INDUSTRIAL RELATIONS

Unit – I: Industrial Relations: Scope and Significance – Causes and Consequences of Industrial Disputes –
Recent Trends in Industrial Relations

Introduction
In simple terms Industrial Relations deals with the worker employee relation in any industry Government
has attempted to make Industrial Relations more health by enacting Industrial Disputes. To solve the
dispute and to reduce the regency of dispute. This in turn improves the relations.
What is Industry? Where we want to have better relations. ―Industry means any systematic activity
carried on by cooperation between an employer and his employee whether such workmen are employed
by such employer directly or by or through any agency including a contractor for the production supply
or distribution of goods or sources with an overview to satisfy human want or wishes (not being wants or
wishes which are merely spiritual or religious in nature) whether or not (i) any capital has been invested
for the purpose of carrying on such activity or (ii) such activity is carried on with a motive to make any
gain or profit and includes any activity relating to the promotion of sales or business or both carried on
by an establishment but does not include.
i) Normal Agriculture operations

ii) Hospital, Dispensaries.

iii) Educational, Scientific Research Training Institution,

iv) Charitable Philanthropic Service

v) Domestic Services etc.

SCOPE OF IR:
Based on above definitions of IR, the scope of IR can easily been delineated as follows
1. Labour relations, i.e., relations between labour union and management.

2. Employer-employee relations i.e. relations between management and employees.

3. The role of various parties’ viz., employers, employees, and state in maintaining industrial relations.

4. The mechanism of handling conflicts between employers and employees, in case conflicts arise.

The main aspects of industrial relations can be identified as follows:

1. Promotion and development of healthy labor — management relations.

2. Maintenance of industrial peace and avoidance of industrial strife.

3. Development and growth of industrial democracy.

OBJECTIVES OF IR:
The primary objective of industrial relations is to maintain and develop good and healthy relations
between employees and employers or operatives and management. The same is sub- divided into other
objectives.

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 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 organization 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. Socialize industrial activity by involving the government participation as an employer.

Industrial Dispute : f industrial dispute or difference between employers and employees employers and
employers or employees and employees which is connected with the employment or non employment or
the terms of employment or with the condition of labour of any person.

1. There must be a dispute or difference the dispute or difference must be between employers
and employees employee and employees, employers and employers.

2. The dispute must be connected with employment or non employment or terms of

employment or with the conditions of labour of any person.
The dispute which has resulted in strained relations is a controversy in which the workman is directly or
substantially interested. It must also be a grievance felt by the workman which the employer is in a
position to remedy. The existence of a grievance is necessary and it must be communicated to the
employer.

General causes of industrial disputes strains which results in bad industrial relations are.
1. Close mindedness of employers and employees one thinking to extract maximum work with
minimum remuneration, other thinking to avoid work and get more enhancements in pay and
wages.

2. Irrational wage, wage system and structure not mutually acceptable

3. Poor working environment, low presence of safety, hygiene conditions vitiated atmosphere for
smooth working

4. Poor human relations, and lack of dexterity on the part of management personnel

5. Lack of control over the situations erosion of discipline, which rebounds.

6. Introduction of new technology or automation mechanization, Computerization etc. without

proper consultations, preparations and discussion with workers and creating climate.

7. Nepotism, unequal workloads, disproportionate wage, and responsibilities.

8. Adoption of unfair labour practices either by employer or employees and unions.

9. Unjustifiable profit sharing, and not considering workers as a co-shares of the gains of the
industry.

10. Frequent union rivalries over membership foisting up of fake unions.

11. Strikes lock out, lay off, and resulting retrenchment due to high handedness on the part of the
concerned.

12. Throwing away the agreements and arrived settlements

13. Militancy of the unions

 14. Attitude of government and political parties who may indirectly control some the unions for their
own gains or to get a hold on the industry.
Suggestions for the improvement of industrial relations and reduce disputes

1. Trade unions should be strengthened democratically so that they can understand and toe with the
main stream of the national industrial activities. They can drop the somehow survive attitude by
promising impossible and consequent perpetual strain.
2. Employers should have more transparency in their dealings with workers to build confidence and
have progressive outlook.
3. They should have open minded flexible collective Bargaining.
4. Workers should be allowed to participate in the management through forums, committees and
councils,
5. Sound labour policy, planning
6. Proper leadership and communication
7. Enforcement of discipline
8. Try to have union within workers fold.
9. Equity in distribution of wealth by acknowledging workers as team members

Definition of some important terms used in Industrial Relations

Arbitrator – Neutral person to decide on common issue, includes an umpire Average pay – average
wages payable to a workman. In case of monthly paid workman in the three complete calendar months,
in the case of weekly paid, in the four complete weeks, in the case of daily paid workman in the 12 full
working days preceding
Award: An interim or a final determination of any industrial distribute or of any question relating thereto
by any labour (court), industrial Tribunal or national Tribunal and includes an arbitration award
Conciliation officer: Means conciliation officer appointed under (1) Act to make conciliatory effort
between employer and employees to bring amity.
Labour Court – Means a labour court constituted under (1.D) Act to adjudicate over industrial dispute
cases etc.
Public utility Service – (I) Any Railway service or any transport service for carriage of passenger or
goods by air (2) any service in major port to clock. Postal & Telegraph Industrial establishments on the
working of which the safety of the establishments, or the workmen employed there in depends. Industries
which supply power light, water to public, Public conservancy or sanitation. Few others indicated in
Schedules.
Settlement: - means a settlement arranged or in the course of conciliation proceedings and include a
written agreement between the employer and workmen arrived at otherwise than in the course of
conciliation proceeding where such agreement has been signed by the parties there to in such manner as
may be prescribed and a copy there of has been sent to an officer authorized in this behalf by the
appropriate government and the conciliation officer
It means an adjustment arrived at in the course of conciliation proceeding before a conciliation officer or
before Board of conciliation. It also includes a written agreement between the employer and the workmen
otherwise than in the conciliation proceedings. In such a case the agreement must be signed by the parties
in the prescribed manner and a copy of which must be sent to an officer authorized in this behalf by the
appropriate government and the conciliation officer. Thus, the settlement indicates the agreement arrived
at either in the conciliation proceedings or otherwise between employer and the workmen. Unfair labor
practice. Generally, to interfere with, restrain from, join or assist a trade union or to engage in concerted
activities for the purpose of collective bargaining or other mutual aid or protection to establish employer
sponsored trade union of workmen, to discharge or dismiss workmen by way of victimization, to recruit
workmen during a strike which is not an illegal strike etc.
PARTIES INVOLVED IN INDUSTRIAL RELATIONS ARE
1) Workers and their unions, the intelligence level knowledge of workers, back-ground of worker
leaders, real or boghus their linkage with political unions, are to be considered for the effective
relations.

2) Nature of employment and employers, whether benevolent, interested in workers or aiming to get
as much profit as possible squeezing workers their attitude plays vital role in maintaining better
relations. Whether they want to have team, and growth of their team as a whole or just hire and
fire system.

