HUMAN RESOURCE

MANAGEMENT

Labor Relations and Collective

Bargaining
Introduction

 Today's workforce is far more complicated

than what used to appear years ago
 With industrialization, apart from issues such
as productivity & globalization, more human
issues is also a prime issue with large &
increasing workforce
 Ways have been devised to bring conflicting
parties to the negotiating table

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Concept of Labour/Industrial Relations (IR)

The concept began in America in the late 1910s & then gradually
spread in industries & universities
The term "labour/industrial relations" is usually used in unionised
firms & industries
The term "industrial" was originally used in the context of industrial
employment as mine, mill or factory
Today the term is adopted in all paid employment & industrial
subdivisions like trade, mining, government, etc.
IR is the state of relations between employers & employees or, more
macroscopically viewed, the relations between capital & labor
The term "labor relations" refer to a system or web of rules
regulating employment & the ways in which people behave at work
These rules regulate the behavior of union representatives,
management or employer in the process of collective bargaining
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The main conceptual elements of industrial
relations are as follows:
 Labour legislation
 Labour management
 Labour history
 Trade unions
 Collective bargaining
 Causes & remedies of unemployment
 Labour administration
 Adjustment of labour disputes
 Personnel & employment problems
 Employers' labour policy
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Trade Unions

 Labour Unions are a vehicle by which workers act

collectively to protect & promote their interests
 A labour union is an association of employees formed for
the primary purpose of influencing an employer's decisions
about conditions of employment
 Where labour unions exist, it influences a number of
organizational activities such as recruitment sources,
hiring criteria, work schedules, job design, payment
procedures, safety rules & eligibility for training programs
 Among them, the most obvious and pervasive area of
worker's influence is wage rates & working conditions
 The subject of union management is labour relations or
industrial relations

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 Trade Unions (…Cont’d)

 Trade Unions may engage in fraternal activities, political

action & related activities
 It is a social group & it brings to the work environment a
second formal organization
 The union hierarchy sits along the management hierarchy
and the workers become members of both
 Sometimes this arrangement is beneficial to workers because
when the management does not satisfy their wants they can
turn to the union for help
 At other times this arrangement is stressful because each
organization makes some conflicting demands on workers
  Over 200 trade unions have emerged in Nepal after the
restoration of democracy in 1990
 The Trade Union Act 1993 provided a framework for the
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registration & functioning of trade unions.
Trade Union Movement in Nepal
 Over 200 trade unions have emerged in Nepal
after the restoration of democracy in 1990
 The Trade Union Act 1993 provides a framework
for the registration and functioning of trade
unions
 The trade union movement in Nepal is directly
linked to the history of democratic movement in
Nepal
 Although the history of industrial development in
Nepal started in 1936 and there have been
frequent labor unrest for many reasons,
particularly in 1947 at Biratnagar Jute Mills there
was no specific labor legislation till 1959
 For the first time in 1959, the Nepal Factories and
Factory Workers Act was enacted when the Nepali
Congress was in government
 But the trade union movement was almost void
after King Mahendra took over executive powers
and established an autocratic regime in 1960
 Till the period from 1960-1990, the autocratic
regime banned the formation of trade unions
affiliated to different political parties
 The Labor Act in Nepal was only enacted after the
restoration of democracy in 1990
 It replaced the Nepal Factories and Factory
Workers Act 1959
 The Department of Labour has registered over
200 trade unions that have emerged in Nepal
after the restoration of democracy in 1990.
The Trade Union Act 1993 provided a framework
for the registration and functioning of trade
unions.
There are now three national-level trade unions
registered in Nepal that are as follows:
All Nepal Trade Union Federation (A-N-T-U-F) Affiliated to CPN Maoist (Unity), now divided
or Akhil Nepal Majdur Sangathan (Krantikari) among UCPN (M) and UCPN-M.

Democratic Confederation of Nepalese Trade Established in 1997. Affiliated to Nepali

Unions (DECONT) Congress.
( Prajatantrik Majdur Sangh)

General Federation of Nepalese Trade Unions Founded in 1989. Its chairman Mukunda
(GEFONT) Neupane was the first Labour minister with a
(Akhil Nepal Majdur Sangathan) trade union background. Affiliated to
Communist Party of Nepal (U-M-L).

