Unit-V

EMPLOYEE GRIEVANCES AND DISPUTES SETTLEMENT MACHINERIES

INTRODUCTION
'Grievance' implies dissatisfaction, or distress, or suffering or grief caused
unnecessarily or illegally. In labour-management relations it is a complaint or
representation made in writing as regard to a company related matter arising
from employment or service conditions, or from conditions involving unfair
treatment by the employers, or from violation of any agreement or standing ins-
tructions. Grievance is defined as real or imaginary feeling of personal injustice
that an employee has concerning his employment relation.
Prompt redressal of grievances is a must for creating good labour-management
relations and promoting efficiency at the plant level. Grievances must not be
allowed to accumulate because grievances breed grievances. Piling up of
grievances may create a sense of frustration, disloyalty and non-cooperation
among workers who may lose interest in work and thus may affect the q u a lit y
and quantity of out put. This may also lead to indiscipline taking the form of
increased absenteeism, go slow, work to rule, demonstrations, gherao, violence
and strikes. Proper disposal of grievance needs a serious consideration for
harmonious industrial relations and maintenance of industrial peace.

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Employees sometimes do not know precisely what is making them dissatisfied.
Their own feeling may set up mental blocks that prevent them from interpreting
correctly what is happening. They may not have sufficient knowledge of human
nature or of the many social forces impinging on them. Not knowing t heir actual
grievances but still feeling dissatisfied they tends to file grievances about some-
thing else.
A grievance rate is usua lly stated in terms of, number of written grievances
presented for 100 employees in one year. A typical grievance rate is 10 to 20
a n d any rate above or below that range might indicate a la bo ur relations
situation meriting further investigation. Method of ha nd ling grievances w ill affect
the rate of grievance.
Employees of all types and at all levels develop grievances. Grievances are not
some headache, brought about by unions but may complicate the situation and
cause more grievances either temporarily or permanently. Other factors affecting
grievance rate are management job conditions, government‘s rules, general
social conditions and the home environment.
The principal object of any grievance system is to encourage human problems to
be brought to the surface. Management can learn about them and may try
corrective action. The social organization of a plant is very much like a
complicated machine. Both need constant attention and frequent adjustments.
Grievances, which are expressed, whether they are presented formally or
informally, are symptoms, which should be carefully studied by management to
determine the real causes of this "human machine" breakdown.
Almost everyone agrees that it is better to prevent fire than trying to stop them
after that have started and the same philosophy applies to grievances.
Grievance system helps to solve problems before they become serious. If
problems are allowed to accumulate unsolved, their quantity may get so great
that they may have adequate pressure "to blow off the lid of the whole section or

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department." A good grievance system can prevent the developments of
unwanted system and keep social pressures within bounds.
A grievance system like counselling is a process of employees‘ emotional release of
their dissatisfaction. It provides a means by which a frustrated and aggrieved
employee can become aggressive and strike back at the various controls, which any
group imposes, on him. Emotional release often plays an important role in individual
grievance cases. Grievance procedures help to establish and maintain a work culture
or way of life. Each group has its own particular way of living together, and the
grievance procedure helps to develop this group culture.
A manager tends to give more care to the human aspects of his job when he
knows that some of these actions are subject to challenge and review in a grievance
system. He is encouraged to develop effective compromises and working
relationship with his group. However that the pendulum can swing too far, a
supervisor may become so aware of the grievance system that he is afraid to make
decisions and hesitates to direct and discipline his men.
Grievances are human problems and are to be handled in a human way. Every
worker has the right to present his grievances to his employer and obtain their
redressal. The management has to see that grievances are so received and settled
that the worker gets the necessary sense of satisfaction. The following are the
important steps that should be taken in handling grievances.
1. Define, express and describe the nature of grievance at the heart of the
employee's complaint as early as possible, so that the wrong complaint may
not be handled and the real grievance may not turn up again to plague the
management.
2. After locating the real issue, the next step is to gather all relevant facts,
about the issue, i.e. how and where it took place and the circumstances under
which it transpired. Such fact gathering requires interviewing and listening to

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employees. This will, however, convince the employees that the management
was sincere in seeing that justice is done.
3. After getting the real picture of the grievance the management must make a list
of alternate solutions. If possible the suitability of this decision may be checked
before taking and announcing the final decision.
4. Gather additional information for checking tentative solutions for finding out
the best possible one. For this, or the past experience of the executive in
similar cases maybe helpful. Company's own record of grievances, if
maintained can also be helpful in this respect.
5. The decision having finally being reached should then be passed in clear
unequivocal terms to the employees concerned. The ultimate decision is the tool
of action.

6. Follow up the case so that it is handled satisfactorily and the trouble

eliminated. It is essential to see the attitude of the Secondly, he should feel that
the employees are fair in presenting their grievances, unless it is proved
otherwise. Thirdly, in handling grievances, management should display a
sincere interest in the problems of employees and a constructive willingness to
be of help. All executives must have confidence in themselves and should be
fully aware of their responsibilities and be willing to carry these burdens.
Such a positive attitude must be apparent to employees in order to gain their
respect and cooperation. The manager should consider the grievance
seriously and should not show a casual attitude. Grievances should be handled
in terms of their total effects upon the organisation and not merely their
immediate or individual effects.
Organisational Responsibility. Organisational responsibility for handling
grievances should be divided and shared by all levels of management and
representatives of labour unions. As a good practice or procedure the

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employees should be required to present their grievances to their immediate
superior, even if the final decision matter rests with the higher authority. This
will save the supervisor from losing his importance and respect with his
subordinates. After examining and investigating the matter at his level he can
pass it on to the higher level with his findings and recommendation. Similarly,
action can be taken by the executives at the middle level, if the matter is
beyond their jurisdiction. The top-level management has the responsibility to
decide cases which are having company wide implication. In this they may be
even assisted by personnel or labour officers with their advice and the
information collected and maintained. The top-level management must
establish the broad policies and rules, which may form the basis for handling
grievances.

In some companies labour unions assume the responsibility of getting the

grievances redressed, particularly at the middle and top-level management.