3) Position of government, political will whether opportunities favoring employers or interested in

workers, are to be seen. Their interest in workers can be seen through their actions in creating
Laws for labor welfare and implementing them effectively.
Causes of industrial unrest in Ethiopia can be classified mainly under four heads they are
1) Financial Aspects
a) Demand for increase of wages, salaries and other perks. workers demand goes on increasing
with the increase in cost of living

b) Demand for more perks, and fringe benefits. Issue of bonus also has become a contentious one,
even though Bonus Act has come fixing minimum rate payable as 81/3% of their total salary in
spite of profit or loss incurred by the industry.

c) Incentives festivals allowances, concessions etc requires a hike every now and then, workers
compare these benefits with other industries and demand them – without comparing the capacity
of the industry where they are working.
2) Non financial aspects
a) Working hours, rest hours, traveling hours are source of disputes. If houses are provided some
section of workers want to include travel time also as working hours.

b) Introduction of machines, computers modernization, automation – In effect any act of

management which may result in economy in man power is resisted

c) More facilities like free meals free group travel etc are sought every now and then
3) Administrators Causes
a) Non implementation of agreements awards and other local settlements – with full sprit

b) stifling with recognition of labour unions though registered,

c) Attempt to weaken existing trade unions and trying to foist fake unions

d) Un healthy working conditions

 e) Lack of skill on the part of leaders supervisors

f) Disproportionate works loads, favoritism

g) Victimisation, nepotism attitude of management in recruitment, promotion, transfer etc

h) Instead of re deployment or skill improvement easier way of retrenchment forced voluntary

retirement schemes (C.R.S) are adopted.
4) Government and political pressures
a) Industrial unions affiliating with political unions which are in power, resulting in frequent shift of
loyalty and resultant unrest
b) Politician influencing workers group closes examples is the Nalco – taken over by Sterlite, the
state government supported (propped up) strike at chattisgrah state against Nalco, for months
together resulting in total stoppage of the industry for some time.

c) Some time unions, workers strike against mergers, acquisition, taken over, disinvestments
policies, of government and private sectors.
5. Other causes of strained relations.
a. Refusal to have workers participation in the running of the industry.
b. Non adherence to laid out ‗standing orders ‘grievances procedures
c. Refusal to have free frank, and transparent collective bargaining.

a) d) Sympathetic strike – a show of readership to workers of neighboring industries, and conducting

a token strike when they are in full strike. This may cause internal bitterness.
Forms of Industrial Disputes:
Strikes: Strike is the most important form of industrial disputes. A strike is a spontaneous and concerted
withdrawal of labour from production. The Industrial Disputes Act, 1947 defines a strike as “suspension
or cessation of work by a group of persons employed in any industry, acting in combination or a
concerted refusal or a refusal under a common understanding of any number of persons who are or have
been so employed to continue to work or accept employment”.

According to Patterson “Strikes constitute militant and organised protest against existing industrial
relations. They are symptoms of industrial unrest in the same way that boils symptoms of disordered
system”.

(i) Primary Strikes:

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

However, these relations are severed and the employer incurs losses. This form of strike is popular in the
USA but not in Ethiopia. The reason being, in Ethiopia, the third person is not believed to have any locus
standi so far the dispute between workers and employer is concerned.
Types of Industrial Disputes:

They are discussed one by one:

1. Interest Disputes:
These disputes are also called ‘economic disputes’. Such types of disputes arise out of terms and
conditions of employment either out of the claims made by the employees or offers given by the
employers. Such demands or offers are generally made with a view to arrive at a collective agreement.
Examples of interest disputes are lay-offs, claims for wages and bonus, job security, fringe benefits, etc.

2. Grievance or Right Disputes:

As the name itself suggests, grievance or right disputes arise out of application or interpretation of
existing agreements or contracts between the employees and the management. They relate either to
individual worker or a group of workers in the same group.

That’s way in some countries; such disputes are also called ‘individual disputes’. Payment of wages and
other fringe benefits, working time, over-time, seniority, promotion, demotion, dismissal, discipline,
transfer, etc. are the examples of grievance or right disputes.

If these grievances are not settled as per the procedure laid down for this purpose, these then result in
embitterment of the working relationship and a climate for industrial strife and unrest. Such grievances
are often settled through laid down standard procedures like the provisions of the collective agreement,
employment contract, works rule or law, or customs /usage in this regard. Besides, Labour Courts or
Tribunals also adjudicate over grievance or interest disputes.

Generally, industrial disputes are considered as ‘dysfunctional’ and ‘unhealthy’. These are manifested in
the forms of strikes and lock-outs, loss of production and property, sufferings to workers and consumers
and so on. But, sometimes industrial disputes are beneficial as well.

It is the dispute mainly which opens up the minds of employers who then provide better working
conditions and emoluments to the workers. At times, disputes bring out the causes to the knowledge of
the public where their opinion helps resolve them.
 Unit oooII : Trade Unions: Trade Union Structure and Movement in Ethiopia

Meaning and Definition:

Trade union is a voluntary organisation of workers formed to protect and promote their interests through
collective action. It may be formed on plant basis, industry basis, firm basis, regional basis or national
basis. Different writers and thinkers have defined the trade union differently.

Trade union is a “continuous association of wage earners for the purpose of maintaining and improving
the conditions of their working lives.”

Trade union means an association of workers in one or more occupation— an association carried on
mainly, for the purpose of protecting and advancing the members’ economic interests in connection with
their daily work’.
A trade union is a continuous association of persons in industry, whether employers, employees or
independent workers—formed primarily for the purpose of the pursuit of the interest of its members and
of the trade they represent.
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:
i. Collective bargaining with the management for securing better work environment for the workers/
employees.
ii. Providing security to the workers and keeping check over the hiring and firing of workers.
iii. Helping the management in redressal of grievances of workers at appropriate level.
iv. If any dispute/matter remains unsettled referring the matter for arbitration.
v. To negotiate with management certain matters like hours of work, fringe benefits, wages and
medical facilities and other welfare schemes.
 vi. To develop cooperation with employers.
vii. To arouse public opinion in favor of labor/workers.
Benefits of Trade Union:
Workers join trade union because of a number of reasons as given below:
1. 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.
2. Union protects the economic interest of the workers and ensures a reasonable wage rates and wage
plans for them.
3. Union helps the workers in getting certain amenities for them in addition to higher wages.
4. Union also provides in certain cases cash assistance at the time of sickness or some other
emergencies.
5. Union organize negotiation between workers and management and are instruments for settlement
of disputes.
6. 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.
7. Trade union imparts self-confidence to the workers and they feel that they are an important part of
the organization.
8. It provides for promotion and training and also helps the workers to go to higher positions.
9. It ensures stable employment for the workers and opposes the motive of management to replace the
workers by automatic machines.
10. Workers get an opportunity to take part in the management and oppose any decision which
adversely effects them.
Unit – III: Promotion of Harmonious Relations – Machinery for Prevention and Settlement of Industrial
Disputes – Conciliation – Arbitration and Adjudication – Code of Discipline.

Industrial Unrest in Ethiopia: Causes and Policy of the Government

By industrial unrest is meant conflict between employers and workers in industries.

The industrial labour display their protests in the form of strikes, gheraos, go slow tactics, demonstrations
and so on, whereas the employers show their might by retrenchment, dismissals, lockouts etc. Industrial
unrest causes industrial recession and decline in national income.

The major factors behind such unrest in recent times are as follows.
1. The trade union leaders try image-building exercises.
2. Taking advantage of the political instability the country, the trade union leaders seek concessions
from the government and factory owners.
3. Rampant trade unionism has led to a deteriorating work culture among workers.
4. The New Economic Policy, 1984 empowered the employers to punish workers by endorsing the
methods of lockout.
The share of lockouts in total man-days lost is on the increase. Thus, there has been a qualitative change
in the industrial disputes which strongly suggests an unfavourable treatment of the labourers.
Causes of Industrial Unrest:
1. Wage Related Issues:
The wage levels in different industries vary tremendously. The disparity in wages between skilled and
unskilled labour is large even within an enterprise. This is true in both the organised and the unorganised
sectors. The demand for higher bonus has been a major cause for industrial disputes.

