GBA (S6) 04

Exam. Code: IR

INDUSTRIAL RELATIONS
(HRM Specialisation)

SEMESTER - VI

BUSINESS ADMINISTRATION
BLOCK - 1

KRISHNA KANTA HANDIQUI STATE OPEN UNIVERSITY

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Subject Experts

1. Prof. Nripendra Narayan Sarma, Maniram Dewan School of Management.,KKHSOU

2. Prof. Munindra Kakoti, V.C. ARGUCOM
3. Prof. Rinalini Pathak Kakati, Dept. of Business Administration, G.U.
Course Co-ordinator : Dr. Smritishikha Choudhury, Asst. Prof., KKHSOU & Dr. Chayanika Senapati,
Asst. Prof., KKHSOU
SLM Preparation Team

UNITS CONTRIBUTORS
1,2,3,4,5,7,8 Dr. Bipasha Chetiya Barua, Dibrugarh University
6 Dr. Chayanika Senapati,KKHSOU

Editorial Team
Content : Retd. Prof. U R Dhar, Gauhati University
Structure, Format & Graphics: Dr. Smritishikha Choudhury, KKHSOU, Dr. Chayanika Senapati,
KKHSOU
January, 2020
ISBN : 978-93-89559-97-2

This Self Learning Material (SLM) of the Krishna Kanta Handiqui State Open University is
made available under a Creative Commons Attribution-Non Commercial-Share Alike 4.0 License
(international): http://creativecommons.org/licenses/by-nc-sa/4.0/

Printed and published by Registrar on behalf of the Krishna Kanta Handiqui State Open University.

Headquarters: Patgaon, Rani Gate, Guwahati-781017

City Office: Housefed Complex, Dispur, Guwahati-781006; Web: www.kkhsou.in

The University acknowledges with thanks the financial support provided by the
Distance Education Bureau, UGC for preparation of this material.

PDF created with pdfFactory Pro trial version www.pdffactory.com

 BACHELOR IN BUSINESS ADMINISTRATION

INDUSTRIAL RELATIONS

Block 1

DETAILED SYLLABUS

Page No.
UNIT 1. Industrial Relations: An Introduction 7-29
Meaning and definition of Industrial Relations (IR), Evolution of Industrial
Relations (IR), Approaches to Industrial Relations (IR), Trade unionism,Bipartite
and Tripartite bodies, Causes of Industrial Disputes, Nature of Industrial Dispute
and Classification of Industrial Dispute
UNIT 2. Theoretical framework of Industrial Relations 30-39
Environmental Theory: Dunlop’s System Theory (1980); Implant Theory:
Flanders; HYMAN; Gandhian Approach to IR: The Trusteeship Theory of
Mahatma Gandhi
UNIT 3. Industrial Workers 40-52
Industrial Workers – Background, Education, Skills and Adjustments,
Characteristics of Industrial Worker, Absenteeism and Influence of Trade
Unions
UNIT 4. Trade Unions 53-71
Growth of Trade Union in India,Legal Framework of Trade Unions In India,
Distinctive Feature of Indian Labour and Employment Laws , Trade Union
Recognition,Problems of Trade Unions,Employee Association: Membership
and Financial Status and Trade Union Act
UNIT 5. Industrial dispute and Employee Grievance 72-90
Nature and Scope of Industrial Dispute;
Causes and Consequences of Industrial Dispute; Prevention and Settlement
of Industrial Dispute in India;
Nature and Cause of Grievance and Grievance Redressal Procedure

PDF created with pdfFactory Pro trial version www.pdffactory.com

 UNIT 6. Organizational Discipline 91-103
Meaning and Objectives of Discipline; Principles for Maintenance of Discipline;
Types of Discipline; Essentials of a Good Disciplinary System; Disciplinary
Action- Punishment for Disciplinary Action and Procedure for Disciplinary
Action.
UNIT 7. Machinery for prevention and settlement of Industrial Dispute 104-112
Statutory Measures for Dispute Settlement and Non-Statutory Measures for
Dispute Settlement

PDF created with pdfFactory Pro trial version www.pdffactory.com

 COURSE INTRODUCTION

The course “Industrial Relation” of B.B.A. 6th semester is a Human Resource Management
specialisation course, which will focus on the different aspects of issues related to Human resource
in an industry or in an organistaion. So, this course will help you in gaining knowledge which you have
to be applied in solving the complicated problems of human resource management. This course will
also enhance the learner’s knowledge on different aspects of Industrial relations.
The course has 15 units and is divided into two blocks: Block 1 and Block 2.
Block 1 deals with the Industrial Relations: An Introduction, Theoretical framework of Industrial
Relations, Industrial Workers, Trade Unions,Industrial dispute and Employee Grievance, Organizational
Discipline, Machinery for prevention and settlement of Industrial Dispute and Collective Bargaining.
Block 2 concentrates on Labour welfare and Social Security, Workers participation in
Management, laws related to Employee Relations,Industrial Health, Concept of Wages, Technology
and Indistrail Relations and India & ILO.
Each unit of these blocks includes some along-side boxes to help you know some of the
difficult, unseen terms. Some “EXERCISES” have been included to help you apply your own thoughts.
You may find some boxes marked with: “LET US KNOW”. These boxes will provide you with some
additional interesting and relevant information. Again, you will get “CHECK YOUR PROGRESS”
questions. These have been designed to self-check your progress of study. It will be helpful for you if
you solve the problems put in these boxes immediately after you go through the sections of the units
and then match your answers with “ANSWERS TO CHECK YOUR PROGRESS” given at the end of
each unit. you in making your learning more active and efficient. And, at the end of each section, you
will get “CHECK YOUR PROGRESS” questions. These have been designed to self-check your
progress of study. It will be better if you solve the problems put in these boxes immediately after you
go through the sections of the units and then match your answers with “ANSWERS TO CHECK
YOUR PROGRESS” given at the end of each unit.

PDF created with pdfFactory Pro trial version www.pdffactory.com

 BLOCK INTRODUCTION

This is the first block of the course “Industrial Relations”. This block consists of seven units.
The first unit explains Meaning and definition of Industrial Relations (IR), Evolution of Industrial Relations
(IR), Approaches to Industrial Relations (IR), Trade unionism,Bipartite and Tripartite bodies, Causes
of Industrial Disputes, Nature of Industrial Dispute and Classification of Industrial Dispute
The second unit is about Environmental Theory: Dunlop’s System Theory (1980); Implant Theory:
Flanders; HYMAN; Gandhian Approach to IR: The Trusteeship Theory of Mahatma Gandhi The third
unit describes about Industrial Workers – Background, Education, Skills and Adjustments,
Characteristics of Industrial Worker, Absenteeism and Influence of Trade Unions
The fourth unit enlighten us with the Growth of Trade Union in India,Legal Framework of Trade Unions
In India, Distinctive Feature of Indian Labour and Employment Laws, Trade Union Recognition,Problems
of Trade Unions,Employee Association: Membership and Financial Status and Trade Union Act
The fifith unit explains Nature and Scope of Industrial Dispute; Causes and Consequences of Industrial
Dispute; Prevention and Settlement of Industrial Dispute in India; Nature and Cause of Grievance and
Grievance Redressal Procedure
The sixth unit explains about meaning and Objectives of Discipline;Principles for Maintenance of
Discipline; Types of Discipline; Essentials of a Good Disciplinary System; Disciplinary Action-
Punishment for Disciplinary Action and Procedure for Disciplinary Action.
The seventh unit explains Statutory Measures for Dispute Settlement and Non-Statutory Measures
for Dispute Settlement
The eighth unit is about meaning and Concept of Collective Bargaining, Objectives of Collective
Bargaining, Features of Collective Bargaining,Strategies and Approaches to Collective Bargaining,
Collective Bargaining Process, Impact of Collective Bargaining and Workers’ Participation In
Management
The structure of Block 1 is as follows :
UNIT 1 : Industrial Relations: An Introduction
UNIT 2 : Theoretical framework of Industrial Relations
UNIT 3 : Industrial Workers
UNIT 4 : Trade Unions
UNIT 5 : Industrial dispute and Employee Grievance
UNIT 6 : Organizational Discipline
UNIT 7 : Machinery for prevention and settlement of Industrial Dispute

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

UNIT 1: INDUSTRIAL RELATIONS: AN INTRODUCTION

UNIT STRUCTURE

1.1 Learning Objectives

1.2 Introduction
1.3 Meaning and Definition of Industrial Relations (IR)
1.4 Evolution of Industrial Relations (IR)
1.5 Approaches to Industrial Relations (IR)
1.6 Trade Unionism
1.7 Bipartite and Tripartite Bodies
1.8 Industrial Disputes
1.8.1 Causes of Industrial Disputes
1.8.2 Nature of Industrial Dispute
1.8.3 Classification of Industrial Dispute
1.9 Let Us Sum Up
1.10 Further Reading
1.11 Answers To Check Your Progress
1.12 Model Questions

1.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

l define the meaning of the term Industrial Relations
l phase out the evolution of the theory and practice of Industrial
Relations
l learn various popular approaches to the practice of Industrial
Relations
l discuss the meaning, role and need for Trade Unionism
l distinguish between Bipartite and Tripartite Bodies with regard to
Industrial Disputes.

Industrial Relations and Labour Legislations 7

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

1.2 INTRODUCTION

This is the first unit of the course Industrial Relations. In this unit, we
are going to discuss the meaning of Industrial Relations the evolution of the
theory and practice of Industrial Relations.
Basically, IR sprouts out of employment relation. It is a dynamic
and developing socio-economic process. Though Independent India got
an opportunity to restructure the industrial relations system the colonial
model of IR remained in practice for sometimes due to various reasons
like the social, political and economic implications of partition, social tension,
continuing industrial unrest, communist insurgency, conflict, and competition
in the trade union movement. In the process of consultation and
confrontation, gradually the structure of the Industrial Relations System
(IRS) evolved.
Like other behavioural subjects, both the scenario of IR and factors
affecting it are perceived differently by different behavioural practitioners
and theorists. For example, while some perceive IR in terms of class conflict,
others view it in terms of mutual co-operation, yet others understand it
related to competing interests of various groups and so.
Owing to this widening purview of Industrial Relations as a subject
matter of research and study, it becomes significant to understand the
subject from its basic concepts in context to realistic industrial environment.
This unit, therefore, attempts to throw light upon certain very preliminary
concepts of Industrial Relations intending at creation of a stronger hold on
the subject.
At the end of this unit we will get a fair idea about learn various
popular approaches to the practice of Industrial Relations.

1.3 MEANING AND DEFINITION OF INDUSTRIAL

RELATION (IR)

Armstrong has defined IR as “IR is concerned with the systems

and procedures used by unions and employers to determine the reward

8 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

for effort and other conditions of employment, to protect the interests of the
employed and their employers and to regulate the ways in which employers
treat their employees.”
According to Dale Yoder, “IR is a designation of a whole field of
relationship that exists because of the necessary collaboration of men
and women in the employment processes of Industry”.
In the opinion of V. B. Singh “Industrial relations are an integral
aspect of social relations arising out of employer-employee interaction in
modern industries which are regulated by the State in varying degrees, in
conjunction with organised social forces and influenced by the existing
institutions. This involves a study of the State, the legal system, and the
workers’ and employers’ organizations at the institutional level; and of the
patterns of industrial organisation (including management), capital structure
(including technology), compensation of the labour force, and a study of
market forces all at the economic level”.
Encyclopedia of Britannica defined IR more elaborately as “The
concept of industrial relations has been extended to denote the relations
of the state with employers, workers, and other organisations. The subject,
therefore, includes individual relations and joint consultation between
employers and workers at their places of work, collective relations between
employers and trade unions; and the part played by the State in regulating
these relations”.

1.4 EVOLUTION OF INDUSTRIAL RELATION (IR)

IR is a dynamic subject in nature. The nature of IR can be seen as

an outcome of complex set of transactions among the major players such
as the employers, the employees, the trade union, and the state in a given
socio-economic context. In other words, a change in the nature of IR has
become sine quo non with change in the socio-economic context of a
country.
Keeping this fact in view, IR in India has been discussed under the
following two time phases:
1. Pre- Independence Era
Industrial Relations and Labour Legislations 9

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

2. Post-Independence Era
1. Pre-Independence Era:
The structure of the colonial economy, the labour policies of colonial
government, the ideological composition of the political leadership, the
dynamics of political struggle for independence, and so on shaped the
colonial model of industrial relations in India during the pre-independence
era. At that time, even union movement was considered an important part
of the independence movement.
But what became evident was that the colonial dynamics of the
union movement, the ambivalence of the native capital and the experience
of the outside political leadership acted as a hindrance to the process of
building up of industrial relations institutions. Moreover, factors like the
ideology of Gandhian class harmony, late entry of leftists and the bourgeois
character of congress also weakened the class approach to the Indian
society and industrial conflict. Thus, till the Second World War, the attitude
of the colonial government toward industrial relations was a passive
regulator only. It was the economic emergence of the Second World War
that altered the colonial government’s attitude towards industrial relations.
State intervention began in the form of introduction of several war
time measures like the Defense of India Rules (Rule 81- A), National Service
(Technical Personnel) Ordinance, and the Essential Service (Maintenance)
Ordinance. As such, the colonial government imposed extensive and
pervasive controls on industrial relations by the closing years of its era.
The joint consultative institutions were established primarily to arrive at
uniform and agreeable labour policy.
Close to India’s independence, several instances that served as
threshold plank for IR during post Independence era could be evidenced.
To mention a few were passing of Indian Trade Unions (Amendment) Act,
1947, Industrial Employment (Standing Orders) Act 1946, Bombay Industrial
Relations Act, 1946, and Industrial Disputes Act, 1947 and split in AITUC
and formation of INTUC.
2. Post-Independence era:
The colonial model of IR remained in practice for sometime even
10 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

after independence due to various reasons like the social, political and
economic implications of partition, social tension, continuing industrial
unrest, communist insurgency, conflict, and competition in the trade union
movement. However, gradually, owing to consultations and discussions,
the structure of the Industrial Relations System (IRS) evolved.
State intervention in the IRS was a part of the interventionist
approach to the management of industrial economy. Several considerations
like unequal distribution of power in the labour market, neutrality of the
state, incompatibility of free collective bargaining institution with economic
planning etc. provided moral justification for retaining state intervention in
the IRS. However state intervention does not mean suppression of trade
unions and collective bargaining institution. In fact, state intervention and
collective bargaining were considered as complementary to each other.
Gradually, various tripartite and bipartite institutions were introduced to
supplement the state intervention in the IRS.
The tripartite process was considered an important instrument of
involving participation of pressure groups in the state managed system.
Non-formal ways evolved intending to do away with the flaws of the formal
system. But the political and economic forces in the mid 1960s aggravated
industrial conflict and rendered non-formal system ineffective. In the process
of reviewing the system, National Commission on Labour (NCL) was
appointed in 1966.
Several committees were appointed to suggest measures for
reforming the IRS – as a result of which tripartism was revived in the 1980s.
Government passed the Trade unions and the Industrial Disputes
(Amendment) Bill, 1988. But, it also proved yet another legislative disaster
as it was severely criticised by the left parties.
Consequently, the tripartite deliberations held at the ILC in 1990 decided
three measures to reform IR in India:
(i) To withdraw the Trade Union and the Industrial Disputes (Amendment)
Bill, 1988.
(ii) To constitute a bipartite committee of employers and unions to
formulate proposals for a comprehensive legislation.
Industrial Relations and Labour Legislations 11

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

(iii) To consider the possibility of formulating a bill on workers’ participation

in management, 1990. In the 33rd session of ILC, another bipartite
committee was constituted to recommend changes in the TU and ID
Acts. The government introduced a Bill on Workers, Participation in
Management in Parliament in 1990.
In sum, it can be said that one of the primary features of the history
of IR in India has been that it is dynamic in nature. Particularly since
liberalization in 1991, IR in India has seen many new challenges like
emergence of a new breed of employees (popularly termed as ‘knowledge
workers’), failure of trade union leadership, economic impact, and
employers’ insufficient response.

CHECK YOUR PROGRESS

Q 1: Define IR.
..................................................................
................................................................................................
Q 2: What are the two time phases IR in India?
................................................................................................
................................................................................................

