Unit-2

▪Collective Bargaining: Significance, types & procedure of

Collective bargaining
▪Discipline: The Industrial Employment (Standing Orders)
Act 1961, Misconduct, Disciplinary Action, Types of
Punishments, Code of Discipline, Domestic Enquiry,
▪ Grievance Handling in IR: Grievance Settlement Procedure,
Industrial Disputes, Preventive & Settlement Machinery in
India. Employee Participation and Empowerment:
Objectives,
▪Employee Participation, Advantages of Employee
Participation, Employee Participation in India, Methods of
Participation, Employee Empowerment. Case Studies
 Collective Bargaining:
• Collective bargaining is a procedure by which the terms
and conditions of workers are regulated by agreements
between their bargaining agents and employers.
•
• The basic objective of collective bargaining is to arrive at
an agreement on wages and other conditions of
employment.
• The underlying idea of collective bargaining is that the
employer and employee relations should not be decided
unilaterally or with the intervention of any third party.

• Both parties must reconcile their differences voluntarily

through negotiation, yielding some concessions and
making sacrifices in the process.
 Approaches in Industrial Bargaining
• Industrial bargaining has three approaches: Unilateral, Bilateral
Tripartite
1. Unilateral Approach:
In unilateral approach the employer alone decides the terms and
conditions of employment. This is known individual bargaining.
2. Bilateral Approach:
In bilateral approach, the employer and worker negotiate with
each other. When workers association and their representatives
negotiate with one another, it is known as bilateral collective
bargaining.
3. Tripartite Approach:
In tripartite approach besides the two main parties, a third party
also intervenes to facilitate settlement.
 Nature of Collective Bargaining:

• A power game.

• A rational process where conflicting interest are

reconciled.

• A forum where unions go to collect and

management to bargain.
 Features:
1. Collective
2. Flexible
3. Voluntary
4. Strength
5. Continuous
6. Dynamic
7. Power Relationship
8. Representation
 Objectives:
1. To select disputes relating to the wages and working
conditions.
2. To protect the interest of workers through collective
action.
3. To resolve the differences between workers and
management through voluntary negotiations and arrive at
a consensus.
4. To avoid third party interventions in matter relating to
employment.
 Importance:

• Collective bargaining creates a normative system for

regulating industrial conflicts.

• Collective bargaining does not prevent industrial conflicts

but provides a forum for discussion.

• Collective bargaining protects the individual employee

against the arbitrary actions of management.
 Issues:
1. Working condition and wages
2. Work norms
3. Incentive payment
4. Job security
5. Change in technology
6. Work tools, techniques and practices
7. Staff transfers and promotions
8. Grievances
9. Disciplinary matters
10. Health and safety
 Types of Bargaining:

• Four distinct types of barraging have evolved

over time:
• 1. Conjunctive
• 2. Cooperative
• 3. Productivity
• 4. Composite
• 1. Conjunctive/Distributive Bargaining:
In this type of bargaining, the employers and employees try to
maximize their respective gains. Issues like wages, bonus etc.
are negotiated under conjunctive bargaining.
• It operates under zero some conditions i.e. “my gain is your
loss and your gain is my loss”. Conjunctive bargaining is also
called distributive bargaining.

• 2. Co-operative/Integrative Bargaining:
In co-operative bargaining, both parties realize the importance
of surviving in difficult times and decides to negotiate the
terms of employment with mutual understanding.
Labour can sacrifice something and may accept wage cuts and
management may also agree to sacrifice something for the
survival of the firm. Co-operative bargaining is resorted mainly
in the times of recession.
• 3. Productivity Bargaining:

• It is done by the management. workers are often given the

incentives and bonus for the increased productivity.

• The workers get encouraged and work very hard to the standard
level of productivity to gain these benefits.

• This type of bargaining beneficial for both employer and

employee as both enjoy the benefits in the form of increased
production and the increased pay respectively.
4.Composite Bargaining: In this type of collective
bargaining, along with the demand for increased wages, the
workers also express their concern over the working
conditions, recruitment and training policies, environmental
issues, mergers and amalgamations with other firms, pricing
policies, etc. with the intention to safeguard their interest
and protect the dilution of their powers.