2.2 - CAUSES OF EMPLOYEE GRIEVANCES:

1. Promotions
2. Amenities
3. Continuity of service
4. Compensation
5. Disciplinary action
6. Fines
7. Increments
8. Leave
9. Medical benefits
10. Nature of job
11. Payment
12. Acting promotion
13. Recovery of dues
14. Safety appliances
15. Superannuation
16. Supersession
17. Transfer

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18. Victimization
19. Condition of work

THE MODEL GRIEVANCE PROCEDURE

The model Grievance Procedure settled by the tripartite committee has successive
time bound steps, each leading to the next in case of dissatisfaction.
1. Under the procedure, an aggrieved employee would first present his grievance
verbally to a designated officer who would 48 hours.
2. In case the worker is dissatisfied with the decision or fails to get an answer within
stipulated time, he would, personally or accompanied by his department
representative, present his grievance to the head of the department.
3. If he departmental head fails to give a decision within three days or if his decision
is unsatisfactory, the aggrieved worker can seek relief through the "Grievance
Committee‖ consisting of management and workers. This committee would

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communicate its recommendations to the manager within seven days of the
grievance reaching it.
4. If the recommendation is not made within the stipulated time, reasons there for
would be recorded, and in case unanimous recommendations are not possible, the
relevant papers would be placed before the manager for decision. The manager is
expected to communicate his decision to the worker within three days,
5. The worker would have a right to appeal to the higher authorities for revision of
the manager's decision. All such appeals have to be decided within a week of
the worker‘s petition. The worker, if he so desires, could take a union official with
him for discussion with the appellate authority.

6. In case of failure to settle the grievance even at the stage, the union and
management may refer it to voluntary arbitration within a week of receipt of the
management's final decision.
SUGGESTION :
The National Commission on Labour observed that there should be statutory
backing for the formulation of an effective grievance procedure which
should be simple, flexible and less cumbrous, and more or less on the lines of
the pre Grievance Procedure. A grievance procedure, whether formal or
informal, statutory or voluntary, has to ensure that it gives a sence of,

(i) satisfaction to the individual worker,

(ii) reasonable exercise of authority to the manager, and
(iii) participation of unions.

The participation of the unions is necessary, because ultimately the unions will
be answerable to members. To make procedure the effective, it is important
that it should be simple and have a provision for at least one appeal. Besides,
the procedure should be time-bound and have a limited number of steps.

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Hence, the Commission recommended that a grievance procedure should
normally provide for three steps.
(a) approach to the immediate superior;
(b) appeal to the departmental head/manager; and
(c) appeal to the bipartite grievance committee representing management
and recognised union.

The constitution of the committee should have a provision that in case a

unanimous decision is not possible, the unsettled grievance may be referred to
an arbitrator. At earlier stages a worker should be free to be presented by a co -
worker and an officer of the union.

Considering the varying size and nature of units, the Commission suggested
that it would not be desirable to be too rigid to have standardised procedure in
all sizes of units. Hence, the Commission said that some informality in the
approach may be required in case of small units, say units employing less than
100 workers, because in them it is easier both for the management and workers
to have close contacts and personal approach. On the other hand, it would be
more appropriate to introduce a formal procedure in units employing 100 or more
workers.
COLLECTIVE BARGAINING

In political life democratic countries have established systems of discussion

through representative assemblies for determining the laws by which they shall

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be governed. In international relationships we have gone only some way along
this road. Mean while in the world of industry and commerce a process has been
evolving the past century for the negotiation between management and
employees of terms and conditions of service and the establishment of peaceful,
orderly relations at the place of work through mutual settlement of differences
and the cooperation of all those engaged in the enterprise. This process is known
as Collective Bargaining.
The development of collective bargaining has been closely associated with the
growth of trade unions in all countries and sometimes with the growth of
employers associations also. However, the Webbs did not consider that the
collective bargaining depended on or necessarily had its origin in trade unions.
If facts they pointed out that it could and take did place in British industry
through committees set up to settle specific issues, but they added that, "it was
the Trade Union alone which can provide the machinery for any but its most
casual and limited application.‖ Thus, trade unions could provide machinery for
the settlement of any dispute.
It generally began with craft unions of skilled workers or organised to protect
their skill by preventing employers from under cutting jobs rates. The craft
unions discoverd that it was only by strengthening their organisation and forcing
the issues at district and national level that genuine standards could be achieved,
It was only at the end of nineteenth century that general unions began to
develop in Britain and to bargain at all levels of employees.
A bargain is an agreement, and it takes at least two to make a bargain. But
collective bargaining as opposite of individual bargaining which take place
between management and a worker, as an individual, apart from his fellow
employees.
A collective bargain is an agreement made by or on behalf of a group, and
collective bargaining is, therefore, the method by which a group agreement is

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reached between the representatives of employers aid the employees. Thus,
collective bargaining is method of fixing the terms of employment by means of
bargaining between an organised body of employees and an employer or
association of employers, usually acting through duty authorized agents. The
essential thing is that collective bargaining intends to put t the workers on a
footing of equality with employers at the occasion of a bargain in regard to
the terms of employment. It should, however, be noted that collective
bargaing is a bargain between interested parties not a decree from outside
parties.
Beatrice Webb, a famous socialist writer and speaker, is credited with the
coinage of the term "Collective Bargaining. Accordingly, collective bargaining
takes place when a number of work-people enter into negotiation as bargaining
unit with an employer or groups of employers with the object of reaching
agreement on concilitions of employment for the work people concerned.
Collective bargaining has been defined in the Encyclopaedia of social
Sciences as "a process of discussion and negotiation between two parties,
one or both of whom is a group of persons acting in concert. The resulting
bargaining is an understanding as to the terms or conditions under which a
continuing service is to be performed More specially, collective bargaining is
the procedure by which an employer or employers and a group of employees
agree upon the conditions of work.
Collective bargaining has also been defined as he process of employer-union
negotiation for the purpose of reaching agreement as to the terms and conditions
of employment for a specified period.
The National Association of Manufactures has stated that in its simplest
definition, the process of collective bargaining is a method by which
management and labour may explore each others problems and view points, and