1.5 APPROACHES TO INDUSTRIAL RELATION (IR)

The IR scenario and its influencers and/or determinants are

perceived differently by different behavioural practitioners and theorists.
For example, while some perceive IR in terms of class conflict, others view
it in terms of mutual co-operation, and yet others understand it as related
to competing interests of various groups.
Based on these perceptions, the behavioural theorists have
developed some approaches to explain the IR dynamics.
The popular approaches to IR are:
1. Unitary Approach
2. Pluralistic Approach
3. Marxist Approach

12 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

Let us now discuss the approaches in the following ways:

1. Unitary Approach: The Unitary approach to IR is based on the
assumption that every one- employee, employer or government-
benefits when the emphasis is on a common interest. In other words,
under this approach, the foundation of IR rests on mutual co-
operation, team work, shared goal, and so on.The Unitary Approach
views conflict at work place as a temporary aberration resulting from
poor management or mismanagement of employees. Under other
conditions, it projects employees usually accepting of and cooperating
with management. Conflict in the form of strikes is disregarded as it
is considered destructive.
2. Pluralistic Approach: Pluralist Approach is, however, quite a
departure from the Unitary Approach of IR. This approach was evolved
and practiced in mid 1960s and early 1970s in England. A. Fox, one
of the major contributors to this Approach, perceived that organisation
is a coalition of competing interest groups mediated by the
management. At times, it may so happen that management in its
mediating role may pay insufficient attention to the needs and claims
of employees.
Employees, under such a situation, may unite in the form of
trade unions to protect their needs and claims. This encouraged trade
unions to become legitimate representatives of employees in
anorganisation. This has resulted in the system of IR beingruled by
concessions and compromises between management and trade
unions.
Conflict between employees and management has been
considered as not only inevitable but also necessary. Normally,
employees are not found to be that forceful in the negotiation process
as is the management. Therefore, there exists a tendency among
employees to join trade unions so as to negotiate with management
on equal terms to protect their interests.
However, the basic assumption of this approach that, employees
and management do not arrive at an acceptable agreement, do not
Industrial Relations and Labour Legislations 13

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

hold good in a free society as inspite of a society being free, power

distribution may not necessarily be equal among the competing forces.
3. Marxist Approach: Like Pluralists, Marxists also view conflict between
labour and management as inevitable. But unlike pluralists,
theyregard conflict as a product of the capitalist society based on
classes. According to Marxists conflict arises because of division within
the society in terms of the ‘haves’ i.e., capitalists and the ‘have not’s
i.e., labour. The main objective of capitalists has been to improve
productivity by paying minimum wages to labour. On the other hand,
the labour views this as their exploitation by the capitalists.
The Marxists do not welcome state intervention as, in their view,
it usually supports management’s interest. They debate that the
pluralistic approach is supportive of capitalism and the unitary
approach is looked upon as an anathema. Hence, the labour-capital
conflict, according to this approach, cannot be solved by bargaining,
participation and cooperation.
As such, the role of trade union comes in and is seen as a
reaction to exploitation by capitalists along with being a weapon to
bring a revolutionary social change by changing capitalistic system.
So as to serve this purpose, coercive powers such as strikes, gherao,
etc. are exercised by the labour against capitalists.
Apart from the above three, some other approaches to IR include the
following:
1. The Industrial Sociology Approach: G. Margerison, an industrial
sociologist, opines that the core of industrial relations is the nature
and development of the conflict itself. According to him, conflict is
the basic concept that should form the basis of the study of industrial
relations. He critised the prevalent approach to industrial relations
stating that it was more concerned with studying the resolution of
industrial conflict than its generation and focused upon the
consequences of industrial disputes than their causes. According to
this school of thought, there are two major conceptual levels of
industrial relations. The first being the intra-plant level where
14 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

situational factors, such as job content, work task and technology,

and interaction factors produce three types of conflict – distributive,
structural, and human relations. These types of conflicts are resolved
through collective bargaining, structural analysis of the socio-technical
systems and man-management analysis respectively. The second
level is outside the firm and is primarily concerned with the conflicts
not resolved at the intra-organisational level. This approach rejects
the special emphasis given to rule determination by the “Systems
and Oxford models”. Rather, it suggests a method of inquiry, which
attempts to develop sociological models of conflicts.
2. The Oxford Approach: As per this approach, the industrial relations
system is a study of institutions of job regulations and the stress is
on the substantive and procedural rules as in Dunlop’s model.
Flanders, the exponent of this approach, considers every business
enterprise as a social system of production and distribution having a
structured pattern of Conceptual Framework of relationships. The
“institution of job regulation” is categorised by him as internal and
Employment Relations as external. While the former is an internal
part of the industrial relations system such as code of work rules,
wage structure, internal procedure of joint consultation, and grievance
procedure; trade unions are considered as an external
organization.Flanders excludes collective agreements from the sphere
of internal regulation. According to him, collective bargaining is central
to the industrial relations system.
The “Oxford Approach” can be expressed in the form of an equation:
r = f (b) or r = f (c)
where,
r = the rules governing industrial relations
b = collective bargaining
c = conflict resolved through collective bargaining.
The “Oxford Approach” can be criticised on the ground that it is
too narrow to provide a comprehensive framework for analysing
industrial relations problems as it over emphasises the significance
Industrial Relations and Labour Legislations 15

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

of the political process of collective bargaining and gives insufficient

weight to the role of the deeper influences in the determination of
rules. While institutional and power factors are viewed as of
paramount importance, variables such as technology, market, status
of the parties, and ideology, are not given any prominence at all. This
narrowness of approach constitutes a severe limitation.
3. The Action Theory Approach: The action theory approach takes
the collective regulation of industrial labour as its focal point just like
the systems model. The actors operate within a framework, which
can at best be described as a coalition relationship. The actors, it is
claimed, agree in principle to cooperate in the resolution of the conflict,
their cooperation taking the form of bargaining. Thus, this theory
analyses industrial relations focusing primarily on bargaining as a
mechanism for the resolution of conflicts. While the systems model
of industrial relations constitutes a more or lesscomprehensive
approach, it is hardly possible to speak of one uniform action theory
concept.
4. The Human Relations Approach: As stated by Keith Davies, human
relations are “the integration of people into a work situation that
motivates them to work together productively, cooperatively and with
economic, psychological and social satisfactions.” He perceives the
goals of human relations are: (a) to get people to produce, (b) to
cooperate through mutuality of interest, and (c) to gain satisfaction
from their relationships. The human relations school founded by Elton
Mayo and later propagated by Roethlisberger, Whitehead, W.F.
Whyte, and Homans offers a coherent view of the nature of industrial
conflict and harmony. It highlights certain policies and techniques to
improve employee morale, efficiency and job satisfaction along with
encouraging small work groups to exercise considerable control over
the environment , thereby helping to remove a major irritant in labour-
management relations. However, some of its viewswere criticised by
Marxists, Pluralists, and others on the ground that it encouraged
dependency and discouraged individual development, and ignored
16 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

the importance of technology and culture in industry. Given these

criticisms, however, it must be admitted that the human relations
school has thrown a lot of light on certain aspects such as
communication, management development, acceptance of workplace
as a social system, group dynamics, and participation in management.
5. The Gandhian Approach: Gandhiji can be called one of the greatest
labour leaders of modern India. His approach to labour problems
was completely new and refreshingly human. He held definite views
regarding fixation and regulation of wages, organisation and functions
of trade unions, necessity and desirability of collective bargaining,
use and abuse of strikes, labour indiscipline, workers participation in
management, conditions of work and living, and duties of workers.
The Ahmedabad Textile Labour Association, a unique and successful
experiment in Gandhian trade unionism, implemented many of his
ideas. Gandhiji had immense faith in the goodness of man and he
believed that many of the evils of the modern world have been brought
about by wrong systems and not by wrong individuals. He insisted
on recognising each individual worker as a human being and believed
in non-violent communism. He also laid down certain conditions
necessary for a successful strike like:(a) the cause of the strike must
be just and there should be no strike without a grievance;(b) there
should be no violence; and (c) non-strikers or “blacklegs” should never
be molested. He was not against strikes but pleaded that they should
be the last weapon in the armoury of industrial workers and hence
should not be resorted to unless all peaceful and constitutional
methods of negotiations, conciliation and arbitration are exhausted.
Gandhiji’s concept of trusteeship is a significant contribution in
the sphere of industrial relations. He stated that employers should
not regard themselves as sole owners of mills and factories of which
they may be the legal owners. Rather, they should regard themselves
only as trustees, or co-owners. He also appealed to the workers to
behave as trustees, not to regard the mill and machinery as belonging
to the exploiting agents but to regard them as their own, protect them
Industrial Relations and Labour Legislations 17

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

and put to the best use they can. The theory of trusteeship, can
therefore, be said to be based on the view that all forms of property
and human accomplishments are gifts of nature and as such, they
belong not to any one individual but to society. This approach aimed
at achieving economic equality and the material advancement of the
“have-nots” in a capitalist society by non-violent means.
Gandhiji realised that relations between labour and management
can either be a powerful stimulus to economic and social progress or
an important factor in economic and social stagnation. Industrial peace
was recognized as an essential condition not only for the growth and
development of the industry, but also as a great measure, for the
improvement in the conditions of work and wages. At the same time,
he not only endorsed the workers’ right to adopt the method of
collective bargaining but also actively supported it. He advocated
voluntary arbitration and mutual settlement of disputes and pleaded
for perfect understanding between capital and labour, mutual respect,
recognition of equality, and strong labourorganisation as the essential
factors for happy and constructive industrial relations.
6. Human Resource Management Approach: The term, Human
Resource Management (HRM)finds application in a diverse range of
management strategies, which includes personnel or industrial
relations management. Some of the components of HRM are: (i)
human resource organisation; (ii) human resource planning; (iii)
human resource systems; (iv) human resource development; (v)
human resource relationships; (vi) human resource utilisation;(vii)
human resource accounting; and (viii) human resource audit. This
approach emphasizes upon individualism and direct relationship
between management and its employees. Therefore, it questions
the collective regulation basis of traditional industrial relations.

1.6 TRADE UNIONISM

Labour unions or trade unions are organizations formed by workers

from related fields that work for the common interest of its members. They

18 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

help workers in issues like fairness of pay, good working environment, hours
of work and benefits. They represent a cluster of workers and provide a link
between the management and workers.
The purpose of labour unions is to look into the grievances of wagers
and act as the medium of communication between the workers and
management.
Regulation of relations, settlement of grievances, raising new
demands on behalf of workers, collective bargaining and negotiations are
the other key principle functions that these trade unions perform.
The Indian Trade Union Act, 1926, is the principle Act which controls
and regulates the mechanism of trade unions. In India, political lines and
ideologies influence trade union movements.
The trade unionism movement originated in the 19th century in
Great Britain, continental Europe, and the United States. In many countries
it is seen as synonymous with the term labour movement. Smaller
associations of workers started appearing in Britain in the 18th century,
but they remained sporadic and short-lived through most of the 19th century.
This was partially due of the hostility they encountered from employers
and government groups that resented this new form of political and
economic activism. Unions and unionists, during those days, were regularly
prosecuted under various restraint-of-trade and conspiracy statutes in both
Britain and the United States.
While union organizers in both countries faced similar obstacles,
their approaches evolved quite differently: while the British movement
favoured political activism, which led to the formation of the Labour Party
in 1906, on the other hand, American unions pursued collective bargaining
as a means of winning economic gains for their workers. British unionism
received its legal foundation in the Trade-Union Act of 1871. However, in
the United States the same effect was achieved more slowly and uncertainly,
by a series of court decisions that whittled away at the use of injunctions,
conspiracy laws, and other devices against unions.

Industrial Relations and Labour Legislations 19

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

CHECK YOUR PROGRESS

Q 3: What are the popular approaches to IR ?
..................................................................
................................................................................................
Q 4: What is The Gandhian Approach ?
................................................................................................
................................................................................................
Q 5: What is Trade Union ?
................................................................................................
................................................................................................

1.7 BIPARTITE AND TRIPARTITE BODIES

Bipartite Bodies
Bipartism is a system of industrial relations where social and labour
issues are discussed between trade unions and management, usually at
the enterprise level. Bipartite machinery comprises of two important
constituents - the works committees and the joint management councils.
These are purely consultative, and not negotiating, joint machineries- with
equal representation of the employers and the workers –set up exclusively
for dealing with disputes affecting the plant or industry.
Bipartite consultative machinery was first recognized as important
around 1920, when a few joint committees were set up in the presses
controlled by the Government of India. These committees were also
introduced in Tata Iron and Steel Company at Jamshedpur. The First-Five-
Year Plan of India also highlighted the importance of bipartite bodies by
specifically stating that - “There should be the closest collaboration, through
the consultative committee at all levels, between employers and employees
for the purpose of increasing production, improving quality, reducing cost
and eliminating waste.
Below is a discussion on the two important constituents of bipartite
mechanisms, as finds mention above -

20 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

a. Works Committees: These committees have been regarded as the

most effective social institutions of industrial democracy and as a
statutory body, established within the industrial units with
representatives of the management and workmen, for preventing,
and settling industrial disputes at the unit level. Works Committees
can be formed by any enterprise, employing 100 or more workers.
The objectives of such committees are: (i) To remove the causes of
friction in the day-to-day work situation by providing an effective
grievances-resolving machinery; (ii) To promote measures securing
amity and good relationship; (iii)To serve as a useful adjunct in
establishing continuing bargaining relationship; and (iv)To strengthen
the spirit of voluntary settlement, rendering recourse to conciliation,
arbitration and adjudication rather infrequent; for these are achieved
by commenting upon matters of concern or endeavour to compose
any material difference of opinion in respect of such matters.
b. Joint Management Council: The Joint Management Councils give
labour a greater sense of participation and infuse a spirit of
cooperation between the two parties without encroaching upon each
other’s sphere of influence, rights and prerogatives. They provide a
scope for close mutual interaction between labour and management
with emphasis on generating a co-operative atmosphere for
negotiation and settlement. These committees also aim at making
the will of the employees effective in the management; ensure the
operation of the private-owned concern in conformity with national
interests and provide for a popular agency for supervising the
management of nationalized undertakings. In brief, such committees
try to promote industrial goodwill and harmonious relations through
better understanding of employees by management and of
management by workers.
Tripartite Bodies
Tripartismcan be best described as a system of labour relations in
which the state, employers, and workers are autonomous yet
interdependent partners, pursuing common interests and participating in
Industrial Relations and Labour Legislations 21

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

decisions affecting them in a binding spirit of mutuality and reciprocity.

This can take place at either or both macro and micro levels. Tripartite
consultation is an important feature of India’s industrial relations system.
In India, the system originated way back in as 1942. The two main forums
for Tripartite Consultationin the country are the Indian Labour Conference
(ILC) and the Standing Labour Committee (SLC). The objectives of Tripartite
Consultation include the following:
i. to promote uniformity in labour legislation.
ii. to lay down a procedure of industrial disputes.
iii. to consider matters of importance to both the managements and
labour.
There are a number of tripartite bodies which operate at the Central
and State levels. The Indian Labour Conference, Standing Labour
Committees, Wage Boards and Industrial Committees operate at the Central
level and State Labour Advisory Boards operate at the state level. All these
bodies play an important role in reaching at voluntary agreements on various
labour matters. Though the recommendations of these bodies are only
advisory in nature they carry considerable weight with the government,
workers and employers.

1.8 INDUSTRIAL DISPUTES

According to Sec. 2 of the Industrial Dispute Act, 1947, “Industrial

dispute means any dispute or difference between employees and
employers or between employers and workmen or between workmen and
workmen, which is connected with the employment or non-employment or
the terms of employment or with the conditions of labour of any person”
Industrial disputes are of symptoms of industrial unrest in the same way
that boils are symptoms of a disordered body.
Whenever an industrial dispute occurs, both management and
workers try to pressurize each other. The management may resort to lock-
out and the workers may resort to strike, gherao, picketing, etc.
1. Strike: Strike is a very powerful weapon used by a trade union to get
its demands accepted. It means quitting work by a group of workers
22 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

for the purpose of bringing pressure on their employer to accept their

demands. According to Industrial Disputes Act, 1947, “Strike means
a cessation of work by a body 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 to accept employment.”
There are many types of strikes. A few of them are discussed below:
i. Economic Strike: Under this type of strike, members of the
trade union stop work to enforce their economic demands such
as wages, bonus, and other conditions of work.
ii. Sympathetic Strike: The members of a union collectively stop
work to support or express their sympathy with the members of
other unions who are on strike in the other undertakings.
iii. General Strike: It means a strike by members of all or most of
the unions in a region or an industry. It may be a strike of all the
workers in a particular region of industry to force demands
common to all the workers. It may also be an extension of the
sympathetic strike to express general protest by the workers
iv. Sit Down Strike: When workers do not leave their place of
work, but stop work, they are said to be on sit down or stay in
strike. It is also known as tools down or pen down strike. The
workers remain at their work-place and also keep their control
over the work facilities.
v. Slow Down Strike: Employees remain on their jobs under this
type of strike. They do not stop work, but restrict the rate of
output in an organised manner. They adopt go- slow tactics to
put pressure on the employers.
2. Lock-out: The Industrial Disputes Act, 1947 has defined lock-out as
closing of a place of employment or the suspension of work or the
refusal by an employer to continue to employ any number of persons
employed by him. It is an act on the part of the employers to close
down the place of work until the workers agree to resume the work
on the terms and conditions specified by the employers.
Industrial Relations and Labour Legislations 23

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

3. Gherao: It is a Hindi word which means ‘to surround’. It implies a

collective action initiated by a group of workers under which members
of the management of an industrial establishment are prohibited from
leaving the business or residential premises by the workers who block
their exit through human barricade.
4. Picketing: When workers are dissuaded from reporting for work by
stationing certain men at the factory gates, such a step is known as
picketing. It is basically a method of drawing the attention of public
towards the fact there is a dispute between the management and
the workers.

1.8.1 Causes of Industrial Disputes

The causes of Industrial Disputes may of the following reasons:

a. Economic causes, and
b. Non-economic causes.
Economic causes include the following:
(i) Wages,
(ii) Bonus,
(iii) Dearness allowance,
(iv) Conditions of work and employment,
(v) Working hours,
(vi) Leave and holidays with pay, and
(vii) Unjust dismissals or retrenchments.
Non-economic causes include the following:
(i) Recognition of trade unions,
(ii) Victimisation of workers,
(iii) Ill-treatment by supervisory staff,
(iv) Sympathetic strikes,
(v) Political causes, etc.

1.8.2 Nature of Industrial Dispute

The nature of an industrial dispute may be explained thus:

1. According to Section 2A of the Industrial Disputes Act, 1947,
24 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

a workman has a right to raise an industrial dispute with regard

to termination, discharge, dismissal, or retrenchment of his or
her service, even though no other workman or any trade union
of workman or any trade union of workmen raises it or is a
party to the dispute.
2. The dispute must affect a large number of workmen who have
a community of interest and the rights of these workmen must
be affected as a class.
3. The dispute must be taken up either by the industry union or
by a substantial number of workmen.
4. There must be some nexus between the union and the
dispute.

1.8.3 Classification of Industrial Dispute

Industrial Disputes have been classified by the ILO into the

following two main types:
1. Interest Disputes: Also called ‘economic disputes’, they 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: Grievance or Right disputes
arise out of application or interpretation of existing agreements
or contracts between the employees and the manage-ment.
They relate either to individual worker or a group of workers
in the same group.
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.
Such grievances are often settled through laid down
Industrial Relations and Labour Legislations 25

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

standard procedures like the provisions of the collective agreement,

employment contract, works rule or law, or customs /usage in this
regard apart from Labour Courts or Tribunals to adjudicate over
them.
Although most often industrial disputes are considered as
‘dysfunctional’ and ‘unhealthy’, sometimes industrial disputes are
beneficial as well. Dispute opens up the minds of employers and
motivates and/or induces them to provide better working conditions
and emoluments to the workers.

CHECK YOUR PROGRESS

Q 6: Name the different types of industrial
disputes.
................................................................................................
................................................................................................
Q 7: Define Lock out?
................................................................................................
................................................................................................

1.9 LET US SUM UP

l The concept of industrial relations has been extended to denote the

relations of the state with employers, workers, and other organisations.
The subject, therefore, includes individual relations and joint
consultation between employers and workers at their places of work,
collective relations between employers and trade unions; and the
part played by the State in regulating these relations”.
l IR is dynamic in nature. The nature of IR can be seen as an outcome
of complex set of transactions among the major players such as the
employers, the employees, the trade union, and the state in a given
socio-economic context. In a sense, change in the nature of IR has
26 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

become sine quo non with change in the socio-economic context of

a country.
l The three popular approaches to industrial relation are as follows: 1.
Unitary Approach 2. Pluralistic Approach 3. Marxist Approach.
l Labour unions or trade unions are organizations formed by workers
from related fields that work for the common interest of its members.
They help workers in issues like fairness of pay, good working
environment, hours of work and benefits. They represent a cluster of
workers and provide a link between the management and workers.
l The purpose of these unions is to look into the grievances of wagers
and present a collective voice in front of the management. Hence, it
acts as the medium of communication between the workers and
management.