Thus, the purpose of the Collective Bargaining is to reach a

mutual agreement between the employee and the employer
with respect to the employment terms and enjoy a long term
relationship with each other.
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 labour practice
7. A problem solving approach rather than a fire fighting
approach.
 The Process of Collective Bargaining:
• The whole process of collective bargaining takes place
mainly in two stages:
• Negotiations
• Implementation
Briefly the following steps are involved in collective
bargaining process:
• a. Identification of the problem
• b. Preparing for negotiations
• c. Negotiation of agreement
• d. Implementation of contract
 a. Identification of the Problem:
The nature of the problem influences the whole process
whether the problem is very important or the problem is a
minor have to be identified.
As such it is important for both the parties to be clear about
the problem before entering into negotiations.

• b. Preparing Negotiations:
When it becomes necessary to solve the problem through
the collective bargaining process, both parties prepare
themselves for negotiations.
The preparation starts with the selection of representatives.
After selection they should be educated about the complete
problem and its pros and cons.
Their power and authority during negotiations also should
be clearly spelt out.
c. Negotiation Agreement:
Usually there will be a chief negotiator who is from the
management side. He or she directs and presides over the
process. The chief negotiator presents the problem its
intensity and nature and the views of both parties. Then he
or she allows both parties to present their views. When a
solution is reached it is put on paper. Both parties signed
the agreement.
d. Implementation of Contract:
The agreement can be made on a temporary basis. The
union may always demand the renewal of such agreements
which benefit the workers. Management may reject the
demand taking the financial position of the organization
into consideration.
 Misconduct and Discipline
• Misconduct:
Unacceptable or improper behaviour, by an employee or
professional person.

• Discipline:
Discipline is a procedure that correct or punishes a
subordinate because a rule of procedure has been violated.
Discipline is the regulation of human activities to produce a
controlled performance. The real purpose of discipline is to
encourage employees to behave sensibly and safely.
 Purpose of Discipline:
• The purpose of discipline is to encourage employees to
behave sensibly at work, where being sensible is defined as
adhering to rule and regulations. Following are the some
purpose and objective of disciplinary action:
1. To enforce rules and regulations
2. To punish the offender
3. To serve as example to other to strictly follow rules
4. To ensure the smooth running of the organization
5. To increase working efficiency
6. To maintain industrial peace
7. To improve working relations and tolerance
8. To develop a working culture this improves performance
 Types of Punishment:
• Types of Punishment:
The types of discipline that may occur are as follows in
general order of increasing seriousness:

• Oral Reprimand: An oral statement by the supervisor to a

subordinate employee, usually pointing out an
unsatisfactory element of job performance, and is intended
to be corrective or cautionary.
• An oral reprimand informally defines the area of needed
improvement, sets up goals for the achievement of
improvement, and informs the employee that failure to
improve may result in more serious actions.
• Written Reprimand: This is the first level of formal
discipline. The written reprimand is issued by the
supervisor with approval of the department head and
copies are sent to the city manager and director. The
director’s copy shall be placed in the employee’s
personnel file.

• Salary Reduction: A department head may recommend a

salary decrease of one or more steps within the limits of
the pay range established for a class as a disciplinary
measure, for a period of at least one pay period and not
more than one year.
• Disciplinary Demotion: A department head may recommend the
movement of an employee from one class to a class of work having
lower responsibilities, skills, performance requirements and
maximum rate of pay. However, no employee shall be demoted to a
position for which the minimum qualifications are not possessed.

• Suspension: A department head may suspend an employee without

pay at any time. Suspensions without pay shall not exceed 30
consecutive working days or 15 shifts.
• Leave Reduction: A department head may reduce an employee’s
vacation, compensatory time and/or holiday time as a method of
disciplinary action. Absent employee approval, the department head
may choose another form of discipline to supplement the leave
reduction.
• Dismissal: A department head may recommend the dismissal of a
regular employee.
 Code of Discipline:

• A code of discipline has been laid down to maintain

harmonious relations and promote industrial peace.

• It applies to both public and private sector enterprises and

aims to secure the settlement of disputes and grievances
by a mutually agreed procedure.