2. Lack of Welfare and Social Security:

Social security measures can be divided into two categories (i) social insurance and (ii) social assistance.
Social insurance schemes are generally financed by the employees, employers and the State. However,
such welfare measures face the following problems: (a) insufficient coverage, (b) lack of employment
insurance, (c) inherent bottlenecks of an exit policy, (d) overlapping schemes, and (e) lack of facilities
vis-a-vis requirement of beneficiaries.

3. Improved Working Conditions:

Demand for lesser working hours, better-safety measures, holidays, leave etc., provoke trade unions to
fight against employers.

4. Wave of Globalisation:
The new policy of liberalisation has opened up the avenue of foreign investment in Ethiopia resulting in
an intense competition in the economy. The entrepreneurs are often forced to squeeze wages and push
productivity for survival in today’s market-driven economy.
5. New Lifestyles:
The workers are increasingly adopting new urban lifestyles and this is expensive and requires a larger
income for the family. The workers are often drawn into industrial battle by such compulsions.

6. Low-cost Production Alternatives:

The employers often defeat the purpose of trade unions by searching out low-cost production alternatives
in the form of small-scale subsidiary units in smaller towns where low wages will do.

7. Rising Wages and Low Productivity:

The big companies often close down their units because labour productivity often fails to keep pace with
inflated wages. Such moves taken often invite industrial tension.

Policy of the Government:

The Industrial Relations Policy has two basic objectives: (i) prevention and peaceful settlement of
disputes, and (ii) promotion of good industrial relations via labour management and cooperation.

The first major step was taken in 1947 with the passing of the Industrial Disputes Act. It provided for (a)
a joint working committee of employers and employees for promotion of good relations between the
parties; (b) the recruitment of conciliation officers by the government for bringing both the parties
together; (c) appointment by the government of a Board of Conciliation to go into any industrial dispute
and to suggest remedial measures; (d) the appointment of a Court of Enquiry consisting of one or two
independent persons to investigate the matters of dispute and submit its report to the government; (e)
labour courts to be set up by the state governments to investigate matters relating to disputed orders of
the employers and dismissals and suspensions of employees by the management.

Beyond these would be the industrial tribunals. These tribunals exist at state and national levels. The state
government has the authority to adjudicate disputes regarding wages, bonus, sharing of profit, etc., by
appointing one or more industrial tribunal. A person holding the rank of a High Court Judge is to be on
the tribunal. The Central government appoints the national tribunal for adjudicating disputes which
involve issues of national importance.

Apart from the above methods, the following practices are becoming common.

Joint Management Councils enable workers to participate in management, help them to understand
industrial problems and bring about better relations between the management and labour.

The Ethiopian Labour Conference evolved a Code of Discipline in industry in 1958. According to the
code, employers as well as labourers voluntarily agree to maintain mutual trust and cooperation.
The code listed the following activities in factories:
1. For declaring strikes and lock-outs prior notice is required.
2. The parties can take any action only after consulting each other.
3. There should not be any deliberate attempt to damage plant or property.
4. Disputes should be settled speedily.
Several employers and trade unions, which are not members of any central employees and labour
organisation, have accepted the code.
An Industrial Truce Resolution was adopted in November 1962 by a joint meeting of the central
organisation of employers and labourers so that, during emergency, the production is not slowed down or
interrupted. Both the Industrial Truce Resolution and Code of Discipline stress on dispute settlement
through voluntary arbitration.

The National Arbitration Promotion Board was established in July 1967 by the Government of Ethiopia
to promote voluntary arbitration for dispute settlement. The Board has representatives belonging to the
employers’ and labourers’ organisations, PSUs, etc. The Board endeavours to ensure that employers and
labourers take voluntary initiatives to settle disputes.

As an after effect of the liberalisation policy of 1991, a National Renewal Fund (NRF) was set up. The
main objectives: (i) providing assistance to cover the costs of training and re-employing employees in the
event of modernisation, technology upgradation and industrial restructuring; (ii) providing funds for
compensating employees affected by restructuring or closure of industries both in public and private
sectors; and (iii) building a safety net through funds for employment generation schemes for employers.

IMPORTANCE OF HARMONIOUS INDUSTRIAL RELATIONS

There has been a phenomenal growth in employment, wages, benefits ,working conditions ,status of the
worker .educational facilities etc, with the growth and spread of industry .Moreover ,career patterns have
also changed wi9dely by providing change for wide varieties of jobs to the working communities .This
has been possible only through fast industrial development which, in its turn ,depends on Industrial
peace. There has been an acute necessity in Ethiopia especially during the post-independence period ,to
industrialise her economy in order to tackle the multifarious socio-economic problems .In the words of
Pandit Jawaharlal Nehru “ The alternative (to industrialization ) is to remain in a backward .under-
developed ,poverty –stricken and a weak country .We can’t even retain our freedom without industrial
growth.” Hence one of the main goals of the Five Year Plans in Ethiopia has been rapid industrialization
and more employment in secondary and tertiary industries .It is also viewed that one of the essential steps
for building up an economically free and self-sustaining Ethiopia is, large scale industrialization at rapid
and steady growth. With the attainment of independence and with the launching of Planning era ,serious
and earnest efforts have been made towards rapid economic development of Ethiopia .Ethiopia has been
… in the midst of an ambitious and critically important effort to raise the living standards of her people
by a integrated …industrial and economic development plan.” The size of Industrial labor in Ethiopia has
increased remarkably due to rapid and planned industrial development .The increase in Industrial labor
led to the formation and development of trade unions and various social groups. It has also been
recognized that management would be disorganized .ill- equipped and ineffective It is realized that the
concrete co-operation between labor and management is highly essential to fulfil the demonstrated the
fact that,” an economy organized for planned production and distribution ,aiming at the realization of
social justice and the welfare of masses can function effectively only in an atmosphere of industrial
peace. All these necessitate the maintenance of harmonious industrial relations so as to maintain higher
productivity to fulfil the goals of the Five Year Plans in Ethiopia. The investment in and the scope of
industries in Ethiopia have been growing plan after plan .Much of the success or failure of Ethiopian Five
Year Plans would be dependent on the maintenance of harmonious employee-employer relations
Frequent industrial conflicts not only affect the management and labor but also tend to impoverish the
community as a whole. They lead to wastage ,forment class hatred .embitter mutual relations and inflict
damages on the progress of the nation. They affect production and national income in an adverse
manner .They also clog the progress and development of the nation .Further ,it is not an exaggeration to
say that if we are successful in industry the answers to class-antagonisms and world conflicts becomes
easier. Need for Industrial Peace. The objectives of maintenance of industrial peace is not only find out
way6s and means to solve conflicts or to settle differences but also to secure the unreserved cooperation
of and goodwill among different groups in industry with a view to drive their energies and interest
towards economically viable commercially feasible ,financially profitable and socially desirable
channels. It also aims at the development of a sense of mutual confidence ,dependence and respect and at
the same time encouraging them to come to closer to each other for removing misunderstanding
,redressing grievances
,if any ,in a peaceful atmosphere and with open mind and fostering industrial pursuits for mutual benefits
and social progress ,But the maintenance of congenial industrial relations ,particularly in a democratic
society like ours is not only a significant task but also a complicated one.

