement for the contract of the employment.

Objectives of the act

 To impose statutory obligation on the employer to pay bonus

 To outline the principles of payment of bonus according to a prescribed formula
 To provide minimum and maximum bonus payment
 Enforcement of bonus

Principles of bonus

Surplus income should be deducted by the following items

 Provision for depreciation

 Rehabilitation reserve
 Return of 6% on share capital
 Return on working capital

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 After all these deductions, it is called as available surplus

 From these available surplus, a reasonable share(bonus) should be distributed to the
employees
 available surplus= surplus-deductions

Factors for bonus

 Supreme court endorsed a formula for bonus with following factors

 The extent of available surplus
 Gap between wages received and minimum wages
 Contribution of labor to the profits of industry
 Extent of welfare work taken by employers towards employees
 Needs of shareholders and capital
 Needs for industry expansion
 Financial stability of employer

Scope and application

 The act extends to whole of India and it is applicable to those establishments

employing 20 or more workers employed on any day during an accounting year.
 However it is not applicable to the non-profit making institutions like RBI, LIC,
educational institutions, red cross society, hospitals, social welfare institutions.

Wage or salary

 Means all remuneration (other than overtime wages) capable of being expressed in
monetary terms which includes DA.
 However wage does not include any allowance, commission, travelling concession,
HRA, lighting, water, medical allowance ,bonus ,gratuity.

Eligibility for bonus

 Every employee is eligible to receive bonus provided he has worked in the company
for not less than 30 days
 An employee is not eligible for bonus if his services are terminated on account of
fraud, violent behavior ,theft or misappropriation of any property of the establishment

Payment of minimum and maximum bonus

 Minimum payment of bonus should not be less than 8.33% of the wages.
 However 20% of wages can be the maximum bonus

Set on /set off adjustment for bonus

 Set on : in any accounting year, if allocable surplus exceeds maximum bonus, the
amount shall be carried for being set on in the next accounting year and soon upto 4th
accounting year for the purpose of payment of bonus

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 Set off : in any accounting year, if there is no allocable surplus and falls short of
minimum bonus, the amount shall be carried for being set off in the next accounting
year upto 4th accounting year

Time limit for payment of bonus

Bonus is required to be paid to an employee within a period of eight months from the close of
the accounting year

Deductions from bonus

Employer is authorized to deduct the proportionate amount of financial losses incurred by an

employee from the bonus

Reference of dispute under act

 The dispute between employer and employee with respect to bonus shall be deemed
to be the industrial dispute within the purview of industrial dispute act
 A dispute of an individual workman wrt bonus cannot be considered as industrial
dispute. However he can refer the dispute to the labor court

Penalty for offences

 If any person fails to comply with the provisions of the act, he is punishable with
imprisonment for a term which may extend to six months or with fine or both

Employee Compensation Act 1923

The Workmen‘s Compensation Act, 1923 (Employees‘ Compensation Act, with effect from
31.05.2010) aims to provide financial protection to the workmen and/or their dependents in
case of accident arising out of and in the course of employment and causing either death or
disablement of the workman, come into force with effect from 1st July, 1924. Besides, the
Act has a provision of paying compensation to the workman for some occupational diseases
contracted by them during the course of their employment

Provision and Scope of the Act

The Act applies to workers of the employees in any capacity specified in Schedule (ii) of the
Act which includes mines, plantations, construction work and certain other and specific
category of railway servers.

The amount of compensation payable to workman depends on the nature of the injury caused
by the accident based on the monthly wages of the workman and age of the workman
concerned.

In case of death, the minimum amount of compensation fixed is Rs.1.20 Lakh and maximum
Rs.4.56 Lakh, whereas in case of permanent total disablement the minimum compensation
fixed is Rs.1.40 Lakh and maximum Rs.5.48 Lakh.

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OBJECTIVES

The Workmen's Compensation Act, 1923, aims to provide workmen and/or their dependents
some relief in case of accidents arising out of and in the course of employment and causing
either death or disablement of workmen.

Features of Workmen's Compensation Act 1923

In accordance with Section 3 of the Employee Compensation Act, if an employee suffers a personal
injury as a result of an accident that:

 is brought on by employment (that is, while working), and;

 arises while working, or while on the job, and;
 The victim of the injury either dies or becomes disabled.

If the aforementioned three conditions are satisfied, employers are obligated by the Workmen's
Compensation Act of 1923 to pay compensation.

Need of Workmen‟s Compensation Act, 1923

 The first argument is that any fees or expenses incurred once an employer is covered by
such a policy will be paid for by the insurance partner.
 In the event of a work-related illness, injury, or death, employees or their families may get
considerable compensation. The insurance provider that provides workmen's compensation
insurance coverage is responsible for this legal obligation for an employer.
 In accordance with the Workmen's Compensation Act of 1923, legal criteria are governed.
It becomes necessary to purchase workmen's compensation insurance in order to comply
with the standards and guidelines indicated above and to fulfill legal duties.

Significance of Workmen‟s Compensation Act, 1923

Workmen‘s compensation insurance is an important type of insurance policy designed to protect

employers from the financial liability of workplace injuries and occupational illnesses.