• This code was formulated after serious discussion and

deliberations on the recommendations of the Indian
Labour Conference held in New Delhi July 1957.
 The Code is Applicable to:
1. All Central Organizations of Employers and workers,
(except those under Ministry of Defense, Railways,
Ports and Docks.)
2. Insurance industry.
3. The State Bank of India.
4. The Reserve Bank of India.
 Basic Objectives of the Code of Discipline:
• The Basic Objectives of Code of Discipline are to:
1. Maintain peace and order in industry.
2. Facilitate a free growth of trade unions
3. Promote constructive criticism at all levels of management
and employment
4. Eliminate all forms of coercion, intimidation and violations
of rules and regulations governing industrial relations.
5. Avoid stoppage of work in industry.
6. Avoiding litigations
• Provisions in the Code of Discipline:
• All central organizations of employees and workers have
voluntarily accepted the ‘Code of Discipline’ applicable
in Indian Industry. This code of Discipline applied both to
the public as well as the Private sector.

• According to the Code of Discipline, it is Mandatory:

(i) To lay down a regular grievance procedure in every
organization.

(ii) Each grievance should be promptly redressed by legal

means and through the normal channels. There should be
no direct, arbitrary or unilateral action on either party.
(iii) To avoid litigation, lock-outs and strikes (sit-down and
stay in) intimidation, victimization or delaying tactics
should be avoided.
(iv) Unfair practices like negligence of duty, damage to
property and physical stress should be discouraged.
(v) Management should give workers the freedom to form
trade unions.
(vi) Management should promptly implement awards,
agreements, settlements and policy decisions.
(vii) The trade unions should function in a democratic fashion
and discourage violence, casteism, communalism,
provincialism, intimidation or personal deformation in
inter-union dealings.
 Domestic Enquiry:
• A domestic inquiry, in the context of human resource
management, is a search for truth, facts,
or circumstances concerning charges alleged by
the employer against its employee.
• It is an inquiry created by the management against its own
employee against who allegedly committed certain acts
of misconduct.
• The process begins after the issuance of the so-called
"show cause" letter to the employee accused of
committing the infraction.
• Once the response to the letter was deemed unsatisfactory,
the domestic inquiry can then commence.
 Grievance:
• A grievance is a formal complaint that is raised by an
employee towards an employer within the workplace. There
are many reasons as to why a grievance can be raised, and
also many ways to go about dealing with such a scenario.

• Grievance means any type of dissatisfaction or

discontentment’s arising out of factors related to an
employee’s job which he thinks are unfair. A grievance arises
when an employee feels that something has happened or is
happening to him which he thinks is unfair, unjust or
inequitable.
 In an organization, a grievance may arise due to several
factors such as:

• Violation of management’s responsibility such as poor

working conditions
• Violation of company’s rules and regulations
• Violation of labor laws
• Violation of natural rules of justice such as unfair
treatment in promotion, etc.
• Various sources of grievance may be categorized under
three heads: (i) management policies, (ii) working
conditions, and (iii) personal factors
1. Grievance resulting from management policies
include:
• Wage rates
• Leave policy
• Overtime
• Lack of career planning
• Role conflicts
• Lack of regard for collective agreement
• Disparity between skill of worker and job responsibility
2. Grievance resulting from working conditions
include:
• Poor safety and bad physical conditions
• Unavailability of tools and proper machinery
• Negative approach to discipline
• Unrealistic targets
3. Grievance resulting from inter-personal factors
include
• Poor relationships with team members
• Autocratic leadership style of superiors
• Poor relations with seniors
• Conflicts with peers and colleagues

• It is necessary to distinguish a complaint from grievance.

A complaint is an indication of employee dissatisfaction
that has not been submitted in written. On the other hand,
a grievance is a complaint that has been put in writing and
made formal.
 Grievance Settlement Procedure:
• Grievance procedure is a Step by step process an
employee must follow to get his or her complaint
addressed satisfactorily. In this process, the formal
(written) complaint moves from one level of authority (of
the firm and the union) to the next higher level.