Dispute Settlement Machineries for Settling Industrial Disputes

Some of the major industrial dispute settlement machinery are as follows: 1. Conciliation 2. Court of
Inquiry 3. Voluntary Arbitration 4. Adjudication.

This machinery has been provided under the Industrial Disputes Act, 1947. It, in fact, provides a
legalistic way of setting the disputes. As said above, the goal of preventive machinery is to create an
environment where the disputes do not arise at all.

Even then if any differences arise, the judicial machinery has been provided to settle them lest they
should result into work stoppages. In this sense, the nature of this machinery is curative for it aims at
curing the aliments.

1. Conciliation:
Conciliation, is a form of mediation. Mediation is the act of making active effort to bring two conflicting
parties to compromise. Mediation, however, differs from conciliation in that whereas conciliator plays
only a passive and indirect role, and the scope of his functions is provided under the law, the mediator
takes active part and the scope of his activities are not subject to any statutory provisions.

Conciliation is the “practice by which the services of a neutral party are used in a dispute as a means of
helping the disputing parties to reduce the extent of their differences and to arrive at an amicable
settlement of agreed solution.”
Sanjeev Institute of Planning and Management Page 32
The Industrial Disputes Act, 1947 provides for conciliation, and can be utilised either by appointing
conciliation officers (permanently or for a limited period) or by constituting a board of conciliation. This
conciliation machinery can take a note of a dispute or apprehend dispute either on its own or when
approached by either party.

With a view to expediting conciliation proceeding, time-limits have been prescribed—14 days in the case
of conciliation officers and two months in the case of a board of conciliation, settlement arrived at in the
course of conciliation is binding for such period as may be agreed upon between the parties or for a
period of 6 months and with continue to be binding until revoked by either party. The Act prohibits strike
and lock-out during the pendency of conciliation proceedings before a Board and for seven days after the
conclusion of such proceedings.

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.

2. 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. Voluntary Arbitration:
On failure of conciliation proceedings, the conciliation officer many persuade the parties to refer the
dispute to a voluntary arbitrator. Voluntary arbitration refers to getting the disputes settled through an
independent person chosen by the parties involved mutually and voluntarily.

In other words, arbitration offers an opportunity for a solution of the dispute through an arbitrator jointly
appointed by the parties to the dispute. The process of arbitration saves time and money of both the
parties which is usually wasted in case of adjudication.
Voluntary arbitration became popular as a method a settling differences between workers and
management with the advocacy of Mahatma Gandhi, who had applied it very successfully in the Textile
industry of Ahmedabad. However, voluntary arbitration was lent legal identity only in 1956 when
Industrial Disputes Act, 1947 was amended to include a provision relating to it.

The provision for voluntary arbitration was made because of the lengthy legal proceedings and
formalities and resulting delays involved in adjudication. It may, however, be noted that arbitrator is not
vested with any judicial powers.

He derives his powers to settle the dispute from the agreement that parties have made between
themselves regarding the reference of dispute to the arbitrator. The arbitrator should submit his award to
the government. The government will then publish it within 30 days of such submission. The award
would become enforceable on the expiry of 30 days of its publication.

Voluntary arbitration is one of the democratic ways for setting industrial disputes. It is the best method
for resolving industrial conflicts and is a close’ supplement to collective bargaining. It not only provides
a voluntary method of settling industrial disputes, but is also a quicker way of settling them.

It is based on the notion of self-government in industrial relations. Furthermore, it helps to curtail the
protracted proceedings attendant on adjudication, connotes a healthy attitude and a developed outlook;
assists in strengthening the trade union movement and contributes for building up sound and cordial
industrial relations.

4. Adjudication:
The ultimate remedy for the settlement of an industrial dispute is its reference to adjudication by labour
court or tribunals when conciliation machinery fails to bring about a settlement. Adjudication consists of
settling disputes through intervention by the third party appointed by the government. The law provides
the adjudication to be conducted by the Labour Court, Industrial Tribunal of National Tribunal.

A dispute can be referred to adjudication if hot the employer and the recognised union agree to do so. A
dispute can also be referred to adjudication by the Government even if there is no consent of the parties
in which case it is called ‘compulsory adjudication’. As mentioned above, the dispute can be referred to
three types of tribunals depending on the nature and facts of dispute in questions.

These include:
(a) Labour courts,

(b) Industrial tribunals, and

(c) National tribunals.

The procedure, powers, and provisions regarding commencement of award and period of operation of
award of these three bodies are similar. The first two bodies can be set up either by State or Central
Government but the national tribunal can be constituted by the Central Government only, when it thinks
that the adjudication of a dispute is of national importance. These three bodies are into hierarchical in
nature. It is the Government’s prerogative to refer a dispute to any of these bodies depending on the
nature of dispute.

(а) Labour Court:

A labour court consists of one person only, who is normally a sitting or an ex-judge of a High Court. It
may be constituted by the appropriate Government for adjudication of disputes which are mentioned in
the second schedule of the Act.

The issues referred to a labour court may include:

1. The propriety or legality of an order passed by an employer under the Standing Orders.

2. The application and interpretation of Standing Orders.

3. Discharge and dismissal of workmen and grant of relief to them.

4. Withdrawal of any statutory concession or privilege.

5. Illegality or otherwise of any strike or lockout.

6. All matters not specified in the third schedule of Industrial Disputes Act, 1947. (It deals with the
jurisdiction of Industrial Tribunals).

(b) Industrial Tribunal:

Like a labour court, an industrial tribunal is also a one-man body. The matters which fall within the
jurisdiction of industrial tribunals are as mentioned in the second schedule or the third schedule of the
Act. Obviously, industrial tribunals have wider jurisdiction than the labour courts.

Moreover an industrial tribunal, in addition to the presiding officer, can have two assessors to advise him
in the proceedings; the appropriate Government is empowered to appoint the assessors.

The Industrial Tribunal may be referred the following issues:

1. Wages including the period and mode of payment.
2. Compensatory and other allowances.
3. Hours of work and rest intervals.
4. Leave with wages and holidays.
5. Bonus, profit sharing, provident fund and gratuity.
6. Shift working otherwise than in accordance with the standing orders.
7. Rule of discipline.
8. Rationalization.
9. Retrenchment.
10. Any other matter that may be prescribed.
(c) National Tribunal:
The Central Government may constitute a national tribunal for adjudication of disputes as mentioned in
the second and third schedules of the Act or any other matter not mentioned therein provided in its
opinion the industrial dispute involves “questions of national importance” or “the industrial dispute is of
such a nature that undertakings established in more than one state are likely to be affected by such a
dispute”.

The Central Government may appoint two assessors to assist the national tribunal. The award of the
tribunal is to be submitted to the Central Government which has the power to modify or reject it if it
considers it necessary in public interest.

It should be noted that every award of a Labour Court, Industrial Tribunal or National Tribunal must be
published by the appropriate Government within 30 days from the date of its receipt. Unless declared
otherwise by the appropriate government, every award shall come into force on the expiry of 30 days
from the date of its publication and shall remain in operation for a period of one year thereafter.

Conciliation As A Process To Resolve Business Disputes

In all types of Businesses, some or other kinds of problems are bound to arise. Some or many of them can
easily be solved through common sense while some may become a dispute, the resolution of which
requires a great understanding and therefore, it becomes important to resolve such disputes amicably as
well as speedily as lurking on it forever would bring the Business to a standstill.

What is Conciliation?

As per Oxford Dictionary, conciliation means; ‘The action of stopping someone from being angry.’ As
mentioned above, it is important to solve Business disputes while maintaining the cordial relation
between the parties involved.

