EMPLOYEE

RELATIONS AND
LABOUR LAWS
MBA 2 N D YEAR(3 R D SEMESTER)
The field of study that covers employment relationships in their entirety is called industrial relations.
In general, it is believed to be the study of relations between the employees and employers. There
are a multitude of factors at play at the workplace that shape up the relations between workers,
employers, and the government. The field of industrial relations came into existence with the advent
of the industrial revolution as an important tool to understand the complex relations between
employers and employees.
There are many different ways to look at industrial relations as there are the perspectives of workers,
employers, government, and the perspective of the society. If you are a worker, you would obviously
associate industrial relations with better wages, safety at workplace, job security, and training at
workplace.
On the other hand, industrial relations for an employer are all about productivity, conflict resolution
and employment laws. Sound industrial relations and effective social dialogue are a means to
promote better wages and working conditions as well as peace and social justice. As instruments of
good governance they foster cooperation and economic performance, helping to create an enabling
environment for the realization of the objective of Decent Work at the national level
Instead, employers now use the term "employee relations," which refers to relationships that exist in both
unionized and nonunionized workplaces. Employers hope to manage employee relations successfully with
each respective individual, as a means to raise morale and productivity.
‘Employee relations’ is a concept that is being preferred over the older industrial relations because of the
realization that there is much more at the workplace than industrial relations could look or cover. In general,
employee relations can be considered to be a study of relations between employees as well as employer and
employees so as to find ways of resolving conflicts and to help in improving productivity of the organization by
increasing motivation and morale of the workers. The field is concerned with providing information to
employees regarding the goals of the organization so that they have a better understanding of the aims and
policies of the management.
Basic and Applied Research (IJSBAR) (2014) Volume 18, No 2, pp 117-124 informed about their poor
performances and ways and means to correct performance. Employee relations also take care of grievances
and the problems of the employees and let them know all about their rights and what to do in case of
discrimination. Therefore “new employment relationship” go beyond the collective bargaining level to include
non-union organizations where dialogue might be between employers and their employees, although with
alternative bargaining structures.
INTRODUCTION
Employees are the major assets of an organisation. It is essential that the
employees perform together as a collective unit and contribute equally towards
the realization of a common goal. No task can be accomplished if the individuals
are constantly involved in conflicts and misunderstandings. It has been observed
that targets are achieved at a much faster rate if the employees work together
and share a warm relationship with each other. Employees must be comfortable
with each other to deliver their best and enjoy their work.
What is employee relationship management?
Employee relation management refers to managing the relation between the
various employees in an organisation. The relationship can be between
employee and employer as well as between employees at the same level.
Importance and necessity of
labour law
1. Improves industrial relations i.e. employee-employer relations and minimizes industrial disputes.
2. Prospects workers from exploitation by employers or management.
3. Helps workers getting fair wages.
4. Minimizes labour unrest.
5. Reduces conflicts and strikes.
6. Ensures job security
7.Promotes welcome environment
8. Fixes rest pauses and working hours
9. Provides compensation to workers, who are victims of accidents.
IT’S ABOUT RELATIONSHIPS

The essence of employee relations is the process of building strong relationships

between managers and employees based on fairness, trust, and mutual respect.
It takes time and energy (and sometimes money) to create this type of work
environment; however, it is worth the effort.
A good employee relations climate leads to motivated, loyal, and high-performing
employees who are focused on achieving the best results possible for their
company Just as we think about tools and materials as resources, employees are
also resources. Without them, the goals of the organization would never be
realized. But as companies continue to require a constant focus on the “bottom
line,” there is a real risk that key front-line supervisors and managers will not
spend the time to nurture employee relation-ships or give employee issues
enough care and attention.
KEY INGREDIENTS TO IMPROVE ERM
❏Communication. Ongoing, frequent two-way communication is one of the most important components of
a comprehensive employee relations strategy. Interactive communication—both giving a message and
actively listening to what is being said in response—builds trust between employees and their managers.
❏Trust. If employees do not trust their managers, the flow of upward communication will be compromised
(or simply will not happen); likewise, if managers do not trust the employees who work for them, the
downward flow of communication will be negatively affected.
❏Ethics. If employees do not perceive managers as having good business ethics, they will indirectly question
the managers’ motives (which may cause stress and have an impact on their overall performance).
❏Fairness. All employees should be treated in a consistent manner under the same circumstances. This does
not mean, however, that superior performance should not be singled out and rewarded. ❏Feelings.
Managers need to be alert and sensitive to the feelings of their employees. Exhibiting empathy and
awareness is an important part of establishing a trusting relationship with employees.
❏Perceptions and Beliefs. In employee relations, perception is even more important than reality. If
employees believe the organization has fair policies and practices and tries to communicate truthfully, they
will respond better than if they believe the organization is untrustworthy and tends to
KEY INGREDIENTS TO IMPROVE
ERM
shade the truth. Frequent and honest communication will go a long way to ensure that
employee beliefs and perceptions are related to the actual reality of the workplace.
❏Clear Expectations. Employees need to know not only what to expect from their managers,
but also what their managers expect of them. No one likes to be surprised with new or
conflicting requirements. Knowing what to expect reduces stress and helps employees focus on
the job at hand.
❏Conflict Resolution. Although conflicts arise in every organization, how they are handled
varies widely. Dealing with issues head-on and resolving disputes fairly and quickly should be
your company’s ultimate goal
WHAT EMPLOYEES WANT
To establish a positive employee relations climate in your business, it is important to take
the time to understand what your employees want.
What motivates them?
What stresses them?
What do they feel is missing in the workplace?
Can you change it?
And do you even want to?
Employees
Employers
1.Appreciation 1. Good wages
2. Feeling “in” on things 2. Job security
3. An understanding attitude 3. Promotion opportunities
4. Job security 4. Good work conditions
5. Good wages 5. Interesting work
6. Interesting work 6. Loyalty from management
7. Promotion opportunities 7. Tactful discipline
8. Loyalty from management 8. Appreciation
9. Tactful discipline 9. An understanding attitude
10. Good work conditions 10. Feeling “in” on thing
 WHY MANAGEMENT SHOULD
CARE?
If your management team fails to make employee relations a key business issue, it is
possible that the consequences may not be immediately felt. But make no mistake—there
undoubtedly will be a negative impact on your organization at some point in the future.
Some of the potential consequences of a poor employee relations climate include the
following:
❏Unionization. When employees perceive their workplace as unfair, they are
more inclined to seek outside resources (such as a union) to help protect them
and to negotiate issues on their behalf related to employment, benefits, and
policies.
WHY MANAGEMENT SHOULD
CARE?
❏ Employee Absenteeism. Another major impact is a frequent increase in employee absenteeism.
Unscheduled absences drive up the cost of doing business as a result of their impact on employee
benefit costs, replacement workers, higher stress levels among employees, additional training, and
the decrease in overall employee performance.
❏Employee Turnover. When employees do not trust their management and perceive that the
company is not acting fairly, many will elect to leave the organization in search of work at a
company where the situation is more positive. Employee turnover can significantly drive up costs as
a result of the need to recruit and train replacements.
❏ Litigation. If an employee is unable to resolve an employment-related situation at work, the
frequent response is to seek outside legal action. Defending against allegations of wrongful
employment actions is expensive. It also distracts management and employees from focusing on
their primary business and creates unnecessary stress, mistakes, or delays in decision making. In
addition, lawsuits that are resolved in the employee’s favour can result in significant financial
penalties for the company, as well as criminal and/or civil sanctions.
POSITIVE WORKPLACE
PRACTICES

