Industrial Relations/ Employee

Relations
 Objectives
• Concept of IR
• Subjects under IR
• Theories
• Perspectives
• Roles of Workers, Management and Govt.
• IR scenario in India
 What is Industrial Relations?
• Relation between Employer - Employee?
• Relation between Employer – Employees?

• Synonymously used as Employee Relations

– No more unions
– Its about dealing with individuals
– Regulation of employment relationship between
employer and employee
 What is Industrial Relations?
Contd.
• “Industry” refers to “any productive activity in which an
individual (or a group of individuals) is (are) engaged”
• “Relations” means “the relationships that exist within the
industry between the employer and his workmen/
employees.”
• Basically it is the:
– Relationship between union and management
– Conducted within a legislative framework devised by
Govt., institutions
– Have implications for all including society
– All aspects of employment relationships
 Definition
IR is considered as a system of rules and regulations, which
govern the relationship between the major parties i.e.
employer and employees.

Various Schools of Thoughts:

1. Industrial relations is a rule making process.

2. Industrial relations is the process of interaction among
institutions of job regulation.
3. Industrial relations is a process of struggle for control
over work structures and work processes.
 IR includes
• Relationships between:
– individual workers, workers - their employer, employers
- employers, employers and workers - organizations
formed to promote their respective interests
• Processes through which these relationships are
expressed:
– collective bargaining, workers’ participation in decision-
making, and grievance and dispute settlement
• Management of conflict between
– employers, workers and trade unions
 Concepts under IR
• Trade Unionism
• Collective Bargaining
• Machinery for Settlement of Industrial Disputes
(Arbitration and Adjudication)
• Workers’ Participation in Management
• Grievance Redressal System
• Discipline Handling
• Labour Laws
• Social Security Systems
• Working Conditions, Health and Safety
 How is it Different from HRM?
• Industrial Relation pertains to the study and
practice of collective bargaining, trade
unionism, and labor-management relations.
• Human resource management is a separate,
largely distinct field that deals with nonunion
employment relationships and the personnel
practices and policies of employers.
 Why are we studying IR?
• Is it relevant in today’s organizations?