It has been derived from the word ‘concile.’ Conciliate and reconcile are both employed in the sense of
uniting men’s affections but under different circumstances.

Conciliation means ‘bringing of opposing parties or individuals into harmony to settle the dispute.’

Conciliation can easily solve the following types of disputes: commercial, financial, family, real estate,
employment, intellectual property, insolvency, insurance, service, partnerships, environmental and
product liability. Apart from commercial transactions, the mechanism of conciliation is also adopted for
settling various types of disputes such as labor disputes, service matters, antitrust matters, consumer
protection, taxation, excise, etc

This method provides the parties with an opportunity to negotiate, converse and explore options aided by
a neutral third party, the conciliator, to exhaustively determine if a settlement is possible.
Conciliator

Conciliator, also called conciliating officer tries to resolve the dispute between parties by lowering down
the tensions between them or say, in a way, calms both the parties by talking to them separately. They try
to improve communications between both by interpreting the key issues that caused the conflict and
encourage them to explore the solutions which are beneficial to all the parties involved, that is, he tries to
create a win-win situation and arrive at a mutually acceptable outcome.

However, the conciliator does not have any power to impose the settlement arrived at. All he does is to
try to break the deadlock and encourage the parties to reach an amicable settlement by acting as a conduit
for communication, filtering out the disturbing elements and allowing the parties to focus on the
underlying core objectives. In all, conciliator doesn’t decide; he just helps the parties to arrive at a
decision.

Unit-IV: Grievances and Discipline: Grievances Redressal Machinery – Discipline in Industry _

Measures for dealing with Indiscipline.

The term “grievance” has been defined by different researchers in different ways.

Mondy and Noe defined grievance as “employee’s dissatisfaction or feeling of personal injustice relating
to his or her employment.”

Keith Davis defines grievance as “any real or imagined feeling of personal injustice which an employee
has about the employment relationship.”

Nature of grievance

A grievance may be submitted by workers, or several workers, in respect of any measure or situation,
which directly affects, or is likely to affect, the conditions of the employment of one or several workers
in the organization. Where a grievance is transformed into a general claim either by the union or by a
large number of workers, it falls outside the grievance procedure and normally comes under to purview
of collective bargaining. The following areas were causes of employee grievance:

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 Victimization,
18. Condition of work.
The International Labour Organization (ILO) classifies a grievance as a complaint of one or more
workers with respect to wages and allowances, condition of work and interpretations of service
stipulations, covering such areas as overtime, leave, transfer, promotion, seniority, job assignment and
termination of service. Chandra found that policy issues relating to hours of work, incentives, wages, DA,
and bonus are beyond the scope of the grievance procedure-they fall under preview of collective
bargaining.
CAUSES OF GRIEVANCE

There are several causes, which leads to employee grievance in an organization. Management Practices

1. The behaviour of supervisor, peer’s group can cause grievance.

2. The improper division of work among employees lead to employee grievance.
3. The negligence of one’s efforts towards the organization.
4. The autocratic organizational environment can cause grievance.
5. The implementation of personnel policies is not intended policies, it well lead to grievance.
6. If task objective is not clearly defined to employee, then also then employee get frustrated and
ultimately grievance arises.
7. Matters such as employee compensation, seniority, overtime and assignment of personnel to shifts
are illustrations of ambiguities leading to grievance.
8. Poor communication between management and employees is another cause of grievance.
Union Practices
In firms where there are multiplicities of unions, many of whom may have political affiliation; there is
constant jostling and lobbying for numerical strength and support. Where unions are not formed on the
basis of specialized craft but are general unions, the pressure to survive is great and, hence there is a need
to gain the support of workers. Under such circumstances the grievance machinery could be an important
vehicle for them to show their undeniable concern for workers welfare. The fact that a union can provide
a voice for their grievance is an important factor in motivating employees to join a union. Realizing that
members expect action and only active unions can generate membership, unions some time incline to
encourage the filing of grievance in order to demonstrate the advantage of union membership. It makes
union popular that it is the force to solve out the grievance with the management.

Individual Personality Trait

Sometimes mental tension, caused perhaps by ill health also contributes to grievance. Some are basically
predisposed to grumble and find fault with every little matter, seeing and looking out only for faults. On
the other hand, there are employees who are willing to overlook minor issues and discomforts and get on
with the job.

Management of Grievance

It has been widely recognized that there should be appropriate procedure through which the grievance of
workers may be submitted and settled. The main aim to solve out grievance with fairness and justice, so
that workers dissatisfaction about various aspects can be properly examined and solved out. For this
grievance resolution machinery is an urgent need to manage. Grievance resolution machinery permits
employee to express complaints without affecting their job, and encourages and facilitates the settlement
of misunderstanding between management and labour. The existence of grievance resolution machinery
builds confidence in employees to express their discontent, enhance their morale, and satisfies them and
also protects them from the injustice; proper and effective communication between management and
workers facilitates review and correction. Thus, presence of grievance machinery explains the
organizational health, projects the shop floor cultures and shows leadership quality.

Steps for Managing grievances

Flippo describes five steps for managing a grievance. These are following as:

1. Receiving and defining the nature of dissatisfaction: The supervisor should receive the grievance in
a way which itself is satisfying to the individual. It involves his leadership style. It has been that
employee-centred supervisors cause fewer grievances than production –centred supervisors.

2. Getting the facts: Efforts should be made to separate facts from the opinions and impressions. Facts
can be obtained easily if proper records are maintained by supervisors regarding specific grievances and
individual attendance, rating and suggestions.

3. Analyzing the facts and reaching a decision: The supervisor must analyze the facts carefully to
reach a specific decision, so that grievance can be solved out fruitfully.

4. Applying the answer: The supervisor has to effectively communicate the decisions to the individuals
even if they are adverse in nature. The answer to the aggrieved individuals must be based on legitimate
ground.

5. Follow-up: The following of the grievance should be made to determine as to whether or not clash of
interest has been resolved. In situation where follow up indicates that the case is not resolved
satisfactorily, the former four steps should be repeated. The frequent errors in processing of grievance
break the whole process. The management should attempt to avoid these errors.

Grievance Machinery

Grievance machinery will be required to set up in each under takings to administer the grievance
procedure. For the purpose of constituting a fresh grievance machinery, workers in each department (and
where a department is too small, in a group of departments) and each shift, shall elect, from amongst
themselves and for a period of not less than one year at a time, departmental representatives and forward
the list of persons so selected to the management. Where the union in the undertaking is in a position to
submit an agreed list of names, recourse to election may not be necessary. Similar is the case, where
work committees are functioning satisfactorily, since the work committee member of a particular
constituency shall act as the departmental representative correspondingly, the management shall
designate the persons for each department who shall be approached at the first stage and the departmental
heads for handling grievances at the second stage. In the case of appeals against discharges or dismissal,
the management shall designate the authority to which appeals could be made.
Grievance Procedure

While adaptations have to be made to meet special circumstances such as those obtaining in the Defence
Undertaking, Railways, Plantations and also small undertakings employing few workmen, the procedure
normally envisaged in the handling of grievances should be as follows:

a. Aggrieved employee shall first present his grievance verbally in person to the officers designated
by management for this purpose. An answer shall be given within 48 hours of the presentation of
complaint.

b. If the worker is not satisfied with the designated officer, he shall, either in person or accompanied
by his departmental representatives, present his grievance to the head of the department designated
by management for this purpose. The time allotted to reply within 3 days. If the action cannot be
taken with in that period, the reason for this delay should be recorded.

c. If the decision by departmental head is unsatisfactory, then the grievant may request the forwarding
of his grievance to the grievance committee which shall make its recommendations to the managers
within 7 days of the workers request. The management shall implement unanimous
recommendations of the Grievance Committee.