In most jurisdictions, employers are legally required to carry this type of insurance in order to cover
the costs of medical treatment, lost wages, and other related expenses that may be incurred by
employees due to an injury or illness.

Workers' compensation insurance provides employers with financial protection from the costs of
treating and rehabilitating injured workers, as well as covering any legal fees associated with
defending against a worker‘s compensation claim. It also ensures that the employer‘s financial
resources are not depleted by the costs associated with a workplace injury or illness.

Conditions Under Which the Employer is not Required to Provide Compensation

(a) In respect of any injury which does not result in the total or partial disablement of the workman
for a period exceeding 3 [three] days;

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(b) In respect of any 4 [injury, not resulting in death, caused by] an accident which is directly
attributable to—

(i) The workman having been at the time thereof under the influence of drink or drugs, or

(ii) The wilful disobedience of the workman to an order expressly given, or to a rule expressly
framed, for the purpose of securing the safety of workmen, or

(iii) The will full removal or disregard by the workman of any safety guard or other devices which
he knew to have been provided for the purpose of securing the safety of workmen.

What Does a Workmen's Compensation Policy Not Cover

 Any and all responsibilities a contract entails.

 Accidents or injuries resulting from drug or alcohol abuse.
 Injuries resulting from wars, insurrections or invasion.
 Contractor staff is not covered unless they are declared or insured.
 The first 3 days of disability when it lasts for fewer than 28 days.
 Any harm, as long as it doesn't render you partially incapacitated for more than three days.
 Any damage or impairment brought on by a worker who disregarded safety regulations or
guidelines.

Industrial disputes act of 1947

OBJECTS OF THE ACT

 To promote measures for securing good relations between employers and employees
by settling the dispute
 To provide a suitable machinery for investigation and settlement of industrial disputes
 To prevent illegal strikes
 To provide relief to workmen in matters of lay-offs, retrenchment, wrong dismissal
 To give the right of collective bargaining and promote conciliation

Important highlights of 1982 Act (Amendment)

 Central Govt is empowered to refer the dispute to labor court or Industrial Tribunal
 Industry definition is widened wrt BWSSB
 Workers & supervisors with salary of Rs 1600 p.m are also covered
 Time bound grievance establishment
 Continuation of dispute proceedings in case of death of a workman by his heirs
 Provision for full payment to worker during an appeal to high court, Supreme Court
 Provision for layoffs in mines
 Provision is applicable to establishments over 100 workers

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Definitions

Industry: any business, trade, undertaking, manufacturing, calling, service, handicrafts

Industrial dispute: any dispute or difference between employers and employees, between
employers, or between employees which is connected with the employment, conditions of
labor, of any person

Retrenchment: the termination by the employer of the service of a workman for any reason
whatsoever, other than as a punishment inflicted by way of disciplinary action

Strike: a cessation of work by a body of persons employed in any industry acting in

combination

Methods and Machinery under the Industrial Dispute Act

Conciliation- works committee, conciliation officer, conciliation board

Arbitration- court of inquiry

Adjudication-labor court, industrial tribunal, national tribunal

Obligations of employers

 Constitute work committees and provide facilities for proper working

 Implement all agreements, settlement and awards and produce all documents for
conciliation and proceedings
 Desist from declaring illegal lockout Layoff, retrenchment compensation
 No change in service conditions without notice
 Avoid taking disciplinary action against workers during pendency of disputes

Rights of employers

 Retrench or lay off workers as per the act

 Appeal against awards
 Declare lockout during strike
 Claiming confidential information

Obligations of workers

 Abide by the agreements or settlements

 Desist from declaring illegal strike
 Cooperate with all authorities to resolve disputes

Rights of workers

 To receive notice of any change in the service and working conditions

 To receive layoff and retrenchment compensation
 To represent the proceedings under the act

Prof. Sanjana G, Assistant Professor, East West Institute of Technology, Bangalore Page 92
 INDUSTRIAL RELATIONS & LEGISLATIONS– 22MBAHR304

 To claim any legal due from the employer

Important Questions from Module 4-6:

1. What is the meaning of Employee Relation?

2. Explain the advantages & disadvantages of Employee Relations.
3. Brief the significance of Employee Relation.
4. Brief the legal provisions to maintain Employee Relation.
5. Explain the health & welfare provisions under Factory Act 1948.
6. Explain the provisions of Payment of Gratuity Act 1972.
7. Explain briefly growth & development of trade union movement in India.
8. Explain the provisions under ESI Act 1948.
9. Brief the provision of Contract Labor (Regulation & Abolition) Act1970.
10. Explain the provisions of Minimum Wages Act 1926.
11. Briefly explain the procedure for settlement of Industrial Disputes and authorities
under Industrial Dispute Act 1947.
12. Briefly explain the rights and duties of registered trade union.
13. Brief the obligations of employers under ESI Act 1948.
14. State the objectives of Payment of Gratuity Act 1972.
15. Define factory under factory act 1948.

Prof. Sanjana G, Assistant Professor, East West Institute of Technology, Bangalore Page 93