CHAPTER 4

INDUSTRIAL RELATIONS

1. Industrial relations
The term ‘industrial relations’ refers to relationships between management and labor or
among employees and their organizations that characterize or grow out of employment.
Theoretically speaking, there are two parties in the ‘employment’ relationship-labor and
management. Both parties need to work in a spirit of cooperation, adjustment and
accommodation. In their own mutual interest certain rules for co-existence are formed and
adhered to.

The term industrial relations have been defined by different authors in different ways. Dale
Yoder defined it as “a relationships between management and employees or among
employees and their organizations that characterize and grow out of employment”.

According to R A Lester, industrial relations, “involve attempts to have workable solutions

between conflicting objectives and values, between incentive and economic security,
between discipline and industrial democracy, between authority and freedom and between
bargaining and cooperation.

One of the most comprehensive definitions which views industrial relations from the
perspective of human relationships is by J. Henry Richardson: "Industrial relations is an
art, the art of living together for purposes of production. The parties while working together
learn this art by acquiring the skills of adjustment.

Let us now discuss the features of Industrial Relations. A few notable features pertaining to
industrial relations are as under:
1) Industrial relations are born out of employment relationship in an industrial setting.
Without the existence of two parties i.e. labour and management, this relationship
cannot exist. It is the industry, which provides the environment for industrial relations.
(II) Industrial relations are characterized by both conflict and co-operation. So the focus of
 industrial relations is on the study of the attitudes, relationships, practices and
procedures developed by the contending parties to resolve or at least minimize
conflicts.
(III) As the labour and management do not operate in isolation but are a part of the large
system, so the study of industrial relations also includes vital environmental issues
like technology of the workplace, country's socio-economic and political environment,
nation's labour policy, attitude of trade unions, workers and employers.
(IV) Industrial relations also involve the study of conditions conducive to the labour,
management co-operation as well as the practices and procedures required to elicit
the desired co-operation from both the parties.
(V) Industrial relations also study the laws, rules, regulations, agreements, awards of court,
customs and traditions, as well as policy framework laid down by the government for
eliciting co-operation between labour and management. Besides this, it makes an in-
depth analysis of the intervening patterns of the executive and judiciary in the
regulation of labour-management relations.

According to the ILO, “industrial relations deal with either the relationships between the
state and the employers and the workers’ organization or the relation between the
occupational organizations themselves”. The ILO uses the expression to denote such
matters as “freedom of association and the protection of the right, to organize, the
application of the principles of the right to organize and the right of collective bargaining,
collective agreements, conciliation and arbitration and machinery for cooperation between
the authorities and the occupational organizations at various levels of the economy.

The scope industrial relations:

 Promotion and development of healthy labor- management relations;
 Maintenance of industrial peace and avoidance of industrial strife and
 Development of industrial democracy.

Industrial relations is concerned with the relationship between management and workers
and the role of regulatory mechanism in resolving any industrial dispute. It is concerned with
the systems, rules and procedures used by unions and employers to determine the reward
for effort and other conditions of employment, to protect the interests of the employed and
their employers, and to regulate the ways in which employers treat their employees.
Industrial relations covers the following areas:
 Collective bargaining
 Role of management, unions and government
 Machinery for resolution of industrial disputes
 Individual grievance and disciplinary policy and practice
 Labor legislation
 Industrial relations training
The major parties to Industrial Relations are the employees, employee representatives,
employers, associations of employers, government and courts and tribunals.

2. Factors influencing Industrial relations

Industrial relations are influenced by various factors, viz., institutional factors, economic
factors and technological factors.
 Institutional factors: These factors include government policy, labor legislation,
collective agreements, employee courts, employers’ federations, social
institutions like community, caste, joint family, creed, system of beliefs, attitudes
of works, system of power, status, etc.
 Economic factors: These factors include economic organizations like capitalist,
communist, mixed, etc, the structure of labor force, demand for and supply of
labor force.
 Technological factors: These factors include mechanization, automation,
rationalization, computerization, etc.