Industrial Discipline
This article provides an overview on Industrial Discipline. After reading this article you will learn about:
1. Meaning of Industrial Discipline 2. Maintenance of Industrial Discipline 3. Code of Discipline in
Ethiopian Industry.

Meaning of Industrial Discipline:

Industrial discipline refers to orderly working of the employees of an industrial undertaking in
accordance with established rules, regulations and conventions. Discipline is a force that prompts an
individual to observe rules, regulations and procedures to attain an objective. In the broad sense,
discipline means orderliness — the opposite of confusion. In an organization, discipline is the orderly
conduct of its members.

Industrial discipline can thus be defined as “the orderly conduct of affairs by the members of an
industrial organization who adhere to its necessary regulations because they desire to co-operate
harmoniously in forwarding the end which the group has in view and willingly recognize that to do
this, their wishes must be brought into a reasonable union with requirements of the group in
action.”
Formerly, discipline meant the kind of regimentation of thought and action that obtains in the army.
Discipline is definitely something which is opposite of chaos, irregularity and disorder in human
behaviour and action. Mary C. Niles traces the origin of the word discipline to root meaning “to learn”.
According to her, the purpose of discipline is not to punish the workers but to help them learn proper
conduct.
Discipline is essential for any successful activity and, where it refers to industrial discipline, it
essentiality gets an added value. In industrial organizations, discipline is a must. The condition of
complete peace and harmony as opposed to chaos is a very important factor for the success of an
industrial unit.

In an atmosphere of discipline, work environment improves productivity of labour increases, production

gears up and the organization, as a whole, attains prosperity and achieves its objectives and goals.
Discipline may be self-imposed or enforced. In the case of self-imposed discipline, employees regulate
themselves and their conduct but, in enforced discipline, regulation comes from the top.

When the discipline is self-imposed, naturally there is spontaneous work on the part of the employees
and no enforcement is necessary; motivation comes from within. It is a more powerful force for the
workers to work more. Nevertheless, occasions arise under which managers are compelled to rely on
enforced discipline for bringing in recalcitrant employees to task.
Maintenance of Industrial Discipline:
The maintenance of industrial discipline is a difficult and highly complicated task and needs very
efficient handling.

Varied are the ways that can be adopted, but a few of them are outlined below:
1) Workers are to be consulted while framing rules and regulations.

2) Rules and regulations should be properly framed.

3) There should not be any communication gap between the management and the workers.

4) New workers should be given proper orientation.

5) Where necessary, charts, graphs and other methods should be used so that the workers may
understand them.

6) Penalty for breaking rules should be used only where it is absolutely necessary.

7) Victimization should not be the aim of punishment.

8) Favoritism, nepotism and casteism should be avoided.

9) Managerial staff should never be breakers of law which they themselves have framed for enforcing
discipline.

10) Code of conduct or discipline should be framed and followed.

11) A disciplinary committee should be formed.

12) A suitable machinery should be set up to listen to the appeals made by the aggrieved party.

The ways of maintaining discipline are broadly discussed above. Where indiscipline actually takes place,
some measures must be taken to enforce discipline.

According to Paul Pigors and Charles A. Myres, the following steps may be taken for disciplinary
action:
(a) Preliminary investigation,

(b) An informal, friendly talk,

(c) An oral warning or reprimand,

(d) A written or official warning, and

(e) A graduated series of penalties such as disciplinary lay-off, demotional downgrading or transfer and
— as a last resort — discharge.

These are termed ‘clinical approach’.

In Ethiopia, the principles of natural justice are followed in dealing with cases of indiscipline. The
accused is to be given opportunity to defend himself and, under no circumstances, a man with sense of
partiality should be appointed a judge and punishment should never be disproportionate to offence.

Disciplinary action is taken after domestic enquiry by the appointment of an Enquiry Officer and by
framing and issuing a charge-sheet. The offender is given opportunity to submit his explanation, the en-
quiry notice is given, the proceedings are conducted, findings are made known and the decision is
communicated to the proper authority.

The authorities of the firm proceed with utmost caution before any disciplinary action is taken.
Unit – V: Collective Bargaining (CB) – CB Practices in ethiopia – Participative Management Forms
and levels – Schemes of Workers’ Participation in Management in Ethiopia.

The term “Collective Bargaining” was identified by Sydney and Beatrice Webb in 1897. Probably, it
means, “to bar the gains (of others), collectively.” Collective Bargaining – Contract Negotiation and
administration involves the relations between employers operating through their representatives and the
organised labour. It can be defined as the process through which representatives of management and
union meet to negotiate a labour agreement. This means that both management and labour are required
by law to negotiate wages, hours, and terms and conditions of employment “in good faith”. Good faith
bargaining is a term that means both parties are communicating and negotiating and that are being
matched with counter proposals with both parties making every reasonable effort to arrive at agreements.
It does not mean that either party is compelled to agree to a proposal.

According to Harbinson, collective bargaining is “a process of accommodation between two institutions

which have both common and conflicting interests.” The Asian Regional Conference of ILO held in
1953, asserts that collective agreements are usually the best measures for the determination and
adjustment of wages and that attempt should be made as early as possible to develop systems of
collective negotiations based on free associations of employers and workers.

Scope of Collective Bargaining

The scope of collective bargaining is quite vast because of the delicacy of the employer, employee
relationship, changing necessity of the organization and its employees, changes in the business
environment and competition within the industry and across industry. According to Monappa, the scope
of collective bargaining agreements now covers issues such as wages, bonus, overtime, paid holidays,
paid sick leave, safety wear, production norms, hours of work, performance appraisal, workers
participation in management, hiring, firing of job evaluation norms and modernization. The scope of
collective bargaining varies from organization to organization and industry to industry depending upon
existence of strong and matured union and its leadership trust and confidence between union and
management, past history and present status of organization with respect to negotiation and their
implementation.

Features of Collective Bargaining

Randle observes: “A tree is known by its fruit. Collective bargaining may best be known by its
characteristics.” The main characteristics of collective bargaining are:

1. It is a group action as opposed to individual action and is initiated through the representatives of
workers. On the management side are its delegates at the bargaining table; on the side of workers is
their trade union, which may represent local plant, the industry membership or nation-wide
membership.
2. It is flexible and mobile, and not fixed or static. It has fluidity and ample scope for a compromise,
for a mutual give-and-take before the final agreement is reached or the final settlement is arrived at.

3. It is a bipartite process. The employers and the employees are the only parties involved in the
bargaining process. There is no third party intervention. The conditions of employment are
regulated by those directly concerned.

4. It is a continuous process which provides a mechanism for continuing and organised relationships
between management and trade unions. “The heart of collective bargaining is the process for a
continuing joint consideration and adjustment of plant problems.”

5. It is industrial democracy at work. Industrial democracy is the governance of labour with the
consent of the governed workers. The principle of arbitrary unilateralism has given way to that of
self government in industry. Collective bargaining is not a mere signing of an agreement granting
seniority, vacations and wage increases. It is not a mere sitting around a table, discussing
grievances. Basically, it is democratic: it is a joint formulation of company policy on all matters
which directly affect the workers.

