Class notes - Industrial relations

Lecture-1- Introduction to Industrial relations

Meaning
The term ‘industrial relations’ means the relationship between labour and management
which arises through interactive processes. Both labour and management interact with each
other on different issues-may be the issues relating to employment terms and conditions as
specified in the standing orders/bipartite settlement, HR practices or the issues concerning
court judgement, legal implications, government orders, instructions.

Parties in Industrial relations

1. Employees
The workers who provide their services to the organization are an essential resource
and contributes to generating the desired output.
Following are some of the reasons for which employees find maintaining sound industrial
relations to be useful for them:

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

2. Employers
Employers are responsible for providing a favourable work environment for the
employees. They have many rights and powers like laying off inefficient employees, taking
strategic decisions such as mergers, acquisition or shutdown of the organization and
adapting technological changes in the operations.
Following are the different ways in which managers can benefit from sound industrial
relations in the organization:

• Motivating the employees to give their best and gaining their trust and commitment;
• improving the overall efficiency and ensuring effective communication among the
employees and the management;
• dealing with problems of trade union along with negotiation of employment terms
and conditions with such employee representative.
3. Government
Before the 19th century, the government didn’t use to intervene in the conflicts
between the employer and the employee. However, later on, there was a change in the
attitude of the government bodies, they started regulating the industrial relations through
labour courts and tribunals, for the following reasons:
Safeguarding the interest of both the parties;

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

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

• Representing the owners in collective bargaining with the employees or government

and also in case of national issues;
• creating a proper mechanism to resolve industrial disputes;
• giving an insight into the employee relations in an organization and providing
suggestions accordingly.

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

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

6. Courts and Tribunals

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

• Judicial flaws;
• conflicting judgment;
• poor evaluation of penalty;
• confusing terms and conditions.
Another important party-

International Labor Organization (ILO)

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

Simultaneously, an International Labor Code (ILC) was set up to establish the

recommendations and conventions for minimum international labour standards.
The ILC aimed to look into matters like:

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

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

Factors Affecting Industrial Relations

1. Socio-Ethical and Cultural Factor:

Interaction between workers and management personnel becomes effective and

complementary when both the parties possess positive thought process, values, beliefs that
facilitate to develop a state of collaborative approach, willingness to help, desire for
accepting risk, responsibilities to function in a joint venture and application of rational,
judicious approach on the issues.

All these traits and attributes develop mostly from social, ethical and cultural activities. So,
the positive social, ethical and cultural values influence interaction between labour and
management in a positive way. In such situation, human relations will be cordial and
industrial relations will be better.

2. Technological Advancement:
In case of advancement of technology production is increased, quality of the product is
improved, extent of defective product is minimised, cost of production is reduced,
productivity is increased. All this increases the wages of the workers and makes them
happy.

The contented and happy workers are much more willing to keep the production activities
running than to disturb the system, and for this, they establish good relations with their
boss. So, advance in technology influences the industrial relations pattern of the industry.

3. Market Conditions:

Product market plays an important role to Judge Company’s strength to run the production
activities. If, the market condition is uncomfortable, production is affected, worker’s
earnings get reduced, and in the process discontented, unhappy workforce is created.
Under such circumstances, labour-management relation is disturbed and reverse is the case
when market ‘conditions improve.

4. Economic Conditions:

If, the workers are well paid and can satisfy their physiological need to the extent they
desire, they feel contented and develop positive impression about the management. In such
situation, workers manifest effective behavioural activities and establish better relations
with boss through complementary transactions. Hence, economic health of the workers
influences the pattern of IRs.

5. Psychological Factor:

Mind-set, perception, attitudes of both workers and management, determine outcome of

their interaction. Conflict arises when perception level differs, attitudes vary, mind-set is
dissimilar and all this disturbs the labour management relations. Better human relation
occurs, when positivises in all these psychological areas prevail.

6. Ideological Factor:
Since labour-management relation arises out of interaction between labour and
management the influence / guidelines of the government or governmental machineries /
agencies, the ideological similarities, dissimilarities amongst workers, trade union leaders,
government also affect interactive processes. So, more the similar ideology the concerned
parties possess, better is the industrial relations.