1.10 FURTHER READING

1) Ratnam C S V, Industrial Relations, Oxford University Press, New

Delhi, 2013.
2) Monappa A et al, Industrial Relations and Labour Laws, 2nd edition,
McGraw-Hill Education, India, 2012.
3) Srivastava S C, Industrial Relations and Labour Laws, 6th Revised
Edition, Vikash Publishing House, India, 2014.

1.11 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No 1: Armstrong has defined IR as “IR is concerned with the

systems and procedures used by unions and employers to determine
the reward for effort and other conditions of employment, to protect
the interests of the employed and their employers and to regulate
Industrial Relations and Labour Legislations 27

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 1 Industrial Relations: An Introduction

the ways in which employers treat their employees”.

Ans to Q No 2: IR in India has been discussed under two time phases:
Pre- Independence Era and Post-Independence Era
Ans to Q No 3: The popular approaches to IR are: Unitary Approach,
Pluralistic Approach and Marxist Approach
Ans to Q No 4: Gandhiji’s concept of trusteeship is a significant contribution
in the sphere of industrial relations. He stated that employers should
not regard themselves as sole owners of mills and factories of which
they may be the legal owners. Rather, they should regard themselves
only as trustees, or co-owners. He also appealed to the workers to
behave as trustees, not to regard the mill and machinery as belonging
to the exploiting agents but to regard them as their own, protect them
and put to the best use they can.
Ans to Q No 5: Labour unions or trade unions are organizations formed
by workers from related fields that work for the common interest of its
members. They help workers in issues like fairness of pay, good
working environment, hours of work and benefits. They represent a
cluster of workers and provide a link between the management and
workers.
Ans to Q No 6: The ILO has classified the industrial disputes into two main
types. They are: Interest Disputes and Grievance or Right Disputes.
Ans to Q No 7: The Industrial Disputes Act, 1947 has defined lock-out as
closing of a place of employment or the suspension of work or the
refusal by an employer to continue to employ any number of persons
employed by him.

1.12 MODEL QUESTIONS

Q 1: Define IR and emphasise upon the need to take up IR as a specialized

subject of study in HRM.
Q 2: Discuss the evolution of IR in India.

28 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Relations: An Introduction Unit 1

Q 3: Distinguish between the pre-independence and the post-independence

developments of IR in India.
Q 4: Throw light upon the Unitary, Pluralist and Marxist approaches to IR.
Q 5: Draw focus to the Human relations Approach and the Gandhian
Approach to the discipline of IR.
Q 6: Create understanding about the meaning of Trade Unionism.
Q 7: Enlist and explain a few causes of Industrial disputes and state
remedies to them.
Q 8: Explain the composition and functioning of Bipartite and Tripartite
bodies for settlement of Industrial Disputes.

*** ***** ***

Industrial Relations and Labour Legislations 29

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 2 Theoritical Framework of Industrial Relations

UNIT 2 : THEORITICAL FRAMEWORK OF

INDUSTRIAL RELATIONS
UNIT STRUCTURE

2.1 Learning Objectives

2.2 Introduction
2.3 Environmental Theory: Dunlop’s System Theory (1958)
2.4 Implant Theory: Flanders; HYMAN
2.5 Gandhian Approach to IR: The Trusteeship Theory of Mahatma
Gandhi
2.6 Let Us Sum Up
2.7 Further Reading
2.8 Answers To Check Your Progress
2.9 Model Questions

2.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

l identify various environmental theories of IR
l identify and understand various implant theories of IR
l understand the Gandhian Approach to IR and its influence over
the global IR practices.

2.2 INTRODUCTION

Much study and research have been undertaken, in various parts

of the globe, from varying dimensions of thought and determining factors,
in respect of Industrial Relations in actual practice. As an aftermath of
these, various theories of and approaches to IR have come into existence.
While some of them tend to be complimentary and supplementary to each
other, some others tend to be contradictory in nature. However, each of
them hold valuable information of substance and are individually capable
of providing guidance to practitioners and stakeholders of the field under
different situational contexts; and are collectively capable of contributing
30 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Theoritical Framework of Industrial Relations Unit 2

ample inputs to the basket of knowledge in this area. As such, this unit is
devoted to three important categories of theoretical framework with regard
to IR.

2.3 ENVIRONMENTAL THEORY: DUNLOP’S SYSTEM

THEORY (1958)

The credit for applying the systems concept to Industrial relations

goes to Dunlop. It is within this perspective that Dunlop analyses industrial
relations systems as a sub-system of society. “An industrial relations system
at any one point of time in its development is regarded as comprised of
certain actors, certain contexts, an ideology which binds the industrial
relations system together and a body of rules created to govern the actors
at the workplace and work community”. According to Dunlop’s System Model
of Industrial Relations consists of three agents – management
organizations, workers and formal/informal ways they are organized and
government agencies. These actors and their organizations are located
within an environment – defined in terms of technology, labor and product
markets, and the distribution of power in wider society as it impacts upon
individuals and workplace. Within this environment, actors interact with
each other, negotiate and use economic/political power in process of
determining rules that constitute the output of the industrial relations system.
He proposed that three parties-employers, laborunions, and government–
are the key actors in a modern industrial relations system. He also argued
that none of these institutions could act in an autonomous or independent
fashion. Instead they were shaped, at least to some extent, by their market,
technological and political contexts.
Thus it can be said that industrial relations industrial relations is a
social sub system subject to three environmental constraints- the markets,
distribution of power in society and technology.
Dunlop’s model identifies three key factors to be considered in
conducting an analysis of the management-labor relationship:
1. Environmental or external economic, technological, political, legal and

Industrial Relations and Labour Legislations 31

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 2 Theoritical Framework of Industrial Relations

social forces that impact employment relationships.

2. Characteristics and interaction of the key actors in the employment
relationship: labor, management, and government.
3. Rules that are derived from these interactions that govern the
employment relationship.
Dunlop emphasizes the core idea of systems by saying that the
arrangements in the field of industrial relations may be regarded as a system
in the sense that each of them more or less intimately affects each of the
others so that they constitute a group of arrangements for dealing with
certain matters and are collectively responsible for certain results”..
In effect – Industrial relations is the system which produces the rules of the
workplace. Such rules are the product of interaction between three key
“actors” – workers/unions, employers and associated organizations and
government
The Dunlop’s model gives great significance to external or
environmental forces. In other words, management, labor, and the
government possess a shared ideology that defines their roles within the
relationship and provides stability to the system.
Dunlop’s formulation and application of the concept of industrial
relations system has been criticized on the following grounds:
1. That it is essentially a non-dynamic model of IRs from which it is
difficult to explain IR change;
2. That it concentrates on the structure of the system, ignoring the
process within it;
3. That it tends to ignore the essential element of all IRs, that of the
nature and development of conflict itself;
4. That it focuses on formal rules, to the neglect of important informal
rules and informal processes;
5. That it may not be integrated, and it is problematic whether or not the
actors share a common ideology;
6. That it fails to give an account of how inputs into the system are
converted into outputs;
7. That it is environmentally biased and provides no articulation between
32 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Theoritical Framework of Industrial Relations Unit 2

the “internal” plant level systems and the wider systems;

8. That it favors an analytical approach based on comparison rather than
problem-solving approach built on description; and
9. That it makes no special provision for the role of individual personalities
in IR as the actors are being viewed in a “structural “rather than in a
“dynamic “sense.

CHECK YOUR PROGRESS

Q 1: What, according to Dunlop, are the agents
to an Industrial Relations System?
............................................................................................................
............................................................................................................

2.4 IMPLANT THEORY: FLANDERS; HYMAN

l The Pluralist Theory of Flanders (1970)

According to Flanders, conflict is inherent in an industrial system.
Hence, collective bargaining is required as a formal system to settle conflicts.
This theory is also known as Oxford Model. According to this theory, collective
bargaining is central to the IR system. The rules of the system are viewed
as being determined through the rule-making process of collective
bargaining, which is regarded as a political institution involving a power
relationship between the employers and employees.
The Oxford Approach can be expressed in the form of an equation:
r = f (b) or r = f (c)
where, r = the rules governing IR
b = collective bargaining
c = conflict resolved through collective bargaining
The Oxford Approach can be criticized on the ground that it is too
narrow to provide a comprehensive framework for analyzing IR problems. It
overemphasizes the significance of the political process of collective
bargaining and gives insufficient weight to the role of the deeper influences
in the determination of rules. Institutional and power factors are viewed as

Industrial Relations and Labour Legislations 33

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 2 Theoritical Framework of Industrial Relations

of paramount importance, while variables such as technology, market, status

of the parties and ideology are not given any prominence. This narrowness
of approach constitutes a severe limitation.
l The Structural Contradictions Theory of Hyman (1971)
Marxian analysis of IR and trade unionism has also taken several
forms broadly categorisable into “pessimistic “and “optimistic” approaches.
The pessimistic approaches were represented by the writings of Lenin,
Michels and Trotsky while the optimistic line of thinking was represented
by Marx and Engels. These two approaches represent two variants of the
Structural Contradictions approach to IR.
The pessimistic school talks of limitations of trade union
consciousness and feels that unless the working class joins hands with
intellectuals, it is not possible, to bring in a new social order.
Optimist school, however, sees the role of working classes as not
only maintenance and enhancement of wage level, but also to carry class
struggle against capitalist class in thrust towards creating a classless society.
It is in this “optimistic” tradition that Hyman has enunciated his analysis of
IR and trade unionism. Trade unions, in Hyman’s writings, “represent
workers’ response to the deprivations inherent in their role as employees
within a capitalist economy – opposition and conflict cannot be divorced
from their existence and activity” (Hyman and fryer, 1978: 152). Thus, in
Hyman’s analysis, the politico-economic structure within which, the trade
unions are in conflict with employers because of the inherent deprivations.
Any analysis of IR and trade unionism should, therefore, be sensitive not
only to the structure of the political economy but also to the deprivations
and socio-economic inequalities which are inherent components of the
capitalist mode of production. This perspective immediately revealsthe
limitations of some of the approaches to IR discussed earlier, especially
those oriented to the control and containment of dissension and differences.
Dunlop has said that rule-making is central to the governance of work
relations. He has said explicitly that “the establishing of these procedures
and rules – the procedures themselves are rules – is the centre of attention
in an industrial relations system”. The entire IR system in this approach
34 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Theoritical Framework of Industrial Relations Unit 2

appears to be all geared to bring every foreseeable event under a procedural

or substantive rule, thus reducing or eliminating any form of imbalance in
the system. Thus, neither politico-economic structures nor socio-economic
inequalities are called into question. Hyman’s approach is also at variance
with the liberal-pluralist approach represented by Flanders.”What is the
substance of a system of industrial relations? Nothing could be more
revealing of the past neglect of the subject’s theory than one simple fact.
Not until recently has it been explicitly stated that a system of industrial
relations is a system of rules” (Flanders, 1965 ). The formulation of rules
and implementation of rules appear to be the bread and butter of IR. “These
rules appear in different guides: in legislation and in statutory order; in trade
union regulations; in collective agreements and arbitration awards, in social
conventions, in managerial decisions and in accepted custom and practice”.
(Flanders, 1965). Employers, government, employee organizations and the
judicial system interact with each other in the process of rule-making.
Flanders emphasizes rules, job regulations, institutions of job regulation as
indicative of the ‘order’ orientation – organization of this approach to IR.

CHECK YOUR PROGRESS

Q 2: What is the basic idea contained in the
Puralist Theory?

............................................................................................................
............................................................................................................

2.5 GANDHIAN APPROACH TO IR: THE

TRUSTEESHIP THEORY OF MAHATMA GANDHI

Mahatma Gandhi came up with Trusteeship Approach to IR where

a trustee is one who holds property in trust for another/others. Trusteeship
is the application of the law of God to human society and human institutions.
The principle of Trusteeship expresses the inherent responsibility of a
business enterprise to its consumers, workers, shareholders, and the
community and the mutual responsibilities of these to one another (Goyder

Industrial Relations and Labour Legislations 35

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 2 Theoritical Framework of Industrial Relations

1980).
The concept of trusteeship implies stewardship without ownership.
Such stewardship is not for private profit, but for the greatest good of all.
Gandhi believed that people should keep the minimum of wealth for
themselves to be able to lead a life that millions lead and give up the rest to
be held in trust for the greatest good of all.
However, in industrial relations, conflict is inherent and often
unavoidable due to tensions of command and subordination,
competitiveness, exploitation, physical deprivation at work, and economic
security. Conflict may arise due to:
I. Wage-work bargain,
II. Managerial system of work governance, or
III. Fundamental divisions and differing values in society.
Conflict manifests itself in one or more of the following forms:
I. Relatively hidden and unorganized individual ways, such as, low
employee morale, high labour turnover, absenteeism, accidents, etc.
II. Grievances, Indiscipline, etc.
III. Strikes or other forms of industrial action, overt (strike/ lockout) or
covert (work-to-rule, go-slow, gherao, etc)
Gandhi believed in non-violent communism, going so far as to say
that “if communism comes without any violence, it would be welcome.” He
laid down certain conditions for a successful strike such as:
1. The cause of the strike must be just and there should be no strike
without a grievance;
2. There should be no violence;
3. Non-strikers or “blacklegs” should never be molested. He was not
against strikes but pleaded that those should be the last weapons in
the armoury of industrial workers, and hence, should not be restored
to unless all peaceful and constitutional methods of negotiations,
conciliation and arbitration are exhausted.

36 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Theoritical Framework of Industrial Relations Unit 2

CHECK YOUR PROGRESS

Q 3: What do you understand by the Principle of
Trusteeship?
............................................................................................................
............................................................................................................

2.6 LET US SUM UP

l The credit for applying the systems concept to Industrial relations goes
to Dunlop. It is within this perspective that Dunlop analyses industrial
relations systems as a sub-system of society.
l According to Dunlop’s System Model of Industrial Relations consists
of three agents – management organizations, workers and formal/
informal ways they are organized and government agencies. These
actors and their organizations are located within an environment –
defined in terms of technology, labor and product markets, and the
distribution of power in wider society as it impacts upon individuals
and workplace
l The Pluralist Theory of IR is also known as Oxford Model. According
to Flanders, conflict is inherent in an industrial system. Hence, collective
bargaining is required as a formal system to settle conflicts. According
to him, collective bargaining is central to the IR system. The rules of
the system are viewed as being determined through the rule-making
process of collective bargaining, which is regarded as a political
institution involving a power relationship between the employers and
employees.
l Marxian analysis of IR and trade unionism has also taken several forms
broadly categorisable into “pessimistic “and “optimistic” approaches.
The pessimistic approaches were represented by the writings of Lenin,
Michels and Trotsky while the optimistic line of thinking was represented

Industrial Relations and Labour Legislations 37

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 2 Theoritical Framework of Industrial Relations

by Marx and Engels. These two approaches represent two variants of

the Structural Contradictions approach to IR.
l The pessimistic school talks of limitations of trade union consciousness
and feels that unless the working class joins hands with intellectuals,
it is not possible, to bring in a new social order.
l Optimist school, however, sees the role of working classes as not
only maintenance and enhancement of wage level, but also to carry
class struggle against capitalist class in thrust towards creating a
classless society.
l Mahatma Gandhi proposed the trusteeship approach. A trustee is
one who holds property in trust for another/others. For Gandhi,
trusteeship is the application of the law of God to human society and
human institutions. It becomes trusteeship when a company accepts
its total responsibility and when management’s role becomes that of
balancing all the claims upon the company on the basis of seeking
justice as the aim of business…. A company is not a human person,
therefore, it cannot have a human soul. What it can and should have
is a corporate personality which enables its managers and employees
to realize that they are serving the community through the company.

2.7 FURTHER READING

1) Padhi P K , Labour and Industrial Laws, 2/E 2nd Edition, PHI Learning
Pvt. Ltd., New Delhi, 2012.
2) Ratnam C S V, Industrial Relations, Oxford University Press, New
Delhi, 2013.
3) Monappa A et al, Industrial Relations and Labour Laws, 2nd edition,
McGraw-Hill Education, India, 2012.
4) Srivastava S C Industrial Relations and Labour Laws, 6th Revised
Edition, Vikash Publishing House, India, 2014.

38 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Theoritical Framework of Industrial Relations Unit 2

2.8 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No 1: According to Dunlop’s System Model of Industrial Relations

consists of three agents – management organizations, workers and
formal/informal ways they are organized and government agencies.
Ans to Q No 2: The Pluralist Theory is also known as Oxford Model.
According to Flanders, conflict is inherent in an industrial system.
Ans to Q No 3: The principle of Trusteeship expresses the inherent
responsibility of a business enterprise to its consumers, workers,
shareholders, and the community and the mutual responsibilities of
these to one another.

2.9 MODEL QUESTIONS

Q 1: Who, according to Dunlop, are the parties to an IR system? What

are their respective roles and stakes?
Q 2: Draw a detailed discussion on Dunlop’s Systems Theory focusing
upon the environmental dimension that he has forwarded in the
theory.
Q 3: Draw an interface between Flander’s and Hyman’s Theories of IR.
How were they different from Dunlop’s?
Q 4: Throw light upon the Gandhian Approach to IR. Analyse its applicability
and suitability in today’s modern industrial environment.

*** ***** ***

Industrial Relations and Labour Legislations 39

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 3 Industrial Workers

UNIT 3 : INDUSTRIAL WORKERS

UNIT STRUCTURE

3.1 Learning Objectives

3.2 Introduction
3.3 Industrial Workers - Background, Education, Skills and
Adjustments
3.4 Absenteeism
3.5 Influence of Trade Unions
3.6 Let Us Sum Up
3.7 Further Reading
3.8 Answers To Check Your Progress
3.9 Model Questions

3.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

l know about the origin and background of Industrial Workers
l learn about the educational status, skill status and other
characteristics of Indian industrial workers
l discuss the meaning of, causes of and remedies to absenteeism in
workplace
l describe the significant impact and influence that trade unions exhibit.

3.2 INTRODUCTION

In this unit we are going to discuss the various concepts related to

industrial workers. The plight of any relationship is determined by the
personal, social, professional, educational, locational, legal, and such other
back drops where it originates or exists. Hence, an understanding of the
background and present status of the prime parties involved in the
relationship helps in setting mutual goals and in maintaining a congenial
and smooth relationship. With this object in mind, this unit has been so
designed as to create an understanding of the background of industrial
40 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Workers Unit 3

workers, their educational status, skills, etc. – with special reference to the
Indian context - as workers are a primary stakeholder of any industrial
relations activity/decision. Moreover, with the same intention in mind, the
unit also focuses upon various facets of absenteeism in the workplace and
the significance of existence and influence of trade unions within and outside
the organization.

3.3 INDUSTRIAL WORKERS – BACKGROUND,

EDUCATION, SKILLS AND ADJUSTMENTS

Industrial Workers refer to all those workers, who are employed

in manufacturing units, i.e., the workers employed in large scale, village &
small scale industries are considered industrial labour in general sense.