6. Collective bargaining is not competitive process but is essentially a complementary process, i.e.
each party needs something that the other party has, namely, labour can make a greater productive
effort and management has the capacity to pay for the effort and to organize and guide it for
achieving its objectives.

Objectives of Collective Bargaining

The objectives of collective bargaining, according to the Guide, include the recognition of union as an
authority in the workplace, improvement of workers standards of living and enlargement of their share in
the profit of the enterprise, expression of the worker’s desire in a concrete form to be treated with due
respect and attainment of democratic participation in decision influencing their working conditions,
development of orderly practices for sharing in these decisions and settlement of disputes which may
stem in the day-to-day working of the enterprises and accomplishment of broad general objectives
including defending and promoting the workers interest throughout the country. According to De-Cenzo
and Robbins, the objective of collective bargaining is to agree upon an acceptable contract to
management, union representative and the union membership. The purpose of collective bargaining is to
attain industrial peace not at any price. Rather, it aims at the commonly held goals of a free society. In
fact, the major function of collective bargaining is to generate pressures for enhancement of the dignity,
worth and freedom of individual workers.
PROCESS OF COLLECTIVE BARGAINING

Collective bargaining has two faces: a) The negotiation state; and b) The stage of contract administration.
The process of collective bargaining involves six major steps

1. Preparing for negotiations

2. Identifying bargaining issues.
3. Negotiating
4. Settlement and contract agreement
5. Administration of the agreement.
One bargaining environment is the type of bargaining structure that exists between the union and the
company.
The four major types of structures are:
1. One company dealing with a single union,
2. Several companies dealing with single union,
3. Several unions dealing with a single company, and
4. Several companies dealing with several unions.
The bargaining process is comparatively simple and easy if the structure is of first type and becomes
difficult and complicated in the remaining.
Negotiation Stage
At the negotiation stage, certain proposals are put forward which explore the possibility of their
acceptance and have the way to mutually agreed terms after careful deliberation and consideration. The
negotiation stage itself involves three steps namely preparation for negotiation, identifying bargaining
issues and negotiating.
1. Preparation for negotiation
Careful advance preparations by employers and employees are necessary because of the complexity of
the issue and the broad range of topic to be discussed during negotiations. Effective bargaining means
preparing an orderly and factual case to each side. Today, this requires much more skill and
sophistication than it did in earlier days, when shouting and expression of strong emotions in smoke
filled rooms were frequently the keys to getting one’s proposals accepted.
From the management side the negotiations are required to:
1. Prepare specific proposal for changes in the contract language.
2. Determine the general size of the economic package the company proposes to offer.
3. Prepare statistical displays and supportive date for use in negotiations, and Prepare a bargaining
book for company negotiations, a compilation of information on issues that will be discussed,
giving an analysis on the effect of each case, its use in other companies, and other facts.
From the employee’s side:
The union should collect information in at least three areas:
1. The financial position of the company and its ability to pay.
2. The attitude of the management towards various issues in past negotiation or inferred from
negotiations in similar companies.
3. The attitudes and desires of the employees. The other arrangements to be made are selecting the
negotiators from both sides and identifying a suitable site for negotiation.
2. Identifying Bargaining Issues:
The major issues discussed in collective bargaining fall under the following four categories:
a. Wage related issues:
This includes such topics as how basic wage rates are determined, cost of living adjustments, wage
differentials, overtime rates, wage adjustments and the like.
b. Supplementary economic benefits:
These include such issues as pension plans, paid vacations, paid holidays, health insurance plans,
retrenchment pay, Unemployment pension, and the like.
c. Institutional issues:
These consist of the rights and duties of employers, employees, unions, employee’s stock ownership
schemes, and the like.
d. Administrative issues:
These include such issues as seniority, employee discipline and discharge procedures, employee health
and safety, technological changes, work rules, job security, and the like. While the last two categories
contain important issues, the wage and benefit issues are the ones which receive the greatest amount of
attention at the bargaining table.
3. Negotiating:
Preparations have been made and issues being identified, the next logical step in collective bargaining
process is negotiation. The negotiating phase begins with each side presenting its initial demands. The
negotiation goes on for days until the final agreement is reached. But before the agreement is reached, it
is a battle of wits, playing on words, and threats of strikes and lockouts. It is a big relief to everybody
when the management representatives and the union finally sign the agreement. The success of
negotiation depends on skills and abilities of the negotiators. At times, negotiations may breakdown even
through both the labour and the management may sincerely want to arrive at an amicable settlement. In
order to get negotiations moving again, there are several measures that are usually adopted by both the
parties, which sometimes even includes unethical measures
1. Through third party intervention such as arbitration and adjudication,
2. Unions tactics likes strikes and boycotts, and
3. Management strategies such as lockouts, splitting the union, bribing union leaders and using
political influence.
(B) Contract Administration
When the process of negotiation has been completed, it is time to sign the contract, the terms of which
must be sincerely observed by both the parties. The progress in collective bargaining is not measured by
the more signing of an agreement rather, it is measured by the fundamental human relationships
agreement. Once an agreement is signed, both the trade union and the management are required to
honour it in letter and spirit. The union officers and company executives should explain the terms and
implications of the contract to employees and supervisors with a view to ensuring that the day to day
working relationship between workers and management is guided by that contract. It is important that
contract must be clear and precise. Any ambiguity leads to grievances or other problems. The whole
process of contract administration is identified by two steps, namely settlement and contract agreement
i.e. settlement of disputes by collective bargaining and find a solution as an contract agreement between
union and management and administration of agreement i.e. implementation according to the letter and
spirit of the provisions of the agreement.
Prerequisites for Collective Bargaining
1. There should be careful selection of negotiation teams and issues. The team should have a mixed
composition, including productions finance and IR experts.
2. It is important for the management to recognize the union and to bargain in more good faith, in
unionised situations.
3. The negotiating teams should have open minds, to listen and appreciate the other’s concern and
point of view and also show flexibility in making adjustments to the demands made.
4. The need to study adequately or do ‘homework’ on the demands presented, i.e. to gather data on
wages and welfare benefits in similar industries in the geographical area.
5. Both the management and union should be able to identify grievances, safety and hygiene
problems on a routine basis and take appropriate remedial steps.
6. Trade unions should encourage internal union democracy and have periodic consultations with
the rank and file members.
7. Trade unions should show their equal concern regarding both quantity of work output as agreed
upon and quality of work. They should show their full commitment towards the viability of the
firm and its products/services.
Workers’ Participation in Management
The concept of workers’ participation in management is a broad and complex one. Depending on the
socio-political environment and cultural conditions, the scope and content of participation may change.
Various terms have come to be used to denote different forms and degree of participation. For example,
joint consultation, labour-management cooperation, codetermination, joint decision making, workers’
participation in industry and workers’ participation in management. These terms or their variants have
been interpreted and explained differently. In any case, a common thread running through all
interpretations is the idea of associating employees in managerial decision- making. The International
Institute for Labour Studies defined WPM as “the participation resulting from practices which increase
the scope for employee’s share of influence in decision making at different tiers of organizational
hierarchy with concomitant assumption of responsibility”.
In the words of Gosep, Workers’ Participation may be viewed as:
1. An instrument for increasing the efficiency of enterprises and establishing harmonious industrial
relations;
2. A device for developing social education for promoting solidarity among workers and for tapping
human talent;
3. A means for achieving industrial peace and harmony which leads to higher productivity and
increased production;
4. A humanitarian act, elevating the status of a worker in the society;
5. An ideological way of developing self-management and promoting industrial democracy.
A clear and more comprehensive definition is