Grievance procedure is a formal communication between

an employee and the management designed for the
settlement of a grievance. The grievance procedures differ
from organization to organization.
• Open door policy
• Step-ladder policy
1. Open door policy:
Under this policy, the aggrieved employee is free to meet
the top executives of the organization and get his
grievances redressed.
Such a policy works well only in small organizations.
However, in bigger organizations, top management
executives are usually busy with other concerned matters
of the company.
Moreover, it is believed that open door policy is suitable
for executives; operational employees may feel shy to go
to top management.
2. Step ladder policy:
• Under this policy, the aggrieved employee has to follow a
step by step procedure for getting his grievance redressed.
In this procedure, whenever an employee is confronted
with a grievance, he presents his problem to his
immediate supervisor.
• If the employee is not satisfied with superior’s decision,
then he discusses his grievance with the departmental
head.
• The departmental head discusses the problem with joint
grievance committees to find a solution. However, if the
committee also fails to redress the grievance, then it may
be referred to chief executive.
• If the chief executive also fails to redress the grievance,
then such a grievance is referred to voluntary arbitration
where the award of arbitrator is binding on both the
parties.
 How to handle an employee grievance:

• Establish whether the grievance needs to be resolved

formally or informally.
• Choose an appropriate manager to deal with the
grievance.
• Carry out a full investigation and gather all relevant
evidence, sending it to the employee in advance of the
meeting.
• Arrange the grievance meeting, inviting the employee and
reminding them of their statutory right to be
accompanied.
• Make sure accurate notes are taken throughout by a
person who is not involved in the case.
• Give the employee the opportunity to explain the details
of their grievance and what they would like the
outcome to be.
• Adjourn the meeting consider the evidence before
making a decision.
• Inform the employee in writing of the decision,
explaining how and why the decision was reached.
• Notify the employee of their right to appeal against the
outcome of the grievance procedure.
Steps in Grievance Handling Procedure:

• At any stage of the grievance machinery, the dispute must

be handled by some members of the management.

• In grievance redressed, responsibility lies largely with the

management. And, grievances should be settled promptly
at the first stage itself.

• The following steps will provide a measure of guidance to

the manager dealing with grievances.
i. Acknowledge Dissatisfaction:
Managerial/supervisory attitude to grievances is
important. They should focus attention on grievances, not
turn away from them. Ignorance is not bliss, it is the bane
of industrial conflict. Condescending attitude on the part
of supervisors and managers would aggravate the
problem.

ii. Define the Problem:

Instead of trying to deal with a vague feeling of
discontent, the problem should be defined properly.
Sometime the wrong complaint is given. By effective
listening, one can make sure that a true complaint is
voiced.
iii. Get the Facts:
Facts should be separated from fiction. Though grievances
result in hurt feelings, the effort should be to get the facts
behind the feelings. There is need for a proper record of
each grievance.

iv. Analyze and Decide:

Decisions on each of the grievances will have a precedent
effect. While no time should be lost in dealing with them, it
is no excuse to be slip-shod about it. Grievance settlements
provide opportunities for managements to correct
themselves, and thereby come closer to the employees.
v. Follow up:
Decisions taken must be followed up earnestly. They
should be promptly communicated to the employee
concerned.
If a decision is favorable to the employee, his immediate
boss should have the privilege of communicating the
same.
 Industrial Disputes
• In common parlance, dispute means difference or
disagreement of strife over some issues between the parties.
• As regards industrial dispute, since its settlement proceeds as
per the legal provisions contained in the ‘Industrial Disputes’
Act, 1947, hence it seems pertinent to study the concept of
industrial disputes from a legalistic angle.

• According to Section 2 (k) of the Industrial Disputes Act,

1947, the term ‘industrial dispute’ means “any dispute or
difference between employers and employers or between
employers and workmen, or between workmen and
workmen, which is connected with the employment or non-
employment or the terms of employment and conditions of
employment of any person”.
 Forms of Industrial Disputes:
• The industrial disputes are manifested in the following
forms:
• Strikes: Strike is the most important form of industrial
disputes. A strike is a spontaneous and concerted withdrawal
of labour from production.
• The Industrial Disputes Act, 1947 defines a strike as
“suspension or cessation of work by a group of persons
employed in any industry, acting in combination or a
concerted refusal or a refusal under a common
understanding of any number of persons who are or have
been so employed to continue to work or accept
employment”.
• According to Patterson “Strikes constitute militant and
organized protest against existing industrial relations. They
are symptoms of industrial unrest in the same way that boils
symptoms of disordered system”.