Employers can use a number of tools to help build a positive employee relations climate,
including those outlined below.
❏ Written Rules, Policies, and Agreements
It is important for employees to know what to expect so that they can anticipate how specific
issues will be handled during the course of their employment. Communicating a company’s
expectations and “rules of the road” typically occurs through the distribution of an employee
handbook and written policies, but may also be communicated during new hire training or by
written contracts and agreements to certain high-level individuals.
POSITIVE WORKPLACE
PRACTICES
❏ Employee Handbook Employee handbooks are an excellent tool for compiling a company’s
key policies and rules into one manual that is typically distributed to each company employee at
the time of initial hire. The handbook is generally set up in an easy-to-read form and is
comprehensive in nature. Though not all-inclusive, the manual typically covers important issues
such as discrimination and harassment; expected business conduct; employee performance and
disciplinary procedures; search, inspection, and investigation guidelines; drug and alcohol
testing; electronic monitoring; use of company property; and standards for lateness and
absence.
❏ HR Policies Written policies are essential to provide guidance to a company’s managers and
employees about how certain issues should and will be handled. There should be clearly written
policies that prohibit harassment and discrimination, hostile work environment, abuse, injury,
damage to property, the possession of weapons in the workplace, and drug/alcohol use and
abuse.
TOOLS FOR ERM
1.Employee Opinion Surveys
One of the most valuable tools for employee relations specialists is an employee opinion survey. These
surveys have two functions: They measure the workplace climate in terms of employee satisfaction and they
serve as a tool to create action plans for managers in modifying work conditions to improve overall job
satisfaction. Questions examine employee opinion in specific areas such as compensation and benefits;
general employee opinion survey questions ask for feedback from employees on a variety of workplace
issues, such as leadership, performance, pay and overall work attitudes.
2.Training Aids
Supervisors and managers frequently consult employee relations specialists for advice on how to determine
when to administer employee discipline or when to consider termination. Before effecting decisions
concerning the employment relationship, leadership training may be in order. The benefits of leadership
training are improved relationships between supervisors and their employees as well as more effective
workforce management skills. When employee relations specialists are called on to help improve supervisor
and manager performance, they general use one-on-one guidance based on their expertise supplemented by
materials such as tapes and books.
TOOLS FOR ERM
3.Legal Resources
Employee relations specialists keep current on labour and employment laws, as well as legislation that can
potentially affect the work environment. Therefore, legal resources available for researching labour and
employment laws are an oft-used employee relations tool. Legal resources include subscription-based services
as well as publicly available resources such as legislative summaries and news feeds. In addition, knowledge of
labour and employment laws permits employee relations specialists to perform the basic duty for which they
are hired: protect the interests of the employer while maintaining a productive employer-employee
relationship. Although legal counsel is another resource for employee relations specialists, too-frequent
dependence on legal counsel can drive up employer costs.
4.Human Resource Information Systems
Human resources information systems are tools employee relations specialists use regularly. HRIS generate
employee census reports and assist employee relations specialists in analyzing workforce trends, compensation
structure, pay practices and recruitment and selection processes. Annual reports to federal agencies such as
the U.S. Equal Employment Opportunity Commission, the U.S. Department of Labour and the Occupational
Safety and Health Administration are based on data compiled and stored via complex HRIS.
TOOLS FOR ERM
5.Departmental Expertise
Employee relations specialists are usually human resources generalists with a broad knowledge
base. Nevertheless, despite their exceptionally broad understanding of topics such as
compensation, safety, recruitment and employee development, they rely heavily on the
expertise of HR department employees who handle employee issues in these areas day in and
day out. An employee relations tool, therefore, is the expertise of colleagues who lend
additional expertise and knowledge whenever required.
Industrial relation and employee
relation
Essentially, employee relations is a two person relationship between employee and employer. The focus is
on how to effectively manage and strengthen this relationship. Industrial Relations on the other hand, is a
three person relationship between the organisation, the union and the workforce that the union
represents.
Industrial Relations originated in the mid-20th century during the Industrial Revolution in the UK. It came
about as a means to understand the complex relationship between employers and employees. An
employee associates Industrial Relations with better safety, training, job security, pay and conditions in
the workplace. An employer understands it to be about productivity, employment law and conflict
resolution. This resolution often involved the intervention of a Union. The union represents the employee
as a collective workforce and raises issues to the organisation.
Employee Relations is the study of the relationship between employees and also between employers and
employees. A business which focuses on the importance of strong Employee Relations often results in
higher engagement, higher motivation and ultimately improved productivity and profitability. Employee
Relations is about providing information to employees on the goals of the organisation. Employees should
understand the ultimate goals of the business and what their role is in achieving these goals.
Industrial relation and employee
relation
Instead, employers now use the term "employee relations," which refers to relationships that exist
in both unionized and nonunionized workplaces. Employers hope to manage employee relations
successfully with each respective individual, as a means to raise morale and productivity.
‘Employee relations’ is a concept that is being preferred over the older industrial relations
because of the realization that there is much more at the workplace than industrial relations could
look or cover.
In general, employee relations can be considered to be a study of relations between employees as
well as employer and employees so as to find ways of resolving conflicts and to help in improving
productivity of the organization by increasing motivation and morale of the workers. The field is
concerned with providing information to employees regarding the goals of the organization so that
they have a better understanding of the aims and policies of the management.
Employees are also informed about their poor performances and ways and means to correct
performance. Employee relations also take care of grievances and the problems of the employees
and let them know all about their rights and what to do in case of discrimination
IMPORTANCE OF EMPLOYEE
RELATION MANAGEMENT
Every individual at the workplace shares a certain relationship with his fellow workers. Human beings are not
machines who can start working just at the push of a mere button. They need people to talk to, discuss ideas
with each other and share their happiness and sorrows. An individual cannot work on his own, he needs
people around. If the organization is all empty, you will not feel like sitting there and working. An isolated
environment demotivates an individual and spreads negativity around. It is essential that people are
comfortable with each other and work together as a single unit towards a common goal.
It is important that employees share a healthy relation with each other at the work place. Let us find out why
employee relations are important in an organization:
1.There are several issues on which an individual cannot take decisions alone. He needs the guidance and
advice of others as well. Sometimes we might miss out on important points, but our fellow workers may
come out with a brilliant idea which would help us to achieve our targets at a much faster rate. Before
implementing any plan, the pros and cons must be evaluated on an open forum where every employee has
the right to express his opinions freely. On your own, you will never come to know where you are going
wrong, you need people who can act as critic and correct you wherever you are wrong. If you do not enjoy a
good relation with others no one will ever come to help you.
IMPORTANCE OF EMPLOYEE
RELATION MANAGEMENT
2.Work becomes easy if it is shared among all. A healthy relation with your fellow workers would
ease the work load on you and in turn increases your productivity. One cannot do everything on his
own. Responsibilities must be divided among team members to accomplish the assigned tasks
within the stipulated time frame. If you have a good rapport with your colleagues, he will always be
eager to assist you in your assignments making your work easier.
3.The organization becomes a happy place to work if the employees work together as a family. An
individual tends to lose focus and concentration if his mind is always clouded with unnecessary
tensions and stress. It has been observed that if people talk and discuss things with each other,
tensions automatically evaporate and one feels better. Learn to trust others, you will feel relaxed.
One doesn’t feel like going to office if he is not in talking terms with the person sitting next to him.
An individual spends around 8-9 hours in a day at his workplace and practically it is not possible that
one works non stop without a break. You should have people with whom you can share your lunch,
discuss movies or go out for a stroll once in a while. If you fight with everyone, no one will speak to
you and you will be left all alone. It is important to respect others to expect the same from them.
IMPORTANCE OF EMPLOYEE
RELATION MANAGEMENT
4.An individual feels motivated in the company of others whom he can trust and fall back on
whenever needed. One feels secure and confident and thus delivers his best. It is okay if you
share your secrets with your colleagues but you should know where to draw the line. A sense of
trust is important.
5.Healthy employee relations also discourage conflicts and fights among individuals. People
tend to adjust more and stop finding faults in each other. Individuals don’t waste their time in
meaningless conflicts and disputes, rather concentrate on their work and strive hard to perform
better. They start treating each other as friends and try their level best to compromise and make
everyone happy.
IMPORTANCE OF EMPLOYEE
RELATION MANAGEMENT
6.A healthy employee relation reduces the problem of absenteeism at the work place.
Individuals are more serious towards their work and feel like coming to office daily. They do not
take frequent leaves and start enjoying their work. Employees stop complaining against each
other and give their best
7.It is wise to share a warm relation with your fellow workers, because you never know when
you need them. You may need them any time. They would come to your help only when you are
nice to them. You might need leaves for some personal reasons; you must have a trusted
colleague who can handle the work on your behalf. Moreover healthy employee relations also
spread positivity around.
It is essential that employees are comfortable with each other for better focus and
concentration, lesser conflicts and increased productivity.
INTRODUCTION TO INDUSTRIAL
RELATIONS

Industrial relations has become one of the most delicate and complex problems of modern
industrial society. Industrial progress is impossible without cooperation of labors and
harmonious relationships. Therefore, it is in the interest of all to create and maintain good
relations between employees (labor) and employers (management).
The term ‘Industrial Relations’ comprises two terms: ‘Industry’ and ‘Relations’. “Industry” refers
to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By
“relations” we mean “the relationships that exist within the industry between the employer and
his workmen” (Adewumi, 1993). The term industrial relations explain the relationship between
employees and management which stem directly or indirectly from union-employer
relationship. Industrial relations are the relationships between employees and employers within
the organizational settings. The field of industrial relations looks at the relationship between
management and workers, particularly groups of workers represented by a union. Industrial
relations are basically the interactions between employers, employees and the government, and
the institutions and associations through which such interactions are mediated (Abell, 1985).
The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry”
refers to “any productive activity in which an individual (or a group of individuals) is (are)
engaged”. By “relations” we mean “the relationships that exist within the industry between the
employer and his workmen.”
Concept of Industrial Relations
The term industrial relations explain the relationship between employees and management
which stem directly or indirectly from union-employer relationship. Industrial relations are the
relationships between employees and employers within the organizational settings.
The field of industrial relations looks at the relationship between management and workers,
particularly groups of workers represented by a union. Industrial relations are basically the
interactions between employers, employees and the government, and the institutions and
associations through which such interactions are mediated.
The term industrial relations have a broad as well as a narrow outlook. Originally, industrial
relations were broadly defined to include the relationships and interactions between employers
and employees. From this perspective, industrial relations cover all aspects of the employment
relationship, including human resource management, employee relations, and union-management
(or labour) relations.
Now its meaning has become more specific and restricted. Accordingly, industrial relations pertains
to the study and practice of collective bargaining, trade unionism, and labor-management relations,
while human resource management is a separate, largely distinct field that deals with non-union
employment relationships and the personnel practices and policies of employers.
The term industrial relations have a broad as well as a narrow outlook. Originally, industrial
relations were broadly defined to include the relationships and interactions between employers
and employees. From this perspective, industrial relations cover all aspects of the employment
relationship, including human resource management, employee relations, and union-management
(or labour) relations.
Objectives of Industrial
Relations

The main objectives of industrial relations explained by Dickson (1981) are:

1.To safeguard the interest of labor and management by securing the highest level of mutual
understanding and good-will among all those sections in the industry which participate in the
process of production.
2.To avoid industrial conflict or strike and develop harmonious relations, which are an essential
factor in the productivity of workers and the industrial progress of a country.
3.To raise productivity to a higher level in an era of full employment by lessening the tendency
to high turnover and frequency absenteeism.
4.To establish and promote the growth of an industrial democracy based on labor partnership in
the sharing of profits and of managerial decisions, so that an individual’s personality may grow
its full stature for the benefit of the industry and of the country as well.
Objectives of Industrial
Relations
4.To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable
wages, improved living and working conditions, said fringe benefits.
5.To improve the economic conditions of workers in the existing state of industrial managements
and political government.
6.Socialization of industries by making the state itself a major employer
7.Vesting of a proprietary interest of the workers in the industries in which they are employed.
8.Control exercised by the state over industrial undertaking with a view to regulating production
and promoting harmonious industrial relations.
Two Dominant Aspects of Industrial
Relations
Lansbury and Prideaux (1981) discussed two dominant aspects of Industrial relations that would facilitate WPM. The first aspect is
cooperation and the second is conflict.
Cooperation
Cooperation between labor and capital is one of the basic requirements for the functioning of modern industries and the growth
of industrialization. Here labor means workers who man the
factories, mines and other industrial establishments or services. Capital stands for the owners of business enterprises who supply
the capital and own the final products. Cooperation is a form of social interaction where in two or more persons work together to
gain a common end. Cooperation involves reciprocity of intent as well as jointness of behavior, and it may even become an end in
itself.
Conflict
Conflict too is inherent in the industrial relations setup of today and it is endemic in human life. It becomes apparent when
industrial disputes resulting in strikes and lockouts become frequent. The prevailing industrial unrest, the frequency of work-stop
pages resulting either from strikes or lockouts, and the slowing down of production are the occasional expressions of the ever-
present and latent conflict between workers and the management. Motives are important in conflict. A conflict refers to
incompatible behavior and any industrial conflict includes human conflict. It emerges whenever two or more persons or groups
seek to possess the same object, occupy the same space or the same exclusive position, play incompatible roles and undertake
mutually incompatible means for achieving their purposes.
Emerging problems of IR
Industrial relations is a fancy word that really means the ways in which senior- and mid-level
managers at your company interact with rank-and-file employees. Regardless of your
organizational structure, there will always be challenges in employee relations that you must
handle before these challenges become major problems. These challenges are the result of the
divide that exists at your company between those who make decisions and those who must
implement those decisions. Understanding the common problems faced by employees in
organization is the key to maintaining a harmonious relationship between management and
staff.
Emerging problems of IR
Lack of Privacy
One of the biggest challenges of employee relations is the fact that there is no presumption of privacy when
business owners hire employees. Many companies have policies that allow security personnel to monitor
internet use, phone calls, voicemails, and email correspondence. Technology has also increased the problems
faced by employees in organization because of the increased intrusion of video and audio surveillance. When
employees feel as if every move they make is being monitored, they lose trust in upper management and
company leaders.
It's an "Us Against Them" Mentality
Another of the pressing problems faced by employees in organization is that many workers believe that a
significant divide exists between a company's workers and managers. This is a natural reaction by a group of
people who understand that they must often subordinate their own desires to implement the will of
management. This division can cause a number of issues, such as contract negotiation problems and strikes,
which can require the intervention of trade and labor unions. However, if you establish the proper balance
between empowering your employees, and maintaining a chain-of-command, you can help resolve one of the
biggest challenges in industrial relations.
Emerging problems of IR
Inflexibility of Employer
Business owners that run their companies like an autocracy, can trigger challenges in industrial relations because they
create an inflexible environment. When an employer is inflexible, it can stifle employee creativity, especially if employees
believe that management doesn’t solicit their ideas and suggestions, and is hostile to any suggestions or ideas that
employees do make. The problem is that when management restricts creativity and imagination, it can also stifle
innovation and compromise the company’s competitive position within its industry. Employers that allow employees to
participate in running the company by soliciting, and using their ideas and suggestions often find a more productive
business environment.
Gender Wage Disparity
In some companies, the gap between what a woman earns for a position versus what a man earns for the same position, is
another significant challenge in industrial relations. Although the latest research suggests that the gender pay gap is
narrowing, many instances still exist in which women discover that they are being paid less than a male colleague for the
same work. This can create conflict, especially if a company’s management is predominantly male. Although there are
multiple factors that can lead to a gender pay gap, the usual perception of female employees is that management may not
value their contribution as much as they do that of male employees. Business owners that are proactive at ensuring that
those men and women who have similar skills, talents, and prior experience, will earn the same wage -- and this can help
prevent this problem.
Emerging problems of IR
Narrow Focus of Employees
Another issue that arises out of industrial relations is the narrow focus that some employees
have about their role in a company. An employee might regard his task as only a job that he
must complete, rather than a role he can examine as to how he benefits the organization. Many
employees see their managers as people who give orders, rather than as facilitators who can
help employees achieve professional goals. Forward-thinking business owners, who embrace a
team concept and who give employees latitude to develop ideas and make important decisions
without oversight, can offset this problem.
Trade Unions: Objectives, Function, Formation,
Regulation, Rights and Liabilities!

“A trade union is a combination of persons. Whether temporary or permanent, primarily for the
purpose of regulating the relations between workers and employers or between workers for
imposing restrictive conditions on the conduct of any trade or business and includes the
federations of two or more trade unions as per Sec. 2 (h) Trade Unions Act, 1926.
“A Trade Union is an organisation of workers, acting collectively, who seek to protect and
promote their mutual interests through collective bargaining”. Trade unions, also known as
labour unions are organizations of workers in a common trade who have organized into groups
dedicated to improving the workers’ work life.
The trade Unions Act, 1926 provides for registration of trade unions with a view to render lawful
organisation of labour to enable collective bargaining. It also confers on a registered trade union
certain protection and privileges.
Applicability of the Act
The Act extends to the whole of India and applies to all kinds of unions of workers and
associations of employers, which aim at regularising labour management relations.
A Trade Union is a combination whether temporary or permanent, formed for regulating the
relations not only between workmen and employers but also between workmen and
workmen or between employers and employers.
Objectives of Trade Union
The following are the objectives of trade union:
(1) To improve the economic lot of workers by securing them better wages.
(2) To secure for workers better working conditions.
(3) To secure bonus for the workers from the profits of the enterprise/organization.
(4) To ensure stable employment for workers and resist the schemes of management which
reduce employment opportunities.
(5) To provide legal assistance to workers in connection with disputes regarding work and
payment of wages.
(6) To protect the jobs of labour against retrenchment and layoff etc.
(7) To ensure that workers get as per rules provident fund, pension and other benefits.
(8) To secure for the workers better safety and health welfare schemes.
(9) To secure workers participation in management.
(10) To inculcate discipline, self-respect and dignity among workers.
(11) To ensure opportunities for promotion and training.
(12) To secure organizational efficiency and high productivity.
(13) To generate a committed industrial work force for improving productivity of the system.
Functions of Trade Unions:
(1) Collective bargaining with the management for securing better work environment for the
workers/ employees.
(2) Providing security to the workers and keeping check over the hiring and firing of workers.
(3) Helping the management in redressal of grievances of workers at appropriate level. If any
dispute/matter remains unsettled referring the matter for arbitration.
(4) To negotiate with management certain matters like hours of work, fringe benefits, wages and
medical facilities and other welfare schemes.
(5) To develop cooperation with employers.
(6) To arouse public opinion in favour of labour/workers.
Benefits of Trade Union:
Workers join trade union because of a number of reasons as given below:
 A worker feels very weak when he is alone. Union provides him an opportunity to achieve his
objectives with the support of his fellow colleagues.
• Union protects the economic interest of the workers and ensures a reasonable wage rates and
wage plans for them.
• Union helps the workers in getting certain amenities for them in addition to higher wages.
• Union also provides in certain cases cash assistance at the time of sickness or some other
emergencies.
•Union organize negotiation between workers and management and are instruments for
settlement of disputes.
•Trade union is also beneficial to employer as it organizes the workers under one banner and
encourages them follow to peaceful means for getting their demands accepted.
• Trade union imparts self-confidence to the workers and they feel that they are an important
part of the organization.
• It provides for promotion and training and also helps the workers to go to higher positions.
• It ensures stable employment for the workers and opposes the motive of management to
replace the workers by automatic machines.
• Workers get an opportunity to take part in the management and oppose any decision which
adversely effects them.
Role of Trade union in
Industrial Relations
Unions carry out a number of functions
1. A trade union generally negotiates with employers on behalf of its members, advocating for improvements
such as better working conditions, compensation and job security. They negotiate on behalf of their members
on pay scales, working hours and working conditions. These areas can include basic pay, overtime payments,
holidays, health safety, promotion prospects, maternity and paternity rights and job security.
These unions play an important role in industrial relations — the relationship between employees and
employers.
2. Depending on the circumstances, unions may try to protect or improve workers’ rights. They also provide
information on a range of issues for their members, for instance on pensions. They help with education and
training schemes and may also participate in measures designed to increase demand for the product
produced and hence for labour.
3. Some also provide a range of benefits to their members including strike pay, sickness pay and
unemployment pay. In addition many get involved in pressurizing their governments to adopt a legislation,
which will benefit their members or workers in general, such as fixing a national minimum wage.
 REGISTRATION OF A TRADE
UNION
• Registration of a trade union is not compulsory but is desirable since a registered trade union enjoys certain
rights and privileges under the Act. Minimum seven workers of an establishment (or seven employers) can
form a trade union and apply to the Registrar for it registration.
• The application for registration should be in the prescribed form and accompanied by the prescribed fee, a
copy of the rules of the union signed by at least 7 members, and a statement containing
• the names, addresses and occupations of the members making the application, the name of the trade
union and the addresses of its head office, and the titles, names, ages, addresses and occupations of its
office bearers.
• If the union has been in existence for more than a year, then a statement of its assets and liabilities in the
prescribed form should be submitted along with the application. The registrar may call for further
information for satisfying himself that the application is complete and is in accordance with the provisions,
and that the proposed name does not resemble to an existing trade union.
• On being satisfied with all the requirements, the registrar shall register the trade union and issue a
certificate of registration, which shall be conclusive evidence of its registration.
Formation and Registration of Trade
Union:

The following steps are involved in the registration of trade union:

Registration of a trade union is not compulsory but is desirable since a registered trade union
enjoys certain rights and privileges under the Act. Minimum seven workers of an establishment
(or seven employers) can form a trade union and apply to the Registrar for it registration.
Appointment of Registrars:
(a) The appropriate government shall appoint a person to be the registrar of trade unions for
each state. The appropriate government may appoint as many additional and deputy registrars
of trade unions as it thinks fit for the purpose of exercising and discharging under the
superintendence and direction of the registrar.
Such powers and functions of the registrar under this Act as it may, by order, specify and define
the local limits within which any such additional or deputy registrar shall exercise and discharge
the powers and functions so specified.
Mode of Registration:
(b) (i) Mode of Registration:
Any seven or more members of a trade union may, by subscribing their names to the rules of the
trade union and by otherwise complying with the provision of this Act with respect to
registration, apply for registration of the trade union under this Act.
(ii) Where an application has been made under sub­section (i) for the registration of a trade
union, such application shall not be deemed to have become invalid merely by reason of the fact
that, at any time after the date of the application, but before the registration of the trade union,
some of the applicants, but not exceeding half of the total number of persons who made the
application, have ceased to be members of the trade union or have given notice in writing to the
registrar dissociating themselves from the application.
(c) Application for Registration:
(i) Every application for registration of a trade union shall be made to the registrar and shall be
accompanied by a copy of the rules of the trade union and a statement of the following
particulars, namely—
1. The names, occupations and addresses of the members making application.
2. The name of the trade union and the address of its head office.
3. The titles, names, age, addresses and occupations of the office bearers of the trade union.
(ii) Where a trade union has been in existence for more than one year before the making of an
application for its registration, these shall be delivered to the registrar, together with the
application, a general statement of the assets and liabilities of the trade union prepared in such
form and containing such particulars as may be prescribed.
(d) Provisions to Be Contained In the Rules of a Trade Union:
A trade union shall not be entitled to registration under this Act, unless the executive thereof is constituted in accordance with
the provisions of this Act.
(e) Power to Call For Further Particulars and To Require Alterations of Names:
(i) The registrar may call for further information or the purpose of satisfying himself that any application complies with the
provisions of Section 5, or that the trade union is entitled to registration under Section 6, and may refuse to register the trade
union until such information is supplied.
(ii) If the name under which a trade union is proposed to be registered is identical with that by which any other existing trade
union has been registered or, in the opinion of the registrar, so nearly resembles such name as to be likely to deceive the
public or the members of either trade union, the registrar shall require the persons applying for registration to alter the name
of the trade union stated in the application, and shall refuse to register the union until such alteration has been made.
(f) Registration:
The registrar, on being satisfied that the trade union has complied with all the requirements of the Act in regard to registration
shall register the trade union by entering in a register, to be maintained in such form as may be prescribed, the particulars
relating to the trade union contained in the statement accompanying the application for registration.
(g) Certificate of Registration:
The registrar, on registering a trade union under section and, shall issue a certificate of registration in
the prescribed form which shall be conclusive evidence that the trade union has been duly registered
under this Act.
(h) Cancellation of Registration:
A certificate of registration of a trade union may be withdrawn or cancelled by the registrar on the
application of the trade union to be verified in such manner as may be prescribed in if the registrar is
satisfied that the certificate has been obtained by fraud or mistake or that the trade union has ceased
to exist.
It has to provide not less than two months’ previous notice in writing specifying the ground on which it
is proposed to withdraw or cancel the certificate shall be given by the registrar to the trade union
before the certificate is withdrawn or cancelled otherwise than on the application of the trade union.
(i) Registered Office:
All communications and notices to a registered trade union may be addressed to its registered
office. Notice of any change in the address of the head office shall be given within fourteen days
of such change to the registrar in writing, and the changed address shall be recorded in the
register referred to in Section-8 of the Companies Act.
(j) Incorporation of Registered Trade Union:
Every registered trade union shall be a body corporate by the name under which it is registered
and shall have perpetual succession and a common seal with power to acquire and hold both
movable and immovable property and to contract, and shall by the said name sue and be sued.
Rights and Liabilities of Registered Trade
Unions:

1. Objects on Which General Funds May Be Spent:

The general funds of a registered trade union shall not be spent on any other objects than the payment of salaries,
allowances and expenses to the office bearers of the trade unions; expenses for the administration of the trade
union; the presentation or defiance of any legal proceeding to which the trade union of any member thereof is a
party; the conduct of trade disputes and compensation of members for loss arising out of trade disputes; provision
of education, social or religious benefits for members; upkeep of a periodical published.
2. Constitution of a Separate Fund for Political Purposes:
A registered trade union may constitute a separate fund, from contributions separately levied for or made to that
fund, from which payments may be made for the promotion of the civic and political interests of its members, in
furtherance of any of the objects such as the payment of any expenses incurred, either directly or indirectly; the
holding of any meeting or the distribution of any literature/documents in support of any such candidate; the
registration of electors of the selection of a candidate for any legislative body constituted under or for any local
authority; the registration of electors or the selection of a candidate for any legislative body constituted under/or
for any local authority; holding of political meetings of any kind.
4. Immunity from Civil Suit in Certain Cases:
(i) No suit or other legal proceeding shall be maintainable in any civil court against any registered trade union or any
office bearer or member thereof in respect of any act done in contemplation or furtherance of a trade dispute to which a
member of the trade union is a party on the ground only that such act induces some other person to break a contract of
employment, or that is in interference with the trade, business or employment of some other person or with the right of
some other person to dispose of his capital or of his labour as he wills.
A registered trade union shall not be liable in any suit or other legal proceeding in any civil court in respect of any
fortuitous act done in contemplation or furtherance of a trade dispute by an agent of the trade union if it is proved that
such person acted without the knowledge of, or contrary to express instructions given by the executive of the trade
unions.
5. Enforceability of Agreements:
Notwithstanding anything contained in any other law for the time being in force, an agreement between the members of
a registered trade union shall not be void or voidable merely by reason of the fact that any to the subjects of the
agreement are in restraint of the trade.
6. Right to Inspect Books of Trade Unions:
The account books of a registered trade union and the list of members thereof shall be open to inspection by an office
bearer or member of the trade union at such times as may be provided for in the rules of the trade union.
7. Right of Minors to Membership of Trade Unions:
Any person who has attained the age of 18 years may be a member of a registered trade union
subject to any rules of the trade union to the contrary, and may subject as aforesaid, enjoy all
the rights of a member and execute all instruments and give all acquaintances necessary to be
executed or given under the rules.
8. Effects of Change of Name and of Amalgamation:
The change in the name of a registered trade union shall not affect any rights or obligations of
the trade union or render defective any legal proceeding by or against the trade union. An
amalgamation of 2 or more registered trade unions shall not prejudice any right of any of such
trade unions or any right of a creditor of any of them.
 Shortcomings of Trade
Unions
Trade union movement in our country suffers from the following weaknesses:
1. Uneven Growth:
Trade unions are concentrated in large scale industry sector and in big industrial centers. There is very little trade union activity in
small sector, agricultural labour and domestic sector. Trade unionism has touched only a portion of the working class in India.
2. Small Size:
Most of the unions have low membership though the number of unions and union membership are increasing, average
membership is inadequate.
3. Weak Financial Position:
The average yearly income of unions is very low and inadequate. The subscription rates are low and many members do not pay
the subscription in time. Due to their financial weakness, most of the unions are not in a position to undertake welfare
programmes for workers.
4. Political Leadership:
Trade unions are under the leadership and control of political parties and outsiders. Politicians exploit unions and workers for
their personal and political gains. Thus, the political leadership is very harmful to the trade union movement in India.
Shortcomings of Trade
Unions
5. Multiplicity of Unions:
There exist several unions in the same establishment or industry. The existence of rival unions
with conflicting ideology is greatly responsible for unhealthy growth of trade union movement.
In some cases employers encourage split in unions to undermine their bargaining power.
6. Problem of Recognition:
Employers are under no obligation to give recognition to any union.
7. Absence of Paid Office-Bearers:
Most of the unions do not have Hill-time paid office-bearers. Union activists working on
honorary basis devote only limited time and energy to union activities. Union officers lack
adequate knowledge and skill due to lack of proper training, weak financial position and political
leadership are the main reasons for this state of affairs.
Shortcomings of Trade
Unions
8. Apathy of Members:
Majority of workers do not take keen interest in union activities. The attendance at the general
meetings of unions is very poor.
9. Opposition from Employers:
Trade unions in India have to face opposition from employers. Many employers try to intimidate
or victimise labour leaders, start rival union and bribe union officials.
10. Inter-Union Rivalry:
Multiple unions create rivalry. Unions try to play down each other in order to gain greater
influence among workers. Employers take advantage of infighting. Inter-union rivalry weakens
the power of collective bargaining and reduces the effectiveness of workers in securing their
legitimate rights.
Industrial Democracy &
Participative Management

One of the important requirements of industrial relation is industrial democracy. Worker’s

participation in management (WPM) is essentially a step in promoting industrial democracy. This
is the modern trend in industrial world both in developed and developing countries. This is a
concept of extending democracy of political systems in government to the industries.
The form, structure and the content of WPM vary with social norms and nature of government
in each country. WPM takes the shape of self- management, co-determination, worker director
and joint management councils. Despite variation in interpretation, all agree that participation
means sharing the decision making power between management and workers.
Participation may protect the interests of both parties. But more than this protection,
participation is a system of checks and balances which prevents exploitations and provides
equity and fairness. This requires great awareness, education and conceptual skill from both the
parties, to make WPM, a success.
Level of Participation:
(a) Informative Participation
This is merely information sharing of major aspects like product mix, productivity, balance sheet
etc. Workers are not allowed close scrutiny of accounts.
(b) Consultative Participation
Here workers are consulted on such aspects like welfare, work methods, safety programmes.
Worker’s body or joint councils can make recommendation. It is left to management to accept
the recommendations or not.
(c) Associative Participation
Here, the consultation is extended to more areas. In addition, management has a moral
responsibility to implement recommendation made by joint councils.
(d) Administrative Participation
Here, management having accepted the recommendations of joint councils refers alternatives of
implementation plans or strategies for the consideration of the councils to suggest the best one.
Here authority of decision making is delegated.
(e) Decisive Participation
Here decisions are taken jointly by management and workers on all important matter concerning
the firm. Here both are equally responsible and accountable for the success or failure based on
such decision. This, in a true sense, is the sharing of “profits” and “pains”.
A number of analysis have shown that significant changes of human behaviour is possible rapidly
if persons who are expected to change are allowed to decide “what” and “how” about such
changes.
 Unit :2
SYNOPSIS
1.COLLECTIVE BARGAINING: SIGNIFICANCE, TYPES &
PROCEDURE OF COLLECTIVE BARGAINING DISCIPLINE:
2.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.
3.EMPLOYEE PARTICIPATION AND EMPOWERMENT:
OBJECTIVES, EMPLOYEE PARTICIPATION, ADVANTAGES OF
EMPLOYEE PARTICIPATION, EMPLOYEE PARTICIPATION IN
INDIA, METHODS OF PARTICIPATION, EMPLOYEE
EMPOWERMENT. CASE STUDIES
Collective bargaining
is a process of negotiation between employers and a group of employees aimed at agreements
to regulate working salaries, working conditions, benefits, and other aspects of workers'
compensation and rights for workers. The interests of the employees are commonly presented
by representatives of a trade union to which the employees belong. The collective agreements
reached by these negotiations usually set out wage scales, working hours, training, health and
safety, overtime, grievance mechanisms, and rights to participate in workplace or company
affairs.
Definition of Collective
Bargaining