3. Objectives of industrial relations

The fundamental objective of industrial relations is, to maintain sound relations between
employees and employers. The other objectives can be drawn from this objective. They are:
 To enhance the economic status of the worker;
 To regulate the production by minimizing industrial conflicts through state control;
 to provide an opportunity to the workers to have a say in the management and
decision-making;
 to improve workers’ strength with a view to solve their problems through mutual
negotiations and consultation with the management;
 to encourage and develop trade unions in order to improve the worker’ collective
strength;
  to avoid industrial conflict and their consequences; and
 to extend and maintain industrial democracy.

Much of employee relations is designed to send the message that the organization is a
concerned institution that will help, protect, assist and deal fairly with all its members. The
typical decisions that managers face in designing employee relations program include:
 Communication: How best can we convey our philosophy to employees and solicit
their opinions/ suggestions on work issues?
An employee handbook is a necessary part of communicating an employee relations
program. The handbook sets out the rules and policies within which employees and
managers must operate.
 Protection: Are there aspects of the workplace that threaten the well being of
employees?
Every manager and employee wants a healthy and safe work environment. The
issue confronting contemporary organizations is, at what cost?
 Assistance: How shall we respond to special needs of specific employees?
 Cooperation: To what extent should decision making and control be shared?
The highest degree of potential employee involvement in organizational decisions
occurs when workers are also owners.
 Discipline and conflict: How shall we deal with it?
Labor relations deals with unionized workers while employee relations deals with
non-union workers.

4. 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. Both the employer and employees may begin the process with divergent
views but ultimately try to reach a compromise, making some sacrifices. As soon as a
compromise is reached, the terms of agreement are put into operation.

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 negotiations, yielding some concessions
and making sacrifices in the process. Both should bargain from a position of strength; there
should be no attempt to exploit the weaknesses or vulnerability of one party. Both parties
have, more or less, realized the importance of peaceful co-existence for their mutual benefit
and continued progress.

Collective bargaining is the process by which union representatives for employees in a

bargaining unit negotiate employment conditions for the entire bargaining unit. It is the
process whereby representatives of management and workers negotiate over wages,
hours, grievance procedure and other terms and conditions of employment. It is a give-and
take process between representatives of two organizations for the benefit of both.
The attitude of management toward unions is one major factor in determining the collective
bargaining relationship. This attitude plays a crucial role in management's strategic
approach to collective bargaining.

Collective bargaining refers to the negotiation, administration and interpretation of a written

agreement between two parties that covers a specific period of time. This agreement or
contract lays out in specific terms the conditions of employment; that is, what is expected of
employees and what limits there are in management authority

The objective of collective bargaining is to agree on an acceptable contract- acceptable to

management, union representatives and the union membership. Four issues appear
consistently throughout all labor contracts: Wages; Hours; Terms and conditions of
employment and Grievance procedures.

5. Process of collective Bargaining

The collective bargaining process is made up of a number of stages. Over time, each
situation develops sight modifications, which are necessary for effective bargaining.
5.1. Preparation
Both labor and management representatives spend much time preparing for
negotiations. If a previous contract is expiring, the grievances filed under the old
contract will be reviewed to identify contract language changes to be negotiated.
Employer and industry data concerning wages, benefits, working conditions,
management and union rights, productivity and absenteeism are gathered.

Once the data are analyzed, each side identifies what its priorities are and what
 strategies and tactics it will use to obtain what it wants. Each tries to allow itself
some flexibility in order to trade off less important demands for more critical ones.

5.2. Initial Demands

Typical bargaining includes initial proposals of expectations by both sides. The
amount of calmness exhibited sets the tone for future negotiations between the
parties.

5.3. Continuing Negotiations

After opening positions have been taken, each side attempts to determine what the
other values highly so the best bargain can be struck. During negotiations, both
management and union must evaluate cost proposals concerning changes in wages,
benefits, and other economic items quickly and accurately.

Both employer and employee bargaining representatives negotiate in good faith. In

good faith negotiations, the parties agree to send negotiators who can bargain and
make decisions, rather than people who do not have the authority to commit either
group to a decision.

