Labor Relations and Collective

Bargaining
Unit 8

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 Labor Relation
Concept
 Traditionally, labor relation is concerned with relationship
between employers and employees (workers) and the role of
regulatory mechanism in resolving only industrial dispute.
 In dynamic (modern) concept, labor relations are concerned
with managing inter- relationships among workers, employers,
and society.
“Labor relations are the complex of interrelations among
workers, managers and government.”- John T. Dunlop

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 Actors of Labor Relations
1. Workers (Employees)
2. Employers
3. Society
i. Government
ii. Pressure groups

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1. Worker (Employees)
 The workers working in the organization are the key
actors in the labor relations. Workers sell their labor, skills
and efficiency to the organizations in order to obtain their
goals.
 The trade unions are the association of workers that work
in favor of the workers and protect their interests.
 These unions represent employee’s interests and problems
to the management on issues such as wages, working
hours, working conditions and physical facilities.

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2. Employers
 Employers are important actors of labor relations. They are the
buyers of labor, skills and efficiency of workers in order to
obtain organization goal. Employers hire as well as fire
workers.
 Employers are represented by employer associations. They
promote and protect the interests of the employers. These
associations put pressure on the trade union and the
government.

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3. Society
 Society is an important influence on industrial relations.
 Society in labor relation is represented by the government and
other pressure groups.
i. Government
 The government can be at national or local level depending
upon the political structure of the country. It regulates the
relationship between workers and employers
 The government tries to bring uniformity in industrial relations
through the enactment of labor laws, rules and regulations .
ii. Pressure groups
 Pressure groups are special interest groups which lobby and
pressurize the government for the enactment or better laws to
protect the interest of employees as well as employers.

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 Process of Labor Relations
1. Unionization
2. Dispute situation
3. Collective bargaining
4. Settlement of contract
5. Contract administration

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1. Unionization (formulation of union)
 A union is represented by workers.
 The process of labor relations begins with the formal
establishment of labor union and its recognition by employer.
 The unionization process follows legal basis, organizing
drive, registration, election and recognition.
2. Dispute situation
 Dispute means debate or argument (differences or
disagreement) over some issues between two parties.
 Disputes are conflicts between workers and management.
 The cause of disputes can be economic, managerial and
political.
 It is related to wages, benefits, services, working condition,
discipline, political interference.

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3. Collective bargaining
 It is concerned with a process of negotiation, settlement and
administration of a time bond agreement between labor and
management to settle disputes.
 It refers to negotiation between unions and management to
settle disputes.
 Through collective bargaining, a compromise is reached
between union and management.

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4. Contract settlement
 The compromise between union and management is converted
into a written contract.
 This contract is approved by union members.

5. Contract administration
 The agreed upon contract is administered by:
 Communicating the contract to all union members and
management members.
 Implementing the contract
 Interpreting the contract for grievance resolution
 Monitoring activities during the contract period.

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 Unionism
 Unionism is a process of organizing employees within
organization acting for their welfare.
 Unionism comprises employees’ collective effort to join
together with a view to bargaining, negotiating with
management and administering an various matters to
maximize their welfare.
 Worker get organized in labor unions.
 Employers get organized in employer associations.
 Professionals get organized in professional associations.
Example: Nepal Medical Associations, Nepal Bar Council,
Association of Chartered Accountants etc.

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 Reasons for Joining Unions
1. Job security
2. Higher compensation
3. Better working condition
4. Minimize discrimination
5. Collective bargaining power
6. Employee growth
7. Sense of belongingness

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 Collecting bargaining
Concept
 It is concerned with a process of negotiation, settlement and
administration of a time bond agreement between labor and
management to settle disputes.
“Collective bargaining can be defined as negotiations about
working conditions and terms of employment between an
employer and a group of employees or one or more
employees’ organizations with a view to reaching an
agreement”- Internal Labor Organization (ILO)

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 Issues in Collective Bargaining
1. Mandatory bargaining issues
2. Illegal bargaining issues
3. Voluntary (permissible) bargaining issues

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1. Mandatory bargaining issues
 In mandatory bargaining issues which are taken into
consideration and negotiation is mandatory under the law.
 They include wages, working hours, rest period, layoffs,
transfer, benefits, pay, pensions, insurance benefits, profit
sharing plans, employee security.
 Both management and union need to consider legal provision
before come into final negotiation.