Industrial disputes between the employee and employer can also be settled by discussion and
negotiation between these two parties in order to arrive at a decision.
This is also commonly known as collective bargaining as both the parties eventually agree to
follow a decision that they arrive at after a lot of negotiation and discussion.
According to Beach, “Collective Bargaining is concerned with the relations between unions
reporting employees and employers (or their representatives).
It involves the process of union organization of employees, negotiations administration and
interpretation of collective agreements concerning wages, hours of work and other conditions of
employees arguing in concerted economic actions dispute settlement procedures”.
According to Flippo, “Collective Bargaining is a process in which the representatives of a labor
organization and the representatives of business organization meet and attempt to negotiate a
contract or agreement, which specifies the nature of employee-employer union relationship”.
Types of collective bargaining
Conjunctive or Distributive Bargaining: In this form of collective bargaining, both the parties viz. The
employee and the employer try to maximize their respective gains. It is based on the principle, “my gain
is your loss, and your gain is my loss” i.e. one party wins over the other. The economic issues such as
wages, bonus, other benefits are discussed, where the employee wishes to have an increased wage or
bonus for his work done, whereas the employer wishes to increase the workload and reduce the wages.
Co-operative or Integrative Bargaining: Both the employee and the employer sit together and try to
resolve the problems of their common interest and reach to an amicable solution. In the case of
economic crisis, such as recession, which is beyond the control of either party, may enter into a mutual
agreement with respect to the working terms. For example, the workers may agree for the low wages or
the management may agree to adopt the modernized methods, so as to have an increased production.
Productivity Bargaining: This type of bargaining is done by the management, where the workers are
given the incentives or the bonus for the increased productivity. The workers get encouraged and work
very hard to reach beyond the standard level of productivity to gain the additional benefits.
Through this form of collective bargaining, both the employer and the employee enjoy the
benefits in the form of increased production and the increased pay respectively.
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.
The Collective Bargaining
Process

The collective bargaining process begins with some sort of labor disagreement, when a union or
group of workers doesn't see eye to eye with an employer on a particular employment issue.
The first stage of the process involves preparation, where each side chooses a representative to
represent their respective interest in the negotiations.
Next, the parties meet for a discussion. The negotiation process can frequently turn heated and
emotionally charged. For that reason, the parties typically agree to certain ground rules before
beginning, in order to avoid conflict which could cause the process to fail. Once the specifics of
the dispute have been discussed, the parties exchange proposals of options to resolve the
dispute. This is followed by the bargaining process, whereby the parties explore various
potential compromises.
As the parties get close to reaching an agreement, a tentative written
collective bargaining agreement is drafted, revised, and developed as the parties reach a final
agreement. Once all terms are firm, the final collective bargaining agreement is reviewed and
signed by both parties, and becomes a binding contract.
Main Features of Collective
Bargaining:

Some of the salient features of collective bargaining are:

It is a Group Action:
Collective bargaining is a group action as opposed to individual action. Both the parties of
settlement are represented by their groups. Employer is represented by its delegates and, on the
other side; employees are represented by their trade union.
It is a Continuous Process:
Collective bargaining is a continuous process and does not end with one agreement. It provides a
mechanism for continuing and organised relationship between management and trade union. It is a
process that goes on for 365 days of the year.
It is a Bipartite Process:
Collective bargaining is a two party process. Both the parties—employers and employees—
collectively take some action. There is no intervention of any third party. It is mutual given-and-take
rather than take-it-or-leave-it method of arriving at the settlement of a dispute.
It is a Process:
Collective bargaining is a process in the sense that it consists of a number of steps. The starting point is the
presentation of charter of demands by the workers and the last step is the reaching of an agreement, or a
contract which would serve as the basic law governing labour-management relations over a period of time
in an enterprise.
It is Flexible and Mobile and not Fixed or Static:
It has fluidity. There is no hard and fast rule for reaching an agreement. There is ample scope for
compromise. A spirit of give-and-take works unless final agreement acceptable to both the parties is
reached.
It is Industrial Democracy at Work:
Collective bargaining is based on the principle of industrial democracy where the labour union represents
the workers in negotiations with the employer or employers. Industrial democracy is the government of
labour with the consent of the governed—the workers. The principle of arbitrary unilateralism has given
way to that of self-government in industry. Actually, collective bargaining is not a mere signing of an
agreement granting seniority, vacations and wage increase, by sitting around a table.
It is Dynamic:
It is relatively a new concept, and is growing, expanding and changing. In the past, it used to be emotional, turbulent
and sentimental, but now it is scientific, factual and systematic.
It is a Complementary and not a Competitive Process:
Collective bargaining is not a competitive process i.e., labour and management do not opt while negotiating for the
same object. It is essentially a complementary process i.e., each party needs something which the other party has,
namely, labour can put greater productive effort and management has the capacity to pay for that effort and to
organise and guide it for achieving the enterprise’s objectives.
The behavioural scientists have made a good distinction between “distributive bargaining” and “integrative bargaining”.
The former is the process of dividing up the cake which represents what has been produced by the joint efforts of
management and labour.
In this process, if one party wins something, the other party, to continue the metaphor of the cake, has a relatively
smaller size of the cake. So it is a win-lose’ relationship. The integrative bargaining, on the other hand, is the process
where both the parties can win—each party contributing something for the benefit of the other party.
It is an Art:
Collective bargaining is an art, an advanced form of human relations.
Means of Collective Bargaining:
Generally, there are four important methods of collective bargaining, namely, negotiation,
mediation, conciliation and arbitration for the settlement of trade disputes. In this context R.F.
Hoxie said that arbitration is often provided for in collective bargaining under certain
contingencies and for certain purposes, especially when the parties cannot reach agreement,
and in the interpretation of an agreement through negotiation.
Conciliation is a term often applied to the art of collective bargaining, a term often applied to
the action of the public board which attempts to induce collective bargaining.
Mediation is the intervention usually uninvited, of some outside person of body with a view of
getting conciliation or to force a settlement, compulsory arbitration is extreme mediation. All
these things are aids or supplement to collective bargaining where it breaks down. They
represent the intervention of outside parties.
Case study 1:
Given below is a situation which many companies often face in today’s competitive scenario.
In a company X, union had given a proposal to the management for a 20 % hike in the wages. The
collective bargaining process was still going on.
The Industrial relations manager was clever, so he called for an immediate meeting with the union. He
tried to put the state of affairs in front of the union and asked them to find a solution. This is what he
presented to the union:
•The input prices (cost of raw material, electricity, water etc.) have gone up by 10 %
•Due to competition the company has to reduce the product price by 10%
•At the same time the shareholders are also expecting 5 % more returns from the existing 15 %
The IR manager puts forward the above circumstances in front of the union and asked them to give a
solution.
Tasks for the participants:
•How to develop a strategy to respond this situation?
•What are the areas that you can explore to find an answer?
Importance of Collective
Bargaining:
The collective bargaining advances the mutual understanding between the two parties i.e.,
employees and employers.
The role of collective bargaining may be evaluated from the following point of view:
(1) From Management Point of View:
The main object of the organisation is to get the work done by the employees at work at
minimum cost and thus earn a high rate of profits. Maximum utilization of workers is a must for
the effective management. For this purpose co-operation is required from the side of the
employees and collective bargaining is a device to get and promote co-operation. The labour
disputes are mostly attributable to certain direct or indirect causes and based on rumors, and
misconceptions. Collective bargaining is the best remedial measure for maintaining the cordial
relations.
(2) From Labour and Trade Union Point of View:
Labour has poor bargaining power. Individually a worker has no existence because labour is
perishable and therefore, the employers succeed in exploiting the labourers.
The working class in united form becomes a power to protect its interests against the
exploitation of the employers through the process of collective bargaining.
The collective bargaining imposes certain restrictions upon the employer. Unilateral action is
prevented. All employees are treated on equal footings. The conditions of employment and
rates of wages as specified in the agreement can be changed only through negotiations with
labour. Employer is not free to make and enforce decisions at his will.
Collective bargaining can be made only through the trade unions. Trade unions are the
bargaining agents for the workers. The main function of the trade unions is to protect the
economic and non- economic interests of workers through constructive programmes and
collective bargaining is one of the devices to attain that objective through negotiations with the
employers, Trade unions may negotiate with the employer for better employment opportunities
and job security through collective bargaining.
(3) From Government Point of View:
Government is also concerned with the process of collective bargaining. Government passes and
implements several labour legislations and desires it to be implemented in their true sense. If
any person violates the rules and laws, it enforces them by force.
Collective bargaining prevents the Government from using the force because an amicable
agreement can be reached between employer and employees for implementing the legislative
provisions. Labour problems shall be minimised through collective bargaining and industrial
peace shall be promoted in the country without any force.
Collective bargaining is a peaceful settlement of any dispute between worker and employers
and therefore it promotes industrial peace and higher productivity resulting an increase in the
Gross National Product or the national income of the country.
Industrial Employment
(Standing Orders) Act, 1946
The main objectives of the Act, besides maintaining harmonious relationship between the
employers and the employees, are to regulate the conditions of recruitment, discharge,
disciplinary action, leave, holidays, etc. of the workers employed in industrial
units/undertaking/establishments.
Ambit of industrial employment (standing
orders) Act 1946

The industrial employment standing orders act is the piece of labour legislation which lays the
model standing orders applicable to every industrial establishment under the act.