5.4. Settlement and contract Agreement

After an initial agreement has been made, the two sides usually return to their
respective constituencies to determine if what they have informally agreed on is
acceptable.

A particularly crucial stage is ratification of the labor agreement, which occurs when
union members vote to accept the terms of a negotiated agreement. Prior to the
ratification vote, the union negotiating team explains the agreement to the union
members and presents it for a vote. If approval is voted, the agreement is then
formalized into a contract. If the contract does not match the perceptions and
interests of those it covers, then the likelihood of ratification decreases.

6. Bargaining Impasse

Regardless of the structure of the bargaining process, labor and management do not
always reach agreement on the issues. If impasse occurs, then the disputes can be taken to
conciliation, mediation or arbitration.
 6.1. Conciliation and mediation
In conciliation or mediation, an outside party attempts to help two deadlocked parties
continue negotiations and arrive at a solution. In conciliation, the third party attempts
to keep union and management negotiators talking so that they can reach a
voluntary settlement but makes no proposals for solutions.

In mediation, the third party assists the negotiators in their discussion and also
suggests settlement proposals. In neither conciliation nor mediation does the third
party attempt to impose a solution.

6.2. Arbitration
The process of arbitration is a means of deciding a dispute in which negotiating
parties submit the dispute to a third party to make a decision. Arbitration is used to
solve bargaining impasses primarily in the public sector.

7. Trade union
Trade unions are voluntary organizations of workers formed to promote and protect their
interest through collective action. It is an organization of workers, acting collectively,
seeking to promote and protect its mutual interests through collective bargaining.

The reasons individuals join unions are as divers as the people themselves. The most
common reasons are:
a) Higher wages and benefits
There are power and strength in numbers. As a result, unions sometimes are
able to obtain higher wages and benefit packages for their members than
employees would be able to negotiate individually.

b) Greater job security

Unions provide its members with a sense of independence from management’s
power to arbitrarily hire, promote, or fire. The collective bargaining contract will
stipulate rules that apply to all members, thus providing fairer and more uniform
treatment.
 c) Influence work rules
Where a union exists, workers are provided with an opportunity to participate in
determining the conditions under which they work, and an effective channel
through which they can protest conditions they believe are unfair.

d) Compulsory membership

8. Employee Discipline
Employee discipline may be considered as a force that promotes individuals or groups to
observe the rules, regulations and procedures.

Discipline is a form of training that enforces organizational rules. The goal of preventive
discipline is to heighten employee awareness of organizational policies and rules.
Knowledge of disciplinary actions may prevent violations. The emphasis on preventive
discipline is similar to the emphasis on preventing accidents.
Counseling by a supervisor in the work unit can have positive effects. Many times people
simply need to be made aware of rules.

8.1. Progressive discipline

Progressive discipline incorporates a sequence of steps into the shaping of employee
behaviors. It uses verbal and written reprimands and suspension before resorting to
dismissal. It suggests that actions to modify behaviour become progressively more severe
as the employee continues to show improper behavior. Progressive discipline procedures
include:
First offence verbal caution
Second offence written reprimands
Third offence suspension
Fourth offence demotion
Dismissal

8.2. Effective Discipline

Because of legal aspects, managers must understand discipline and know how to
administer it properly. Effective discipline should be aimed at the behavior, not at the
employee personality because the reason for discipline is to improve performance. The
manager administering discipline must consider the effect of actions taken by other
managers and of other actions taken in the past

Consistent discipline helps to set limits and informs people about what they can and cannot
do. Inconsistent discipline leads to confusion and uncertainty.

Effective discipline requires accurate written record keeping and written notification to the
employee. In many cases, the lack of written notification has been evidence for an
employee’s argument that he or she “did not know”. Also, effective discipline requires that
people know the rules. When people perceive discipline as unfair, it is often on the basis
that they did not realize they had broken a rule.

Additionally, effective discipline is immediate. The longer the time that transpires between
the offense and the disciplinary action, the less effective the discipline will be.