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2. Illegal bargaining issues
 Illegal bargaining issues are forbidden by law.
 They include separation of employees based on race, different
wages for same employees, termination of employees without
describing reason, partiality of promotion.
 For such type of negotiation between employer and union,
there is no legal value.

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3. Voluntary (permissible) bargaining issues
 Such issues are neither mandatory nor illegal.
 They become a part of negotiations only through the joint
agreement of both management and union.
 Such issues would be beneficial both for employer and worker.
 Voluntary bargaining issues involve pension benefits, union
affairs, contract with internal unions, settlement of unfair labor
charge, price of cafeteria, and continuance of past contract.

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 Grievances
Concept
 Grievances means employee’s dissatisfaction or feeling of
personal injustice to his or her employment.
 Employee grievances are resulted from the perception of
unfair treatment on the job and differences in employee’s
expectations and managerial practices.
 When employee’s complaint is filed and brought to the notice
of management. It becomes a grievance. The complaint may
be related to wages, working hours , employment conditions,
unfair practices of the managers and supervisor and
promotion- related issues.
“A grievance is only dissatisfaction or feeling of injustice in
connection with one’s employment situation that is brought to
the attention of management.”- Dale S. Beach
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 Grievances Handling Procedures
A. Open door policy
B. Step ladder procedure

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A. Open door policy
 In this policy, employees are invited to informally drop
(walk-in) in the room of the higher level of management any
time and talk over (express) their grievances.
 The problem is resolved in a mutually satisfying way.
 This policy is suitable for small organization where
employees are directly linked with top management of the
firm.
 In big organizations, higher management may not have time
to attend to each grievance at a personal level.

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B. Step ladder procedure
 This procedure consists of several steps through which an
employee can take his grievances to successively higher levels
of management for resolution.
The steps in grievance procedure are:
Step(1): Grievant Supervisor
Step(2): Grievant Department Head
Step(3): Grievant Grievance Committee
Step(4): Grievant Chief Executive
Step(5): Grievant Voluntary Arbitrator
Step (6): Grievant labor court

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Step(1): Grievant supervisor
 The grievant employee verbally (orally) explains his grievance
to his immediate supervisor. He seeks satisfaction from his
supervisor.
 The supervisor gives a decision about the grievance within
fixed time period.
Step(2) Grievant Department Head
 If the grievant is not satisfied with the decision of the
supervisor, he puts the grievance in writing and appeals to the
department head.
 Under it, the department head gives his judgment over this
issue within a fixed time period.

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Step(3) Grievant Grievance committee
 If the grievant is not satisfied with the decision of the
department head, he appeals to a grievance committee.
 This committee is composed of some representatives of
employer and employees.
 This committee gives a decision within a fixed time period.
Step(4): Grievant Chief Executive
 If the decision of the grievance committee is not accepted by
the grievant, he appeals to chief executive of the organization
for revision.
 Union officials are involved for grievance discussions with
management.
 The chief executive gives a decision within a fixed time
period.

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Step(5): Grievant Voluntary Arbitrator
 If the grievant is not satisfied with the decision of the chief
executive, the grievance is referred for voluntary arbitrator.
 An arbitrator is an outside third party who is brought to settle
grievance. He has the authority to make decision.
Step (6): Grievant labor court
 If arbitrator is also unable to solve the grievance, it goes to the
labor court.
 The decision given by labor court will be valid for both of the
conflicting parties.
 Labor court is the final step in most grievance procedures.

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 Labor disputes
Concept
 Dispute means debate or argument (differences or
disagreement) over some issues between two parties.
 In a broader sense, labor dispute refers to any conflict between
employers and workers, between employers and employers ,
between workers and workers, and between employers and
government.
 Labor disputes refer to any conflict between employers and
workers .