The 1850s mark the increase in the labour intensive industrial

development. This decade saw the successful establishment of jute and
cotton mills. The coal-fields were connected with the railway junctions to
facilitate the supply of coal to the expanding railway system in India.
Since India was subjected to British industrial interests, the building
of railway system and working coal-fields could not give stimulus to industrial
revolution. As observed by Daniel Thorner, the railway system was
constructed both to drain out the raw materials at economical rates and
also to create a demand for British industrial goods.
To put it in his words:
In the economic sphere the railways fostered a measure of regional
specialization in both agricultural and industrial production and encouraged
the bringing of more land under cultivation. The railways appear also to
have helped raise the level of wages and prices and to have helped make
them more nearly uniform in the sub-continent as a whole.
Yet when we consider the fact that the railways have been the
largest and most important enterprise of a truly modern character in India,
involving heavy machinery, precision techniques, and advanced
communications, we have to conclude that they have had surprisingly few
constructive results. They helped spread a veneer of modernization over

Industrial Relations and Labour Legislations 41

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 3 Industrial Workers

the countryside while doing little to initiate a process of modernization.

In 1946, 70 per cent of the industrial index was constituted by the
cotton textiles jute textiles and coal. All other mining and industrial concerns
accounted for about one third of the total industrial production on the eve of
independence.
The industrial growth up-to the first World War was confined entirely
to these four basic industries viz., railways, coal, jute and cotton. It was the
alarming growth of steel industry in Germany which rather compelled the
British Government to develop conciliatory steel industry in India, and the
Tata Iron and Steel Industry (TISCO) made its mark on the industrial map
of India in 1911.
Next in importance to the railway industry was the coal industry.
Not only was it the basic requirement of railways in India, but also of the
British industry. The production of coal was just one lakh tonnes in the
1840s which rose to three lakhs tonnes in 1860, one million tonnes during
the First World War, and, thereafter, remained almost static on 250 million
tonnes during the period of subjugation of the country to Pax Britannica.
This industry was controlled and managed exclusively by the British till the
1920s. Thereafter, small coal-fields were developed by the Indian
management.
Next in order of importance was the jute industry - also started
by the British. The first jute industry, in India, was established in 1854.
Three more mills came into existence by 1862 followed by, 4000 looms in
operation by the year 1877. This number rose to 15,000 looms by the
close of the century.
The military preparations in Europe in the twentieth century helped
increase the number to 40,000 looms by the time the First World War
came to an end.
Around the same time, the Indian textile industry was ruthlessly
destroyed by the British in India. However, the cotton industry was revived
by the Indian entrepreneurs. The Parsicommunity which traded in raw-
cotton were the first to establish a cotton mill in 1854. Thereafter, the growth
of cotton industry was rapid in the country. The number of mills increased
42 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Workers Unit 3

from just 8 in 1861 to 271 mills in 1914 and the trend till 1946.
The First World War forced the industrial growth, in India, at a faster
rate and in diverse areas. On the one side, marine activities being curbed
in 1800, India was left with no merchant marine of its own. The country
was also deprived of the marine facility offered by the British merchant
fleet during the war.
The British empire was exposed to the grave danger of non-
availability of spare parts and machinery brought and there was evidenced
almost a break-down even in railway service. British compulsion to place
its demands for government stores, so far obtained from England, on Indian
resources helped in the emergence of other light industries in the country.
The general and electrical engineering industries which were absent from
the industrial map of 1914, had become an important sector by 1919.
Railway workshops, ordinance factories, iron and steel factories,
chemical industries and others had obtained a respectable place on the
industrial map of India by that time. This trend of industrial growth provided
jobs to an increasing number of people and led to the emergence of a
substantial labour force in India as depicted in the table that follows:

Industrial Relations and Labour Legislations 43

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 3 Industrial Workers

Table: Growth of Industrial Employment in India

It is evident in the above table that there was a labour force of about
546 thousands in 1892 which increased to 3854 thousands by 1949 i.e., it
increased 700 per cent during this period. This phenomenal growth was in
the railways as it employed the largest number of people. Further, this number
rose from 259 thousands in 1892 to 901 thousand in 1949.
Thus, there was an increase of about 350 per cent in the
employment of labourers in the railways which was followed by the mining
industry. There were just 33 thousands miners in 1892 which rose to 594
thousands in 1948 i.e., the employment opportunities increased by 180
per cent in mining industry.
Next to the railways in providing employment was the cotton industry
that employed 121 thousands people in 1892 and 661 thousands people
in 1848. The overall factory employment, however, was insignificant with
only 254 thousands people in the factory employment in 1882. By 1949,
the factories in India were providing jobs to about 2580 thousands people
and industrial growth was much below the potentialities of the country.
During the Second World War, India still remained predominantly an
agricultural country with only eleven per cent of the population in urban
centres. Until 1939, over seven- tenths of the export trade consisted of
raw materials and food stuffs and about three-quarters of the imports
consisted of wholly or partially manufactured goods.
The number of persons employed in organized sector remained
extremely low for a population of the size of India. This was mainly because
of the tendency that the country could not have a substantial labour force,
which could leave its impact on the socio-economic development of the
country during this period.
Characteristics of Industrial Workers:
1) Illiteracy: A large proportion of industrial workers in India are illiterates
& ignorant. So they cannot understand the problems confronting the
economy in general & industries in particular. They do not even
understand their own problems.
2) Lack of Discipline: There is no discipline among the industrial labours
44 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Workers Unit 3

in India Indiscipline, absenteeism without any reasons. Moving from

one job to another etc, are very common.
3) Migratory Characters: Industrial labour in India is migratory in
character. Most of the laborers in industries are drawn from villages &
are cages to return to their homes during their busy agricultural
seasons.
4) Lack of Organisations: The industrial labour in India is not united,
but is divided & sub – divided on the basis of language, region, caste,
etc. They are unable to organize themselves. Consequent upon that
most of the trade unions are controlled by outsiders.
5) Low Efficiency: The efficiency of industrial labour in India is very low.
Their productivity is also very low. Lack of education, training, research
medical facilities, etc, are reasons for low productivity.
6) Poverty: The industrial labours in India are very poor. Their salary,
standard of living & productivity are very low. They are unable to
generate interest in their work because of poverty.
7) Superstitions: Most of the industrial labour in India are superstitions
& tradition – bound. They believe in fatalistic & Meta physical things.
They have irrational outlook.
8) Large Scale Absenteeism: It is another important feature of industrial
labour. They remain absent without any reason.
9) Ignorant of Roles & Regulations: A good proportion of our industrial
workers are ignorant of rules & regulation.
10) Bad Habits: The industrial labourers in India are addicted to bad habits.
They are involved in unhealthy practices. As a result, their efficiency &
mental discipline are badly affected.

CHECK YOUR PROGRESS

Q 1: Enlist the chacteristics of the Indian industrial
workers.
................................................................................................
................................................................................................

Industrial Relations and Labour Legislations 45

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 3 Industrial Workers

3.4 ABSENTEEISM

Absenteeism is an employee’s intentional or habitual absence from

work. While employers expect workers to miss a certain number of workdays
each year, excessive absences can equate to decreased productivity and
can have a major effect on company finances, morale and other factors.
This article looks at the causes of absenteeism, the costs of lost productivity
and what employers can do to reduce absenteeism rates in the workplace.
People miss work for a variety of reasons, many of which are legitimate
and others less so. Some of the common causes of absenteeism include
(but are not limited to):
l Bullying and harassment - Employees who are bullied or harassed
by co-workers and/or bosses are more likely to call in sick to avoid
the situation
l Burnout, stress and low morale - Heavy workloads, stressful
meetings/presentations and feelings of being unappreciated can
cause employees to avoid going into work. Personal stress (outside
of work) can lead to absenteeism.
l Disengagement - Employees who are not committed to their jobs,
co-workers and/or the company are more likely to miss work simply
because they have no motivation to go.
l Childcare and eldercare - Employees may be forced to miss work
in order to stay home and take care of a child/elder when normal
arrangements have fallen through (for example, a sick caregiver or a
snow day at school) or if a child/elder is sick.
l Injuries - Accidents can occur on the job or outside of work, resulting
in absences. In addition to acute injuries, chronic injuries such as
back and neck problems are a common cause of absenteeism.
l Depression - According to the National Institute of Mental Health,
the leading cause of absenteeism in the United States is depression.
Depression can lead to substance abuse if people turn to drugs or
alcohol to self-medicate their pain or anxiety.
l Illness - Injuries, illness and medical appointments are the most

46 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Workers Unit 3

commonly reported reasons for missing work (though not always the
actual reason). Not surprisingly, each year during the cold and flu
season, there is a dramatic spike in absenteeism rates for both full-
time and part-time employees.
l Job hunting - Employees may call in sick to attend a job interview,
visit with a head-hunter or work on their resumes/CVs.
l Partial shifts - Arriving late, leaving early and taking longer breaks
than allowed are considered forms of absenteeism and can affect
productivity and workplace morale.

CHECK YOUR PROGRESS

Q 2: What do you understand by absenteeism?
....................................................................
................................................................................................
Q 3: State a few of the causes of work place absenteeism.
................................................................................................
................................................................................................

4.5 INFLUENCE OF TRADE UNIONS

A Trade union is an organization of workers, acting collectively,

who seek to protect and promote their mutual interests through collective
bargaining. Trade unions are based upon the concept of “class-struggle”
between the capitalist employers and their workers.
Trade Unions in India are registered and file annual returns under
the Trade Union Act (1926). The Trade Union movement in India is largely
divided along political lines and follows a pre-Independence pattern of
overlapping interactions between political parties and unions. Trade unions
have gradually evolved and have now come to occupy an important place
in the modern industrial order, they have now become gigantic associations;
they have now become institutions which are interested in the social, cultural
and political development of the county.The firm or industry level trade
unions are often affiliated to larger Federations. The largest Federations in
the country represent labour at the National level and are known as Central
Industrial Relations and Labour Legislations 47

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 3 Industrial Workers

Trade Union Organisations (CTUO).

Trade Unions have three cardinal principles: Unity is strength,
Equality of pay for equal work, Security of employment. Now-a-days the
trade union movement is no longer solely a movement for advancing claims
as a movement seeking to increase the material well being of its members
but has grown into a force which not only defends the political, social and
cultural interests of its members but also carries out special tasks affecting
enterprising and intellectual workers especially with regard to their career,
jobs, salaries, paid holidays, vocational training, recreational and health
improvement programmes etc.
The establishment of textile and clothing mills around the port cities
of Bombay (now Mumbai), Calcutta (now Kolkata), Madras (now Chennai)
and Surat in the second half of the 19th century led to the start of the
industrial workforce in India. The credit for the first association of Indian
workers is generally given to the Bombay Mill-Hands Association founded
by N.M. Lokhande in 1890. This was just after the passing of the ‘First’
Factories Act in 1881 by the British Government. Thereafter the formation
of several labour associations and unions could be evidenced. The first
clearly registered trade-union is considered to be the Madras Labour Union
founded by B.P. Wadia in 1918, while the first trade union federation to be
set up was the All India Trade Union Congress in 1920.
With the rapid growth of unions around the time of the First World
War, the Russian Revolution and the setting up of the ILO, industrial conflict
began to increase. Over 1,000 strikes were recorded between 1920 and
1924. Consequently, the Trade Union Act (1926) was passed which created
the rules for the regulation and closer monitoring of Trade Unions. During
the first year of the operation of the Act, 28 unions registered and submitted
returns with a total membership of100,619. The number grew rapidly
thereafter. By the time of Independence of India in 1947, there were 2,766
unions registered which had a combined membership of over 1.66 million.
This resulted in a wide influence of unions and workers’ organisations and
led to significantly favourable social legislation being enacted in the first
decade of Independence.
48 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Workers Unit 3

Post Independence in 1947 and post formation of the Republic in

1950, India largely followed a socialist economic approach encouraging
public sector employment and pro-worker legislations. The trade-union
movement reflected divisions along Socialist and Communist lines. In the
subsequent decades, significant expansion in trade union membership
could be seen with the number of active unions reaching its peak in the
mid-1970s and mid-1980s. The 1970s in India was a period characterised
by political instability but the 1980s was characterised by the beginnings
of a distinct turn towards more market-friendly policies, support for
industrialists and an implicit opposition to workers.
After economic liberalisation in 1991, there was seen a declining
government intervention in the economy as well as a decline in the creation
of public sector employment and encouragement for the private sector.
Initiatives at unionization in the private sectors were often met with
opposition and the wider general withdrawal of State support for workers
further undermined their bargaining power. These policies led to a
stagnation in the number of unionised formal sector workers.
This led to a gradual shift in focus about the importance of the
Informal sector and ‘Informal employment in the formal sector’ from the
late 1990s onwards which meant that trade unions also began to focus on
these workers. As a result, there was greater enrolment of these workers
subsequently leading to increases in union membership. The Central Trade
Union Organisations (CTUOs) increased their combined membership from
13.21 million in 1989 to 24.85 million in 2002. Almost all the CTUOs now
have at least 20 percent of their official members coming from the informal
sector.
For a long time after 1947, neither the government nor the
management (or even the unions themselves) thought of the unions as a
group who may contribute to the economic performance of the economy
or the enterprise. However, this is changing gradually. The unions and the
management are entering into agreements with bearing on productivity
and growth of the enterprise.

Industrial Relations and Labour Legislations 49

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 3 Industrial Workers

CHECK YOUR PROGRESS

Q 4: Explain the meaning of Trade Union.
..................................................................
................................................................................................

3.6 LET US SUM UP

l Pre- independence, railway workshops, ordinance factories, iron and

steel factories, chemical industries and others had obtained a respect-
able place on the industrial map of India. It was this industrial growth
which provided jobs to an increasing number of people and led to the
emergence of a substantial labour force in India.
l Absenteeism is an employee’s intentional or habitual absence from
work. While employers expect workers to miss a certain number of
workdays each year, excessive absences can equate to decreased
productivity and can have a major effect on company finances, morale
and other factors. This article looks at the causes of absenteeism, the
costs of lost productivity and what employers can do to reduce
absenteeism rates in the workplace.
l A Trade union is an organization of workers, acting collectively, who
seek to protect and promote their mutual interests through collective
bargaining. Trade unions are based upon the concept of “class-
struggle” between the capitalist employers and their workers.
l Trade Unions in India are registered and file annual returns under the
Trade Union Act (1926). Statistics on Trade Unions are collected
annually by the Labour Bureau of the Ministry of Labour, Government
of India. As per the latest data, released for 2012, there were 16,154
trade unions which had a combined membership of 9.18 million (based
on returns from 15 States - out of a total of 36 States).[1] The Trade

50 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Workers Unit 3

Union movement in India is largely divided along political lines and

follows a pre-Independence pattern of overlapping interactions
between political parties and unions. The net result of this type of
system is debated as it has both advantages and disadvantages.

3.7 FURTHER READING

1) Hancock Keith and Landsbury Rusell D(2016), Industrial Relations

Reform: Looking to the Future : Essays in honour of Joe Isaac AO,
Federation Press, Annandale (Australia).
2) Misra S N(2013), Labour and Industrial Law, Central Law Publications,
India.
3) Ratnam C S V(2013), Industrial Relations, Oxford University Press,
New Delhi, 2013.

3.8 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No 1: The characteristics of Indian industrial workers include –

illiteracy, lack of discipline, lack of organization, poverty, superstition,
migratory character, low efficiency, among others.
Ans to Q No 2: Absenteeism is an employee’s intentional or habitual
absence from work.
Ans to Q No 3: Among the various causes of absenteeism, a few are – job
hunting, stress and burnout, childcare and eldercare, bullying and
harassment, depression, partial shifts, etc.
Ans to Q No 4: A Trade union is an organization of workers, acting collectively,
who seek to protect and promote their mutual interests through

Industrial Relations and Labour Legislations 51

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 3 Industrial Workers

collective bargaining. Trade unions are based upon the concept of

“class-struggle” between the capitalist employers and their workers.

3.9 MODEL QUESTIONS

Q 1: Elaborately discuss the development, composition and characteristics

of Industrial Workers in India.
Q 2: Explain the meaning and causes of absenteeism.
Q 3: Discuss the negative effects of absenteeism on industrial functioning.
Q 4: Is there a cure for absenteeism? Suggest remedial measures to deal
with the crucial issue of absenteeism in workplace.
Q 5: Emphasise upon the influence that trade unions exhibit in the industrial
environment, owing to the kind of role that they play.

*** ***** ***

52 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

UNIT 4 : TRADE UNIONS

UNIT STRUCTURE

4.1 Learning Objectives

4.2 Introduction
4.3 Growth of Trade Union in India
4.4 Legal Framework of Trade Unions in India
4.5 Trade Union Recognition
4.6 Problems of Trade Unions
4.7 Employee Association: Membership and Financial Status
4.8 Trade Union Act 1926
4.9 Let Us Sum Up
4.10 Further Reading
4.11 Answers To Check Your Progress
4.12 Model Questions

4.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

l learn the growth and development of Trade Unions in India
l Identify the conditions required of a trade union to be recognized
as one legally
l discuss the various challenges and problems relating to Trade unions
l explain the concept and features of Employee associations
l get an insight into the Trade union Act, 1926.

4.2 INTRODUCTION

In Unit 1, we got a brief idea about trade unionism. Let us now discuss
about this in detail. The Trade Union Movement in India proved to be a catalyst
for change in so far as the treatment of industrial workers was concerned.
The formalization of a body of worker representatives gave the comparatively
‘deprived’ workers the much-needed forum wherein to express their opinions
and put forward their demands, grievances and other issues relating to
Industrial Relations and Labour Legislations 53

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

working conditions, compensation, facilities/amenities/benefits, etc. in a

judicious manner. In other words, it was as if, they got a ‘voice’ in the industry
which helped them fight against being exploited. The Trade Union Act 1926
only added weightage to their stand. This unit, therefore, looks into the various
important aspects of trade union development, formation and recognition,
problems and legal framework; especially with reference to India.

