MBA HR02 UNIT I Industrial Relation and Labour Enactments

UNIT I Industrial Relations

means the relationship between employers and employees in course of employment in industrial organizations. However, the concept of Industrial Relations has a broader meaning. In a broad sense, the term Industrial Relations includes the relationship between the various unions, between the state and the unions as well as those between the various employers and the government. Relations of all those associated in an industry may be called Industrial Relations. According to International Labour Organization, Industrial relations comprise relationships between the state on one hand and the employer’s and employee’s organization on the other, and the relationship among the occupational organizations themselves. Industrial relation

Definition: According to J.T. Dunlop , “Industrial relations are the complex interrelations among managers, m anagers, workers and agencies of the government”  Features of Industrial Relations:

1. Industrial relations are outcomes of employment relationships in an industrial enterprise. These relations cannot exist without the two parties namely employers and employees. 2. Industrial relations system creates rules and regulations to maintain harmonious relations. 3. The government intervenes to shape the industrial relations through laws, rules, agreements, terms, charters etc. 4. Several parties are involved in the Industrial relations system. The main parties are employers and their associations, employees and their unions and the government. These three parties interact within economic and social environment to shape the Industrial relations structure. 5. Industrial relations are a dynamic and developing concept, not a static one. They undergo changes with changing structure and scenario of the industry as and when change occurs. 6. Industrial relations include both individual relations and collective relationships.

Objectives of Industrial Relations: 1. To maintain industrial democracy based on participation of labour in the management and gains of  industry. 2. To raise productivity by reducing tendency of high labour turnover and absenteeism. 3. To ensure workers’ participation in management of the company by giving them a fair say in decision-making and framing policies. 4. To establish a proper channel of communication. 5. To increase the morale and discipline of the employees. 6. To safeguard the interests of the labour as well as management by securing the highest level of  mutual understanding and goodwill between all sections in an industry. 7. To avoid all forms of industrial conflicts so as to ensure industrial peace by providing better living and working standards for the workers. 8. To bring about government control over such industrial units which are running at a loss for protecting the livelihood of the employees. Prof. Amit Kumar

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Importance of Industrial Relations: 1. Uninterrupted Production: The most important benefit of industrial benefits is that it ensures continuity of production. This means continuous employment for all involved right from managers to workers. There is uninterrupted flow of income for all. Smooth running of industries is important for manufacturers, if their products are perishable goods and to consumers if the goods are for mass consumption (essential commodities, food grains etc.). Good industrial relations bring industrial peace which in turn tends to increase production. 2. Reduction in Industrial disputes: Good Industrial relations reduce Industrial disputes. Strikes, grievances and lockouts are some of the reflections of Industrial unrest. Industrial peace helps in promoting co-operation and increasing production. Thus good Industrial relations help in establishing Industrial democracy, discipline and a conducive workplace environment. 3. High morale: Good Industrial relations improve the morale of the employees and motivate the worker workers to work more and better. 4. Reduced wastage: Good Industrial relations are maintained on the basis of co-operation and recognition of each other. It helps to reduce wastage of material, manpower and costs. 5. Contributes to economic growth and development.

CAUSES OF POOR INDUSTRIAL RELATIONS/ FACTORS AFFECTING INDUSTRIAL I NDUSTRIAL RELATION: 1. Economic causes: Often poor wages and poor working conditions are the main causes for unhealthy relations between management and and labour. Unauthorised deductions deductions from wages, lack of fringe benefits, absence of promotion opportunities, faulty incentive schemes are other economic causes. Other causes for Industrial conflicts are inadequate infrastructure, worn-out plant and machinery, poor layout, unsatisfactory maintenance etc. 2. Organizational causes: Faulty communications system, unfair practices, non-recognition of trade unions and labour laws are also some other causes of poor relations in industry. 3. Social causes: Uninteresting nature of work is the main social cause of poor Industrial relations. Dissatisfaction with job and personal life culminates into Industrial conflicts. 4. Psychological causes: Lack of job security, non-recognition of merit and performance, poor interpersonal relations are the psychological reasons for unsatisfactory employer-employee relations. 5. Political causes: Multiple unions, inter-union rivalry weaken the trade unions. Defective trade unions system prevailing in the country has been one of the most responsible causes for Industrial disputes in the country. 6. Technological Factor: 7. Global factor: Like Global Culture, International Trade Agreements & relations, International Labour agreements (ILO) etc.

