Unit I

Definition - need, importance, scope, objectives of industrial relations - Factors influencing

industrial relations,Bipartite and tripartite bodies in industrial relations - Wage settlements.

Concept of IR:
Basically, IR sprouts out of employment relation. Hence, it is broader in meaning and wider in
scope. IR is dynamic and developing socio-economic process. As such, there are as many as
definitions of IR as the authors on the subject. Some important definitions of IR are produced here.

According to Dale Yoder’, IR is a designation of a whole field of relationship that exists because
of the necessary collaboration of men and women in the employment processes of Industry”.

OBJECTIVES OF IR ARE DESIGNED TO:

1. Establish and foster sound relationship between workers and management by safeguarding their
interests.

2. Avoid industrial conflicts and strikes by developing mutuality among the interests of concerned
parties.

3. Keep, as far as possible, strikes, lockouts and gheraos at bay by enhancing the economic status
of workers.

4. Provide an opportunity to the workers to participate in management and decision making

process.

5. Raise productivity in the organisation to curb the employee turnover and absenteeism.

6. Avoid unnecessary interference of the government, as far as possible and practicable, in the
matters of relationship between workers and management.

7. Establish and nurse industrial democracy based on labour partnership in the sharing of profits
and of managerial decisions.

8. Socialise industrial activity by involving the government participation as an employer.

According to Krikaldy, industrial relations in a country are influenced, to a large extent, by the
form of the political government it has. Therefore, the objectives of industrial relations are likely
to change with change in the political government across the countries

Objectives of Industrial Relations

Industrial relations hold a high significance in the context of human resource management about
addressing the industrial disputes in an organization.
The various other goals of carrying out such practices are as follows:

 Handling Grievance: Industrial relations aim to maintain cordial relationship between the
management and the employees by resolving the disputes and setting up a mechanism to
address the grievances of both the parties.
 Mental Revolution: It emphasizes on transforming the way of thinking of both the
management and the workers. The employer must value the worker’s contribution towards
the organization, and at the same time, the employees must respect the authority of the
management.
 Employees’ Rights Protection: Under industrial relations, various acts (like in India
National Labor Relations Act) and associations were formed to safeguard the rights and
interests of the employees (irrespective of their membership of the labour union).
 Contract Interpretation: Industrial relations emphasizes on providing proper training to
the supervisors and the managers on the labour law contracts to clarify any
misunderstanding.
 Boosting Morale: The motivated workforce is the most efficient resource of the
organization. Therefore, industrial relations emphasizes on building employee’s confidence
and boosting their morale to perform better than before.
 Collective Bargaining: The worker’s representative and the management put up their
proposals in front of each other and negotiates over the same. This is to reach a mutual
decision which is written down in a collective bargaining agreement.
 Increasing Productivity: Industrial relations aims at improving the efficiency and
productivity of the organization by ensuring employees’ long-term retention and minimizing
the rate of their absenteeism.
FACTORS AFFECTING INDUSTRIAL RELATIONS

Industrial relations deals with human behaviour and management of personnel in an organizational
setup. The various factors that influence the relationship between the administration and the
employees in an organization are as follows:

Individual Behavior

Every person has a different perception, background, skills, knowledge, experience and
achievements which influences an individual’s behaviour. The employees, therefore, behave
differently in different situations, thus impacting the work environment in the organization.

Organizational Structure

The hierarchical structure creates more formal relationships among the employees belonging to
different hierarchical levels in an organization. Also, the delegation and execution of decision-
making power by the superior influences the industrial relations between the managers and the
employees.

Psychological Factors

An employee’s attitude and mentality towards the employer and the given task; and the employer’s
psychology towards the workers can be positive or negative, which ultimately impacts the
employee-employer relationship.
Leadership Style

Every manager possesses certain leadership traits and different style to function even in a formal
organization. Through his/her formal or informal ways of generating team spirit and motivating
the employees, he/she impacts the organization’s industrial relations.

Economic and Technical Environment

To cope up with the changes in the economic conditions or technology, organizations need to
restructure the task of the employees including their work duration, conditions and wages; which
leads to a difference in their behaviour, attitude, adapting spirit, etc. towards the organization and
its people.

Legal and Political Environment

The legal framework and political circumstances influence the organization and its industrial
relations. It contributes to the framing of rules, rights, authority, powers, roles and responsibilities
of all the parties of the organization.

Parties Involved in Industrial Relations

To understand the concept of industrial relations, we should know that; who all are responsible for
developing cordial relationships in the organization?

The different persons holding distinct positions in the organization and the external or internal
associations involved in the process of building strong industrial relations can be bifurcated into
the following two categories:

Primary Parties

Those persons or associations which are directly associated with or influenced by the functions of
industrial relations are as follows:
Employees

The workers who provide their services to the organization are an essential resource and
contributes to generating the desired output.

Following are some of the reasons for which employees find maintaining sound industrial relations
to be useful for them:

 Sharing their views, suggestions and ideas with the management to improve the business
operations;
 becoming a part of organizational decision-making and ensuring the betterment of the
working conditions;
 speaking out their problems and grievances and seeking for the redressal of the same.

Employers

Employers are responsible for providing a favourable work environment for the employees. They
have many rights and powers like laying off inefficient employees, taking strategic decisions such
as mergers, acquisition or shutdown of the organization and adapting technological changes in the
operations.

Following are the different ways in which managers can benefit from sound industrial relations in
the organization:

 Motivating the employees to give their best and gaining their trust and commitment;
 improving the overall efficiency and ensuring effective communication among the
employees and the management;
 dealing with problems of trade union along with negotiation of employment terms and
conditions with such employee representative.