4.3 GROWTH OF TRADE UNION IN INDIA

Early Growth: The Trade Union Movement began in India by the

end of the First World War. The exploitation of labor caused by the
exigencies of the war created unrest among the working class of people;
thereby leading them to form unions that would voice their grievances,
fight for their rights and ensure them better working conditions.
As their efforts and perseverance resulted in the formation of
organized worker bodies, the Government was compelled to give them
legal recognition by passing the Trade Union Act of 1926. Unions registered
under this Act were given some valuable rights and privileges.
Since then Trade Unions have been multiplying in large numbers
till they reached the total figure of 1,863 in the year of our independence.
Their membership also has been increasing in the same manner.
Causes:
l The Trade Union Movement in India received a great impetus in the
last war when the price of essential commodities rose abnormally
high owing to the scarcity created by war conditions.
l The rise in the cost of living made industrial workers better organized
than before.
l Their demand for overtime allowance, bonus, compensation, relief,
etc. became more and more insistent and gathered a force which
even the most resourceful of our producing concerns failed to resist.
l The principle of collective bargaining was accepted as the only means
of securing better service conditions from employers.
l Public opinion was strongly in favor of workers who were considered

54 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

to be mercilessly exploited by their masters. This made it easy for

these representative labor unions to get many of their demands
conceded by the employers of labor.
Initiatives: The Government of India too sympathized with the fate
and conditions of the labour class and consequently, passed a series of
Acts for the welfare of industrial labor aimed at giving the workers security
against unjust exploitation.
Trade unionism success stories in the field of industrial labor
encouraged employees in other business organizations such as banking,
insurance and similar other concerns to form associations of their own on
trade union principles to fight for their collective rights.
Industrial Trade unions: The primary role of Trade Unionism,
however, is ordinarily associated with the corporate activities of industrial
workers. It is through continuous agitations that they were able to draw a
large measure of public sympathy.
A democratic government claiming to represent the interests of the
common people cannot possibly remain indifferent to the just and
reasonable demands of such a large section of people condemned to a
life of toll, misery and insecurity. In the light of this belief, some legislative
measures have been adopted by the Government in the hope that they
will mark a new epoch in the history of labor movement in this country and
set at rest all disaffection and unrest among industrial workers.
Need for discipline: But it is a sorry fact that under the
circumstances which now prevail, it is difficult for trade unions in India to
grow and develop along healthy lines and serve the cause of the members
in the way they should. Rather it is desirable of such unions that they
should shed all political character or affiliations and develop a sense of
discipline and responsibility among the members.
Spirit of service to the nation: Trade unions all over the country
should necessarily be actuated in their activities by a spirit of service to the
nation. The worker members and beneficiaries of trade unions should be
made to realize that their interests are indissolubly connected with the
interest of the nation at large and that their prosperity is directly related to
Industrial Relations and Labour Legislations 55

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

the prosperity of the nation as a whole. So they must respond enthusiastically

to the call for national reconstruction.

CHECK YOUR PROGRESS

Q 1: When did the Trade Union Movement begin
in India?

................................................................................................
................................................................................................

4.4 LEGAL FRAMEWORK OF TRADE UNIONS IN

INDIA

The gamut of Indian labour laws divide the industry into two broad
categories:
1. Factory
Factories are regulated by the provisions of the Factories Act, 1948.
All industrial establishments employing 10 or more persons and carrying
manufacturing activities with the aid of power come within the definition of
Factory. The Factories Act makes provisions for the health, safety, welfare,
working hours and leave of workers in factories and is enforced by the
State Government through their ‘Factory’ inspectorates. It puts special
emphasis on welfare, health and safety of workers and is instrumental in
strengthening the provisions relating to safety and health at work, providing
for statutory health surveys, requiring appointment of safety officers,
establishment of canteen, crèches, and welfare committees etc. in large
factories.
The Act also provides specific safe guards against use and handling
of hazardous substance by occupiers of factories and laying down of
emergency standards and measures.
2. Shops and Commercial Establishments
‘Shops and Commercial Establishments’ are regulated by the Shops
and Commercial Establishments Act. This takes the form of state statutes
and respective states have their respective Shops and Commercial
56 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

Establishments Acts which provide for various provisions and guidelines

relating to opening and closing hour, leave, weekly off, time and mode of
payment of wages, issuance of appointment letter etc.
With regard to industrial workers, the Trade Union Act 1926 serves
as the major guide and safeguard to the very existence and functioning of
workers’ unions. Various rights, obligations, duties, liabilities, and other
do’s and don’ts of all the parties to an industrial relation find mention in this
Act. Other than this Act, there are many other labour and employment
laws that make for the legal framework of industrial employment and relation
in India.
Distinctive Feature of Indian Labour and Employment Laws
Characteristically, the Indian Labour and Employment Laws in India
have categorized employees into three main categories: government
employees, employees in government controlled corporate bodies known
as Public Sector Undertakings (PSUs) and private sector employees.
The rules and regulations governing the employment of government
employees stem from the Constitution of India. Accordingly, government
employees enjoy protection of tenure, statutory service contentions and
automatic annually salary increases.
Public sector employees are governed by their own service
regulations, which either have statutory force, in the case of statutory
corporations, or are based on statutory orders.
Employees belonging to the private sector can be further classified
into two broad categories: management staff and workman. Managerial,
administrative or supervisory employees drawing a salary of Rs.1600/- or
more per month are considered management staff. There exists no statutory
provisions relating to their employment. Thus, the conditions of their
employment are governed by respective contracts of employment and their
services can be discharged in terms of their contract of employment.
However, the worker category is covered under the provisions of the
Industrial Disputes Act.
The Unorganised Sector
There are manylabour and employment laws that also apply to the
Industrial Relations and Labour Legislations 57

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

unorganised sector. The unorganized sector can be defined as that part of

the work force that have not been able to organize itself in pursuit of a
common objective because of certain existent constraints of the respective
sectors such as casual nature of employment, ignorance or illiteracy,
superior strength of the employer, and the like. The laws, under this
category, include the likes of the Building and Construction Workers Act
1996, the Bonded Labour System (Abolition) Act 1976, The Interstate
Migrant Workers Act 1979, The Dock Workers Act 1986, The Plantation
Labour Act 1951, The Transport Workers Act, The Beedi and Cigar Workers
Act 1966, The Child Labour (Prohibition and Regulation) Act 1986, and
The Mine Act 1952.
The Law and their Provisions for Women
Although women constitute a significant part of the workforce in
India but they lag behind men in terms of work participation and quality of
employment. According to Government sources, out of 407 million total
workforce, 90 million are women workersin the agricultural sector. In urban
India, the employment of women in the organised sector in March 2000
constituted 17.6 percent of the total organised sector.
Almost all the major central labour laws are applicable to women
workers; with the Maternity Benefit Act resting its full focus on the women
workers only. The Equal Remuneration Act was passed in 1976, providing
for the payment of equal remuneration to men and women workers for
same or similar nature of work. This law does not permit any discrimination
in recruitment and service conditions except where employment of women
is legally prohibited or restricted. The Central Ministry of Labour and the
Central Advisory Committee regularly monitors the enforcement of the
provisions of this law. In so far as occupational hazards concerning the
safety of women at workplaces is concerned, the Supreme Court of India
in the case of Vishakha Vs. State of Rajasthan [(1997) 6 SCC 241] held
that sexual harassment of working women amounts to violation of rights of
gender equality. As such, it also amounts to violation of the right to practice
any profession, occupation, and trade. The judgment also laid down the
definition of sexual harassment, the preventive steps, the complaint
58 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

mechanism, and the need for creating awareness of the rights of women
workers. Implementation of these guidelines has already begun by
employers by amending the rules under the Industrial Employment
(Standing Orders) Act, 1946.
Legal framework with regard to Child Labour
It took an initiative for framing an omnibus legislation prescribing
14 years as the minimum age for employment and work in all occupations
except agricultural activity in family and small holdings producing for own
consumption. This was done with an intended focus on the elimination of
child labour. The legislation also looked into fixing a minimum age of not
less than 18 years to any type of employment and work which by its nature
or circumstances is likely to jeopardize the health, safety or morals of young
persons. Consequently, employment of children has been prohibited in 13
occupations and 51 processes in the country bringing the total to 64 and
more are in the process of being added to this list. In 2006, the Central
Government amended the Child Labour (Prohibition and Regulation) Act,
1986 prohibiting employment of children below 14 years of age even in
non-hazardous industry like restaurants, motels and also as domestic
servants.
To emphasise upon the issue of child labour, the Ministry of Labour
signed a Memorandum of Understanding with the ILO extending
International Programme on Elimination of Child Labour (IPEC) in India for
another two years.
Labour Law Reforms
It is being advocated that all talk of liberalization is futile without
squarely facing up to the imperative of labour reforms. Other efforts at
raising the standard of performance on the economic front to world class
are apt to stall if those managing enterprises find themselves hamstrung
by outdated trade union laws and dilatory methods of adjudication of
industrial disputes.
Productivity, customer service, cost-effectiveness, keeping to
delivery schedules, technological up gradation and modernization have
emerged as the criteria for judging the quality of management of companies,
Industrial Relations and Labour Legislations 59

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

and labour reforms hold the key to increased competitiveness and investment
flows in all these respects. Realising this need, introducing labour market
flexibility and simplifying labour laws has no doubt been emphasized by the
President and Prime Minister of the country from time to time.

CHECK YOUR PROGRESS

Q 2: To which industries are the Indian labour
laws applicable?

................................................................................................
................................................................................................

4.5 TRADE UNION RECOGNITION

A union must be recognised before it may effectively represent any

employees. Once a union is recognised it serves as the bargaining agent
for the workers in a particular bargaining unit. The need for recognition of
trade unions by employers was felt by the working class to ensure that
appropriate modes of collective bargaining took place and that the
agreements, which were collectively reached, were mutually observed.
Recognition of trade unions was regarded as a step towards securing
reasonable levels of pay and working conditions.
By the late 1990’s, it was realised that trade unions have
becomemassive bureaucratic bodies with interests and agendas of those
who comprise its membership. However, there is a growing debate as to
the extent to which they represent and pursue the interests of their
members. It is often argued that this is slight and coincidental.
Trade union recognition works as much in the interests of the
employeras it does in the interest of the worker. The recognition of a trade
union has several repercussions in defending people on disciplinary
charges, accompanying members in meetings with managers and
negotiating local conditions of service.
After the passing of the Trade Unions Act, 1926, it may be observed

60 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

thattrade unions have now become legalized and recognised institutions;

from being institutions which were only very small bodies they have now
become gigantic associations which are interested in the social, cultural
and political development of the country as well.
In the absence of any central legislation, management in several
states have refused to recognise a trade union mainly on the following five
grounds:
(1) most of the office bearers of the union were outsiders,
(2) and sometimes, those disapproved by management, particularly
politicians and ex-employees;
(3) the union consisted of only small number of employees;
(4) there were many rival unions in existence; and
(5) the trade union was not registered under the Trade Unions Act,1926.
The Constitution on Recognition of Trade Unions:
The right to grant recognition to trade unions within the meaning of
Constitution of India, art. 19(1)(c) is a fundamental right or not is answered
in negative because the right to form association does not carry with it the
concomitant right that the association must be recognised by the employers.
Hence withdrawal of recognition does not infringe the fundamental rights
guaranteed under the Constitution of India, art. 19(1)(c).
Necessary Conditions for Recognition:
The Trade Unions (Amendment) Act, 1947, Sec 25D provides that
a trade union will not be entitled for recognition by order of a labour court
under Sec 25E unless it fulfills the following conditions, namely:
(1) that all its ordinary members are workmen employed in the same
industry or in industries closely allied to or connected with another;
(2) that it is representative of all the workmen employed by the employer
in that industry or those industries;
(3) that its rules do not provide for the exclusion from membership of
any class of the workmen referred to in clause. (b);
(4) that its rules do not provide for the procedure for declaring a strike;
(5) that its rules provide that a meeting of its executive will be held at
least once in every six months; and
Industrial Relations and Labour Legislations 61

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

(6) that it is a registered trade union and that it has complied with all
provisions of this Act.

4.6 PROBLEMS OF TRADE UNIONS

Some of the major problems faced by trade unions in India are as

follows:
1. Small Size:
According to the veteran trade union leader V.V. Giri, “the trade
union movement in India is plagued by the predominance of small sized
unions”. Nearly three-fourths of the unions in the country have a
membership of less than 500. Smallness in size of the union implies, among
other things, weakness in bargaining power.
2. Poor Finance:
Small size of unions has its direct bearing on its financial health. It
is the small size of trade unions accompanied by small subscriptions that
the trade unions cannot undertake welfare activities as desired or as is
expected of them.
3. Lack of Enlightened Labour Force:
The lack of an enlightened labour force capable of manning and
conducting the movement efficiently, purposefully and effectively has been
a major problem in the development of trade unions in the country. Lack of
education, division by race religion, language and caste, migratory nature,
lack of self consciousness, and non-permanent class of workers have been
attributed as the causes for the lack of enlightened labour force in India.
4. Multiplicity of Unions:
Of late, trade unionism in India is also characterised by multiplicity
of unions based on craft, creed and religion. The implication of multiplicity
of trade unions is that it leads to rivalry among unions in the organization
and contributes to fragmentation to workers leading to small-sized unions.
5. Politicisation:
Leaders being affiliated to one or the other party, the unions were
more engrossed in toeing the lines of their political leaders than protecting
workers’ interests. This certainly is a serious defect of the Trade Union
62 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

Movement evidenced in India.

Many a times, inspite of political leaders possessing little knowledge
of the background of labour problems, fundamentals of trade unionism,
the techniques of industry, and even little general education – they tend to
exhibit heavy influence upon all significant decisions and workings of the
unions. Naturally, unions cannot be expected to function efficiently and on
a sound basis under the guidance of such leaders.
6. Miscellaneous Problems:
(i) The majority of registered unions are independent unions. One
possible reason for this is the educated workers’ preference to the
independent unions,
(ii) About 90% of workers in the public sector are unionized while in
case of the private sector only 30 % workers are unionized. This is a
World-Wide trend, not only featuring in India. But it has a serious
implication for trade union movement in India as more and more public
sector undertakings are privatized.
(iii) Given the fast changing industrial scenario, jobs are moving from
the organized formal sector to informal sector. However, the
unorganised sector which constitutes about 90% of the total work
force does not come under the purview of the trade unions.

CHECK YOUR PROGRESS

Q 3: State some major problems faced by Trade
Unions in India.
................................................................................................
................................................................................................

4.7 EMPLOYEE ASSOCIATION: MEMBERSHIP AND

FINANCIAL STATUS

The Collins Dictionary defines an Employee Association as “an

organization, other than a trade union, whose members compriseemployees
of a single employing organization. The aims of the association may be

Industrial Relations and Labour Legislations 63

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

social, recreational, or professional”.

Membership: Membership in employee associations may be
automatic upon employment, which implies some degree of employer
sponsorship, or voluntary, which indicates less direct employer support. In
either case, the principal activities include some or all of the following: the
provision of various forms of group insurance, the operation of a credit
union; the supervision of recreational centres or vacation resorts; the
operation of medical centres, cooperative stores, or buying clubs; and the
sponsorship of athletic teams or cultural events. This is one side to the
membership status of employee associations as followed in some countries.
In certain other countries, employee associations are limited mainly
to associations of professional (administrative, technical, and clerical)
workers, formed primarily for the preservation and improvement of
professional standards. In yet certain other parts of the globe, it is common
for non-manual workers to belong to associations that are similar in many
respects to trade unions.
Financial Status: The members of the Association may take it upon
themselves to fund it and thereby, maintain its financial standing. One
such model is a Voluntary Employees’ Beneficiary Association which is a
type of trust fund formed to provide members and their beneficiaries with
a specified set of employee benefits. Life, health, accident, and medical
(including retiree medical) coverage are the most common benefits provided
through a VEBA. It is a fund which enjoys tax exemption under IRC Secm
501 (c) (9) and may be established by a group of employees with common
employment-related connections. The VEBA benefits may be funded by
either the employees or the employers or both as mutually agreed upon.
A VEBA must meet the following IRS requirements:
1. It must be a voluntary association of employees.
2. The organization must provide for payment of life, sick, accident, or
other similar benefits to members or their dependents or designated
beneficiaries. Substantially all of its operations must be devoted to
this purpose.
3. VEBA earnings must be used solely for the administration and
64 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

payment of member benefits and may not be used for the advantage
of any private individual or shareholder.
4. A single employer may establish a VEBA under some circumstances
and subject to fiduciary requirements.
5. VEBA benefits must not favor highly-compensated employees, and
any membership eligibility restrictions must be on a reasonable and
objective basis.

4.8 TRADE UNION ACT 1926

A highlight of the Trade Union Act 1926 is as follows:

Trade Union [Sec. 2(h)]: Trade Union means any combination,
whether temporary or permanent, formed primarily for the purpose of
regulating the relations between workmen and employers or between
workmen and workmen or between employers and employers for imposing
restrictive conditions on the conduct of any trade or business and includes
any federation of two or more Trade Unions.
Provided that this Act shall not affect -
(i) any agreement between partners as to their own business;
(ii) any agreement between an employer and those employed by him as
to such employment; or
(iii) any agreement in consideration of the sale of the goodwill of a
business or of instruction in any profession trade or handicraft.
The law relating to the registration and protection of the Trade
Unions is contained in the Trade Unions Act, 1926 which came into force
with effect from 1st June 1927. The Act extends to the whole of India
except the State of Jammu and Kashmir.
In common parlance, Trade Union means an association of workers
in one or more occupations. Its object is the protection and promotion of
the interests of the working class. Trade Unions have a home grown
philosophy based on workers’ experience and psychology. It grows out of
the workers’ day-to-day experience.