• Depending on the purpose, strikes may be two types:

primary strikes and secondary strikes.

• (i) Primary Strikes:

• These strikes are generally aimed against the employers with
whom the dispute exists. They may include the form of a
stay-away strike, stay-in, sit-down, pen-down or tools-
down, go-slow and work-to-rule, token or protest strike, cat-
call strike, picketing or boycott.
 (ii) Secondary Strikes:
These strikes are also called the ‘sympathy strikes’. In this
form of strike, the pressure is applied not against the
employer with whom the workmen have a dispute, but
against the third person who has good trade relations with
the employer.

• Lock-Outs:
Lock-out is the counter-part of strikes. While a ‘strike’ is an
organised or concerted withdrawal of the supply of labour,
‘lock-out’ is withholding demand for it. Lock-out is the
weapon available to the employer to shut-down the place of
work till the workers agree to resume work on the
conditions laid down by the employer.
• The Industrial Disputes Act, 1947 defined lock-out as “the
temporary shutting down or closing of a place of business
by the employer”.

• Gherao:
Gherao means to surround. It is a physical blockade of
managers by encirclement aimed at preventing the egress
and ingress from and to a particular office or place.
This can happen outside the organizational premises too.
The managers / persons who are gheraoed are not allowed to
move for a long time.
 Types of Industrial Disputes:
• The ILO’ has classified the industrial disputes into two
main types.
• They are:
• 1. Interest Disputes
• 2. Grievance or Right Disputes.
They are discussed one by one:
1. Interest Disputes:
These disputes are also called ‘economic disputes’. Such
types of disputes arise out of terms and conditions of
employment either out of the claims made by the employees
or offers given by the employers.

Such demands or offers are generally made with a view to

arrive at a collective agreement.

Examples of interest disputes are lay-offs, claims for wages

and bonus, job security, fringe benefits, etc.
 2. Grievance or Right Disputes:
• As the name itself suggests, grievance or right disputes
arise out of application or interpretation of existing
agreements or contracts between the employees and the
management.

• They relate either to individual worker or a group of

workers in the same group.

• Industrial disputes are organized protests against existing

terms of employment or conditions of work.
• According to the Industrial Dispute Act, 1947, an Industrial
dispute means

• “Any dispute or difference between employer and employer

or between employer and workmen or between workmen
and workmen, which is connected with the employment or
non-employment or terms of employment or with the
conditions of labour of any person”.

• In practice, Industrial dispute mainly refers to the strife

between employers and their employees. An Industrial
dispute is not a personal dispute of any one person. It
generally affects a large number of workers’ community
having common interests.
• Prevention and Settlement:
• Prevention of Industrial disputes is a pro-active
approach in which an organization undertakes various
actions through which the occurrence of Industrial
disputes is prevented. Like the old saying goes,
“prevention is better than cure”.
• Prevention:
• 1. Model Standing Orders:

• Standing orders define and regulate terms and conditions of

employment and bring about uniformity in them.