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develop a frame work of employment relations within which both may carry on
their mutual benefit.
In a workers education manual issued by the International Labour Office
collective bargaining is defined as "negotiations about working conditions and
terms of employment between employer, a group of emplo yers or one or more
employers organisations, on one hand, and one or more representative workers
organisations on the other, with a view to reaching agreement―, and it is stated
that "the terms of an agreement serve as a code defining the rights and
obligations of each party in their employment relations one another; it fixes a
large number of detailed conditions of employment ; and during its validity
none of the matters it deals with care in normal circumstances give grounds for a
dispute concerning on industrial worker.
Whatever, definition may be accepted, the essence of collective bargaining,
however, lies in the readiness of the parties and the attitude of mutual
acceptance. Bargaining includes give and take the offers and counter-offers
which may precede any agreement. Collective bargaining deals with the
emotions of people as well as with the logic of their interests. Collective
bargaining, thus, becomes a medium to give expression to pent up emotions.
Nature of Collective Bargaining
Collective Bargaining is a continuous process. Even after an agreement is
reached a number, of aspects remain incomplete, for new situations always crop
up. These situations require negotiations, interpretations and get-together. Local,
industry-wide and nation-wide labour relations and developments affect the
agreement once reached. Since negotiations for a new agreement are under way
collective bargaining, maintains a continuity as a process.
Collective bargaining is an institutional process of representations. The chief
participants in collective bargaining do not act for themselves. They are
representatives of their respective institutions. Thus, collective bargaining as

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an institution unfolds a device for safeguarding interests of employees and
employers and strengthen their organisations. It involves the maintenance of
labour unions with certain objectives and group interests to act as a bargaining
agent. Employers or their groups or association also develop an organisation,
working rules, regulations and a common discipline. Hence, in collective
bargaining the employer does not deal directly with his workers. He deals
with an institution (may be representatives of the unions) authorised to represent
the workers purposes of negotiating and administering the terms and conditions
of employment. This representative nature of the organised union-management
relationship applies to administration as well as to negotiation.
Collective bargaining and state intervention co-exist in the mixed economy of
India, although in theory they are contradictory to each other. Collective
bargaining has been accorded acceptance not only as an instrument for
maximization of production but also as a means for equitable distribution.
Collective bargaining, thus, has been inter-twined with the political oriantations
of the labour movement that produce conditions necessitating state arbitration.
Objects of Unions in Collective Bargaining
The central focus of union activity is collective bargaining, the process of
arriving at compromises which settle disputes between an employer and an
organisation of his employees. It is called collective bargaining because
the employees, as a group, select representatives to meet and discuss
differences with the employer.
The unions objects is Collective Bargaining may be the following:

(1) To establish and build up union recognition as an authority the work place.
(2) To raise workers standards of living and win a better share in company's
profits.

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(3) To express in practical terms the workers desire to be treated with due
respect and to achieve democratic participation in decisions affecting their
working conditions.
(4) To establish orderly practices for sharing in these decisions and to settle
disputes which may arise in the day to day life of the company.
(5) To achieve broad general objectives such as defending and as promoting the
interests throughout the country.
Thus, the objective of the trade unions is to safeguard the interest of workers
and to establish industrial peace in dignified manner through collective
bargaining. It is said that, 'industrial peace is something more than the
mere absence of conflict. The absence of strike is not necessarily an
indication of real industrial peace. More adverse consequences might flow
from steady deterioration of relations in industry than from an
occasional spectacular stoppage of work. Just as health in human body
was something more than an absence of diseases, so health in industrial body is
the conscious and laborious creation of man. A really healthy collective
bargaining would see that benefits derived from industry were equitably
distributed among all the parties involved—the employers, the unions, the
management, the customers, the suppliers, the public. Thus, Haribison writes,
"collective bargaining is a process of accommodation between two institutions
which have both common and conflicting intertsts. Its aim is not to seek
industrial peace at any price. Constructive bargaining should seek to promote the
attainment of the commonly held goals of a free society."

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In collective bargaining the object is to reach agreement on wages and other
conditions of employment about which the parties begin with divergent view
points but try to reach a compromise. When the bargain is reached the terms of
the agreement are put into effect.
The main task of joint committees such as works councils is the exchange of
information and suggestions on matters of common interest such as health,
safety, welfare and productive efficiency, and the outcome of discussions may
take the form of recommendations but the final decision is left to the
management.
Even if there is resemblance between such recommendations and parts of a
collective agreement; in works councils the emphasis mainly on cooperation
based on common interests, whereas in collective bargaining it is on
reconciliation of divergent interests or demands.
The success of collective bargaining, according to Carpenter, depends on the
extent to which both sides understand the essential nature of the bargaining
process. Negotiation, he says, should be an appeal to reason, a process by which
the problems of both sides are thoroughly explored, and both the management
and the union should enter into negotiation with the expectation that their ideas
may be changed in the process.
In a single sentence, negotiations are a process by which men‘s mind and
opinions are changed and should be approached by both sides with an
understanding that it is likely to produce these results.
Collective bargaining starts with claims advanced by both sides—demands
from the union and statement by management on how far they can conced
these demands and what they want in return —just as in the bazar vendor
and buyer start by quting prices which are at variance, each knowing that he
will have to make some accommodation in the end in order to reach a final
agreed price. Frankly recognising this, the Canadian Labour Degress has

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declared: "Bargaining would not be bargaining if each side did not start off
by asking more than it really excepts to get; bargaining in itself presupposes
some amount of gives and take."
FUNCTIONS OF COLLECTIVE BARGAINING
Collective bargaining is a technique of social change, some-times performing
its function smoothly and at other times threatening to blow up. The
performance of its function can be viewed under the following three headings.