Nepal Trade Union Congress (N-T-U-C) Inherited the legacy of the Nepal Mazdoor
Congress, the first trade union founded in
1947 by Girija Prasad Koirala. Affiliated to
Nepali Congress.
Employers' Association

The Federation of Nepalese Chambers of Commerce and Industries (FNCCI),

an umbrella organization of the Nepali private sector, was established in 1965
It has played a key role in promoting business and industry in Nepal
It also has a major role as the employers' organization in Nepal, with a
network of 85 district/municipality-level chambers in 69 of the 75 districts
The FNCCI is represented in almost all national councils, boards and policy
advisory bodies concerned with the industry, business and labour relations
The Employers' Council of the FNCCI (FNCCI-EC) established in 1985 as a
permanent organ of FNCCI, apart from representing the interest of corporate
members, established links between employers, employees & the government
through regular contact
It also presents unified opinion on labour matters & industrial relations, &
organizes activities in related areas
A past chairman of the FNCCI-EC, who is the ex-officio Vice Chairman of the
FNCCI, is a Substitute Deputy Member of the Governing Body of the ILO

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Labour Legislations in Nepal

 Although the history of industrial development in Nepal

started in 1936 & there have been frequent labour unrest
for many reasons, there was no specific labour legislation till
1959
 For the first time in 1959, the Nepal Factories & Factory
Workers Act was enacted when the Nepali Congress was in
government
 The Labour Act was only enacted after the restoration of
democracy. It replaced the Nepal Factories & Factory
Workers Act 1959
 The Labour Act 1992 provides for orderly settlements of
industrial disputes
 The new law makes detailed provisions on procedure for
lay-off, retrenchment & dismissal on ground of misconduct
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Labour Legislation in Nepal (…Cont’d)
 Till now, in order to translate the constitutional provisions
related to labour administration, the government has
formulated & enacted the following Labour Laws in Nepal:
 Labour Act 1992
 Trade Union Act 1993
 Bonus Act 1993
 Foreign Employment Act 1985

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Collective Bargaining – Concept

 It is a negotiation between representatives of

management & workers to produce a written agreement
covering terms & conditions of employment
 It is essentially a compromise & balancing of opposing
pressures of two social groups who have enough mutual
interests to work together
 Pressures at the bargaining table usually are framed in
economic & technical terms: yet bargaining overall is a
social process
 Though a difficult process, collective bargaining is a useful
practice to help preserve labour-management autonomy in
a free society
 A third party involvement will usually reduce workers &
management freedom
 It is a continuous process that is flexible with give-and-
take group process
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 It is common practice for both sides to have a number
of non-negotiating advisers and observers. The
advisers deal only with their own negotiators rather
than across the table
 Bargaining tactics:
 Counterproposals
 Trade-off
 Recess
 Delay of "troublesome" issues
 Publicity
 Mediation
 Strike
 Contract arbitration
Labour Disputes
 The term dispute is a 'debate' or an 'argument'

 The word dispute in the IR system is used to indicate a dispute over

the interests & rights of workers with the management

 Disputes over interests: denote debates over the determination of

new wage levels, bonuses, personnel & retrenchment (reduction of
expenditure), leave & hrs. of work, indiscipline

 Disputes over rights: concerned with the interpretation & application

of existing work stds. such as training & devt., working conditions, fair
wage levels

 Disputes are handled with legal provisions of the govt.

 In Nepal, Labour Department is crucial in the process of settlement of

dispute
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Causes of Disputes
 Wages & salary: Disagreement in the process of determination of wages & salary

 Bonus: Different opinions in the determination of bonus distribution

 Personnel cause: Suspension, lack of participation in decision making, lack of union

representation in the recruitment & selection decision, other unfair treatments by the
mgmt.

 Violence & indiscipline: Fighting at the workplace, failure to obey rules, destruction
of organization's property etc.

 Multiple unionisms affiliated with national parties: Showing their influence among
the members

 Working conditions & hours of work: Lack of hygienic working conditions like dirty
lavatories, lighting, drinking water, etc.