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 Settlement of labor disputes
1. Collective bargaining method (joint decision)
2. Conciliation method (third party decision)
3. Mediation method (third party decision)
4. Adjudication (third party decision)

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1. Collective bargaining method (joint decision)
 Under this method of dispute settlement, employees and
management sit together to discuss about the agendas and
problems of employees.
 Then, an agreement is reached being based upon consensus
of both the involving parties to settle the existing disputes or
to avoid future occurring labor disputes in the organization.

2. Conciliation method (third party decision)

 Conciliation means settlement of dispute by persuasion
(opinion/ advice) of third party.
 During discussion, the third party can only provide
suggestions but can’t influence disputing party for the
implementation of its suggestions.

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3. Mediation method (third party decision)
 Mediation is a way of resolving disputes between two parties.
 Mediation is a process whereby the third party submits proposals
for dispute settlements.
 The disputing parties are free to accept or reject the proposal put
by mediator.

4. Adjudication (third party decision)

 Under it, the disputes are settled by either labor court or a
tribunal. This method deals with rights disputes.
 It is a final resort to settle dispute because the verdict of
adjudication is binding on both the parties involving in a dispute.
 It is the most significant means of resolving disputes, but it has
been criticized because of the delay involved in resolving
disputes.

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 Legal Environment in Labor Relations in Nepal
After the restoration of democracy in the country (on the year
2046 BS 1990 AD), a lot of act have been either revised or
new act has been developed. Very recently, labour Act 2074
BS (2017 AD) has replaced the “labour Act 2048 BS”.
This act guides both workers and employers about what to do and
what not to do.
In Nepal’s legal environment, with respect to labor relations is
governed (decided) by the following four major acts.
1. Labour Act 2074 and Labour Rules 2075
2. Trade Union Act 2049 and Trade Unions Rules 2050
3. Bonus Act, 2030 and Rules 2039
4. Child Labor (Regulation and Prohibition) Act 2056

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A. Features and Provision of Labor Act 2074 (2017)
 This act is primary act which governs labor relation in Nepal.
 This act is basically guided by democratic norms, and federal
republic fundamental.
The major provisions of this act are briefly outline below.
1. No work no pay
2. Allow strike
3. Payment during strike
4. Formation of tribunal
5. Categorization of employees
A. Regular employment
B. Task- based employment
C. Causal worker and time-bound workers
D. Including short-time workers
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6. Performance evaluation
7. Firing
8. No discretionary termination
9. Compulsory retirement
 The age for compulsory retirement has been increased to 58
from the previous 55 years
10. Probation period
 The probation period has been shortened to 6 months from the
previous 1 year.
11. Working hours
 Working hours continue to be 8 hours a day and 48 hours a
week. Overtime has been increased to 24 hours per week from
20 hours a week.
12. Head count threshold

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B. Trade Union Act,1992
 This act deals with various aspects related to establishment
and operation of trade unions in Nepal.
The main features of this act are given below.
1. Registration of trade union
2. Autonomous and corporate body
3. Objectives
4. Recognition of the authorized trade union
5. Fund

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1. Registration Of Trade Union
This act has made the provision of registration of trade unions at
different levels;
A. Enterprise level
 The workers of concerned enterprise may constitute an
enterprise level trade union to protect and promote their
occupational rights with at least ten members.
B. Trade union association
 At least fifty enterprise level’s trade union or five thousand
agriculture laborers of at least twenty districts comprising
one hundred persons from each district or five thousand
workers of similar nature enterprise, may constitute a trade
union association by mutual agreement.

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 Trade union association may also be formed by at least five
hundred workers or self-employees working in industry, trade,
profession or service occupation from outside the enterprise by
mutual agreement.
C. Trade Union Federation
 At least ten trade union association may constitute a trade
union federation by mutual agreement.
2. Autonomous and corporate body
 The trade union shall be an autonomous and corporate body
having perpetual succession.