(1) Collective bargaining acts as a technique of long-run social change,

bringing rearrangements in power hierarchy of competing groups.
(2) Collective bargaining serves as peace treaty between two parties in
continual conflict.
(3) Collective bargaining establishes a system of industrial jurisprudence,
defining the rights and duties of the conflicting parties

UNION GOALS IN COLLECTIVE BARGAINING

In approaching collective bargaining, a union has series of goals, some
economic and some non-economic, not all of which can be won from the
employer at one time. Further more, a number of the goals are in conflict with
each other. Therefore, union decides to give priority to these goals, and for

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giving priority union may classify the goals. There are many ways of
classifying the goals union seek to achieve through collective bargaining.
The two categories used here are economic and non- economic, they may also
be classified according to the members as individuals opposed to the unions as
an institution, according to leader versus rank and file, or according to intra-
union interest groups, such as the young against the old or one group of skill
against another.
It follows, then, that the priority ranking of the demands by the union
represents a compromise between the different pressures within the union.
The compromise must, of course take into account the prevailing economic
environment.
1. Economic Goals
The unions major economic goal is to increase wages constantly. In
general terms, this means "more and more " or ―as much as we can get." This
could mean the maximum wage rate or the maximum wage bill, or some
variation of two. Generally, unions place greater emphasis on the wage rate
than the total amount paid out in wages by an employer, because after a wage
increase, multiplant firm might close down its less efficient plants, and
marginal firms might be forced out of business. This may cause unemployment.
Therefore, the best technique to enhance the economic position of the members
is through raising the wage rate. However, there are some exception to this,
particularly in construction and clothing industries. For example, a wage
increases of house painters may have a significant effect on the do it yourself
trend; or a wage in unionised clothing firm may shift employment to
unorganised firms.
The fact that unions generally emphasise the wage rate rather than employment
does not mean that union neglect the latter. However, the approach to this
goal is usually not through wage rate adjustments, but rather through regulation

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of hours, seniority, and working rules. Thus, whenever unemployment
increases significantly as a result of increase in wage rates, unions will
propagandize and bargain for shorter work weeks rather than decreased wages.
Unions also attempt to enhance the employment of their members by devising
and enforcing work rules. In many cases they try to place restrictions on
production, limiting the type of machinery used and the speed at which the
machinery is to be operated. In some instances the work rules are designed to
protect the life and limb of the employees or to avoid "speed ups" and
unhealthful working for the workers. In some instances what was
originally necessary for the workers safety may, after a change in the
methods of production become outdated. Never-the less, the union may still
insist on the working rule in order to provide more jobs for the members.
In deciding which economic goals to pursue most vigorously, unions must
choose, then, between wages, hours, and working rules. More, fringe benefits
should be included, since they add to the employer‘s labour cost.
2. Non-economic Goals
The social and psychological need center around the workers desire to express
his individuality and at the time to be an accepted members of his social
group. Workers, if they are to feel they have some distinct personal worth,
must be able to complain to their employers without fear of reprisal. They
want to be more than a lump of economic assets in a depersonalized enterprise.
The workers feeling of security, of protection against arbitrary or spitefu l action
by his supervisor, are of un-measurable value to him. For this reason union is
worth while to many workers regardless of whether it is able to bring them
higher wages than they otherwise would have received. It satisfies the need of
feeling secure in their jobs and in their status as individual.
The union also provide an opportunity for the worker to become active in social
organisation in association with his fellow workers as equals.

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The second variety of non-economic goals sought through collective
bargaining is aimed at protection of the union as an institution-. When an
employer threatens to break a union or when a rival union attempts to raid its
membership, the fight to protect itself becomes more urgent to a union than
securing immediate wage increase.

PREREQUISITES OF COLLECTIVE BARGAINING

Collective bargaining could be an effective instrument in the settlement of

disputes and advancement of the cause of labour if certain basic conditions are
fulfilled. These basic conditions have been given as follows:
1. Existence of a truly representative, enlightened and strong union
functioning strictly on constitutional trade union lines.
2. Existence of a progressive and strong management, conscious of its
responsibilities to the owners of business, the employees, the consumers and
the country.
3. Unanimity on the basic objectives and recognition of of mutual rights
and obligations.
4. Delegation of authority to local management, where there are several units
of a company.
5. Acceptance of a fact finding approach and willingness to use new
techniques and tools for the solution of industrial problems.
COLLECTIVE AGREEMENTS IN INDIA :
Collective agreements are the result of negotiations between the representatives
of the employer's association and trade union These agreements can be made on
matters like rate wages, hours of work, holidays with pay and the disciplinary
procedure etc. In short, they may relate to working and service conditions.
In India, collective agreements were not common in the past. The Royal
Commission on Labour found that the only attempt made to set up machinery
for regulating the relations between a group of employers and their work-
people was at Ahmedabad. However, the situation has changed since
independence, the trade unions have been growing and agreements with

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employers have become more common. A sample study made by Employers

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federation of India for the years 1956-60 reveals that the number of disputes
settled by collective agreements during the period in question varied between 32
per cent and 49 percent in the units studied. Broadly the agreements are of the
following types:

(i) Agreements which have' been drawn-up after direct negotiations between
the parties are purely voluntary in character for the purpose of their
implementation;

(ii) Agreements which combine the elements of voluntariness and compulsion

i.e. those negotiated by the parties but registered before a conciliator as
settlements; and
(iii) Agreements which acquire legal status because of successful discussion
between the parties when the matters in dispute were under reference to
industrial tribunals/courts and could be considered subjudice, the
agreements reached being recorded by the tribunals/courts as consent
award.

CONCILIATION AND MEDIATION:

The absence of permanently constituted organs of negotiations and its creation
when a conflict is threatened does not solve the disputes effectively in the
world of industry. Moreover, a temporary phase only provides hostility to
bargaining. It deprives the employers and the employees of a feeling of
partnership in a joint venture. The values of organisation and work get
jeopardized due to the inability of the parties in conflict to avoid extreme action.
To avoid the shock in adjustment and working jointly in a cordial atmosphere
necessitate the help of outsiders in negotiations. Thus, conciliation and
mediation are the methods of settling industrial disputes with ‗help of an
outsider. It is considered necessary when mutual negotiations breaks down and
issues remain unresolved.