 Modernisation & automation: Poses a threat to unskilled labour force, resistance in

such changes

 Absence of work councils & grievance-handling procedures at work site:

Disputes may arise due to the lack of grievance-handling mechanisms
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Dispute Settlement Process under Nepalese Legislation

1. Establishment of a labour court

 The Labour Act 1992 (2048) made a provision
for constituting a labour court to settle dispute
between workers & their company
 The court may punish the accused with a fine
up to Rs. 5000 or an imprisonment of up to 2
months or both
 However, if the accused satisfied the court it
may grant pardon or reduce the amount of
punishment or suspend punishment

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Dispute Settlement Process under Nepalese Legislation
(cont’d…)
2. Filing personal claims
 If one or more workers have any complaint against the
company relating to their jobs or services, they may
submit it in writing to the company's management
 Once such a complaint is filed, the company has to call
the concerned worker for discussion on the complaint
within 15 days of its submission to resolve the problem
 If the problem cannot be solved within 15 days of
submission the worker may file a petition in the Labour
Office specifying their claims in detail
 The Labor Officer has to solve the dispute within 15 days
from the date of filing a petition by means of bilateral
discussion between the proprietor & workers'
representatives
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Dispute Settlement Process under Nepalese Legislation
(cont’d…)

 Even if the dispute is not settled, the Chief of the

concerned Labour Office has to decide on the
dispute within the next 7 days
 If any party concerned is not satisfied with the
decision of the Chief, it may appeal before the
Labour Court within 35 days from the date of the
service of notice of the decision

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 Dispute Settlement Process under Nepalese Legislation
(cont’d…)
3. Filing collective claim
 At least 51% of the workers have to sign their claims relating to
collective right, interest & facilities & submit such claims in writing
to the concerned proprietors

 While filing a collective claim, workers have to clearly state the

name of their representatives

 Upon receipt of the claim relating to the dispute, the proprietor

shall hold bilateral discussions with the workers' representatives &
try to solve the problem within 21 days & shall enter an agreement

 If the bilateral discussion fails to resolve the dispute, it shall be

resolved within 15 days by holding bipartite discussions in the
presence of the Labour Officer
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Dispute Settlement Process under Nepalese Legislation
(cont’d…)

 Even if the dispute is not settled, it may be referred to

an arbitrator appointed with mutual consent of the
company & workers
 If any difficulty arises in appointing such an arbitrator,
the govt. constitutes a tripartite committee (equal
representation of the company, workers & govt.) with
the mutual consent of both the parties
 The arbitrator or tripartitie committee has to give its
decision within 15 days
 If any party is not satisfied with the decision, it may
appeal to the govt. within 35 days from the service of
the notice
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Dispute Settlement Process under Nepalese Legislation
(cont’d…)

 In case, the arbitrator or tripartite committee

does not give its decision within 15 days or in
case the government does not decide on the
appeal within 60 days from the date of filing
the appeal, the workers may call a strike

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Dispute Settlement Process under Nepalese Legislation
(cont’d…)

4. Right to strike
 If the dispute is not settled, the workers can
decide to go on strike
 A notice in writing stating the claim & its
rationale, including a resolution passed by at
least 60% of the total workers through secret
ballot shall have to be provided to the
concerned proprietor 30 days in advance
 This notice will also be provided to the Dept. of
Labour, Labour Office & Office of the Local
Administration
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Dispute Settlement Process under Nepalese Legislation
(cont’d…)

5. Lockout
 Employers also have the right to lock out their
organizations if the collective dispute is not solved
 They can lock out their organization after submitting their
justification & obtaining the approval of the govt.
 However, before declaring a lockout, a company has to
issue a notice for information of all workers & employees
at least 7 days in advance, specifying the date of the
lockout being effective & announcing that the enterprise
shall be locked-out if the strike is not called off
 The govt. may declare the lockout illegal, in case it
appears unjustified or is likely to threaten the law & order
of the country
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Concept of Grievance

 Grievance represents the dissatisfaction or feeling of injustice in

connection with the employment of people in the organization
 "A grievance is a complaint about a job that creates
dissatisfaction or discomfort, whether it is valid or not. The
complaint may be made by an individual or by the union." Trotta
 Issues: wage differences, working conditions, employment
conditions, unjust practices of the supervisors, managers,
working hours etc.
 Employees may express their grievances in an active or passive
way
 In unionized organizations, such grievances are filed through the
union
 Managers are responsible to provide an opportunity to express
grievances in an active form

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Handling Grievances or Grievance Procedures
Steps

4 Arbitrator

Employee
grievance
3 Top Mgmt. committee,
national union
representative

Middle mgmt. & Employee, union,

2 labor relations grievance
specialist committee

Employee union
1 Supervisor steward

Aggrieved
employee 27
Handling Grievances or Grievance Procedures (cont’d…)