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3. Objectives
 To engage in economic and social development of the workers
by improving their working conditions.
 To make an effort to establish good relationship between
workers and management.
 To assist in the development of enterprise by increasing the
productivity of enterprise.
 To try to make the workers dutiful and disciplined
4. Recognition of The Authorized Trade Union
 The authorized trade union shall be recognized for the
collective bargaining with the management on behalf of the
workers of authorized enterprise level trade union.
5. Fund
 The trade union shall have its own separate fund.

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 C. Features and Provision of Bonus Act, 2030 (1974)
1. Short tile, extension and commencement
2. Definition: it has defined following terms:
 Enterprise, enterprise owned by government of Nepal, fiscal
year, employee, salary or wage, management, department of
labour, labour office, labour court, prescribed or as prescribed.
3. For the purpose of computation of Bonus, branches and sub-
branches shall be treated as the parts of the enterprise.
4. Submission of the balance-sheet to the department of labour
5. Bonus to be distributed by the profit making enterprise
6. Eligibility for bonus
7. Amount to be obtained for bonus and its assessment
8. Restriction to obtain bonus
9. Types of bonus and period of distribution there of
10. Bonus to be given to the agree or to a member of the family
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11. Bonus may be distributed as advance
12. Deduction of bonus
13. Welfare fund
14. Details to submit in the department of labour
15. Records and statement of account to be maintained
16. Settlement of dispute of bonus
20. Penalty
21. Appeal
23. Liability of the manager
24. Protection of the acts done in good faith
25.Power of government of Nepal to remove difficulties
27. power to frame rules
28. saving

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D. Child Labor (Prohibition and Regulation) Act, 2056 (2000)
Charper-1: preliminary
Chapter - 2: prohibition on engaging a child at work
Chapter-3: provision relating to engaging a child in works
Chapter- 4: provision relating to inspection
Chapter- 5: provision relating to punishment and appeals
Charpter-6: miscellaneous

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 Contemporary Issues in Labor Relations in Nepal.
1. Suspicious management
2. Issues of employee commitment
3. Issues of collective bargaining
4. Issues of policies and strategies
5. Issues of quality of work life
6. Issues of no work no pay and no discrimination
7. Issues of employee grievances
8. Lack of Education and counseling

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1. Suspicious management
 The Nepalese management is suspicious from trade unions
and their activities.
 Management has taken a reactive approach to labor relations.
 A proactive strategy is lacking which requires careful
anticipation and prediction of the moves of labor unions.

2. Issues of employee commitment

 Employee commitment raises employee’s involvement and
engagement at the job and organization.
 Employees are satisfied from the labor relations, they do not
commit for the organization.

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3. Issues of collective bargaining
 Collective bargaining in Nepal lacks good faith.
 Labor regards it as a weapon to fulfill their demands.
 Both labor and management do not make every reasonable
effort to bargain in good faith and arrive at settlement.
 The agreements remain poorly implemented.

4. Issues of policies and strategies

 Labor policies and strategies need to be unified, comprehensive
and integrated to address the interest of actors of labor relations.
 Unfortunately, there is no such document which can represent
all the issues.
 Nepal lacks a comprehensive labor policy.
 Organizations lack labor relations strategy.

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5. Issues of quality of work life
 Quality of work life is least considered in labor relations.
 Unacceptable labor practices such as child and bonded labor
are present.
6. Issues of no work no pay and no discrimination
 Because of growing industrial unrest by employees, employers
wished to have provision of no work no pay.
 Labor Act 2074 BS has provisioned this. But this is still
debatable issue.
 Contemporary issue is also the discrimination in wages and
facilities between male and female employees.
 According the new provision, there should not be child labor,
bonded labor, and labor trafficking in the organization, there
should not be wages discrimination.

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7. Issues of employee grievances
 Employee grievances common issues in Nepali organization.
 Employee grievances are increasing in Nepal.
 It is essential to handle such grievances properly to maintain a
productive work environment.
8. Lack of Education and counseling
 There is lack of proper education, training and counseling for
manager as well as union members for maintaining good labor
relations in the organization.
 Both labor and management in Nepal lack education and
training about managing labor relation.
 This has led to the lack of professional approach to labor
issues.

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 Thank you

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