Suggestions to improve Industrial Relations: 1. Sound personnel policies: Policies and procedures concerning the compensation, transfer and promotion, etc. of employees should be fair and transparent. All policies and rules relating to Industrial relations should be fair and transparent to everybody in the enterprise and to the union leaders. 2. Participative management: Employees should associate workers and unions in the formulation and implementation of HR policies and practices. 3. Responsible unions: A strong trade union is an asset to the employer. Trade unions should adopt a responsible rather than political approach to industrial relations. Prof. Amit Kumar

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4. Employee welfare: Employers should recognize the need for the welfare of workers. They must ensure reasonable wages, satisfactory working conditions, and other necessary facilities for labour. Management should have a genuine concern for the welfare and betterment of the working class. 5. Grievance procedure: A well-established and properly administered system committed to the timely and satisfactory redressal of employee’s grievances can be very helpful in improving Industrial relations. A suggestion scheme will help to satisfy the creative urge of the workers. 6. Constructive attitude: Both management and trade unions should adopt positive attitude towards each other. Management must recognize unions as the spokesmen of the workers’ grievances and as custodians of their interests. The employer should accept workers as equal partners in a joint endeavor for good Industrial relations. 7. Creating a proper communication channel to avoid grievances and misunderstandings among employees & 8. Education and training imparted to the employees

THEORIES OF INDUSTRIAL RELATION 1. Dunlop's System Theory 2.Human relation Theory 3.psychological Theory 4. Sociological Theory 5. Gandhian Theory 6.Pluralist Theory of Flanders

1. Dunlop's System Theory One of the significant theories of industrial labour relations was put forth by John Dunlop in the 1950s. According to Dunlop industrial relations system consists of three agents – management organizations, workers and formal/informal ways they are organized and government agencies. These actors and their organizations are located within an environment – defined in terms of technology, labour and product markets, and the distribution of power in wider society as it impacts upon individuals and workplace. Within this environment, actors interact with each other, negotiate and use economic/political power in process of determining rules that constitute the output of the industrial relations system. He proposed that three parties—employers, labour unions, and government-- are the key actors in a modern industrial relations system. He also argued that none o f these institutions could act in an autonomous or independent fashion. Instead they were shaped, at least to some extent, by their market, technological and political contexts. Thus it can be said that industrial relations is a social sub system subject to three environmental en vironmental constraints- the markets, distribution of power in society and technology. Dunlop's model identifies three key factors to be considered in conducting an analysis of the managementlabor relationship: 1. Environmental or external economic, technological, political, legal and social forces that impact employment relationships. 2. Characteristics and interaction of the key actors in the employment relationship: labour, management, and government. 3. Rules that are derived from these interactions that govern the employment relationship.

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4. Focuses on participants in the process, environmental forces and the output

2. Human Relations Approach to Industrial Relations • Delicate and tricky • Handling is radically different • Physiological needs • Safety and security needs • Egoistic needs - higher order needs, self esteem

3. Psychological approach to Industrial Relations • The general impression about a person is radically different when he is seem as a representative of  management from that of the person as a representative of labour • The management and labour see each other as less dependable • The management and labour see each other as deficient in thinking regarding emotional characteristics characteristics and inter- personal relations.

4. Sociological approach to Industrial Relations • Industry is social world • Various individuals and groups • Difference in individual attitudes and behaviour create problems • Social change cannot be overlooked • Role of state and political parties • Industrial relations are determined by power

5. Gandhian Approach to Industrial I ndustrial Relations • IR are based on fundamental principles of truth and non - violence • The worker should seek redressa l of reasonable demands only through collective action • Strike - peaceful and non- violent method • Avoid strike • Avoid formation of union • Strike- last resort • Voluntary arbitration - se

6. Pluralist perspective In Pluralism, the organization is perceived as being made up o f powerful and divergent sub-groups, each with its own legitimate loyalties and with their own set of objectives and leaders. In particular, the two predominant sub-groups in the Pluralist perspective are the management and trade unions. Consequently, the role of management would lean less towards enforcing and controlling and more toward persuasion and co-ordination. Trade unions are deemed as legitimate representatives of  employees, conflict is dealt by collective bargaining and is viewed not necessarily as a bad thing and, if  managed, could in fact be channelled towards evolution and positive change.