• They also specify the duties and responsibilities of both

employers and employees thereby regulating standards of
their behaviour.
• Under Industrial Dispute Act, 1947, every factory
employing 100 workers or more is required to frame
standing orders in consultation with the workers. These
orders must be certified and displayed properly by the
employer for the information of the workers.
 2. Code of Industrial discipline: The code of Industrial
discipline defines duties and responsibilities of employers
and workers. The objectives of the code are:
• To secure settlement of disputes by negotiation, conciliation
and voluntary arbitration.
• To eliminate all forms of coercion, intimidation and
violence.
• To maintain discipline in the industry.
• To avoid work stoppage.
• To promote constructive co-operation between the parties
concerned at all levels.
• 3. Works Committee: Every industrial undertaking
employing 100 or more workers is under an obligation to
set up a works committee consisting equal number of
representatives of employer and employees. The main
purpose of such committees is to promote industrial
relations. According to Indian Labour Conference work
committees are concerned with:-
• Administration of welfare & fine funds.
• Educational and recreational activities.
• Safety and accident prevention
• Occupational diseases and protective equipment.
• Conditions of work such as ventilation, lightening,
temperature & sanitation including latrines and urinals.
• Amenities such as drinking water canteen, dining rooms,
medical & health services.
• The following items are excluded from the preview of the
work committees.
• Wages and allowances
• Profit sharing and bonus
• Programs of planning and development
• Retirement benefits
• PF and gratuity
• Housing and transport schemes
• Incentive schemes
• Retirement and layoff
• 4. Joint Management Councils: Just to make a start in
labour participation in management, the government
suggested in its Industrial Resolution 1956 to set up joint
management councils. It consists of equal numbers of
workers and employers (minimum 6 & maximum 12)
decisions of the JMC should be unanimous and should be
implemented without any delay. JMC members should be
given proper training. JMC should look after 3 main areas:-
• information sharing
• consultative
• administrative
• 5. Joint Councils: Joint Councils are set up for the whole
unit and deals with matters relating optimum production and
efficiency and the fixation of productivity norms for man
and machine for the as a whole. in every industrial unit
employing 500 and more workers there should be a Joint
Council for the whole unit.
• Features
• Members of the council must be actually engaged in the
unit.
• The chief executive of the unit will be the chairman of the
council and vice chairman will be nominated by worker
members.
• Term of the council will be two years.
• JC shall meet at once in a quarter.
• Decision of the council will be based on consensus and not
on voting.

• Functions:
• Optimum use of raw materials and quality of finished
products
• Optimum production, efficiency and function of
productivity norms of man and machine as a whole.
• Preparation of schedules of working hours and of holidays.
• Adequate facilitates for training.
• Rewards for valuable and creative suggestions received
from workers.
• 7. Collective Bargaining: Collective Bargaining is a process
in which the representatives of the employer and of the
employees meet and attempt to negotiate a contract
governing the employer-employee-union relationships.
Collective Bargaining involves discussion and negotiation
between two groups as to the terms and conditions of
employment.

• 8. Labour welfare officer: The factories Act, 1948 provides

for the appointment of a labour welfare officer in every
factory employing 500 or more workers. The officer looks
after all facilities in the factory provided for the health, safety
and welfare of workers.
• He maintains liaison with both the employer and the
workers, thereby serving as a communication link and
contributing towards healthy industrial relations through
proper administration of standing orders, grievance
procedure etc.

• 9. Tripartite bodies: Several tripartite bodies have been

constituted at central, national and state levels. The India
labour conference, standing labour committees, Wage
Boards and Industries Committees operate at the central
level. At the state level, State Labour Advisory Boards have
been set up. All these bodies play an important role in
reaching agreements on various labour-related issues. The
recommendations given by these bodies are however
advisory in nature and not statutory.
Machinery for settlement of Industrial Disputes:
• 1. Conciliation:
• Conciliation refers to the process by which representatives of
employees and employers are brought together before a third
party with a view to discuss, reconcile their differences and
arrive at an agreement through mutual consent.

• The third party acts as a facilitator in this process.

Conciliation is a type of state intervention in settling the
Industrial Disputes.

• The Industrial Disputes Act empowers the Central & State

governments to appoint conciliation officers and a Board of
Conciliation as and when the situation demands.
• 2. Arbitration: A process in which a neutral third party
listens to the disputing parties, gathers information about the
dispute, and then takes a decision which is binding on both
the parties.
• The conciliator simply assists the parties to come to a
settlement, whereas the arbitrator listens to both the parties
and then gives his judgment.

• 3. Adjudication: Adjudication is the ultimate legal remedy

for settlement of Industrial Dispute. Adjudication means
intervention of a legal authority appointed by the
government to make a settlement which is binding on both
the parties.
• In other words adjudication means a mandatory
settlement of an Industrial dispute by a labour court or a
tribunal. For the purpose of adjudication, the Industrial
Disputes Act provides a 3-tier machinery:
• Labour court
• Industrial Tribunal
• National Tribunal
Employee Participation