Industrial Relations and Labour Legislations 65

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

CHECK YOUR PROGRESS

Q 4: Define Employee Association.
..................................................................
................................................................................................
The Trade Union Act, 1926 has been precisely projected below:

66 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

Objectives:
A Trade union is a voluntary organization of workers relating to a
specific trade, industry or a company and formed to help and protect their
interests and welfare by collective action. Trade unions are the most suitable
organisations for balancing and improving the relations between the
employees and the employer. They aim to:-
l Secure fair wages for workers and improve their opportunities for
promotion and training.
l Safeguard security of tenure and improve their conditions of service.
l Improve working and living conditions of workers.
l Provide them educational, cultural and recreational facilities.
l Facilitate technological advancement by broadening the
understanding of the workers.
l Help them in improving levels of production, productivity, discipline
and high standard of living.
l Promote individual and collective welfare and thus correlate the
workers’ interests with that of their industry.
l Take participation in management for decision-making in connection
to workers and to take disciplinary action against the worker who
commits in-disciplinary action.
Some important Definitions from the Act:
Appropriate Government [Sec. 2]: In relation to Trade Unions
whose objects are not confined to one state ‘the appropriate Government’
is the Central Government. In relation to other Trade Unions, the
‘appropriate Government’ is the State Government.
Executive [Sec. 2(a)]: Executive means the body of which the
management of the affairs of a Trade Union is entrusted.
Trade Dispute [Sec. 2(g)]: A trade dispute means any dispute
between the employers and workmen, the workmen and workmen and the
employers and employers which is connected with the employment or non-
employment, or the terms of employment, or the conditions of labour of
any person. ‘Workmen’ mean all persons employed in trade or industry
whether or not in the employment of the employer with whom the trade
Industrial Relations and Labour Legislations 67

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

dispute arises.
Registered Trade Union [Sec. 2(e)]: A registered Trade Union
means a ‘Trade Union’ registered under the Act.
Certain Acts do not apply to trade unions [Sec 14]:
Below mentioned Acts will not apply to any registered Trade Union,
had the registration of any such Trade Union under any such Act shall be
void.
1. The Societies Registration Act, 1860.
2. The Cooperative Societies Act, 1912.
3. The Companies Act, 1956
Trade Unions can be registered only under the Trade Union Act, 1926.
Registration of Trade Unions
For the purpose of registration a minimum of seven members are
necessary to form a trade union. The reason for fixation of minimum seven
members is to encourage formation of more trade unions so that the trade
union would grow.
Cancellation of Registration [sec. 10] (2001 amendment)
The Registrar of the Trade Union can cancel the registration of the
Trade Union under the following circumstances:
1. When Trade Union registration certificate has been obtained by fraud
or other illegal means.
2. Disobey the rules and regulation of Trade Union act.
3. All the provision contained in section 6 of this act not followed by the
members of the Trade Union.
4. When there are no minimum required numbers of members in the
Trade Union.
[Sec 13] Features of Registered Trade Union
l Registered Trade Union will have perpetual succession (will no stop
after the death of the members of the Trade Union.
l Every registered Trade Union will have common seal.
l Every registered Trade Union can acquire and hold both movable
and immovable property.
l Every registered Trade Union can sue others.
l Every registered Trade Union can sued by others also.
68 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

4.9 LET US SUM UP

l The Trade Union Movement began in India during the closing years
of the First World War. The exploitation of labor caused by the
exigencies of the war created unrest among the working class people
and led them to form unions which, would voice their grievances,
fight for their rights and ensure to them better working conditions.
l The national government of India too having a very sympathetic
attitude to laborers of all categories passed a series of Acts for the
welfare of industrial labor. They gave the workers security against
unjust exploitation.
l A distinguishing feature of Indian Labour and Employment Laws are
that in India there are three main categories of employees:
government employees, employees in government controlled
corporate bodies known as Public Sector Undertakings (PSUs) and
private sector employees.
l A union must be recognised before it may effectively represent any
employees. Once a union is recognised it serves as the bargaining
agent for the workers in a particular bargaining unit. An employee
may not circumvent the union, because recognition entails willingness
‘to negotiate with a view to striking a bargain and this involves a
positive mental decision.
l The Collins Dictionary defines an Employee Association as “an
organization, other than a trade union, whose members
compriseemployees of a single employing organization. The aims of
the association may be social, recreational, or professional”.
l The law relating to the registration and protection of the Trade Unions
is contained in the Trade Unions Act, 1926 which came into force
with effect from 1st June 1927. The Act extends to the whole of India
except the State of Jammu and Kashmir.

Industrial Relations and Labour Legislations 69

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 4 Trade Unions

4.10 FURTHER READING

1) Monappa A (2012), Industrial Relations and Labour Laws, 2nd edition,

McGraw-Hill Education, India, 2012.
2) Srivastava S C(2014); Industrial Relations and Labour Laws, 6th
Revised Edition, Vikash Publishing House, India.
3) Padhi P K(2012) , Labour and Industrial Laws, 2/E 2nd Edition, PHI
Learning Pvt. Ltd., New Delhi.

4.11 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No 1: The Trade Union Movement began in India during the

closing years of the First World War. The exploitation of labor caused
by the exigencies of the war created unrest among the working class
people and led them to form unions which, would voice their
grievances, fight for their rights and ensure to them better working
conditions.
Ans to Q No 2: Indian labour laws divide industry into two broad categories
to which they are applicable – (i) factories and (ii) shops and
commercial establishments.
Ans to Q No 3: Some of the major problems faced by trade unions in India
are - 1. Small Size,2. Poor Finance, 3. Politicisation, 4. Multiplicity of
Unions, 5.Lack of Enlightened Labour Force, 6.Miscellaneous
Problems.
Ans to Q No 4: The Collins Dictionary defines an Employee Association
as “an organization, other than a trade union, whose members
compriseemployees of a single employing organization. The aims of
the association may be social, recreational, or professional”.

70 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Trade Unions Unit 4

4.12 MODEL QUESTIONS

Q 1: Phase out the growth of Trade Unions in India and their present stand.
Q 2: Name the categories into which the Indian Labour Laws divide the
industries?
Q 3: State a few distinctive features of Indian Labour and Employment
laws.
Q 4: Draw attention to the conditions required to be fulfilled for the
recognition and disqualification of recognition of Trade Unions in India.
Q 5: What are employee Associations? Explain their role and financial
management.
Q 6: In a gist, highlight the basic objectives, purpose and components of
the Trade Union act 1926.

*** ***** ***

Industrial Relations and Labour Legislations 71

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

UNIT 5 : INDUSTRIAL DISPUTE AND EMPLOYEE

GRIEVANCE
UNIT STRUCTURE

5.1 Learning Objectives

5.2 Introduction
5.3 Nature and Scope of Industrial Dispute
5.4 Causes and Consequences of Industrial Dispute
5.5 Prevention and Settlement of Industrial Dispute in India
5.6 Nature and Cause of Grievance
5.7 Grievance Redressal Procedure
5.8 Let Us Sum Up
5.9 Further Reading
5.10 Answers To Check Your Progress
5.11 Model Questions

5.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

l define and understand the nature and scope of Industrial Dispute
l identify the causes of industrial disputes
l understand the various methods of prevention and settlement of
industrial disputes in India and the bodies which are responsible
for carrying out such procedures
l distinguish between a dispute and a grievance
l discuss the causes of grievance and their redressal procedures.

5.2 INTRODUCTION

Not only are conflicts indispensable parts of any organizational

functioning but are also quite necessary, if only to bring in newer ideas
and cross-verify decisions taken. If kept under control within desirable limits,
conflicts may rather be helpful for organisations than a pain. However,
when minor conflicts take the shape of disputes, proper mechanisms
72 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

become necessary to manage them. Thus, this unit deals with the concept
of industrial disputes, settlement machineries and procedures and related
topics.

5.3 NATURE AND SCOPE OF INDUSTRIAL DISPUTE

An Industrial Dispute may be defined as a conflict or difference of

opinion between management and workers on the terms of employment.
When an industrial dispute occurs, both the parties, that is the management
and the workmen, try to pressurize each other. The management may
resort to lockouts while the workers may resort to strikes,picketing or
gheraos.
Definition Of Industrial Disputes
According to Section 2(k) of the Industrial Disputes Act,1947,
“Any disputes or differences between employers and employees, or
between employers and workmen, or between workmen and workmen,
which is connected with the employment or non-employment or the terms
of employment or with the conditions of labour, of any person”.
Nature of Industrial Dispute
1. There must be difference of opinion or a dispute:
i. Between employers (such as wage-welfare where labour is
scarce).
ii. between employers and workmen( such as demarcation
disputes).
iii. between workmen and workmen.
2. The subject matter is connected with the employment or non-
employment or the terms of employment or with the conditions of
labour of any person,or it must pertain to any industrial matter.
3. The relationship between the employer and the workman must be in
existence and should be the result of a contract and the workman
actually employed.
Scope of Industrial Dispute
1. Industrial disputes are considered to overcome the disagreement
made between employer and employee in industrial relation.
Industrial Relations and Labour Legislations 73

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

2. It Act as an connectivity between firm and the protesters for

unappropriate consequences.
3. Industrial dispute perform the high degree of trust to be made in
order to make propensity for communication made for conflict.
4. To handle the desired situation through lockout, strikes, picketing,
bans etc; which are highly applicable to maintain the situation.

CHECK YOUR PROGRESS

Q 1: Define Industrial Disputes as per the
Industrial Disputes Act of 1947.

...........................................................................................................
...........................................................................................................

5.4 CAUSES AND CONSEQUENCES OF INDUSTRIAL

DISPUTE

Causes of Industrial Disputes

1. Industrial Factors: The industrial factors that cause industrial
disputes are as follows:
i. Nature of employment: The employment methods or policies
followed by the organizations in employing an individual may
sometimes be the reasons for the conflict/dispute.
ii. Work and its nature: The type of work, unpleasant working
conditions, non-availability of machinery to do the work, working
hours etc., may lead to industrial strike.
2. Management attitude towards employees: The management
practices which are not in accordance with legal requirements and
which are unfair to employees are the sources of disputes such as:
i. Discriminatory labour policies.
ii. Ineffective leadership/supervision.
3. Government machinery: Through government acts as a balance
between the management and workers in setting the disputes,
sometimes it also tends to become the causes of industrial disputes.
74 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

4. Political interference:
i. Politics influencing the trade union movement.
ii. Political instability.
iii. Strained central-state relations.
iv. Existence of multiple labour laws.
5. Economic cause:
Economic reasons, such as the below mentioned, may also result in
an industrial dispute:
i. Low wages.
ii. Dearness allowances (DA)and bonus.
iii. Increasing industrial profits.
Thus, the causes of Industrial disputes may be summed up as follows:
1. Low income: Many times, the income of a worker is not enough to
keep everyone in the family content and to pay all the bills. Thus, if
the earning member loses his/her job, the entire family suffers in
poverty. Low wages cause discontent in employees. Moreover, with
every prices rise, it is also expected that the income of industrial
labourers increase, which may not always happen very promptly.
2. Most industries have unhygienic and unsafe working conditions. This
puts pressure on workers’ health.
3. Employees find it extremely difficult to get leave with pay.
4. Employees are becoming more and more conscious about self-
respect. Tempers flare when they are insulted or instigated by their
superiors.
5. Sometimes, employees are unfairly relieved from their jobs.
Nevertheless, their colleagues unite and fight for the rehiring of their
relieved colleagues.
6. Sometimes, trade unions are not recognized by industries resulting
in strained relations and stress.
7. Replacement of workers by machinery is often found to be a cause
of discontent. Workers are get laid off and replaced by machines
that do the same work.
8. Political involvement in trade unions causes divisions and
unnecessary tensions at times.
Industrial Relations and Labour Legislations 75

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

9. Disputes may also arise due to dishonest mid-level management. This

management preventlabourers from contacting senior management,
and act as middle-men. Lack of communication causes distrust.
Consequences of Industrial Conflicts:
1. Unrest and unnecessary tensions engulf the hearts and minds of all
the people involved - labourers and senior management.
2. There is economic loss due to conflicts because conflicts may result
in strikes and lock-outs. This causes low or no production resulting in
industrial loss.
3. Industrial losses may cause economic depression because many
industries are interlinked. A problem in one industry may drastically
affect another industry.
4. The lives of low-level labourers become worse when they are out of
work. They may be the only working members of the family, and their
joblessness may lead everyone in the family to poverty.
5. When industrial conflicts get out of hand, they become a threat to
peace and security. Workers may resort to violence and indulge in
sabotage.

CHECK YOUR PROGRESS

Q 2: State a few of the causes of industrial
disputes.

................................................................................................
................................................................................................
Q 3: Mention a consequence of industrial disputes.
................................................................................................
................................................................................................

5.5 PREVENTION AND SETTLEMENT OF INDUSTRIAL

DISPUTE IN INDIA

The consequences of an Industrial dispute prove to be harmful to

not only the owners of industries and the workers, but also to the economy
76 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

and the nation as a whole resulting in loss of productivity, profits, market

share and even closure of the plant. Hence, Industrial disputes need to be
averted by all means.
Prevention of Industrial disputes is a pro-active approach in which
an organisation undertakes various actions through which the occurrence
of Industrial disputes is prevented.

Fig: Methods of Dispute Prevention

1. Model Standing Orders:Under Industrial Dispute Act, 1947, every
factory employing 100 workers or more is required to frame standing
orders in consultation with the workers. These orders must be certified
and displayed properly by the employer for the information of the
workers.
Standing orders define and regulate terms and conditions of
employment and bring about uniformity in them. They also specify
the duties and responsibilities of both employers and employees
thereby regulating standards of their behaviour.
2. Code of Industrial discipline: The code of Industrial discipline defines
duties and responsibilities of employers and workers. The objectives
of the code are:
l To secure settlement of disputes by negotiation, conciliation
and voluntary arbitration.
Industrial Relations and Labour Legislations 77

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

l To eliminate all forms of coercion, intimidation and violence.

l To maintain discipline in the industry.
l To avoid work stoppage.
l To promote constructive co-operation between the parties
concerned at all levels.
3. Works Committee: Every industrial undertaking employing 100 or
more workers is under an obligation to set up a works committee
consisting equal number of representatives of employer and
employees. According to Indian Labour Conference work committees
are concerned with:-
l Administration of welfare & fine funds.
l Educational and recreational activities.
l Safety and accident prevention
l Occupational diseases and protective equipment.
l Conditions of work such as ventilation, lightening, temperature
& sanitation including latrines and urinals.
l Amenities such as drinking water canteen, dining rooms, medical
& health services.
However, the following items are excluded from the preview of the
work committees.
l Wages and allowances
l Profit sharing and bonus
l Programs of planning and development
l Retirement benefits
l PF and gratuity
l Housing and transport schemes
l Incentive schemes
l Retirement and layoff
4. Joint Management Councils: It consists of equal numbers of workers
and employers representation (minimum 6 & maximum 12).
Representation of workers to the JMCs should be based on the
nomination by the representation.
The decisions of the JMC should be unanimous and should be
78 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

implemented without any delay. JMC should look after 3 main areas:-
1. information sharing
2. consultative
3. administrative
The primary objectives of the JMC may be stated thus:
l Satisfy the psychological needs of workers
l Improve the welfare measures
l Increase workers efficiency
l Improve the relation and association between workers,
managers and promoters.
5. Suggestion Schemes: As the name suggests, these are schemes
wherein the parties to a dispute offer their suggestions for solution
based on which mutually agreeable decisions are encouraged.
6. Joint Councils: Joint Councils are set up for the whole unit and
deals with matters relating optimum production and efficiency and
the fixation of productivity norms for man and machine for every
industrial unit employing 500 and more workers. The features of these
councils include:
l Members of the council must be actually engaged in the unit.
l The chief executive of the unit will be the chairman of the council
and vice chairman will be nominated by worker members.
l Term of the council will be two years.
l JC shall meet at once in a quarter.
l Decision of the council will be based on consensus and not on
voting.
The Joint Councils have the following functions to deliver:
l Optimum use of raw materials and quality of finished products
l Optimum production, efficiency and function of productivity
norms of man and machine as a whole.
l Preparation of schedules of working hours and of holidays.
l Adequate facilitates for training.
l Rewards for valuable and creative suggestions received from
workers.
Industrial Relations and Labour Legislations 79

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

7. Collective Bargaining: Collective Bargaining involves discussion and

negotiation between two groups as to the terms and conditions of
employment. It is a process in which the representatives of the
employer and of the employees meet and attempt to negotiate a
contract governing the employer-employee-union relationships.
8. Labour welfare officer: The factories Act, 1948 provides for the
appointment of a labour welfare officer in every factory employing
500 or more workers. The officer looks after all facilities in the factory
provided for the health, safety and welfare of workers. He maintains
liaison with both the employer and the workers, thereby serving as a
communication link and contributing towards healthy industrial
relations through proper administration of standing orders, grievance
procedure etc.
9. Tripartite bodies: Several tripartite bodies have been constituted at
central, national and state levels. At the central level, The India Labour
Conference, Standing Labour Committees, Wage Boards and
Industries Committees operate whereas at the state level, State
Labour Advisory Boards have been set up. The recommendations
given by these bodies are however advisory in nature and not
statutory.
Machinery for Settlement of Industrial Disputes:
1. Conciliation: Conciliation is a type of state intervention in settling
the Industrial Disputes. The Industrial Disputes Act empowers the
Central & State governments to appoint conciliation officers and a
Board of Conciliation as and when the situation demands.
Conciliation refers to the process by which representatives of
employees and employers are brought together before a third party
with a view to discuss, reconcile their differences and arrive at an
agreement through mutual consent. The third party acts as a facilitator
in this process. The appropriate government may, by notification in
the official gazette, appoint such number of persons as it thinks fit to
be the conciliation officer. The duties of a conciliation officer are:
a) To hold conciliation proceedings with a view to arrive at amicable
80 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

settlement between the parties concerned.

b) To investigate the dispute in order to bring about the settlement
between the parties concerned.
c) To send a report and memorandum of settlement to the
appropriate government.
d) To send a report to the government stating forth the steps taken
by him in case no settlement has been reached at.
The conciliation officer however has no power to force a
settlement. He can only persuade and assist the parties to reach
an agreement. The Industrial Disputes Act prohibits strikes and
lockouts during that time when the conciliation proceedings are
in progress.
2. Arbitration: It is a process in which a neutral third party listens to the
disputing parties, gathers information about the dispute, and then
takes a decision which is binding on both the parties. Certain
advantages of this process are:
l It is established by the parties themselves and therefore both
parties have good faith in the arbitration process.
l The process in informal and flexible in nature.
l It is based on mutual consent of the parties and therefore helps
in building healthy Industrial Relations.
However, the process is not devoid of flaws. Some of the
disadvantages include:
l Delay often occurs in settlement of disputes.
l Arbitration is an expensive procedure and the expenses are to
be shared by the labour and the management.
l Judgement can become arbitrary when the arbitrator is
incompetent or biased.
Arbitration may take the following two forms:
l Voluntary Arbitration: In voluntary arbitration the arbitrator is
appointed by both the parties through mutual consent and the
arbitrator acts only when the dispute is referred to him.
l Compulsory Arbitration: Implies that the parties are required
Industrial Relations and Labour Legislations 81

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

to refer the dispute to the arbitrator whether they like him or not.
Usually, when the parties fail to arrive at a settlement voluntarily,
or when there is some other strong reason, the appropriate
government can force the parties to refer the dispute to an
arbitrator.
3. Adjudication: Adjudication means intervention of a legal authority
appointed by the government to make a settlement which is binding
on both the parties. In other words adjudication means a mandatory
settlement of an Industrial dispute by a labour court or a tribunal. For
the purpose of adjudication, the Industrial Disputes Act provides a 3-
tier machinery:
l Labour court
l Industrial Tribunal
l National Tribunal
a) Labour Court: The appropriate government may, by notification in
the official gazette constitute one or more labour courts for
adjudication of Industrial disputes relating to any matters specified in
the second schedule of Industrial Disputes Act. They are:
l Dismissal or discharge or grant of relief to workmen wrongfully
dismissed.
l Illegality or otherwise of a strike or lockout.
l Withdrawal of any customary concession or privileges.
Where an Industrial dispute has been referred to a labour court
for adjudication, it shall hold its proceedings expeditiously and
shall, within the period specified in the order referring such a
dispute, submit its report to the appropriate government.
b) Industrial Tribunal: The appropriate government may, by notification
in the official gazette, constitute one or more Industrial Tribunals for
the adjudication of Industrial disputes relating to the following matters:
l Wages
l Compensatory and other allowances
l Hours of work and rest intervals
l Leave with wages and holidays
82 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

l Bonus, profit-sharing, PF etc.

l Rules of discipline
l Retrenchment of workmen
l Working shifts other than in accordance with standing orders.
It is the duty of the Industrial Tribunal to hold its proceedings
expeditiously and to submit its report to the appropriate government
within the specified time.
c) National Tribunal: The central government may, by notification in
the official gazette, constitute one or more National Tribunals for the
adjudication of Industrial Disputes in:
l Matters of National importance
l Matters which are of a nature such that industries in more than
one state are likely to be interested in, or are affected by the
outcome of the dispute.
It is the duty of the National Tribunal to hold its proceedings
expeditiously and to submit its report to the central government within the
stipulated time.