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MEANING OE CONCILIATION AND MEDIATION
Agreements are arrived at mutually by an intermediary who either mediates or
conciliates. Conciliation is a method or a process which brings together the
representatives of workers and employers before a conciliator (a third person
or a group of persons). The main objective is to help mutual discussion
and persuasion in order to come to an agreement. Thus, conciliation is
usually employed when management and labour are in dead-lock in negotiating
a trade agreement. In conciliation both parties look towards the conciliators
with the intention that he should help us to agree. The conciliator's aim is
to reconcile the parties bringing them to an agreement which is very much
similar to that of the mediator. He offers his advice and suggests ways of
resolving the controversy. The parties may or may not accept his
recommendations but once they accept them, they become legally bound by
them.
Again, the aim of the conciliator is to break the dead lock, if any, explain the
stand and view-points of one party to the other‘, convey messages and
generally keep the negotiation going Suggestions may come from the
conciliator or the mediator, but the parties are tree to accept reject them. It is
the parties who ultimately decide the issues. They may come to an agreement
or they may not. These are the methods, which are primarily based on the
principles of collective bargaining.
Mediator helps the parties at their initiation or at least with the consent of both
parties, but it is not necessary in conciliation It is a passive act of intervention
by a third party, i.e. the mediator. A mediator does not impose his will or
judgement upon the disputants but helps the parties to agree and reach a final
decision of their own making. Thus, mediation by an outsider helps the parties
towards positive settlement of a dispute without imposing any personal will or
judgement. A compromise formula is suggested by the mediator with a view to

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bring about voluntary agreement between the parties. But the parties may or
may not accept it. Thus, a mediator plays a more positive role by am sing the
views and interest of the parties in dispute and by advancing suggestion for
compromise for their consideration.
Conciliation and mediation are similar in that neither is compulsory nor
judicial. The mediator has been described as a confidential adviser and an
industrial diplomat. His chief function is to help the two sides to come to an
agreement of their own accord, he does not impose his will or judgement but
helps the parties to reach to an agreement. Thus, it is very much similar to
conciliation. Hence, the term conciliation is often used for the method
which would be more properly described as mediation Obviously, the objective
of conciliation and mediation is the same that is to avert an impending rupture
between the disputant or if the rupture has already taken place to bring them
together as soon as possible without resorting to arbitration. It should,
however, be noted that conciliation is based on mutual negotiation while
mediation is based on negotiation through the third party. There is
intervention of third party both in conciliation and mediation out the conciliator
is more active and more intervening than the mediator.
ARBITRATION

Arbitration is the means of securing a definite judgment or award for any

controversial issue by referring it to a third party. It may imply the existence of
an authority set apart to adjudicate on industrial disputes under recognized
conditions. Arbitration is by mutual consent of the parties. When the
Government decides to refer a case to a Labour Court or Industrial Tribunal, it is
called adjudication. Thus, compulsory arbitration is referred to as adjudication.

Arbitration involves the exercise of an authority to bring about an agreement or

to help the process of settlement by adjudicating on industrial disputes. The

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arbitrator has powers to probe and in the process becomes acquainted with the
facts of the industrial situation.

Arbitration in industry shares several common features with conciliation and

mediation. Just like conciliation and mediation, there is also intervention of third
party. It can either be voluntary or compulsory like conciliation and mediation.
The note of distinction between arbitration an conciliation is that in the former
the decision is finding on the parties, while in the case of later the parties may or
may not accept the decision. Arbitration is characterized by a different approach
than conciliation and mediation. Arbitration procedure is more of judicial nature
and the award has the resemblance of a court‘s judgment. The arbitrator has his
own decision and does not care for the recommendations of the parties. The
procedure of conciliation is not of judicial nature and the conciliator persuades
the parties towards positive settlement of dispute without imposing any personal
will or judgment.

METHODS OF ARBITRATION

Voluntary Arbitration:

The arbitration can either be voluntary or compulsory. Arbitration is voluntary,

if the parties, having failed to settle their differences by negotiation agree to
submit their cases to arbitrator whose decision they agree to accept. Arbitration
is voluntary in the sense that the disputants are free to give their consent or to
refuse to submit their differences to the decision of the arbitrator. Hence, the
fundamental character of voluntary arbitration is the voluntary submission of
cases to an arbitrator, and therefore, it does not necessitate the subsequent
attendance, of witness, investigation and enforcement of awards may not be
necessary, because there is no compulsion. Under voluntary arbitration, it is not
necessary that there may be an ―arbitration agreement‖ or ―arbitration clause‖.

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The former refers to the arrangement for submission of certain types of disputes
while the latter is concerned with the disputes to occur in future.

Compulsory arbitration or adjudication means, when the Government decides to

refer the dispute to arbitration and for the parties to abide by the award of the
arbitration and at the same time prohibit parties from causing work-stoppages.
The main idea behind the imposition of compulsory arbitration is to maintain
industrial peace by requiring the parties to refrain from causing work-stoppages
and providing a way for settling the dispute.

Compulsory Arbitration:

Where parties fail to arrive at a settlement by the voluntary method, recourse is

taken to compulsory arbitration. Arbitration is compulsory, when parties to the
dispute are compelled to submit their cases to an outside person, board or court
and the decision of such agencies is binding upon them. Thus, arbitration when
compulsory follows statutory action and necessitates the submission of case by
parties to an arbitrator. Generally, when the parties fail to arrive at a settlement
by voluntary methods, the Government under statutory provision refer the case
to an authority for adjudication and enforces its award on the parties. Hence,
adjudication is a form of arbitration, which implies compulsory arbitration. The
rules and procedures of arbitration are similar to those commonly followed in
courts of law. Thus, compulsory powers of investigation and compulsory
enforcement of awards, with penalties for breaches of these awards.
Mediation
Mediations is a process available to the parties involved in contract negotiations
by which an outside party is called in by union and management to help them
reach a settlement. The neutral mediator does not ultimately resolve the dispute,
but instead tries to move the parties towards agreement by maintaining
communication and suggesting alternative solutions to dead-locked issues. The
mediator‘s function is to provide a positive environment for dispute resolution