Government

Before the 19th century, the government didn’t use to intervene in the conflicts between the
employer and the employee. However, later on, there was a change in the attitude of the
government bodies, they started regulating the industrial relations through labour courts and
tribunals, for the following reasons:

 Safeguarding the interest of both the parties;

 ensuring that both the employer and the employee, abide by the legal terms and conditions.

Other Parties

The parties (especially the internal or external bodies or associations) which impact the industrial
relations within an organization are as follows:
Employers’ Association

It is an authoritative body, formed to protect the interest of the industrial owners. It performs the
following functions to safeguard the rights of the employers:

 Representing the owners in collective bargaining with the employees or government and
also in case of national issues;
 creating a proper mechanism to resolve industrial disputes;
 giving an insight into the employee relations in an organization and providing suggestions
accordingly.

Trade Unions

When the workers unite together to form an association and elect a representative among
themselves; for the protection of their rights and to raise their demands in front of the management;
it is named as a trade union. Listed below are the objectives of such associations:

 Negotiating collectively with the administration for meeting the individual interest of an
employee;
 upgrading the status of the employees in the organization;
 demanding better working conditions and higher job security for the workers;
 safeguarding the interest of the employees by demanding a higher level of democratic
control over the decision-making at the organizational, corporate and national levels.

Courts and Tribunals

The judiciary includes the ‘courts’ to resolve the legitimate conflicts and the ‘judicial review’ to
administer the justice of the constitution. These courts and tribunals play an essential role in
settlement of industrial disputes by eliminating the possibilities of the following:

 Judicial flaws;
 conflicting judgment;
 poor evaluation of penalty;
 confusing terms and conditions.

International Labor Organization (ILO)

On the international grounds, an association was formed under the name of International Labor
Organization in the year 1919 to set up international norms and standards for dealing with
industrial disputes and issues of the workers.

Simultaneously, an International Labor Code (ILC) was set up to establish the recommendations
and conventions for minimum international labour standards.
The ILC aimed to look into matters like:

 Worker’s compensation, i.e., minimum wages;

 employee’s work duration and number of holidays;
  women employment;
 employee’s safety, security and health in the work environment;
 industrial relations;
 medical facilities and examination along with maternity protection.

Bipartite and Tripartite Bodies

These are purely consultative and not negotiating bodies. This consultative joint
machinery- with equal representation of the employers and the workers has been set up
exclusively for dealing with disputes affecting the plant or industry. Evolution of Such Bodies.

Bipartism is a system of industrial relations where social and labour issues are discussed
between trade unions and management, usually at the enterprise level.
The bipartite consultative machinery comprises two important constituents, viz., the works
committees and the joint management councils.

Bipartite and Tripartite Bodies

Bipartism is a system of industrial relations where social and labour issues are discussed between
trade unions and management, usually at the enterprise level. The bipartite consultative machinery
comprises two important constituents, viz., the works committees and the joint management
councils. These are purely consultative and not negotiating bodies. This consultative joint
machinery- with equal representation of the employers and the workers has been set up exclusively
for dealing with disputes affecting the plant or industry.

Evolution of Such Bodies

The importance of bipartite consultative machinery was first recognized as early as in 1920, when
a few joint committees were set up in the presses controlled by the Government of India. They
were also introduced in Tata Iron and Steel Company at Jamshedpur. The importance of bipartite
consultation was further highlighted by the First-Five-Year Plan which maintained: “There should
be the closest collaboration, through the consultative committee at all levels, between employers
and employees for the purpose of increasing production, improving quality, reducing cost and
eliminating waste,” The second Plan also stressed the need for “joint consultation and
progressively associating the workers and technicians, wherever possible, in management.
Tripartitie bodies
Evolution of tripartite bodies
The Whitley Commission,in 1931, recommended a body be set up to look into the needs for
consultation on labour matters.It envisaged a statutory organization which should ensure adequate
representation of the various interests involved: employers,labour and government. They
recommended that labour members should be elected by registered trade unions and employers·
representatives should be elected by their association. They should meet regularly.
It was only after the 4th Labour Conference held in 1942 that permanent tripartite collaboration
machinery was set up Indian Labour Conference(ILC) and Standing Labour Committee (SLC)
 Initially the ILC consisted of 44 members whereas the SLC was about half the size of the ILC.
The pattern of representation was governed by the obtaining in the International Labour
Conference. It ensured:
i. Equality of representation between the government and the non-government representatives;
ii. Parity between employers and workers;
iii. Nomination of representatives of organized employers and labourers was left to the concerned
organizations; and
iv. Representation of certain interests (unorganized employers and unorganized workers), where
necessary, on an adhoc basis through nomination by government. The delegates are free to
bring one official and one non-official adviser with them.

Other committees
1. Steering Committee on Wages:
It was set up in 1956 and consists of representatives of state government, employers, workers
and an economist.Its functions were
i. To study trends in wages, production and price.
ii. To draw a wage map of India.
iii. To help laying down principles which will guide wage fixing authorities2.
iv. Central Boards of Workers Education:
This was constituted to encourage growth of strong and well informed trade union
movement on responsible and constructive lines and comprised of representatives of central
& state government, employers and workers
2. National Productivity Council:
It encouraged the productivity in the country and consists of the government, employers
associations, labourers association & organizations and independent experts.
3. Central Implementation and Evaluation Machinery:
This is setup to ensure proper implementation of labour awards, agreements and Code of
Discipline. It consists of 4 representatives each of central employers· and workers organizations
with union labour minister as chairman