CHECK YOUR PROGRESS

Q 4: Enlist a few methods of settlement of
industrial disputes.
................................................................................................
................................................................................................

5.6 NATURE AND CAUSE OF GRIEVANCE

A grievance is a problem and submitted by an employee or several

employees of different types. It may be concerning a situation or likely to
affect the terms and conditions of employment of one worker or several
workers.
If a problem is related to and endorsed by all or majority of
employees or if trade union submits a problem as a general claim it falls
outside the scope of grievance procedure and generally comes under the
purview of collective bargaining.
Industrial Relations and Labour Legislations 83

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

Thus, a grievance:
(a) Has a narrower perspective;
(b) Is concerned with the interpretation of a contract or award as
concerned to an individual or a few employees of different types. As
such policy issues do not fall within the scope of grievance machinery.
The causes of employee grievances may include the following:
(i) Demands for individual wage adjustments;
(ii) Complaints about the incentive system;
(iii) Complaints about the job classifications;
(iv) Complaints against a particular foreman;
(v) Complaints concerning disciplinary measures and procedures;
(vi) Objections to the general methods of supervision;
(vii) Loose calculation and interpretation of seniority rules, and
unsatisfactory interpretation of agreements;
(viii) Promotions;
(ix) Disciplinary discharge or lay-off;
(x) Transfer for another department or another shift;
(xi) Inadequacy of safety and health services/devices;
(xii) Non-availability of materials in time;
(xiii) Violation of contracts relating to collective bargaining;
(xiv) Improper job assignment; and
(xv) Undesirable or unsatisfactory conditions of work.
A grievance may be characterized as follows:
(a) Factual:
The employer-employee relationship depends upon the job contract
in any organisation. This contract indicates the norms defining the limits
within which the employee expects the organisation to fulfill his aspirations,
needs or expectations. When these legitimate needs of expectations or
aspirations are not fulfilled, the employee will be dissatisfied with the job.
Such dissatisfaction is called factual grievance.
(b) Imaginary:
When the job contract is not clear-cut and does not indicate the
norms defining the limits within which the employee expects the organisation
84 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

fulfill his needs or aspirations, the employee develops such needs which
the organisation is not obliged to meet. Under such situations, grievances
are not based on facts but that does not stop the employee from feeling
aggrieved. Normally, the organisation does not feel any kind of responsibility
for such grievances and their redressal, because they are based not only
on wrong perceptions of the employee but also on wrong information.
However, such grievances can have far-reaching consequences
on the organisationas the employees are likely to develop an altogether
negative attitude towards the organisation which decreases their
effectiveness and involvement in work.
(c) Disguised:
Although in most cases, organisations consider the basic
requirements of their employees – sometimes psychological needs of the
employees such as need for recognition, affection, power, achievement
etc., tend to go unattended and ignored. These conditions may take the
shape of a disguised grievance; ultimately having a severe bearing on the
health of employer-employee relationship.

5.7 GRIEVANCE REDRESSAL PROCEDURE

Need for a Grievance Handling Procedure:

Grievance procedure is necessary for any organisation due to the
following reasons:
i) Most grievances seriously disturb the employees. This may affect
their morale, productivity and their willingness to cooperate with the
organisation. If an explosive situation develops, this can be promptly
attended to if a grievance handling procedure is already in existence.
(ii) It serves as a check on the arbitrary actions of the management
because supervisors know that employees are likely to see to it that
their protest does reach the higher management.
(iii) The management has complete authority to operate the business as
it sees fit subject, of course, to its legal and moral obligations and the
contracts it has entered into with its workers or their representative
trade union. But if the trade union or the employees do not like the
Industrial Relations and Labour Legislations 85

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

way the management functions, they can submit their grievance in

accordance with the procedure laid down for that purpose.
(iv) It serves as an outlet for employee gripes, discontent and frustrations.
It acts like a pressure valve on a steam boiler. The employees are
entitled to legislative, executive and judicial protection and they get
this protection from the grievance redreessal procedure, which also
acts as a means of upward communication.
(v) It is not possible that all the complaints of the employees would be
settled by first- time supervisors, for these supervisors may not have
had a proper training for the purpose, and they may lack authority.
Moreover, there may be personality conflicts and other causes as
well.
Essential Pre-requisites of a Grievance Handling Procedure:
The grievance procedure, to be sound and effective should possess
certain pre-requisites:
(a) Conformity with Statutory Provisions:
Due consideration must be given to the prevailing legislation while
designing the grievance handling procedure.
(b) Unambiguity:
Every aspect of the grievance handling procedure should be clear
and unambiguous. All employees should know whom to approach first
when they have a grievance, whether the complaint should be written or
oral, the maximum time in which the redressal is assured, etc.
(c) Simplicity:
The grievance handling procedure should be simple and short. If
the procedure is complicated it may discourage employees and they may
fail to make use of it in a proper manner.
(d) Promptness:
The grievance of the employee should be promptly handled and
necessary action must be taken immediately. This is good for both the
employee and management, because if the wrong doer is punished late, it
may affect the morale of other employees as well.

86 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

(e) Training:
The supervisors and the union representatives should be properly
trained in all aspects of grievance handling before hand or else it will
complicate the problem.
(f) Follow up:
The Personnel Department should keep track of the effectiveness
and the functioning of grievance handling procedure and make necessary
changes to improve it from time to time.
Basic Elements of a Grievance Handling Procedure:
The basic elements of a grievance redressal procedure are:
(i) The existence of a sound channel through which a grievance may
pass for redressal if the previous stage or channel has been found to
be inadequate, unsatisfactory or unacceptable. This stage may
comprise three, four or five sub-stages.
(ii) The procedure should be simple, definite and prompt, for any
complexity or vagueness or delay may lead to an aggravation of the
dissatisfaction of the aggrieved employee.
(iii) The steps in handling a grievance should be clearly defined.
These should comprise:
(a) Receiving and defining the nature of the grievance:
(b) Getting at the relevant facts, about the grievance;
(c) Analysing the facts, after taking into consideration the economic,
social, psychological and legal issues involved in them;
(d) Taking an appropriate decision after a careful consideration of all the
facts; and
(e) Communicating the decisions, to the aggrieved employee.
(iv) Whatever the decision, it should be followed up in order that the
reaction to the decision may be known and in order to determine
whether the issue has been closed or not.

Industrial Relations and Labour Legislations 87

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

5.8 LET US SUM UP

l According to Section2(k) of the Industrial Disputes Act,1947, “Any

disputes or differences between employers and employees, or
between employers and workmen, or between workmen and
workmen, which is connected with the employment or non-
employment or the terms of employment or with the conditions of
labour, of any person”.
l The consequences of an Industrial dispute will be harmful to the
owners of industries, workers, economy and the nation as a whole,
which results in loss of productivity, profits, market share and even
closure of the plant. Hence, Industrial disputes need to be averted
by all means.
l Prevention of Industrial disputes is a pro-active approach in which
an organisation undertakes various actions through which the
occurrence of Industrial disputes is prevented. Like the old saying
goes, “prevention is better than cure”.
l A grievance is a problem and submitted by an employee or several
employees of different types. It may be concerning a situation or
likely to affect the terms and conditions of employment of one worker
or several workers.
l If a problem is related to and endorsed by all or majority of employees
or if trade union submits a problem as a general claim it falls outside
the scope of grievance procedure and generally comes under the
purview of collective bargaining.

5.9 FURTHER READING

1) Padhi P K , Labour and Industrial Laws, 2/E 2nd Edition, PHI Learning
Pvt. Ltd., New Delhi, 2012
88 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Industrial Dispute and Employee Grievance Unit 5

2) Kumar H L, Labour Problems and Remedies, 13th Edition, Universal

Law Publishing, India, 2016
3) Purcell J, Good Industrial Relations : Theory and Practice, Palgrave
Macmillan, UK 1981
4) R. Sivarethinamohna, Industrial Relations and Labour Welfare: Text
and Cases, Prentice Hall India Learning Pvt Ltd, India, 2010

5.10 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No 1: According to Section2(k) of the Industrial Disputes Act,1947,

“Any disputes or differences between employers and employees, or
between employers and workmen, or between workmen and
workmen, which is connected with the employment or non-
employment or the terms of employment or with the conditions of
labour, of any person”.
Ans to Q No 2: Some of the causes of industrial disputes are – industrial
factors, management attitudes towards employees, government
machineries, political factors and economic factors.
Ans to Q No 3: One of the consequences of industrial disputes/conflicts
may be industrial losses which may cause economic depression
because many industries are interlinked. A problem in one industry
may drastically affect another industry.
Ans to Q No 4: Some of the methods of dispute settlement include –
Model Standing Orders, Works Committees, Joint Management
Councils, and Collective Bargaining, among others.

Industrial Relations and Labour Legislations 89

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 5 Industrial Dispute and Employee Grievance

5.11 MODEL QUESTIONS

Q 1: Explain the basic nature and scope of industrial disputes.

Q 2: Project the cause and effect relationship evident in industrial disputes.
Q 3: Elaborately discuss the various methods for prevention and settlement
of industrial dispute in India.
Q 4: Characterise grievances and state the causes of the same.
Q 5: Highlight the procedure for Grievance Redressal popularly used in
India.
Q 6: Discuss what makes for effectiveness in Grievance Redressal.

*** ***** ***

90 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Employee Misconduct and Disciplinary Procedure Unit 6

UNIT 6 : ORGANISATIONAL DISCIPLINE

UNIT STRUCTURE

6.1 Learning Objectives

6.2 Introduction
6.3 Meaning and Objectives of Discipline
6.4 Principles for Maintenance of Discipline
6.5 Types of Discipline
6.6 Essentials of a Good Disciplinary System
6.7 Disciplinary Action
6.7.1 Punishment for Disciplinary Action
6.7.2 Procedure for Disciplinary Action
6.8 Let Us sum Up
6.9 Further Reading
6.10 Answers to Check Your Progress
6.11 Model Questions

6.1 LEARNING OBJECTIVES

After going through the unit, you will be able to:

l learn the meaning and objectives of discipline
l discuss the principles behind the maintenance of discipline
l outline the guidelines for disciplinary policy
l discuss the disciplinary actions.

6.2 INTRODUCTION

In the previous unit, we learned about the concept of grievance, its

causes, different forms and effects of grievance. We also learned about
the procedures for grievance handling. The need for grievance redressal
procedure was also discussed.
In this unit, we will learn the meaning and objectives of discipline,
principles of discipline and disciplinary actions. Discipline is very important
for smooth and efficient functioning of an organisation. Discipline means
Industrial Relations and Labour Legislations 91

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 6 Employee Misconduct and Disciplinary Procedure

the presence of orderliness in any particular field of activity. In simple words

it means working, cooperating and behaving in a normal and orderly way,
as any reasonable person would expect an employee to do. Disciplinary
action refers to taking action against an individual who departs from the
devised code of conduct.
In this unit we shall be discussing the guidelines for disciplinary
policy and also will get an idea of the different disciplinary actions.

6.3 MEANING AND OBJECTIVES DISCIPLINE

Meaning of Discipline:
The word “discipline” is derived from the Latin word “disciplina”,
which means teaching, learning and growing. Discipline is one of the most
important aspects involved in maintaining a harmonious human relation in
an organisation. It is not possible for an organisation to survive and sustain
without discipline. Maintenance of discipline is necessary at all levels of
the organisation. Discipline is the process of training an employee so that
he can develop self-control and can become more effective in his work.
Discipline can be defined as an organised behavior of individuals
towards the aspired goals of an organisation. Any behavior which indicates
towards the degradation or hindrance towards the common goal of an
organisation can be considered to be an indisciplined behavior and
deserves punishments as per the model code of conduct of the organisation.
According to Richard D. Calhoon, “Discipline may be considered
as a force that promotes individuals or groups to observe the rules,
regulations and procedures which are deemed to be necessary for the
effective functioning of an organisation.”
Discipline can be simply understood to be an external force which
enables the employees of an organisation to abide by the organisational
rules and regulations, which are necessary for the effective functioning of
an organisation. Discipline maintains the smooth functioning of an
organisation until the employees adhere to the rules established by the
organisation, but in contrary if the employees do not adhere to the rules or
disobey them then a situation of indiscipline arises, which is resolved by
92 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Employee Misconduct and Disciplinary Procedure Unit 6

taking necessary actions against the concerned employee.

Objectives of Discipline:
The main objectives for the establishment of discipline in an organisation
are:
l To obey rules and regulations: The main objective of discipline is
to obey the rules and regulations of the organisation, so that it
becomes convenient to get things done through a large group of
employees, which helps in attaining the organisational goal effectively.
l Certainty: Discipline amongst employees ensures element of certainty
in the organisation despite of different variances.
l Efficiency: Obeyance of rules and regulations leads to smooth
functioning of the activities performed by the employees, hence
enhancing the efficiency level.
l Mutual respect: One of the major objectives of discipline is to create
a conducive work climate, which results in mutual respect amongst
the employees in an organisation.
l Organisational harmony: To develop harmonious environment within
the organisation, this enables the employees to attain better
interpersonal understandings.

CHECK YOUR PROGRESS

Q 1: Define Discipline.
...................................................................
..................................................................................................
..................................................................................................
Q 2: Write any four objectives of discipline.
..................................................................................................
................................................................................................
................................................................................................

Industrial Relations and Labour Legislations 93

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 6 Employee Misconduct and Disciplinary Procedure

6.4 PRINCIPLES FOR MAINTENANCE OF

DISCIPLINE

The following principles should be followed in an organisation to

maintain discipline:
a. Clear objectives: The objectives of an organisation should be clearly
defined to the employees and also the level of output aspired from
an employee should be specified.
b. Specific rules and regulations: Set of rules and regulations should
be framed in consultation with the employees. The organisation should
then function in accordance with these set of rules and regulations.
c. Proper communication: All the rules and regulations should be
properly communicated to the employees, helping the employees in
better understanding of the rules and regulations. It results in better
interpersonal relations among the employees.
d. Provision of investigation: The set of rules and regulations should
also incorporate a provision for investigation, which can help in case
of grievance redressal.
e. Prevention of breach of discipline: The primary objective of
establishment of rules and regulations in an organisation is not to
levy penalty but to maintain a proper functioning of the organisation.
It should always emphasise on prevention of breach of discipline.
f. Self discipline: The management should be responsible to not
promote any act that may encourage the employees to breach
discipline. They must focus of self discipline, as their own conduct
should lead an example for the rest to follow.
g. Specific enforcement authority: The authority for enforcement of
discipline must be specified. Also the procedure for appeal against
any disciplinary actions should be provided to the employees.
h. Rules , regulations must be periodically appraised : All the rules
and regulations should be periodically evaluated and appraised.
i. Discipline action should not be vindictive: Disciplinary action should
not be taken to victimize employees, rather the main objective should

94 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Employee Misconduct and Disciplinary Procedure Unit 6

be to prevent its reoccurrence.

j. Suitable grievance procedure: The grievance redressal procedure
should be so designed that it is convenient and prompt. The grievance
redressal should not be delayed as it leads to chaos and confusion
among the employees.
k. Constitution of discipline committee: A discipline committee should
be constituted to look after the matter concerning indiscipline in an
organisation and give suitable suggestions to avoid reoccurrence.
l. Extent of punishment must be known: The prescribed punishment
relating to indiscipline must be known.

6.5 TYPES OF DISCIPLINE

A disciplinary action is the means by which the various procedures

are used to bring about the controlled state of affairs. The types of discipline
are: Positive or self Discipline, Negative or Enforced Discipline, task
Discipline, group discipline and Imposed Discipline. Let us discuss this in
detail.
1. Positive or Self –Discipline: Self discipline is a willing and instinctive
sense of responsibility that leads on employee to know what needs
to be done. Getting to work on time, knowing the job, setting priorities,
and denying personal preferences for more important ones all
measure how self disciplined you are. This is the highest order of all
disciplines because it springs from the values you use to regulate
and control your actions. The ideal situation is to motivate cadets to
willingly discipline themselves, and exercise self control and direction
to accomplish the task.
2. Negative or Enforced Discipline: Negative Discipline is also called
‘enforced discipline’. In case of negative discipline, employees are
forced to obey orders and abide by rules and regulations that have
been laid down, failing which penalties and punishment would be
imposed on them. Thus, the objective of using negative discipline is
to ensure that employees do not violate rules and regulations formed
by the organisation. In other words, the purpose of negative discipline
Industrial Relations and Labour Legislations 95

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 6 Employee Misconduct and Disciplinary Procedure

is to scare other employees and to ensure that they do not indulge in

undesirable behaviour.
3. Task Discipline: Task discipline is a measure of how well you meet
the challenges of your job. Task discipline requires that you have a
strong sense of responsibility to do your job to the best of your ability.
4. Group Discipline: Group discipline means teamwork. Most jobs
require that several people work effectively as a team, group discipline
is very important.
5. Imposed Discipline: Imposed discipline is the enforced obedience
to legal orders and regulations. This type of discipline provides the
structure and good order necessary throughout the organisation to
accomplish a task regardless of any situation.

CHECK YOUR PROGRESS

Q 3: Write any four principles followed in an
organisation to maintain discipline.
................................................................................................
................................................................................................
................................................................................................
Q 4: What is negative discipline?
................................................................................................
................................................................................................
................................................................................................
Q 5: What Is group discipline?
................................................................................................
................................................................................................
................................................................................................