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drawing on extensive professional experience in the field of labour
management interaction. The mediator must possess thorough knowledge of the
issues, and an ability to innovate solutions to problems. The mediator must be an
effective communicator, know the importance of timing and most of all, have
the confidence and trust of the parties. A mediator must possess attributes such
as integrity, impartiality and fairness.
Conciliation
Conciliation is a process by which representatives of workers and employers are
brought together before a third person or a group of persons with a view to
persuade them to come to a mutually satisfying agreement. The objective of this
10
method is to settle disputes quickly and prevent prolonged work stoppages if
they have already occurred. The essential hallmarks of this approach are :
1. The conciliator tries to bridge the gulf between the parties, if possible.
2. If he does not fully succeed, he tries to reduce the differences to the extent
possible. He acts as a conduit through which message are passed from one
side to the other, coupled with his own interpretations facilitating the
understanding of disputing parties. To the extent possible, he tries to ‗clear
the fog‘ surrounding the issue.
3. He persuades parties to take a fresh look at the whole issues, through a
process of give and take and explore the possibility of reaching a consensus.
4. He only advances possible lines of solutions for consideration by the
disputants. He never tries to force the parties to accept his viewpoint. He
never offers judgement on the issues. If parties feel that the suggestions
offered by the conciliator are acceptable, they may strike a deal.
5. The conciliator need not follow the same path in each case. The process of
conciliation, therefore, has a certain amount of flexibility and informality
built around it.
The conciliation machinery in India consists of the following:

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Conciliation Officer
According to the Industrial Disputes Act, 1947, the Central and State
governments can appoint a conciliation officer to mediate in all disputes brought
to his notice. The officer enjoys the powers of a civil court. He can call and
witness disputing parties on oath and interpret the facts of the case. He is
expected to give judgement within 14 days of the commencement of the
conciliation proceedings. His judgement is binding on all the parties to the
dispute. The conciliation officer has a lot of discretion over the ways and means
to be followed to bring about a settlement between the disputants. He ―may do
all such things as he thinks fit for the purpose of inducing the parties to come to
a fair and amicable settlement of disputes‖.
b. Board of Conciliation
When the conciliation officer fails to resolve the disputes between the parties,
the governments can appoint a Board of Conciliation. The Board of Conciliation
is not a permanent institution like the Conciliation officer. It is an adhoc,
tripartite body having the powers of a civil court, created for a specific dispute.
It consists of a Chairman and two or four other members nominated in equal
number by the parties to the dispute. The chairman who is appointed by the
government should not be connected with the dispute or with any industry
directly affected by such dispute. The board, it should be remembered, cannot
admit a dispute voluntarily. It can act only when the dispute is referred to it by
the Government. The board conducts Conciliation proceedings in the same way
as conducted by a Conciliation officer. The board, however, is expected to
submit its report within two months of the date on which the dispute was
referred to it. The Boards of Conciliation are rarely constituted by the
government these days. In actual practice, settling disputes through a
conciliation officer was found to be more flexible when compared to the Board
of Conciliation.

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Voluntary Arbitration
When conciliation proceedings fail to settle the dispute, the conciliation officer
may persuade the conflicting parties to voluntary refer the dispute to a third
party known as Arbitrator, appointed by the parties themselves. The arbitrator
listens to the viewpoints of both parties and delivers an award or judgement on
the dispute. He, however, does not enjoy judicial powers. The arbitrator submits
his judgement on the dispute to the government. Thereafter the government
publishes the award within 30 days of its submission. The award becomes
enforceable after 30 days of its publication. The arbitration award is binding on
all the parties to the agreement and all other parties summoned to appear in the
proceedings as parties to dispute. Before delivering the judgement, the arbitrator
is expected to follow due procedure of giving notice to parties, giving a fair
hearing, relying upon all available evidence and records and following the
principles of natural justice.
Arbitration is effective as a means of resolving disputes because it is:
1. Established by the parties themselves and the decisions is acceptable to
them, and
2. Relatively expeditious when compared to courts or tribunals. Delays are cut
down and settlements are speeded up.
Arbitration has achieved a certain degree of success in resolving disputes
between the labour and the management. However, it is not without its
weakness. Some weaknesses are:
1. Arbitration is expensive. The expenditure needs to be shared by the labour
and the management.
2. Judgement becomes arbitrary if there is a mistake in selecting the arbitrator.
3. Too much arbitration is not a sign of healthy IR.

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Adjudication
Adjudication or compulsory arbitration is the ultimate remedy for the settlement
of disputes in India. Adjudication consists of settling disputes through the
intervention of a third party appointed by the government. An industrial dispute
can be referred to adjudication by the mutual consent of the disputing parties.
The government can also refer a dispute to adjudication without the consent of
the parties. The Industrial Disputes Act, 1947, provides three-tier adjudication
machinery – namely Labour Courts, Industrial Tribunals and National Tribunals
– for the settlement of industrial disputes. Under the provisions of the Act,
Labour Courts and Industrial Tribunals can be constituted by both Central and
State governments but the National Tribunals can be constituted by the Central
government only.
a. Labour Courts (section-7)
The labour court consists of one independent person (called as presiding officer)
who is or has been a judge of a High Court, or has been a district judge or
additional district judge for not less than 3 years or has held any judicia l office
in India for not less than 7 years. The labour court deals with disputes relating
to: (a) the property or legality of an order passed by employer under the standing
orders; (b) the application and interpretation of standing orders; (c) discharge o r
dismissal of workers including reinstatement of, or grant of relief to wrongly
dismissed persons; (d) withdrawal of any statutory concession or privilege; (e)
illegality or otherwise of a strike or lockout; and (f) all matters except those
reserved for industrial tribunals.
b. Industrial Tribunal (section-7A)
This is also a one – man adhoc body (presiding officer) appointed by the
Government. It has a wider jurisdiction than the labour court. The Government
concerned may appoint two assessors to advise the presiding officer in the
proceedings. An industrial Tribunal can adjudicate on the following matters; (a)

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wages including the period and mode of payment; (b) compensatory and other
allowances; (c) hours of work and rest periods; (d) leave with wages and
holidays; (e) bonus, profit sharing, provident fund and gratuity; (f) shift
working, otherwise than in accordance with the standing orders; (g)
classification by grades; (h) rules of discipline; (i) rationalization; (j)
retrenchment and closure of establishment; and (k) any other matter that may be
prescribed.
c. National Tribunal (section-7B)
This is the third one-man adjudicatory body to be appointed by the central
government to deal with dispute of national importance or issues which are
likely to affect the industrial establishments in more than one state.
It consists of one person only, who is an independent person and below 65 years
of age. He should be or has been judge of a High Court or held the office of
Chairman or any other member of the Labour Appellate Tribunal for a period of
not less than 2 years.
The Central Government may, if it thinks fit, appoint two persons as assessors to
advise the National Tribunal. Duties of a national tribunal are to hold
proceedings of an industrial dispute referred to it by the Central Government
expeditiously, and to submit the award to the referred on the conclusion thereof.
When a national tribunal has been referred to, no Labour Court or Industrial
tribunal shall have any jurisdiction to adjudicate upon such a matter.