Workers’ Participation, may broadly, be taken to cover terms of association of workers and their
representatives with decision-making process, ranging from exchange of information, consultation,
decisions and negotiations to more institutionalized forms such as the presence of workers’ member on
management or supervisory boards or even management by workers themselves.
Objectives and Aims of WPM
It would be more appropriate to classify the objectives of Workers Participation in Management in the
following broad categories:
Ethical or Moral Objectives
In an ethical or moral context, participation in decision making is designed to promote individual
development or fulfilment in accordance with the conception of human rights and dignity to which the
Universal Declaration of Human Rights (1948) probably gives the most widely published expression.
The declaration reads-“All human beings are born free and equal in dignity and rights. They are endowed
with reason and conscience and should act towards one another in a spirit of brotherhood. Further,
everyone, as a member of society… is entitled to realization…of the economic, social and cultural rights
indispensable for his dignity and the free development of his personality”. The Special Advisory
Committee, set up by the Government of Jamaica, defined “Workers’ Participation” as “the extension of
the individual’s human rights at the work place” and stressed that “the procedures, institutions, rules and
styles of management should bring the worker’s recognition, treatment and attention as a human being
rather than as a mere statistical unit of production”.
Socio-Political Objectives
Political democracy ceases to have much significance in the absence of democracy in economic life. A
citizen cannot be regarded as sufficiently mature for political democracy if he is denied democratic rights
in his economic life. The industrial democracy programme adopted by the Swadeshi Trade Union
Confederation in 1971 emphasised: “Industrial democracy is part of the effort made by the labour
movement to extend democracy throughout society…Life away from the workplace has developed in one
way and life at the workplace in another. The difference constantly grows and is at the root of the
increasing need which employees feel to exert an influence on conditions of work and on management…
If arbitrary situations are allowed to persist in one sector of society, they are an obstacle to the progress
of democracy in the other sectors…Industrial democracy should be regarded as part of the general
process of democratization.” In our own country, the Second Five Year Plan, which was directed to the
establishment of a socialist society, stated that a socialist society was based not only on cash incentives
but also on the idea of serving the community and its willingness to recognize such service.
So, individual workers must be induced to feel that in their own way they were helping to build a state
directed towards progress. Consequently, the introduction of industrial democracy was a prerequisite for
the establishment of a socialist society.
Economic Objectives
Economic objectives relate directly or indirectly to increasing the efficiency of the undertaking. By
associating the workers with the decisions taken, it is hoped to improve the quantity and quality of output
and the utilisation of labour, raw materials, equipment and introduction of new techniques. There is
growing awareness of the fact that the knowledge, experience and intelligence of those who actually do
the work are not sufficiently used for improving industrial organisation and methods. Through
participation, it is also hoped to reduce the areas of conflict of interest between management and labour
and to improve labour relations. The implications of workers’ participation in management is
summarised as follows;
1. Workers have ideas, which can be useful.
2. Effective upward communication facilitates sound decision-making at the top.
3. Workers may accept decisions better if they participate in them.
4. Workers may work harder if they share in decisions that affect them.
5. Workers may work more intelligently if, through participation in decision-making, they are better
informed about the reasons for and the intention of decisions.
6. Workers’ participation may foster a more cooperative attitude amongst workers and management,
thus, raising the efficiency by improving team spirit and reducing the loss of efficiency arising
from industrial disputes.
7. Workers’ participation may act as a spur to managerial efficiency. Conversely, it has been pointed
out that the absence of participation results in misunderstanding, resistance, low morale and
suspicion.
8. generate commitment of all employees to the success of the organization;
9. enable the organization better to meet the needs of its customers and adapt to changing market
requirements and hence to maximize its future prospects and the prospects of those who work in it;
10. help the organization to improve performance and productivity and adopt new methods of working
to match new technology, drawing on the resources of knowledge and practical skills of all its
employees;
11. improve the satisfaction the employees get from their work; and
12. provide all employees with the opportunity to influence and be involved in decisions, which are
likely to affect their interests.
Forms of Employee Involvement and Participation
Worker participation is a situation where workers are involved in some way with decision-making in a
business organization. Worker participation can take many forms. There might be a Consultative Council
in the Company, where trade unions and management meet regularly to discuss points of mutual interest.
Workers can be organized in quality circles and meet regularly in small groups to discuss ways in which
their work could be better organized. Marchington (1995) has identified five forms of employee
involvement and participation:
1. Downward communications
Downward communications (team briefing and meetings) take place from managers to employees in
order to inform and ‘educate’ staff so that they accept management plans.
2. Upward problem solving
Upward problem solving is designed to tap into employee knowledge and opinion, either at an individual
level or in small groups. The aims are to increase the stock of ideas in an organization, to encourage
cooperative relationship at work, and to legitimize change. Attitude surveys, quality circles, suggestion
schemes and, total quality management/customer care committees come into this category.
3. Task participation
Task participation and job redesign processes engage employees in extending the range and type of tasks
they undertake. Approaches to job design, such as horizontal job redesign (extending the range of tasks
undertaken at the same level) job enrichment, vertical role integration (taking greater responsibility for
supervisory duties) and team working (where the team organizes its own work so that it becomes ‘self
managed’) may be used.
4. Consultation and representative participation
Consultation and representative participation enables employees take part through their representatives in
management decision-making. One of the aims of management in encouraging this form of participation
is to use it as a safety valve - an alternative to formal disputes - by means of which more deep-seated
employee grievances can be addressed. Joint Consultative Committees and the appointment of worker
directors falls into this category.
5. Financial involvement/participation
Financial involvement or participation takes the form of such schemes as profit sharing and employee
share ownership. Some companies also use gain sharing as a means of involvement. The general purpose
of Financial Participation is to enhance employee commitment to the organization by linking the
performance of the firm to that of employee. Employee is more likely to be positively motivated as he or
she has a financial stake in the company by having a share of profit or by being a shareholder.
a. Co-ownership
In this scheme, the workers are involved in management by making them shareholders of the Company.
Thus, workers share the capital as well as profit. This may be done by inducing them to buy equity
shares. The management may promote the scheme by allowing the worker to make payment in
instalments. It may also advance loans or even give financial assistance to such workers to enable them to
buy equity share. Workers may also be allowed to leave their bonus with the Company as shares (bonus
shares). Participation through ownership has the distinct advantage of making the worker committed to
the job and to the organization. It also offers recognition of the claim of the dignity of labour as the
worker is viewed as partner in the business. This would, in turn, create a sense of belongingness among
workers and stimulate them to contribute their best for the continued progress of the Company.
b. Productivity Bargaining
In this scheme workers’ wage & benefits are linked to productivity. Information on Company performance
is provided to employees as part of the scheme and they are encouraged to discuss with their managers or
team leaders the reasons for success or failure and methods of improving performance. A standard
productivity index is finalized through negotiations initially. Workers do not have to perform at
exceptionally high levels to beat the index. If they are able to exceed the standard productivity norms,
they will get substantial benefits. The aim of such schemes is to educate employees and gain their
commitment. Without such agreement, workers may not realize the importance of raising productivity for
organizational survival and growth.
c. Gain sharing
A form of contingent compensation where owners and employees share in productivity gains, as an
incentive for improvement. Gains are determined by agreed-upon measures of organizational
performance. Gain sharing typically provides for a long term distribution to manufacturing or similar
units of a set percentage of the costs saved through the often substantial revamping of production
processes. Gain sharing programs encourage teams within a firm to solve fundamental problems within
their specific area of expertise.
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