Finally, effective discipline is handled impersonally. Managers cannot make discipline an

enjoyable experience, but they can minimize the unpleasant effects some what by
presenting it impersonally and by focusing on behavior, not on the person.
Discharge: the final alternative
The final stage in the discipline process is termination. A manager may feel guilty when
dismissing an employee, and sometimes guilt is justified.

If an employee fails, it may be because the manager was not able to create an appropriate
working environment. Perhaps the employee was not adequately trained, or perhaps
management failed to establish effective policies. Managers are responsible for their
employees, and to an extent, they share the blame for failure.

Alternative dispute resolution

Alternatives to lawsuits in cases involving employee rights are being used with increasing
frequency. The most common of these alternative dispute resolution methods are
arbitration, peer review panels and mediation.

9. Grievance Management
Grievance is usually more formal in character than a complaint. A grievance is an alleged
misinterpretation, misapplication or violation of a provision in a union-management
agreement.

Grievances may be real or imaginary, valid or invalid, genuine and false. Broadly speaking
a complaint affecting one or more workers constitutes a grievance. It may relate to wages,
the mode of payment, payment of overtime, leave, interpretation of service agreements,
transfer, dismissal or discharge etc.

9.1. Definitions
Keith Davis defines: “Any real or imagined feeling of personal injustice which an employee
has concerning his employment relationship.”

As per Dale Yoder: “Grievance is a written complaint filed by an employee and claiming
unfair treatment.”

According to Flippo… “It is a type of discontent which must be expressed. A grievance is

usually more formal in character than a complaint.”

So, from the above we see that it is a type of discontent, which can be valid or ridiculous,
but to be a grievance in the organizational context it must involve an interpretation or
application of the provisions of labour contract.

9.2. Objectives of Grievance procedure

The main reasons for which a grievance procedure is required:
 It is a channel by which any aggrieved employee may present his grievance;
 It is a procedure to ensure systematic handling of grievance
 Now having discussed the objective what will be the Basic elements in any
grievance Procedure
 Existence of sound channel through which grievance may pass for redressal
 Procedure should be simple, definite and prompt
 Steps should be clearly defined

Management should be concerned with both complaints and grievances, because

complaints are good indicators of potential problems within the workforce. Also, unresolved
complaints may turn into grievances in a union environment.

9.3. Approaches to grievances

A formal grievance procedure sometimes leads management to conclude that the proper
way to handle grievances is to abide by the “letter of the law”. Such an approach can be
labeled the legalistic approach to resolution of grievances.
A much more realistic approach, the behavioural approach recognizes that a grievance may
be a symptom of an underlying problem that management should investigate and rectify. It
is important to consider the behavioural aspects of grievances in order to understand why
grievances are filed and how employees perceive them.

Regarding why grievances have been filled, research has found that union stewards rather
than employees tend to initiate grievances over job descriptions. Also, grievances over work
rules are the least likely ones to be settled informally without resort to the use of grievance
procedures

Management should recognize that a grievance is a behavioural expression of some

underlying problems. This statement does not mean that every grievance is symptomatic of
something radically wrong. Employees do file grievances over pretty matters as well as
over important concerns and management must be able to differentiate between the two.
However, to ignore a repeated problem by taking a legalistic approach to grievance
resolution is to miss much of what the grievance procedure can do for management.

9.4. Grievance Procedures

Grievance Procedures are formal communication channels designed to settle a grievance
as soon as possible after the problem arises. First-line supervisors are usually closest to a
problem. Grievance procedures can vary in the number of steps they include:
o Start: Formal expression of dissatisfaction by employee
o Step 1: Discussion of problem between employee and supervisor
o Step 2: Discussion of written grievance between union steward and
supervisor
o Step 3: Meeting between chief steward and supervisor’s manager
and /or HR manager
o Step 4: Meeting between union committee and unit plant manager or
industrial relations representative
o Step 5: Meeting between national union representative and company
executive or corporate industrial relations officer
o Step 6: Arbitration by impartial entity
Grievance arbitration is a means by which disputes arising from different interpretation of a
labor contract are settled by a third party.