• Industrial progress is impossible without cooperation of

labors and harmonious relationships
• It is in the interest of all to create and maintain good
relations between employees (labor) and employers
(management)
• Ensures continuity of production
• Reduction in Industrial Disputes
• Improves Morale
 Objectives of IR System is to:
• Safeguard the interest of labor and
management
• Avoid industrial conflict or strife and develop
harmonious relations
• Raise productivity by reducing cost
• Establish and promote the growth of an
industrial democracy
• Minimize industrial unrest (strike, lockout)
 IR System
• Actors in the IR system:
Three main parties are directly involved in industrial relations:
Employers: Employers possess certain rights vis-à-vis labors. They have the
right to hire and fire them. Management can also affect workers’ interests by
exercising their right to relocate, close or merge the factory or to introduce
technological changes.
Employees: Workers seek to improve the terms and conditions of their
employment. They exchange views with management and voice their
grievances. They also want to share decision making powers of management.
Workers generally unite to form unions against the management and get
support from these unions.
Government: The central and state government influences and regulates
industrial relations through laws, rules, agreements, awards of court etc.. It also
includes third parties (arbitrators and adjudicators) and labor and tribunal
courts.
 Approaches to study IR
• No single strong explanatory theory
– Dunlop (1958) – Systems Theory of IR
– Kochan et al, (1984) - Strategic Choice Theory
 Employment Relations
Dunlop’s model
 Dunlop’s Model of IR
• Industrial relations is the system which produces the rules of the
workplace.
• Actors:
• Management
• Employees and their representatives (Trade Unions)
• Govt. agencies (Arbitrators)
• Environment/ Context: in which actors operate
• Technological
• Market (economy) and budget constraints
• Locus and distribution of power (political)
• Ideology:
• Set ideas held by actors
• Rules: (product of interaction between the actors)
• Through this process the rules are framed which govern the relations
between the employer and employees
 Dunlop’s Model of IR
• Dunlop's model identifies three key factors to be
considered in conducting an analysis of the
management-labor relationship:
– Environmental or external economic, technological,
political, legal and social forces that impact
employment relationships
– Characteristics and interaction of the key actors in the
employment relationship: labor, management, and
government
– Rules that are derived from these interactions that
govern the employment relationship
 Kochan et al, (1984) - Strategic Choice
Theory
• Integrates strategy, structure, and decision making
• IR activities among actors happen at 3 levels:
– Top tier: Strategic decision making
– Middle tier: Collective Bargaining and/or
Personnel policy-making
– Bottom tier: Workplace, individual and
organizational relationships
• IR strategies are made in response to the firms’
overall competitive strategies
 Perspectives on Industrial Relations
• Unitary
– Organization is perceived as an integrated and
harmonious system, viewed as one happy family
– Only one source of authority: Management
• They own so they control
– All share same objectives, interests and purposes; thus
working together, hand-in-hand, towards the shared
mutual goals.
– Conflict is unnecessary &Trade unions are avoidable
– Still prevails in unorganized sectors and tiny, small-
scale industries
 Perspectives on Industrial Relations
Contd.
• Pluralist
– Organization comprises of distinct groups (Management and
Trade Unions) with different objectives and leadership
– Role of management is towards enforcing and controlling and
more toward persuasion and co-ordination
– Conflict between management and employees is rational and
inevitable
– Conflict is necessary, but can be and needs to be managed and
resolved
– Mutuality and reciprocal influence of trade unions and
management
 Perspectives on Industrial Relations
Contd.
• Radical/ Marxian
– Production system is privately owned and profit
oriented
– Class conflict is necessary for social change to end the
disparity between class & mass
– Two classes of society - workers and capitalists
– Sees industrial conflict synonymous with political and
social conflict
– Conflict in employment relationship is reflective of
the structure of the society
– Role of trade union is to protest exploitation
 Perspectives on Industrial Relations
Contd.
• Trusteeship (Gandhian Philosophy)
– When company accepts its total responsibility
– Seeking justice is the aim of business
– The principle of trusteeship expresses the inherent responsibility
of a company to its consumers, workers and shareholders
– Conflict is inherent
– Interests of groups can be negotiated through collective bargaining
– Main concern is motivation of workers
– Seeks to motivate through positive incentives, not fear
– Interested in employee involvement
– Work cooperatively with them
 Labor Market Situation in India
• How many are covered under Industrial
Relations System?
• Only about 7% of the workforce is employed
in organized and formal sector (1999-2000
survey)
• Although the growth of employment is
increasing in this sector largest chunk is in
Agricultural sector
 Role of Govt.
• Constitutional and legislative framework
– Management and TU should abide by constitution, legislations
and gazette notifications
• Evolve norms through tripartite forums to act as
guidelines for shaping industrial relation
• Responsibility to ensure conformity to these norms
through its judicial and administrative machineries
• State intervention has primarily aimed at ensuring
industrial peace by avoiding industrial disputes, and
expeditious settlement of such disputes when do they arise
• Labour and management were gradually brought under
the umbrella of government’s labour policy which
primarily centers around the legal system
 Role of Govt.
Contd.
• Directive principles of state policy embodied in the constitution
– Art 14: Equality before law
– Art 15: Right against discrimination
– Art 16: Equality of opportunity in matters of public appointment
– Art 19:
• Freedom of Speech and expression
• Freedom to form associations / unions
• Freedom to assemble peacefully
– Art 21: Protection of life and personal liberty
– Art 21: Protection from forced labor
– Art 24: Child labour
– Art 38: Welfare of people
– Art 39: Equal pay for equal work
– Art 41: Right to work
– Art 21: Just and humane conditions of work
– Art 43: Living wage
– Art 43 – A: Participation in Management
 Role of Govt.
Contd.
Enactment of Labor Laws
• Indusrial Disputes Act 1947:
– How to solve the disputes arising out of employment
relations?
• Trade Unions Act 1926:
– What are the rights and responsibilities of Unions?
• Industrial Employment (Standing orders) Act 1946:
– What are the accepted principles between management
and union in general?
 Role of Management / Employer