Object of The Act

To require employers in industrial establishments formally to draft and define conditions of
employment under them. Standing orders mean set of conditions defining the
Conditions of recruitment
Disciplinary action
Discharge
Holidays and leave
The purpose of standing orders act 1946 is to minimize friction between the management and
workers in the industrial establishments. The act contains 15 section and a schedule.
 Industrial Establishment
Section 2(e) defines industrial establishment as:
o Any factory under the factories act 1948
o Industrial establishment as under section 2(ii) of the Payment of wages act, 1936
o Railway under Indian railways act 1890
Procedural Aspects:
Submission And Certification Of Standing Orders
Section 3 defines about submission of draft standing orders. The section lays the procedure that employer shall draft
standing orders relating to the industrial establishment and submit it to the certifying officer who is generally termed as
regional labour commissioner or labour officer. Where such a model standing order has been prescribed, the standing order
draft shall be in conformity with that model standing orders. The standing orders on being certified by the certifying
authority shall bind on both the employer and workman.
Appeals
Section 7 the person workman or any employer, trade union or any parties who are aggrieved by the order of certifying
officer shall appeal to the appellate authority within 30 days of such order sent by certifying authority. The appellate
authority on receipt of order shall modify the order, add, some conditions in it and within seven days of receipt shall send
copies to the certifying officer who shall certify it .
Concept of Subsistence Allowance
Section 10A
The act also provides for the payment of subsistence allowance.
As a result of enquiry and investigation or misconduct charges against any workman and it results in his
suspension by the employer then For the first 90 days : the workman shall be entitled for 50 % wages
For the remaining period: if suspension remains for more than 90 days then 75 % of wages shall be paid
as subsistence allowance.
Schedule And Contents
The act contains only 1 schedule which lays down the matters to be provided in the standing orders of
industrial establishments depending upon the nature of industrial establishment the employer shall
draft standing orders. The matters to be stated are:
Classes of workman, Hours of work, Shift working, Attendance, Condition regarding holidays, Entry
conditions and requirements, Closure and reopening of industrial establishments, Termination of
employment, Suspension & Dismissal for misconduct & acts and omissions amounting to misconduct ,
Means of redressal for unfair treatment
Such other matters as may be prescribed. The employer shall at his discretion draft the standing orders
and get it certified by the authority provided it is in conformity with the model standing orders.
Object of the Act
Object of the Act Is to provide service rules to workman. Is to require employers in industrial
establishments to formally define conditions of employment under them. The Industrial
Employment (Standing Orders) Act, 1946 came into force on 23rd April, 1946 and extends to the
whole of India.
Applicability of the Act
The Act is applicable to all industrial establishments employing 100 or more workmen. The term
industrial establishment includes factory, transport service, construction work, mines, plantation,
workshop, building activity, transmission of power, etc.
The provisions of this Act shall apply to all industrial establishments under the control of the
Central Government. The appropriate Government may, after giving not less than 2 months notice
of its intention to do so, by notification in the Official Gazette, extend the provisions of this Act to
any industrial establishment employing such number of persons less than 100 as may be specified
in the notification.
Important Definitions
Standing Orders [Section 2(g)] Standing Orders mean rules of conduct for workman employed in
an industrial establishment. i.e. rules relating to matters set out in the Schedule to the Act.
Standing orders must specify:
Classification of workmen i.e., temporary, casual, skilled, etc.
Manner of intimating working hours, shift change, transfers, etc.
Workmen Holidays Attendance and late coming rules Leave rules
Termination of employment, suspension, dismissal, etc.
Misconduct, Retirement age Means of redressal of workmen against unfair treatment
Any other matter as may be prescribed
Important Definitions
Appropriate Government [Section 2(b)] “Appropriate Government” means Central
Government: - in respect of industrial establishments under the control of the Central
Government or a Railway administration or in a major port, mine or oilfield. State Government: -
in all other cases.
Appellate Authority [Section 2(a)] An authority appointed by the appropriate Government by
notification in the Official Gazette, to exercise in such area, as may be specified in the
notification the functions of an appellate authority under this Act.
Certifying Officer [Section 2(c)] “Certifying Officer” means Labour Commissioner or Regional
Labour Commissioner, And includes any other officer appointed by the appropriate Government
by notification in the Official Gazette, to perform all or any of the functions of a Certifying Officer
under this Act.
Important Definitions
Employer [Section 2(d)] “Employer” means owner of an industrial establishment to which this
Act applies, and also includes the following persons: A manager named under Section 7(1)(f) of
the Factories Act, 1948. The head of the department or any authority appointed by the
Government in any industrial establishment under its control. Any person responsible to the
owner for the supervision and control of any other industrial establishment which is not under
the control of Government.
Industrial Establishment [Section 2(e)] It means an industrial establishment defined by Section
2(ii) of the Payment of Wages Act, 1936, or a factory as defined by Section 2(m) of the Factories
Act, 1948, or a railway as defined by Section 2(4) of the Indian Railways Act, 1890, or the
establishment of a person who, for the purpose of fulfilling a contract with the owner of any
industrial establishment, employs workmen.
Wages and Workmen [Section 2(i)] Have the same meanings as defined under the Industrial
Disputes Act, 1947.
Approval of Standing Orders
Step 1 - {Section 3} Every employer covered under the Act has to prepare standing orders
covering the matters required under the Act. Five copies of the standing orders shall be sent to
Certifying Officer (Labour Commissioner) for approval. The draft Standing Orders shall be
accompanied by a statement containing prescribed particulars of the workmen employed in the
industrial establishment including the name of the trade union, if any, to which they belong. If
the industrial establishments are of similar nature, a group of employers owning those industrial
establishments may submit a joint draft of Standing Orders subject to such conditions as may be
prescribed.
Step 2 - {Section 4} It shall be the function of the Certifying Officer or appellate authority to
Adjudicate upon the fairness or reasonableness of the provisions of the
The Act has imposed a duty on the Certifying Officer, to consider the reasonableness and fairness of
the Standing Orders before certifying the same. The Certifying Officer is under a legal duty to
consider that the Standing Orders are in conformity with the Act. If the Certifying Officer finds that
some provisions, as proposed by the employer relate to matters which are not included in the
Schedule, or if he finds some provisions are unreasonable he must refuse to certify the same.
Certification of any such Standing Order would be without jurisdiction.
Step 3 - {Section 5} On receipt of the draft Standing Order from the employer, the Certifying Officer
shall forward a copy thereof to the trade union of the workmen or where there is no trade union,
then to the workmen in such manner as may be prescribed, together with a notice requiring
objections, if any, which the workmen may desire to make in the draft Standing Orders.
These objections are required to be submitted to him within 15 days from the receipt of the notice.
On receipt of such objections he shall provide an opportunity of being heard to the workmen or the
employer and will make amendments, if any, required to be made therein and this will render the
draft Standing Orders certifiable under the Act and he will certify the same. A copy of the certified
Standing Orders will be sent by him to both the employer and the employees association within 7
days of the certification.
Step 4 - Effect of certification The Act is a special law in regard to matters enumerated in the
Schedule and the regulations made by the employer with respect to any of those matters. These are
of no effect unless such regulations are notified by the Government under Section 13B or certified by
the Certifying Officer under Section 5 of the Act.
Step 5 - Register of Standing Orders: {Section 8} Certifying Officer has to file a copy of all the
Standing Orders as certified by him in a register maintained for the purpose in the prescribed form.
He shall furnish a copy of the same to any person applying there for on payment of the prescribed
fee.
Step 6 – Appeals: {Section 6} Order of the Certifying Officer can be challenged by any employer,
workman, trade union or any other prescribed representatives of the workmen, who can file an
appeal before the appellate authority within 30 days from the date on which copies are sent to
employer and the workers representatives. The appellate authority, whose decision shall be final, has
the power to confirm the Standing Orders as certified by the Certifying Officer or to amend them.
The appellate authority is required to send copies of the Standing Orders as confirmed or modified
by it, to the employer or workers representatives within 7 days of its order.
Step 7 - Date of operation of standing orders (Section 7) Standing Orders shall come into operation
on the expiry of 30 days from the date on which the authenticated copies are sent to employer and
7 PANKAJ KUMAR, FCS, Chartered S I ( CISI - London), MBA ( Finance ) workers representatives or
where an appeal has been preferred, they will become effective on the expiry of 7 days from the
date on which copies of the order of the appellate authority are sent to employer and workers
representatives.
Step 8 - Posting of standing orders (Section 9) Standing order should be displayed in English and
local language on special Notice Board at or near entrance of the establishment.
Step 9- Duration and modification of standing orders (Section 10) Employers are prohibited to
modify the Standing Orders once they are certified under this Act except on agreement between
the employer and the workmen or a trade union or other representative body of the workmen.
Such modification will not be affected until the expiry of 6 months from the date on which the
Standing Orders were last modified or certified as the case may be. Section 10(2) does not contain
any time limit for making modification application by employee.
Disciplinary Action
The most important use of standing order is in the case of disciplinary action. A workman can be
punished only if the act committed by him is misconduct as defined under the standing orders.
Model standing orders contain such acts like insubordination (rebel), disobedience, fraud,
dishonesty, damage to employers' property, taking bribe, habitual absence or habitual late
attendance, habitual neglect of work, strike in contravention of law etc as misconduct.
The certified standing orders may cover other acts as misconduct, if approved by Certifying
Officer.
The Industrial Employment Standing Orders Act 1946 (IESO Act) requires employers of certain
industrial establishments to clearly define the conditions of employment by issuing standing
orders which are duly certified by the state labour commissioner. Such certified standing orders
(CSO) are required to inter alia define acts and omissions of employees, which constitute
misconduct, and provide a procedure for proceeding against an employee involved in
misconduct. Establishments which are not covered by the IESO Act, may frame service rules or
company policies (Service Rules), which have the same force as CSO.
WHAT CONSTITUTES MISCONDUCT ON
THE PART OF THE EMPLOYEE

In order to initiate a disciplinary proceeding against an employee, the employee must have violated an
established code of conduct or rule or committed an act of moral turpitude as defined under the CSO /
Service Rules. A few examples of common acts or omissions amounting to misconduct are:
Non-adherence to lawful orders of supervising authority;
Participation in an illegal strike or act of abetment of such strike;
An act of fraud resulting in economic and reputational loss to the employer and personal gain for the
concerned employee;
Habitual absence from work or even sleeping at workplace while on duty;
The prevention of Sexual Harassment Act also provides that all establishments would be required to ensure
that an act of sexual harassment on part of an employee must be categorised an act of misconduct and
indulging in such misconduct would trigger appropriate disciplinary action.
NEED FOR CONDUCTING DOMESTIC
ENQUIRY