WORKERS PARTICIPATION IN MANAGEMENT

Definitions

The concept worker‘s participation in management (WPM) is a broad and

complex one. Depending on the socio-political environment and cultural
conditions, the scope and contents of participation may change. In any case, a
common thread running through all interpretations is the idea of associating
employees in managerial decision-making. The view expressed by the
International Institute for Labour Studies (Bulletin 5) is worth quoting here.
WPM has been defined as, ―the participation resulting from practices which

29
increase the scope for employee‘s share of influence in decision-making at
different tiers of organizational hierarchy with concomitant assumption of
responsibility‖.

The concept of worker‘s participation in management crystallizes the concept of

Industrial Democracy, and indicates an attempt on the part of an employer to
build his employees into a team which work towards the realization of a
common objective .

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According to Davis, ―it is a mental and emotional involvement of a person in a
group situation which encourages him to contribute to goals and share
responsibilities in them‖ 2.

―Worker‘s participation in management is a resounding phrase, bridging the past

and the future. It echoes the millennial vision of nineteenth century thinkers
while heralding the evolution of new forms of industrial organization under
twentieth century pressures. The word ‗workers‘ participation‘ is plentifully
supplied with ideas, institutions and opinions 3.
Mamoria defines it as a system of communication and consultation either formal
or informal by which employees of an organization are kept informed about the
affairs of the undertaking and through which they express their opinion and
contribute to management decisions4.

The word ‗participation‘ means sharing the decision-making power with the
lower ranks of the organization in an appropriate manner. Participation has a
unique motivational power and a great psychological value. It promotes
harmony and peace between workers and5 management. When workers
participate in organizational decisions, they are able to see the big p icture
clearly, i.e., how their actions would contribute to overall growth of the
company. They can offer feedback immediately based on their experiences and

31
improve the quality of decisions significantly. Since they are involved in the
decisions from the beginning, they tend to view the ‗decisions‘ as ‗their own‘
and try to translate the rhetoric into concrete action plans with zeal and
enthusiasm. Participation makes them more responsible. They are willing to
take initiative and contribute cost-saving suggestions and growth-oriented ideas.
The feeling of being treated as equals, forces them to repose their confidence in
management and accept plans of rationalization, expansion, etc., without raising
serious objections. Since they are treated with respect now they begin to view
the job and the organization as their own and commit themselves to
organizational activities wholeheartedly.

Output cannot be increased unless there is effective co-operation between labour

and management at all levels. The way of ensuring this is to satisfy their social
and psychological need besides economic ones. Workers‘ participation in
management is one of the most significant modes of resolving industrial
conflicts and encouraging among workers a sense of belongingness in
establishment where they work.
Moreover, India which has launched a vast programme of industrialization, the
need for workers‘ participation is all the more important. It is in reorganization
of these need that under the Second, Third, Fifth and Seventh plans specific
measures have been suggested for worker‘s participation.
The scheme of Joint Management Council, popularly known as Workers‘
participation in management, was introduced on voluntary basis only after over
a decade. However, the scheme of Joint Management Council for various
reasons could not succeed. In order to meet this unhappy state of affairs and to
secure greater measure of co-operation between labour and management to
increase efficiency in public service, the Government of India on October 30,
1975 introduced a scheme of workers‘ participation in management at shop floor
and plant levels. In addition to these, there are voluntary schemes of making the

32
workers‘ shareholders and Directors in the Board of Management. The
inclusion of the concept of workers‘ participation in management in the
Directive Principles of State Policy through the Constitution (Forty-second)
Amendment Act, 1976, gave a momentum to the institution of worker‘s
participation in management. After the constitutional Amendment the Central
Government expressed its intention to amend the 1975-Scheme and to provide
for effective participation of workers in production processes and accordingly
amended the scheme in January 1977.
There are two distinct groups of people in an undertaking, viz., ‗managers‘ and
‗workers‘ performing respectively two separate sets of functions which are
known as ‗managerial‘ and ‗operative‘. Managerial functions are primarily
concerned with planning, organizing, motivating and controlling in contrast with
operative work. A self-employed man may carry out both these functions if the
area of his operations is very small. But in case of big organizations, these
functions are to be performed by different sets of people. Workers‘ participation
in management seeks to bridge this gap authorizing workers to take part in
managerial process. Actually, this is a very wide view of the term worker‘s
participation in management and this is not practically possible.
Participation may take two forms. It may be: (1) ascending participation, and
(2) descending participation. In case of ascending participation, the workers
may be given an opportunity to influence managerial decisions at higher levels
through their elected representatives to joint councils or the board of directors of
the company. But in descending participation, they may be given more powers
to plan and to make decisions about their own work (e.g. delegation and job
enlargement). This form of participation is quite popular in many organizations.
Implications of Workers Participation in Management

The implications of workers‘ participation in management have been

summarized by the International Labour Organization thus:

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1. Workers have ideas which can be useful.
2. Upward communication facilitates sound decision-making. Workers
may accept decisions better if they participate in them.
3. Workers may work more intelligently if they are informed about the
reasons for and the intention of decisions that are taken in a participative
atmosphere.
4. Workers may work harder if they share in decisions that affect them.
5. Workers participation may foster a more cooperative attitude amongst
workers and management thus raising efficiency by improving team
spirit and reducing the loss of efficiency arising from industrial disputes.
6. Workers participation may act as a spur to managerial efficiency.