EVOLUTION OF INDUSTRIAL RELATION IN INDIA

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In the beginning the relationship b/w an employer and employee was informal, personal & intimate since the business and industries establishments were small. The growth of the companies and business organisations which employed thousand of workers changed the relationships. In India a large number of occupations were carried on by small manufactures in their cottages, mostly on hereditary basis. The employer & employee relations were those of master and slave and later on of those of master and servant. From the very early times, the Indian works of arts and crafts were badly damaged during the invasions of foreign invaders, which lasted for about 700 years. The commercial character of the east India Company did not change the conditions of workers. After the abolition of the monopoly of the East India Company in 1883, the British Industrialists and merchants were able to develop some industries (Cotton, jute, railways, Plantation, Coal, Mines etc.) are trade in India. Many other events happened which accelerated the pace of industrial relations during the period,           

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The success of Russian Revolution in 1917. ILO was established in 1919 and it influenced through its conventions and recommendations. AITUC was established in 1920. The happening of Carnatic and Birmingham mills in which Mr. B.P. Wadia was arrested in 1923. The Workmen's Compensation Act 1923. In 1924 left wing emerge on the Indian political political horizon. In 1924 labour party govt. was formed in U.K. British Industrialists of Lancashire and Birmingham put pressure on govt. The Indian Trade Union Act 1926 was promulgated. The Trade Dispute Act 1929 was passed. Royal commission on Labour (1929-31) was formed which made a comprehensive study of Indian Labour problems regarding health, safety and welfare of workers and made recommendations of  far reaching consequences. The Payment of Wages Act 1936. The minimum wages Act 1948 was passed. The employee State Insurance Act 1948 Was passed. The Factory Act 1948. The employee Provident Funds Act 1952 The payment of Bonus Act 1965 The payment of Gratuity Act 1972.

In the year 1969 the first National Commission on labour was formed under the chairmanship of Justice Ganjendragadkar which made significant recommendation. After 1975 the Janta Govt. and each successive govt. thereafter competed with to provide measures for protection of workers interests and formation of worker's welfare. New economic Policy has been initiated in 1991 and has been responsible for emergence of the processes of liberalisation, privatisation and globalisation which mean that the govt. role in social and labour matters has to change. The institution of trade unions is getting weak employers are going for non-unions. The institution of collective bargaining is decentralised and being replaced by individual bargaining. The compensation pattern is changing. The fixed/Assured Time Wage are being replaced by variable performance based wages. International bodies like ILO/WTO, WB/IMF are exerting pressure on industrial relation and the business scenario requires a different blind of employee-relations.

ROLE OF STATE IN INDUSTRIAL RELATIONS The state has an important role to play in industrial relations. it affects industrial relations directly or indirectly. it affects industrial relations directly through legislations and laws it makes while indirectly through the consultations of other agencies such as ACAS, ER, CROTUM etc. In India, the role played by the State is an important feature in the field of industrial relations and State intervention in this area has Prof. Amit Kumar

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assumed a more direct form. The State has enacted procedural as well as substantive laws to regulate industrial relations in the country. For example, in a developing economy like ours, work-stoppages to settle claims have more serious consequences than in a developed economy and similarly, a free market economy may leave the parties free to settle their relations through strikes and lockouts but in other systems varying degrees of State participation is required for building up sound industrial relations.

ROLE OF TRADE UNIONS IN MAINTAINING INDUSTRIAL RELATIONS The trade unions have a crucial role to play in maintaining smooth industrial relations. It is true that the unions have to protect and safeguard the interests of the workers through collective bargaining. But at the same time they have equal responsibility to see that the organization do not suffer on account of their direct actions such as strikes, even for trivial reasons. They must be able to understand and appreciate the problems of managements and must adopt a policy of ‘give and take’ while bargaining with the managements. Trade unions must understand that both management and workers depend on each other and any sort of problem on either side will do harm to both sides. Besides public are also affected, particularly when the institutions involved are public utility organizations.