There is no statute or law in India that specifically lays down the procedure to conduct the disciplinary
enquiry. However, various judicial precedents have laid down a basic structure of the procedure that
ought to be followed while conducting a disciplinary enquiry. Domestic enquiries cannot be conducted
arbitrarily or with any malafide intention on the part of the employer. Therefore, in order to prevent
miscarriage of justice and to prevent the disciplinary enquiry from being challenged before a judicial
forum, the procedures followed in the domestic enquiry must be in accordance with the principles of
natural justice as well as the procedures prescribed under the CSO / Service Rules of the establishment.
PROCEDURE FOR CARRYING OUT DOMESTIC ENQUIRY
Preliminary enquiry:
When a complaint is received against an employee or on occurrence of an incident indicating
misconduct, the employer may at his discretion, conduct a unilateral preliminary enquiry to determine
whether there is adequate material for proceeding with issuing a chargesheet against the employee and
conducting a domestic enquiry or not. However, if the matter is obvious enough, the domestic enquiry
can start with the issue of chargesheet.
Issue of chargesheet:
On the basis of the preliminary enquiry or otherwise, if the disciplinary authority is satisfied that a prima facie case exists, a chargesheet is
required to be issued to the employee. The principal object of issuance of a chargesheet is to provide an opportunity to the person who is
charged with misconduct to know the nature of the offence as per the CSO / Service Rules of the establishment and to be able to present his
side of the case.
As far as possible, it should be precisely mentioned in the chargesheet, under which rule or clause of the CSO / Service Rules of the
establishment, the employee is charged for misconduct. The chargesheet may also indicate the proposed punishment that the employer is
considering. A reasonable period of time of not less than 48 (forty-eight) hours should be provided to the employee to submit his reply to the
chargesheet.
Disciplinary proceedings
The employer may commence disciplinary proceedings after the employee has replied to the charges levelled against him in the chargesheet.
However, if the employee does not respond to the chargesheet or does not provide satisfactory reasons for not being able to do so, the
employer may proceed with the disciplinary enquiry ex-parte. The employer may also suspend the services of the employee with pay, pending
completion of the enquiry.
The employer must ensure that the basic principles of fairness are followed throughout the disciplinary procedure, and the person conducting
inquiry should not be in a position which may suggest bias. The employer shall be required to provide the employee with copies of
reports/statements submitted by other employees/witnesses (if any). The employee should be given adequate notice and a fair opportunity to
examine the witnesses, including himself in his defence, if he so wishes. The enquiry officer may ask the employee questions to ascertain the
facts of the case and allow him a full and fair opportunity to state his or her side of events, explain his or her conduct and state any mitigating
factors. A copy of the enquiry report and findings is to be provided to the employee, before the disciplinary authority proceeds to impose
penalty or punishment.
PUNISHMENT AND APPEAL

Subject to the gravity and nature of misconduct, the disciplinary authority may impose punishment on the
delinquent employee, such that the punishment is commensurate with the gravity of the misconduct.
Where the disciplinary authority does not intend to impose a harsh punishment for minor breaches of
discipline or acts of routine nature such as absence without leave or sufficient cause, late attendance,
negligence in performing duties, etc the disciplinary authority may impose minor punishments such as a
warning, withholding of promotion, withholding of increments of pay and fines.
For misconducts that warrant strict punishments, the disciplinary authority may suspend the services of the
delinquent employee without pay, reduce the rank of the employee to a lower grade or post, or even
terminate the employment of the concerned employee.
The disciplinary enquiry procedure adopted by the employer should also provide the employee an
opportunity to appeal against the decision of the disciplinary authority. The appellate authority shall
consider whether the findings are justified or whether the punishment is excessive or inadequate and pass
appropriate orders within a reasonable time period mentioned in the CSO / Service Rules of the
establishment.
CONCLUSION

While there are no specific timeframes prescribed for conduct of disciplinary enquiry, the
employer should complete the disciplinary enquiry within a reasonable time period to avoid
hardships to the employee. Having said that, the enquiry officer should not show undue haste in
concluding enquiry without consideration to genuine requests of the concerned employee. It is
a good practice for the disciplinary authority to take time to consider all the evidence as a
decision given immediately at the end of the meeting, without a break, could be viewed as
having been pre-judged. Further, disciplinary hearings can be stressful for employees and
witnesses. The employer should be mindful of this and, if necessary, allow for short breaks.
Disciplinary enquiries may sometimes be viewed as stigmatic even if the concerned employee is
acquitted at the end of the disciplinary hearing. Accordingly, before commencing the formal
disciplinary enquiry, the employer may adopt informal mechanisms such as verbal warning or
counseling, depending on that the severity of the offence, the impact the conduct and
performance issues it could have on the establishment.
 Misconduct
Every workplace is required to have appropriate rules reflecting the nature of the business activities,
organizational requirements, and unique characteristics of the working environment. The example
standards of behaviour set out in the annexes can help employers set expectations for employees at the
beginning of the employment relationship and notify employees of the sanctions to expect in cases of
misconduct.
The following are some subjects of possible misconduct that may be included in Annex A (minor offenses):
punctuality;
identification and uniforms;
duties and assignments;
safety and equipment;
workplace behaviour;
restricted work areas; and
workplace property.
 Misconduct
If an employee commits misconduct in one of these areas, the employer must implement a three-warning system whereby
it gives the employee a verbal warning, followed by a written warning, and lastly a final written warning if the misconduct
continues. Any misconduct in which the employee engages beyond the final warning may lead to termination of
employment without severance pay. Warnings are valid for 12 months.
Examples of serious misconduct that may be included in Annex B are:
stealing, misusing, or destroying work property;
injuring another employee
corruption;
drinking alcohol, gambling, or using drugs in the workplace;
violating confidentiality or intellectual property rights;
criminal arrests or sanctions; and
abandonment for three days (or five days in a single month).
Serious misconduct can result in termination of employment without severance pay for a first offense. The employer is not
required to give warnings for serious misconduct.
Neither of the above lists is exhaustive.
GRIEVANCE AND GRIEVANCE
HANDLING MEANING OF
GRIEVANCE
Grievance refers to any dissatisfaction or sense of injustice which is felt by an employee in relation to his pay,
working conditions, leave, recoveries of dues or other aspects of employment. Broadly speaking, “a grievance
is any dissatisfaction that adversely affects organisational relations and productivity.”
1 Grievance may sometimes be expressed and sometimes not. Even sometimes, it may not be valid also. The
grievance arises when the employee feels that something’s happening or going to happen unfair and unjust to
him in the organization. Complaints affecting one or more individual workers in respect of their wage
payments, overtime, leave, transfer, promotions, seniority, work assignment, and discharge would constitute
grievance. Where the points at dispute are of general applicability or considerable magnitude, they will fall
outside the scope of this procedure.
2 However, some type of grievances may be beneficial for the organizations, as it may direct the attention of
management towards improving the working conditions, incentive plans, leave plans etc. When grievances,
generally, minor one are not expressed by the employees they just accumulate and lead to major conflicts
inside the organization such as lockouts, strikes or any other collective disputes. Therefore, proper
administration of grievance and grievance handling is necessary in an organization as unattended grievances
may lead to frustration, low productivity, increase rate of absenteeism, feeling of discontent etc
Causes of Grievances
Whatever be the causes of grievances, they fell under the following categories- 1. Concerning
Working Conditions:- i. Unsafe and unpleasant working conditions. ii. Inadequate toilet facilities,
dirty toilets, etc. iii. Non-availability of necessary raw material, tools and machines. iv. Misfit
between worker’s ability and job. 2. Concerning Management Policy and Practices:- i. Wage rate
and its payment. ii. Incentive. iii. Seniority. iv. Promotion. v. Transfer. vi. Fines, punishments and
penalties. 3. Concerning Violation of Rules and Regulations:- i. Organizational rules and
regulations. ii. Civic laws. iii. Past practices. iv. Procedure of collective bargaining. 4. Concerning
Personality Traits:- i. Fault-finding attitude. ii. Over-ambitious. iii. Mental-tension. iv. Negative
approach to life. v. Excessive ego feelings
GRIEVANCE PROCEDURE
In an organization, employees facing problems must be listened carefully and provided with prompt responses.
For this an effective grievance procedure must be followed by the institution. Grievance procedure helps
employees to raise their concerns, if any, about their job with the management. The concerns may be related to
their working conditions, wages, leaves, promotions etc. There is a specific procedure adopted by every
institution. This procedure is made well known to all the employees and they raise their grievances according to
that procedure only. Employees can use the procedure freely without any fear.
Need for Grievance Handling Procedure: 1. Grievance procedure helps an organization to identify and the
grievance, its nature and its causes. 2. It provides an organization with an established and well known method
of processing grievances. 3. The procedure helps employees to show their feelings to the management. The
problems which can’t be solved by the first line managers can be easily resolved by it. 4. It helps the
management to detect faults in working conditions and take corrective measures for their settlement. 5. It
helps in increasing employees’ morale and his productivity. 6. It helps in keeping a check on the employers if
being biased against the workers, as their actions can be challenged by the employees. 7. It helps the
management to know the feelings and opinions of their employees about the rules and regulation of the
organization. 8. It provides uniformity in the grievance handling. 9. It helps in solving conflicts and disputes
within an organization and thus strengthening good industrial relations.
Steps followed in Grievance
Handling Procedure:
To handle grievance in a systematic manner certain basic steps are followed as
Steps in Grievance Handling Procedure:
Prompt Actions
Identification of the Problem
Defining Correctly
Collection of Facts
Analysing and solving the cause of Grievance Implementation and Follow up
Introduction to Industrial Dispute, it’s
Prevention and Settlement

Industrial disputes are organised 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 of Industrial
Disputes
The consequences of an Industrial dispute will be harmful to the owners of industries, workers,
economy and the nation as a whole, which results in loss of productivity, profits, market share
and even closure of the plant. Hence, Industrial disputes need to be averted by all means.
Prevention of Industrial disputes is a pro-active approach in which an organisation undertakes
various actions through which the occurrence of Industrial disputes is prevented. Like the old
saying goes, “prevention is better then cure”.
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. Therefore, standing orders can be a good basis for maintaining harmonious relations
between employees and employers.
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.
 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
govt: 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
Representation of workers to the JMCs should be based on the nomination by the
representation.
Objectives
Satisfy the psychological needs of workers
Improve the welfare measures
Increase workers efficiency
Improve the relation and association between workers, managers and promoters.
JMC deals with matters like:-
Employee welfare
Apprenticeship scheme
5. Suggestion Schemes:
6. 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.
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. WORKS COMMITTEE ( Section 3 of the Industrial Disputes Act, 1947 ) – a) Requirement – In
case of an industrial establishment in which 100 or more workmen are employed or have been
employed on any day in the preceding 12 months . b) Constituted – The Appropriate
Government may by special or general order require the employer to constitute in a prescribed
manner a Works Committee, consisting of equal representatives of employers and equal
representatives of workmen engaged in the establishment . The representatives of the workmen
will be selected in a prescribed manner from among the workmen engaged in the establishment
and in consultation with the registered trade union if any , as registered under the Trade Unions
Act, 1926. c) Duties of Works Committee – i) Promote Measures for securing and preserving
good Relations between the employer and the workmen , ii) Communicate with the employer
and comment on matters of common interest or concern of the workmen & iii) Initiate and
locate the source of the problem and difference of opinion in respect of matters of common
interest of the workmen engaged in the establishment .
The works committee is a committee consisting of representatives of employers and workmen
(section3). The works committee is a forum for explaining the difficulties of all the parties. The
main objective of the works committee is to solve the problems arising in the day-to-day
working of a concern and to secure industrial harmony. The function of the working committee
is to ascertain the grievances of the employees and to arrive at some agreement. The committee
is formed by general or special order by the appropriate Government in an industrial
establishment in which 100 or more workmen are employed or have been employed on any day
in the preceding 12 months. It consists of the representatives of employers and workmen
engaged in the establishment.