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Need of Workers’ Participation

Worker‘s participation in management has assumed great importance these days

because of the following advantages:

1. Reduced industrial unrest: Industrial conflict is a struggle between two

organized groups which are motivated by the belief that their respective
interests are endangered by the self-interested behaviour of the other.
Participation cuts at this very root of industrial conflict. It tries to
remove or at least minimize the diverse and conflicting interests between
the parties, by substituting in their place, cooperation, homogeneity of
objects and common interests. Both sides are integrated and decisions
arrived at becomes ―ours‖ rather than ―theirs‖.
2. Reduced misunderstanding: Participation helps dispelling employee‘s
misunderstanding about the outlook of management in industry.
3. Increased organization balance: If worker are invited to share in
organizational problems, and to work towards common solutions, a
greater degree of organizational balance occurs because of decreased
misunderstanding of individual and group conflict. Participation leads to
increased understanding throughout the organization. People learn that
others have problems beside themselves.
4. Higher productivity: Increased productivity is possible only when there
exists fullest co-operation between labour and management. It has been
empirically tested that poor ‗labour management relations‘ do not
encourage the workers to contribute anything more than the minimum
desirable to retain their jobs. Thus, participation of workers in
management is essential to increase industrial productivity.
5. Increased Commitment: An important prerequisite for forging greater
commitment is the individual‘s involvement and opportunity to express
himself. Participation allows individuals to express themselves at the
work place rather than being absorbed into a complex system of rules,
procedures and systems. If an individual knows that he can express his
opinion and ideas, a personal sense of gratification and involvement
takes place within him. This, in turn, fortifies his identification with the
organization resulting in greater commitment.
6. Industrial democracy: Participation helps to usher in an era of
democracy in industry. It is based on the principle of recognition of the
human factor. It tends to reduce class conflict between capital and
labour. It also serves as a support to political democracy.
7. Development of Individuals: Participation enhances individual creativity
and response to job challenges. Individuals are given an opportunity to

35
 direct their initiative and creativity towards the objectives of the group.
This facilitates individual growth.
8. Less resistance to change: when changes are arbitrarily introduced from
above without explanation, subordinates tend to feel insecure and take
counter measures aimed at sabotage of innovations. But when they have
participated in the decision making process, they have had an
opportunity to be heard. They know what to expect and why. Their
resistance to change is reduced.

The realization of workers‘ need for participation in the management is

influenced by the following factors:

1. Technology adoption leading to complexity in production process calls

for increased worker cooperation.
2. Employees are no longer treated as subservient but are treated as equals.
3. Growing influence of union prevents exploitation of employees by
management.
4. There are regulations and legislations that facilitate increased workers
participation in management.
5. Higher levels of productivity and efficiency can only come through
motivated and committed employees.
Objectives of Workers’ Participation in Management:

The main objectives of workers‘ participation in management include:

i. To promote increased productivity for the advantage of the organization,

workers and society at large;
ii. To provide a better understanding to employees about their role and
place in the process of attainment of organizational goals;
iii. To satisfy the workers‘ social and esteem needs; and
iv. To strengthen labour management co-operation and thus maintaining
industrial peace and harmony.
v. To develop social education for effective solidarity among the working
community and for tapping latent human resources.
vi. An ideological point of view to develop self-management in industry.
vii. An instrument for improving efficiency of the company and establishing
harmonious industrial relations.
viii. To build the most dynamic human resource.

ix. To build the nation through entrepreneurship and economic

development.

36
 x. To improve the quality of working life by allowing the workers greater
influence and involvement in work and the satisfaction obtained from
work.
xi. Development of human personality
xii. Development of leader from within the industry.
xiii. Development of working class.
xiv. Creation of a just egalitarian society.
xv. Facilitate self-development of worker.

Essential Conditions for Successful Working of WPM

The success of workers portion in management depends upon the following
conditions7.
1. The attitude and outlook of the parties should be enlightened and impartial
so that a free and frank exchange of thoughts and opinions could be possible.
Where a right kind of attitude exists and proper atmosphere prevails the
process of participation is greatly stimulated.
2. Both parties should have a genuine faith in the system and in each other and
be willing to work together. The management must give the participating
institution its rightful place in the managerial organization of the undertaking
and implementing the policies of the undertaking. The labour, on the other
hand, must also wholeheartedly co-operate with the management through its
trade unions. The foremen and supervisory cadre must also lend their full
support so that the accepted policies could be implemented without any
resentment on either side.
3. The experiment of labour participation in management must be given a wide
publicity in order that the idea of participation is ingrained in the minds of
those who are to implement the scheme. Lectures, discussion, film shows,
conferences, seminars and other methods of propaganda may be fruitfully
employed to create enthusiasm about the scheme among the management as
well as the workers.
4. Participation should be real. The issues related to increase in production and
productivity; evaluation of costs, development of personnel and expansion of
markets should also be brought under the jurisdiction of the participating
bodies. These bodies should meet frequently and their decisions should be
timely implemented and strictly adhered to.
5. Objectives to be achieved should not be unrealistically high, vague or
ambiguous but practicable of achievement and clear to all.
6. Form, coverage, extent and level of participation should grow in response to
specific environment, capacity and interest of the parties concerned.
7. Participation must work as complementary body to help collective
bargaining, which creates conditions of work and also creates legal relations.

37
8. Institutional participation should be discouraged but such participation
should be encouraged through changes in leadership styles, communication
process, and inter-personal and inter-group relations.
9. There should be a strong trade union, which has learnt the virtues of unit and
self-reliance so that they may effectively take part in collective bargaining or
participation.
10. Multiple unions in the enterprise should be restricted by legislative
measures. Similarly, there should be no multiplicity and duplicacy of
bipartite consultative machinery at the plant level.
11. A peaceful atmosphere should be there wherein there are no strikes and lock-
outs, for their presence ruins the employees, harms the interest of the
society, and puts the employees to financial losses.
12. Authority should be centralized through democratic management process.
The participation should be at the two or at the most three levels.

13. Programmes for training and education should be developed

comprehensively. Labour is to be educated to enable him to think clearly,
rationally and logically; to enable him to feel deeply and emotionally; and to
enable him to act in a responsible way. The management at different levels
also needs to be trained and oriented to give it a fresh thinking on the issues
concerned.
14. Progressive personnel policies should ensure growth of individual workers
within industry and proper policies should exist for selection, promotion,
compensation, rewards and discipline.
15. Management should be prepared to give all information connected with the
working of the industry and labour should handle that information with full
confidence and responsibility.
16. The Follow-up action on the decisions of the participating forums should be
ensured. The government may also set up machinery to act as a watch-dog
for implementing the scheme.
17. Effective two-way communication is a must for the success of the
programme. The shorter is the time for communication, the greater is the
probability of correct interpretation.

***

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