1. Contact Supervisor
 The employee first contacts her/his supervisor with the help of the union
steward
 They discuss the grievance & try to solve it on the shop floor through
informal discussion
 If grievance is not settled with this agreement, the next step will be
effective
2. Meet the management & labour relations specialist
 They try to reach an agreement after discussing the issue
3. Meeting between union executives & top management
 Top mgmt. & union executives sit together to reach an agreement
 There is responsibility of settling complaints at this level because of the
authority of the top mgmt.
4. Arbitration
 Final step where an independent arbitrator mediates between mgmt. &
employees
 The mediator goes through the rules to handle grievances to settle it in a
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way acceptable to all parties involved
 He may be appointed by the govt. or other private agencies
 General Guidelines of Grievance Handling

Do Don't
1. All could result arbitration. 1. Discuss with union alone.
2. Talk, give full hearing. 2. Make "own" arrangements.
3. Identify violations. 3. Hold back remedy.
4. Stick to time limits. 4. Bind past practice.
5. Visit grievance area. 5. Give up rights as manager.
6. Determine witnesses. 6. Stick to labour agreement.
7. Examine personal record. 7. Bargain on not contractual.
8. Examine prior records. 8. Hold managers too high.
9. Equal status. 9. Give long written answers.
10. Discussions are private. 10. Deny grievances.
11. Inform/update superiors. 11. Agree beyond contract.

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Concept of Discipline

 Discipline is a condition in the organization when

employees conduct themselves in accordance with the
organization's rules & standards of acceptable behaviour
 The term "discipline" refers to a condition in the
organization when employees conduct themselves in
accordance with the organization's rules & standards of
acceptable behaviour – Decenzo
 E.g.s of indiscipline: Absence from the job, drinking on the
job, stealing company's property, fight etc.
 General guidelines in administering discipline:
 Making action "corrective"
 Making action "progressive"
 Making action immediate, with ample warning, consistent
as well as impersonal 30
Types of Discipline Problems

1. Attendance related: habitual lateness, unexcused

absences, abuse of sick leave etc.
2. On-the-job misbehaviors: fighting, gambling,
sleeping on the job, smoking in non-smoking
zones, failure to obey safety rules, arriving
drunk, attacking fellow employees etc.
3. Dishonesty: Unauthorized selling of company
property, stealing, destruction of company's
property, etc.
4. Outside activities: Involvement in unauthorized
strikes, criminal activities outside the job, spying
for competitors, criticizing the management in 31
public, etc.
Causes of Indiscipline
 Lack of supervision
 Violation of rights of employees
 Absence of grievance handling &
settlement machinery
 Personnel problems
 Employer's attitudes
 Lack of communications

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Administering Discipline

 Define disciplinary policies &

procedures
 Respond immediately
 Provide a warning
 State the problem specifically
 Allow the employee to explain his or
her position
 Keep discussion impersonal
 Be consistent 33

 Take progressive action

Disciplinary Actions
Simple oral
warning

Written
warning

Suspension

Demotion

Pay cut

Dismissal

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Disciplinary Actions

1. Simple oral warning

 Manager describes the rules & regulations & her/his
expectation together with informal oral warning
 Opportunity to the employee to suggest ways of improving
the current behavior
 Even after repeated informal warnings, if the problem
recurs, other official actions are imperative
 Managers make a record in the employee's personal file till
the period of full correction of her/his behavior

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Disciplinary Actions (cont’d…)

2. Written warning
 This is activated when there is a repetition of the
offences following oral warning
 Formal disciplining process
 A written warning letter is given & a copy of it
will be filed in the employee's personal file for a
record
 A description of the nature of violation, its effect
& the result of such violation are described in the
letter to warn the concerned employee

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 Disciplinary Actions (cont’d…)

3. Suspension
 If the written warning is not effective, a suspension notice
is given to the employee concerned
 The time for suspension depends on the degree of violation

4. Demotion
 It is an alternative to dismissal or suspension

5. Pay cut
 Though demotivating, it is an appropriate way to warning
an employee to correct her/his behavior on the job

37
Disciplinary Actions (cont’d…)

6. Dismissal
 Dismissal is used when an employee
fails to comply with all other
disciplinary actions

 For a gross misconduct where the

offence is serious, employee may be
dismissed without going through the
other steps
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