It shall be the duty of the working committee to promote measures for securing and preserving
amity and good relations between the employers and workmen and, to that end, to comment
upon matters of their common interest or concern and to endeavour to compose any material
difference of opinion in respect of such matters and decision of the works committees are not
binding.
Conciliation Officer:
The law provides for the appointment of Conciliation Officer by the Government to conciliate
between the parties to the industrial dispute. The Conciliation Officer is given the powers of a civil
court, whereby he is authorised to call the witness the parties on oath. It should be remembered,
however, whereas civil court cannot go beyond interpreting the laws, the conciliation officer can
go behind the facts and make judgment which will be binding upon the parties.
On receiving information about a dispute, the conciliation officer should give formal intimation in
writing to the parties concerned of his intention to commence conciliation proceedings from a
specified date. He should then start doing all such things as he thinks fit for the purpose of
persuading the parties to come to fair and amicable settlement of the dispute.
Conciliation is an art where the skill, tact, imagination and even personal influence of the
conciliation officer affect his success. The Industrial Disputes Act, therefore, does not prescribe
any procedure to the followed by him. The conciliation officer is required to submit his report to
the appropriate government along with the copy of the settlement arrived at in relation to the
dispute or in case conciliation has failed, he has to send a detailed report giving out the reasons
for failure of conciliation.
The report in either case must be submitted within 14 days of the commencement of
conciliation proceedings or earlier. But the time for submission of the report may be extended
by an agreement in writing of all the parties to the dispute subject to the approval of the
conciliation officer. If an agreement is reached (called the memorandum of settlement), it
remains binding for such period as is agreed upon by the parties, and if no such period is agreed
upon, for a period of six months from the date on which the memorandum of settlement is
signed by the parties to the dispute, and continues to be binding on the parties after the expiry
of the period aforesaid, until the expiry of two months from the date on which a notice in
writing of an intention to terminate the settlement is given by one of the party or parties to the
settlement.
Board of Conciliation:
In case Conciliation Officer fails to resolve the differences between the parties, the government
has the discretion to appoint a Board of Conciliation. The Board is tripartite and ad hoc body. It
consists of a chairman and two or four other members.
The chairman is to be an independent person and other members are nominated in equal
number by the parties to the dispute. Conciliation proceedings before a Board are similar to
those that take place before the Conciliation Officer. The Government has yet another option of
referring the dispute to the Court of Inquiry instead of the Board of Conciliation.
The machinery of the Board is set in motion when a dispute is referred to it. In other words, the
Board does not hold the conciliation proceedings of its own accord. On the dispute being
referred to the Board, it is the duty of the Board to do all things as it thinks fit for the purpose of
inducing the parties to come to a fair and amicable settlement. The Board must submit its report
to the government within two months of the date on which the dispute was referred to it. This
period can be further extended by the government by two months.
CONCILIATION OFFICERS ( Section 4 of the Industrial Disputes Act, 1947 ) – a) Appointment – The
Appropriate Government may by notification in the Official Gazette , appoint such number of Conciliation
officers as it may deem fit and necessary in the industrial establishment in a specified area, either
permanently or for a limited time. b) Purpose and objective- Appointed to mediate into and promote a
peaceful and amicable settlement of the industrial dispute in the concerned industrial establishment .
BOARD OF CONCILIATION ( Section 5 of the Industrial Disputes Act, 1947 ) – a) Appointment - The
Appropriate Government may as the occasion arises , by notification in the Official Gazette, constitute a
Board of Conciliation. b) Composition- The Board of Conciliation shall consist of a Chairman and 2 or 4
other members, as the appropriate Government thinks fit. c) Eligibility – The Chairman of the Board of
Conciliation shall be an independent person and the other members shall be persons appointed in equal
numbers to represent the parties to the industrial dispute and any person appointed to represent a party
shall be appointed on recommendation of that party and in case the party fails to appoint the member,
then the Appropriate Government shall appoint such persons as members as it thinks fit to represent that
party . d) Purpose and Objective – Promoting the settlement of an industrial dispute . e) Vacancy to the
post in the Board – In case of vacancy to the post of the Chairman, the Appropriate Government shall
notify the Board that the services of the Chairman is not available and until a new Chairman is not
appointed, the Board will not act and function.
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 judgement.
Advantages of Arbitration:
It is established by the parties themselves and therefore both parties have good faith in the arbitration
process.
The process in informal and flexible in nature.
It is based on mutual consent of the parties and therefore helps in building healthy Industrial Relations.
Disadvantages:
Delay often occurs in settlement of disputes.
Arbitration is an expensive procedure and the expenses are to be shared by the labour and the
management.
Judgement can become arbitrary when the arbitrator is incompetent or biased.
There are two types of arbitration:
Voluntary Arbitration: In voluntary arbitration the arbitrator is appointed by both the parties
through mutual consent and the arbitrator acts only when the dispute is referred to him.
Compulsory Arbitration: Implies that the parties are required to refer the dispute to the
arbitrator whether they like him or not. Usually, when the parties fail to arrive at a settlement
voluntarily, or when there is some other strong reason, the appropriate government can force
the parties to refer the dispute to an arbitrator.
Court of Inquiry:
In case of the failure of the conciliation proceedings to settle a dispute, the government can appoint
a Court of Inquiry to enquire into any matter connected with or relevant to industrial dispute. The
court is expected to submit its report within six months. The court of enquiry may consist of one or
more persons to be decided by the appropriate government.
The court of enquiry is required to submit its report within a period of six months from the
commencement of enquiry. This report is subsequently published by the government within 30 days
of its receipt. Unlike during the period of conciliation, workers’ right to strike, employers’ right to
lockout, and employers’ right to dismiss workmen, etc. remain unaffected during the proceedings in
a court to enquiry.
A court of enquiry is different from a Board of Conciliation. The former aims at inquiring into and
revealing the causes of an industrial dispute. On the other hand, the latter’s basic objective is to
promote the settlement of an industrial dispute. Thus, a court of enquiry is primarily fact-finding
machinery.
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
a) Labour Court: The appropriate government may, by notification in the official gazette constitute one or more labour
courts for adjudication of Industrial disputes relating to any matters specified in the second schedule of Industrial
Disputes Act. They are:
Dismissal or discharge or grant of relief to workmen wrongfully dismissed.
Illegality or otherwise of a strike or lockout.
Withdrawal of any customary concession or privileges.
Where an Industrial dispute has been referred to a labour court for adjudication, it shall hold its proceedings
expeditiously and shall, within the period specified in the order referring such a dispute, submit its report to the
appropriate government.
b) Industrial Tribunal: The appropriate government may, by notification in the official gazette, constitute one or
more Industrial Tribunals for the adjudication of Industrial disputes industrial tribunals have wider jurisdiction
than the labour courts relating to the following matters:
Wages
Compensatory and other allowances
Hours of work and rest intervals
Leave with wages and holidays
Bonus, profit-sharing, PF etc.
Rules of discipline
Retrenchment of workmen
Working shifts other than in accordance with standing orders
It is the duty of the Industrial Tribunal to hold its proceedings expeditiously and to submit its report to the
appropriate government within the specified time.
National Tribunal: The central government may, by notification in the official gazette, constitute
one or more National Tribunals for the adjudication of Industrial Disputes in
Matters of National importance
Matters which are of a nature such that industries in more than one state are likely to be
interested in, or are affected by the outcome of the dispute.
It is the duty of the National Tribunal to hold its proceedings expeditiously and to submit its
report to the central government within the stipulated time.
 Employee Participation & Empowerment

Employee participation and empowerment can be achieved in a small business context. To

empower employees, management must transfer some decision-making authority — this shows
employees that management has faith in them. Participation may be encouraged through a
variety of means; the result is greater employee involvement in certain aspects of your business
and greater organizational efficiency.
Employee Participation

Employee participation involves management actively encouraging staff to assist in running and
improving business processes and operations. Also known as employee involvement, employee
participation includes management recognizing individual employees' opinions and input, so
that employees understand that management views them as unique and individually valuable to
running the business.
Participation is defined as the mental and emotional involvement of people in the activities of
the group, which encourages them take responsibility for and contribute to the achievement of
group goals
Participation proves advantageous for the organization in many ways. It improves the quality and quantity of
output. It also improves the motivation levels of employees, decreases the rate of attrition and absenteeism,
and improves communication within the organization. Other lesser tangible benefits are decreases in the
number of conflicts, lower stress levels, greater commitment to goals, and lower resistance to change.
Certain prerequisites are essential for participation; for instance, adequate time should be allowed for
participation, and the potential benefits of participation should be greater than the costs involved.
For participating effectively, the employees must also have the relevant abilities and skills, and should be
interested in that particular area of work. The participants should be able to exchange their ideas effectively
with each other and they should not perceive the process as a threat to their position or status. The degree
of participation also depends on the area of job freedom for that particular department. There are many
programs that can be used to encourage participation of employees. Some programs involve employees only
to a modest extent, while other programs require a substantial amount of participation from employees.
The most common participation programs are consultative management, suggestion programs, quality
circles and TQM, middle-management committees, industrial democracy and self-managing teams. One or
more of such programs can be used within the same organization. Consultative management refers to the
practice of managers obtaining feedback and contributions from employees on certain issues for making
decisions.