• In the early phase very few participatory

forums like quality circles, suggestion schemes
were encouraged by the employers in some of
the companies to give workers a say in the
whole decision making process though not
giving the actual autonomy and empowerment
to influence it fully.
 Role of Trade Unions
• Beginning years (1850-1900)
• Years of growth (1900-1947
• Militant phase (1947-1970) and
• Decline phase (1980s onwards)
– Absence of legitimacy
– Lack of credibility among trade union leaders.
• Kerala Govt. Employees’ Strike 2003
• New era of IR
• Emergence of white collar managerial unions
 IR in India
• IR movement has been gradual not radical
• Post independence period to period of economic reform
and liberalization of market place
• In earlier stages of industrialization, rules of workplace
were governed by the employers being the powerful
player in the whole system which even led to exploitative
employment practices
• Govt. was pressurized to protect the weaker party workers
• During this period growth of trade unionism, enactment of
several labour legislations, implementation of some of the
ILO conventions and recommendations etc. substantially
influenced the Industrial Relations systems in the country
 IR in India
Contd.
• Movement towards unity and collectivity among
working class giving rise to unionism (1970s)
• Major Trade Unions were formed
• Number of strikes in different sectors and
industries
• Emergence of white collar unionism in sectors
like banking, insurance and other service
organizations (1990s)
 IR in India
Contd.
• First phase was dominated by the state intervention markedly
influenced by large national trade union federations, collective
bargaining was centralized
• The first stage (1980 - 1991) reflects the period when domestic
economic polices significantly changed to increase both internal
competition and export growth. It witnessed a gradual retreat of the
state from not only the economic arena but also from the IR arena.
• The second stage (1991-present) represents the structural adjustment
reforms period and beyond. During this period the whole range of
economic reforms were put into place; however labour laws reforms
have not formally reorganized (Bhattacherjee, 1999).
• Minimal interference of State and inter-region variation has made it
difficult to generalize the present Indian IR system.
 IR in India
Contd.
• Trade Unionism has declined
• Bargaining system has become more decentralized
– Preference of unit level wage settlements based on
productivity rather than national level agreements
– Concession bargaining is gaining ground
• Labour law reforms (Cosmetic Change)
– Industrial Disputes Amendment Act 2002
• Easier for employers for Closure or Lay-off in economically
unviable private establishments
– Contract Labour (Regulation and Abolition) Amendment
Act 2003
• Regulate Contract Labour in services sector
– Maternity Benefit Amendment Act 2007
 Pre- Early- Pre- Post-
independence independence Liberalization Liberalization
Era Era Era Era
Worker Exploitation, Protected Docile and Emergence of
poor working with pro- Dependent on knowledge
conditions labour policy Unions workers &
and long of Govt. massive
working casual and
hours contract
labour
Management Most Restrictions Preferred Became
powerful and of Labour bipartite powerful with
exploitative laws agreements free trade
Forced to and avoided regime but
adopt unions lost control
tripartism over business
 Pre- Early- Pre- Post-
independence independence Liberalization Liberalization
Era Era Era Era
Union Got Became Union rivalry, Lost glory
recognition powerful with lack of with
with Trade support of leadership and decreasing
Union Act govt. and legal professional membership,
1926 system growth lack of support
Was Militant, from govt.
dependent on politicized and
paternalistic dependent on
attitude of external
management leadership
Government Laissez-faire Controlling Shift of labour Succumbed to
approach authority of IR laws & the forces of
towards both & promoting policies from International
labour & tripartism center to state trade & unable
mgmt. for sectional to continue its
interest pro-labour
stand