INTERNALTIONAL LABOUR ORGANISATION ORGANISATION IN IR IR The International Labour Organization (ILO) is a United Nations agency dealing with labour issues, particularly international labour standards and decent work for all. Almost all (185 out of 193) UN members are part of the ILO. As of 2012, 185 countries in the UN are members of the ILO. The ILO was established in April 11, 1919. Its First assembly took place in Washington on April 29, 1919. In 1969, the organization received the Nobel Peace Prize for improving peace among classes, pursuing  justice for workers, and and providing technical assistance to developing nations. Juan Somavía has been the ILO's director-general since 1999. Guy Ryder was elected as the next director-general and begins his term in October 2012.

OBJECTIVES OF ILO There are followings: 1. Full employment and the rising of standards of living. 2. The employment of workers in the occupation in which they can have the satisfaction of giving the fullest measure of their skill and make their contribution to the common well being. 3. The provision, as measure to the attachment of this end and under adequate guarantees for all concerned, of facilities for training and the transfer of labour including migration for employment and settlement. 4. Policies in regard to wages and bonus and other conditions of work calculated to ensure a just share of the fruits of progress to all and a minimum living wage to all employed and in need of  protection. 5. The effective recognition for the right of collective bargaining, the cooperation of management and labour in cont. improvement of productive efficiency and the collaboration of workers and employers in social and economic measures. 6. The extension of social security measures to provide a basic income to all in need of such protection and comprehensive medical care. 7. Adequate protection by the life and health of workers in all occupations. 8. Provision for child welfare and maternity protection. 9. The provision for adequate nutrition, housing and facilities for recreation and culture. 10. The assurance of educational and vocational opportunity. Prof. Amit Kumar

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INTERNATIONAL LABOUR STANDARDS AND INDIA The approach of India with regard to International Labour Standards has always been positive. The ILO instruments have provided guidelines and useful framework for the evolution of legislative and administrative measures for the protection and advancement of the interest of labour. To that extent the influence of ILO Conventions as a standard for reference for labour legislation and practices in India, rather than as a legally binding norm, has been significant. Ratification of a Convention imposes legally binding obligations on the country concerned and, therefore, India has been careful in ratifying Conventions. It has always been the practice in India that we ratify a Convention when we are fully satisfied that our laws and practices are in conformity with the relevant ILO Convention. It is now considered that a better course of  action is to proceed with progressive implementation of the standards, leave the formal ratification for consideration at a later stage when it becomes practicable. We have so far ratified 39 Conventions of the ILO, which is much better than the position obtaining in many other countries. Even whe re for special reasons, India may not be in a position to ratify a Convention, India has generally voted in favour of the Conventions reserving its position as far as its future ratification is concerned. Core Conventions of the ILO: - The eight Core Conventions of the ILO (also called fundamental/human rights conventions) are: • • • • • • • • •

Forced Labour Convention (No. 29) Abolition of Forced Labour Convention (No.105) Equal Remuneration Convention (No.100) Discrimination (Employment Occupation) Convention (No.111) (The above four have been ratified by India). Freedom of Association and Protection of Right to Organized Convention (No.87) Right to Organize and Collective Bargaining Convention (No.98) Minimum Age Convention (No.138) Worst forms of Child Labour Convention (No.182)

Consequent to the World Summit for Social Development in 19 95, the above-mentioned Conventions (Sl.No.1 to 7) were categorized as the Fundamental Human Rights Conventions or Core Conventions by the ILO. Later on, Convention No.182 (Sl.No.8) was added to the list. As per the Declaration on Fundamental Principles and Rights at Work and its Follow-up, each Member State of the ILO is expected to give effect to the principles contained in the Core Conventions of the ILO, irrespective of whether or not the Core Conventions have been ratified by them. Under the reporting procedure of the ILO, detailed reports are due from the member States that have ratified the priority Conventions and the Core Conventions every two years. Under the Follow-up to the ILO Declaration on Fundamental Principles and Rights at Work, a report is to be made by each Member State every year on those Core Conventions that it has not yet ratified.

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