7. Economic Policy:

Economic policies of the government manifest its philosophy, approach towards workers,
employers and affect employer employee relations. Economic policies concerning
liberalization, privatization and globalization (LPG) accept the concept of ‘global village’
where MNCs, TNCs have free access to carry on business/ industrial activities.

Under such situations, small, weak and medium-size organizations are unable to face
competition and find difficulty to survive. Hence, labour management relation is affected.
Even the workers in MNCs, TNCs feel unhappy, discontented as they remain under the
threat of losing their jobs.

There are few other factors also like-

8. Political Parties:

Political parties influence government to formulate labour policies, to enact laws, to issue
instructions, orders to industrial organizations on different aspects. They also dominate
trade union people and rank and file to behave and manifest activities in a way they desire.
In the process, labour-management interaction is controlled by political parties and whole
industrial pattern is influenced.

9. International Relations:

Relations with foreign countries indicate the prospect of marketing the products in the
foreign market. Better relations open up avenues for marketing the goods and increase
volume of sales. Besides these, the benefits of technological advancement are available. In
such a condition, production is increased, profit is enhanced, and workers’ earnings are
increased.
Workers develop better relations with their supervisors. So, human relations are
established. But, if, there is global conflict, the country may not have trade relations with
the foreign country. Production is hampered as demand for goods in foreign market is
reduced. Workers’ earnings are affected, industrial relations is disturbed.

Objectives of Industrial relations

01. Facilitate increased production and productivity
The objective of IRs is to keep the production process/ services running so that target of
production/ services set by organization is attained and also to increase productivity to
enable the organization to grow and develop.

2. Safeguard the rights and interests

To safeguard the interest of labour and management by securing high level of mutual
understanding and goodwill between all sections in the industry which are associated with
the process of production.

3. Establish and maintain industrial democracy

To establish and maintain Industrial Democracy, based on labour partnership, not only by
sharing the gains of the organisation, but also by associating the labour in the process of
decision making so that individual personality is fully recognized and developed into a
civilized citizen of the country.

4. Mutually beneficial labour management relations

To establish and maintain industrial relation based on labour partnership, not only for the
purpose of sharing the gains of organization but also participating in managerial decisions so
that the individual's personality may be fully developed and he may grow into a civilized
citizen of the country.

5. Improvement in the economic and working conditions of workers

The objective of industrial relations is to create a contented and committed workforce by
way of increasing their wages, providing fringe benefits, social security measures,
opportunities to develop, grow etc. This is done through establishment of healthy industrial
relations.

6. Collective Bargaining
The right to bargain collectively with an employer promotes the independence of workers to
influence the establishment in case of mismanagement to work with dignity and liberty. It is
an instrument for pursuing external ends as well as constitutional valuable as a practice of
self-governance.
This along with other efforts help to bring down strikes, lockouts, gheraos and other
pressure tactics by providing better wages and improved working conditions and fringe
benefits to the workers.

7. Contract interpretation
The role of the Industrial Court is to facilitate social dialogue. Social dialogue includes all
types of negotiation, consultation, exchange of information and collective bargaining. The
Industrial Court facilitates social dialogue by defining and adjudicating the rights and
obligations of the tripartite players- governments, employers and employees.

Some other objectives of industrial relations

• To bridge about government control over such units which are running at losses or
where production has to be regulated in the public interest
• To bring the gap, by the state, between the imbalanced, disordered and maladjusted
social order (which has been the result of industrial development) and the need for
reshaping the complex social relationships adaptable to the technological advances
by controlling and disciplining its members, and adjusting their conflicting interests.

The main theme behind the concept of industrial relation is to recognise the fact that
labour is a human being and not a commodity and, therefore, it should be treated as living
being. Every individual differs in mental and emotional abilities, sentiments and traditions.
Human like treatment only can improve the relations between the management and the
labour. In its absence, the whole edifice of organisational structure may crumble down.