6.6 ESSENTIALS OF A GOOD DISCIPLINARY

SYSTEM

a. Defined rules: All the employees irrespective of their positions in the

organisation should be well versed in the organisational rules and
regulations, enabling them to understand the and obey the
96 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Employee Misconduct and Disciplinary Procedure Unit 6

instructions. All instructions should be clear and understandable. The

supervisor particularly is responsible to make the employees
understand about it.
b. Promptness: Misconduct or any violation of rules must be quickly
addressed. The more the delay the more it creates a situation of
chaos and confusion among the employees.
c. Non vindictive approach: Disciplinary action must be non vindictive
in approach, which means the misconduct must be properly enquired
and punishments should be in compliance to the misconduct or
violations. Also it should be kept in mind that the employee should be
given an opportunity to explain his action. The common law principle
that an offender is innocent until he is proved guilty beyond doubt
should be followed.
d. Clear procedure: All the procedures which are followed to address
a grievance or penalty decision should be clearly laid down, without
any prejudice. Also emphasis should be laid on gathering the facts.
Some of the factors that should be considered during the procedure
may include the magnitude of the issue, the frequency of occurrence
of such issues, previous decisions on taken on similar issues, the
track record of the employee concerned.
e. Proper handling of disciplinary action: The handling of disciplinary
action is also an important component of a good disciplinary action
system. The disciplinary action should be in a constructive manner.
Also it should be maintained that the disciplinary action should be
taken in private, as any public involvement would demean the
employee and hamper his/her social standing.

6.7 DISCIPLINARY ACTION

Disciplinary action is a process to improve indiscipline behavior

or performance, when other methods such as counseling and performance
appraisal have not been effective.
The term ‘disciplinary action’ refers to any conditioning of future
behaviour by the application of either rewards or penalties. This approach
Industrial Relations and Labour Legislations 97

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 6 Employee Misconduct and Disciplinary Procedure

includes positive motivational activities, such as praise, participation and

incentive pay, as well as negative motivational techniques, such as
reprimand, layoff, and fines.

6.7.1 Punishment for Disciplinary Action

Fig 10.1 : Types of Punishment

Let us discuss the types of punishment in detail:
Minor Punishment:
l Oral warning: It is the least strict disciplinary action, where
the supervisor or the immediate senior warns the employee
about his unacceptable behavior.
l Written warning: In case misconduct is frequently repeated
by the employee, management can issue a written warning,
bewaring the employee of the consequences.
l Loss of privileges: In case of repetitive misconduct an
employee might lose the privileges like selection of job
assignments, right to select machine etc.
l Fines: Fine is the deduction in remuneration of an employee,
as a penalty of any unnecessary activity or misconduct.
l Punitive suspension: Under punitive suspension an
98 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Employee Misconduct and Disciplinary Procedure Unit 6

employee is prohibited from performing the duties assigned to

him and his wages are withheld for as long as the prohibition
exists.
Major Punishments:
l Withholding of increments: It is a major punishment; it stops
or deducts the increments of an employee enjoyed in his
service. It is equivalent to the (amount of increment) x (12
months) x (number of years of service remaining).
l Demotion: Demotion is the reduction in the position of an
employee from the currently working position. Demotion can
be used only when the employee does not meet the requisite
qualifications as per present scenario.
l Discharge: Discharge is a mutual process of termination of
job, where the employee is not accused of any misconduct
and is discharged from the job when both the parties have
agreed to a common contract.
l Dismissal: As far as an organisation is concerned, dismissal
is the capital punishment. Dismissal makes itself a
disqualification for future employment, which is not so in case
of discharge.

6.7.2 Procedures for Disciplinary Action

The following are the procedures followed for disciplinary actions:

a. Preliminary investigation: It is done to find out whether a
case of misconduct has occurred or the allegations raised
are false.
b. Charge sheet issuance: A charge sheet issues a list of
allegations raised on the employee and ask the employee for
an explanation on the allegations.
c. Explanation of the employee: If the explanation of the
employee is satisfactory then no disciplinary action is taken.
d. Issuance of show cause notice: When the management is
convinced that there are enough evidences, then they can
Industrial Relations and Labour Legislations 99

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 6 Employee Misconduct and Disciplinary Procedure

issue a show cause notice to the employee, to give

clarifications on the charges levied on the employee.
e. Suspension : If the charges levied are of grave nature, then
the employee is immediately suspended with half the amount
of remuneration till the charges are being proved.
f. Notification and Performing the enquiry: The management
forms an enquiry committee which sends a notice for enquiry
to the employee, mentioning the name of enquiry officer, time,
date and place of enquiry etc. The enquiry is performed without
any prejudice, allowing the accused of an opportunity to defend
the charges. The enquiry officer should record the findings of
the enquiry and submit their report to the management.
g. Passing of the final order of punishment: on the basis of
the enquiry report, the management decides the final
punishment. But they also consider the employees past record
and gravity of the charges.

CHECK YOUR PROGRESS

Q 6: State the concept of oral and written warning.
.………………………………………………..
..............................………………………………………………..
..............................………………………………………………..
Q 7: What is discharge and dismissal?
..............................………………………………………………..
..............................………………………………………………..
..............................………………………………………………..
Q 8: What is disciplinary action?
..............................………………………………………………..
..............................………………………………………………..
..............................………………………………………………..

100 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Employee Misconduct and Disciplinary Procedure Unit 6

6.8 LET US SUM UP

In this unit we have discussed the following:

l “Discipline may be considered as a force that promotes individuals or
groups to observe the rules, regulations and procedures which are
deemed to be necessary for the effective functioning of an
organisation.”
l Discipline maintains the smooth functioning of an organisation until
the employees adhere to the rules established by the organisation,
but in contrary if the employees do not adhere to the rules or disobey
them then a situation of indiscipline arises.
l Disciplinary action is a process to improve indiscipline behavior or
performance, when other methods such as counseling and
performance appraisal have not been effective.

6.9 FURTHER READING

1) Aswathappa K(2013), ‘Human Resource Management’, McGraw Hill

Education; Seventh edition.
2) Khanka S.S.(2007), ‘Human Resource Management: Text and Cases’,
S Chand Publishing; Rep. Edn. 2007 edition.
3) Mamoria C.B. & Gankar S.V. (2008), ‘A Textbook Of Human Resource
Management’, Himalaya Publishing House.
4) Michael V.P.(2010), ‘Human Resource Management And Human
Relations’, Himalaya Publishing House. Himalaya Publishing Hous

Industrial Relations and Labour Legislations 101

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 6 Employee Misconduct and Disciplinary Procedure

6.10 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No 1: Discipline may be considered as a force that promotes

individuals or groups to observe the rules, regulations and procedures
which are deemed to be necessary for the effective functioning of an
organisation.
Ans to Q No 2: The four objectives for the establishment of discipline in an
organisation are:
1. Observance of rules and regulations
2. Certainty
3. Efficiency
4. Mutual respect.
Ans to Q No 3: The following principles should be followed in an
organisation to maintain discipline:
a. Clear objectives
b. Specific rules and regulations
c. Proper communication
d. Provision of investigation.
Ans to Q No 4: Negative Discipline is also called ‘enforced discipline’. In
case of negative discipline, employees are forced to obey orders
and abide by rules and regulations that have been laid down, failing
which penalties and punishment would be imposed on them.
Ans to Q No 5: Group discipline means teamwork, now days most of the
organizations require that several people work effectively as a team,
group discipline is very important.
Ans to Q No 6: Oral warning is the least strict disciplinary action, where the
supervisor or the immediate senior warns the employee about his
unacceptable behavior.
Written warning is a type of minor punishment wherein in case
misconduct is frequently repeated by the employee, management
102 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Employee Misconduct and Disciplinary Procedure Unit 6

can issue a written warning, bewaring the employee of the

consequences.
Ans to Q No 7: Discharge is a mutual process of termination of job, where
the employee is not accused of any misconduct and is discharged
from the job when both the parties have agreed to a common contract.
Dismissal is the capital punishment. Dismissal makes itself a
disqualification for future employment, which is not so in case of
discharge.
Ans to Q No 8: Disciplinary action is a process to improve indiscipline
behavior or performance, when other methods such as counseling
and performance appraisal have not been effective.

6.11 MODEL QUESTIONS

Q 1: Elaborate on concept of discipline.

Q 2: Write a short note on objectives for the establishment of discipline in
an organisation.
Q 3: Write about the principles of maintenance of discipline.
Q 4: What are the procedures for disciplinary action?
Q 5: Write a short note on disciplinary action.

*** ***** ***

Industrial Relations and Labour Legislations 103

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 7 Machinery for Prevention and Settlement of Industrial Dispute

UNIT 7 : MACHINERY FOR PREVENTION AND

SETTLEMENT OF INDUSTRIAL DISPUTE
UNIT STRUCTURE

7.1 Learning Objectives

7.2 Introduction
7.3 Statutory Measures for Dispute Settlement
7.4 Non-Statutory Measures for Dispute Settlement
7.5 Let Us Sum Up
7.6 Further Reading
7.7 Answers to Check Your Progress
7.8 Model Questions

7.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

l discuss the various statutory measures for prevention and
settlement of industrial disputes in India
l describe the various non- statutory measures for prevention and
settlement of industrial disputes in India.

7.2 INTRODUCTION

In the previous units we had got a fair idea about the various aspects
of Industrial Dispute and grievance. Now, in this unit we will discuss on the
statutory measures for prevention and settlement of industrial disputes in
India.
It is said, “Prevention is better than cure”. The same stands true in
respect of Industrial Disputes as well. Having realized the need to prevent
disputes, there has been designed various statutory as well as non-statutory
measures to prevent and settle industrial disputes in the country. In the
following sections we will discuss about statutory and non statutory measures
for dispute settlement.

104 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Machinery for Prevention and Settlement of Industrial Dispute Unit 7

7.3 STATUTORY MEASURES FOR DISPUTE

SETTLEMENT

The following is the machinery for prevention and settlement of

industrial disputes provided by the Industrial Disputes Act, 1947:
1. Works Committees: Under the Industrial Disputes Act 1947, works
committees exist in industrial establishments in which one hundred
or more workmen are employed during the previous year. It consists
of an equal number of representatives of workmen and employer.
The duty of the works committee is to promote measures for
securing and preserving amity and good relations between the
employer and workmen. Among the other matters that the committee
deals in are - conditions of work, amenities, safety and accident
prevention, educational and recreational activities, promotion of thrift
and saving etc. However, the following items do not fall under the
purview of the Works Committee:
i) Wages and allowance (ii) Bonus and profit sharing schemes
(iii) Rationalisation and matters connected with fixation of workload
(iv) Provident Fund, gratuity schemes and the retiring benefits (v)
Quantum of leave and national and festival holidays (vi) Retrenchment
and lay-off (vii) Victimisation for trade union activities (viii) Matters
connected with the fixation of standard labour force (ix) Programmes
of planning and development (x) Incentive schemes (xi) Housing
facilities.
2. Court Of Enquiry: The government may appoint a court of enquiry
for enquiring into any industrial dispute. A court may consist of one or
more persons; in case of more than one person, one of the persons
will be the chairman. The court shall enquire into the matter and submit
its report to the Government within a period of six months.
3. Labour Courts: The government has set up Labour Courts for dealing
with the matters specified in the Second Schedule of the Industrial
Disputes Act 1947. These matters include:
(i) The propriety or legality of an order passed by an employer under

Industrial Relations and Labour Legislations 105

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 7 Machinery for Prevention and Settlement of Industrial Dispute

the standing orders.

(ii) The application and interpretation of standing orders.
(iii) Discharge or dismissal of workmen including reinstatement, or
grant or, relief to workmen wrongfully dismissed.
(iv) Withdrawal of any customary concession or privilege.
(v) Illegality or otherwise of a strike or lock-out, and
(vi) All matters other than those specified in the Third Schedule.
4. Industrial Tribunals: A Tribunal is appointed by the Government for
the adjudication of Industrial Disputes relating to any matter specified
in the Third Schedule of the Industrial Disputes Act 1947. These
matters include the following:
(i) Wages including the period and mode of payment.
(ii) Compensatory and other allowances.
(iii) Hours of work and rest intervals.
(iv) Leave with wages and holidays.
(v) Bonus, profit sharing, provident fund and gratuity.
(vi) Shift working otherwise than in accordance with standing orders.
(vii) Classifications by grades.
(viii) Rules of discipline.
(ix) Rationalisation.
(x) Retrenchment of workmen and closure of establishment.
(xi) Any other matter that may be prescribed.
The Industrial Tribunal consists of only one person who is
appointed by the Government and he should either be a Judge of a
High Court or District Judge for a period of not less than three years.
It makes an award after hearing the parties to the dispute and the
award is binding on them.
5. National Tribunal: A National Tribunal is constituted by the Central
Government for the adjudication of industrial disputes involving issues
of national importance. A National Tribunal consists of only one person
who is appointed by the Central Government. A person who is or has
been a Judge of High Court or who has held the office of the Chairman
or member of the Labour Appellate Tribunal is eligible for appointment
in this tribunal.
106 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Machinery for Prevention and Settlement of Industrial Dispute Unit 7

CHECK YOUR PROGRESS

Q 1: Name the statutory methods of prevention
and settlement of industrial disputes.
................................................................................................
................................................................................................

7.4 NON-STATUTORY MEASURES FOR DISPUTE

SETTLEMENT

An effective and congenial industrial relations system would prevail

when it is ensured that wherever possible, the parties to the dispute resolve
it through a consensus-based process such as conciliation and mediation,
before reverting to arbitration and/or adjudication through a tribunal or labour
court.
Thus, some of the major non-statutory industrial dispute settlement
machinery are as follows:
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.
a. Conciliation Officers: Conciliation Officers are appointed by
the Government under the Industrial Disputes Act, 1947.
The Conciliation Officer is held responsible to deliver the following
duties:
i. He has to do all that is necessary for bringing a fair and amicable
settlement of the dispute. In case of public utility service, he
must hold conciliation proceedings in the prescribed manner.
ii. He shall send a report to the government if the dispute is settled
in the course of conciliation proceedings along with the
memorandum of the settlement signed by the parties.
iii. Where no settlement is reached, conciliation officer sends a
Industrial Relations and Labour Legislations 107

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 7 Machinery for Prevention and Settlement of Industrial Dispute

report to the government setting forth the steps taken by him for
ascertaining the facts, circumstances relating to dispute and the
reasons on account of which settlement could not be reached.
The report shall be submitted within 14 days of the
commencement of the conciliation proceedings.
In India, government of Bombay first introduced Conciliation
and Labour Officer in 1934 when the Bombay Trade Dispute
Conciliation Act was passed.
b. Board of Conciliation: In case the Conciliation Officer fails to resolve
the differences between the parties, the government has the discretion
to appoint a Board of Conciliation. The Board is a tripartite and ad
hoc body consisting 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 machinery of the Board
is set in motion only when a dispute is referred to it. It is the duty of
the Board to do all that is necessary to induce 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 – which is extendable by the government by another
two months.
The Board is to deliver the following duties:
(a) Investigate the dispute and do all that is necessaryto induce
the parties to come to a fair and amicable settlement.
(b) A report as to whether a dispute is settled or not within two
months of the date on which the dispute was referred to it has
to be sent to the government by the board.
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 of its
sitting. This report is subsequently published by the government within
108 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Machinery for Prevention and Settlement of Industrial Dispute Unit 7

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. The court of enquiry consists of one or more persons
as decided by the appropriate government.
A court of enquiry is different from a Board of Conciliation in
that whereas theBoard of Conciliation aims at inquiring into and
revealing the causes of an industrial dispute; the basic objective of
the Court of Enquiry is to promote the settlement of an industrial
dispute. Thus, a court of enquiry is primarily a 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.
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 is based on the
notion of self-government in industrial relations.
Arbitration offers an opportunity to solve the dispute through
an arbitrator jointly appointed by the parties to the dispute. This
process saves time and money of both the parties which is usually
wasted in case of adjudication.
The method became popular 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. It may, however, be noted that the
arbitrator is not vested with any judicial powers.
The arbitrator 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
Industrial Relations and Labour Legislations 109

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 7 Machinery for Prevention and Settlement of Industrial Dispute

within 30 days of such submission which would become enforceable

on the expiry of 30 days of its publication.
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. It
consists of settling disputes through intervention by the third party
appointed by the government. Adjudication is to be conducted by the
Labour Court, Industrial Tribunal of National Tribunal.
A dispute can be referred to adjudication if only both 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’.

CHECK YOUR PROGRESS

Q 2: Name the non-statutory methods of
prevention and settlement of industrial disputes.
................................................................................................
................................................................................................

7.5 LET US SUM UP

In this unit we discussed the following:

l Some of the useful methods used for prevention and settlements of
industrial disputes are: 1. Works Committees 2. Conciliation Officers
3. Boards of Conciliation 4. Court Of Enquiry 5. Labour Courts 6.
Industrial Tribunals and 7. National Tribunal!
l Now a day, industrial relations are not a bipartite affair between the
management and the labour. Government is playing an active role in
promoting industrial relations. The concept of industrial relations has
therefore, become a tripartite affair among the employees, employers
and the government.
110 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Machinery for Prevention and Settlement of Industrial Dispute Unit 7

l Thus, some of the major non-statutory industrial dispute settlement

machinery are as follows: 1. Conciliation 2. Court of Inquiry 3.
Voluntary Arbitration 4. Adjudication.
l 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.

7.6 FURTHER READING

1) Hancock Keith and L andsbury Rusell D(2016), Industrial Relations

Reform: Looking to the Future : Essays in honour of Joe Isaac AO,
Federation Press, Annandale (Australia).
2) Misra S N(2013), Labour and Industrial Law, Central Law Publications,
India.
3) Colling Trevor (2010), Industrial Relations: Theory and Practice, 3rd
Edition, John Wiley & Sons, UK.
4) Purcell J(1981), Good Industrial Relations: Theory and Practice,
Palgrave Macmillan, UK.
5) R. Sivarethinamohna (2010), Industrial Relations and Labour Welfare:
Text and Cases, Prentice Hall India Learning Pvt Ltd, India.

7.7 ANSWERS TO CHECK YOUR

PROGRESS

Ans to Q No 1: Some of the useful statutory methods used for prevention

and settlements of industrial disputes are -1. Works Committees 2.
Conciliation Officers 3.Boards of Conciliation 4. Court Of Enquiry 5.
LabourCourts6. Industrial Tribunals and 7. National Tribunal

Industrial Relations and Labour Legislations 111

PDF created with pdfFactory Pro trial version www.pdffactory.com

 Unit 7 Machinery for Prevention and Settlement of Industrial Dispute

Ans to Q No 2: Some of the major non-statutory industrial dispute settlement

machinery are as follows: 1. Conciliation 2. Court of Inquiry 3.Voluntary
Arbitration 4.Adjudication.

7.8 MODEL QUESTIONS

Q 1: Write short notes on : a) Works Committees b) Conciliation Officers

c) Boards of Conciliation d) Court Of Enquiry e) Labour Courts f)
Industrial Tribunals and g) National Tribunal.
Q 2: Distinguish between Statutory and Non-Statutory measures for
prevention and settlement of Industrial Disputes.
Q 3: Compare and contrast between the functioning of the following dispute
settlement machineries: a) Conciliation b) Voluntary Arbitration and
c) Adjudication.

*** ***** ***

112 Industrial Relations and Labour Legislations

PDF created with pdfFactory Pro trial version www.pdffactory.com