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    Industrial Relation (HR 404)

    Industrial Relations (HR 404)

    Chapter 1 & 2

    1. Define Industrial Relations. State the importance of Industrial Relations in todays economic

    scenario. What are the scope and aspects of Industrial Relations?

    Ans. Industrialization process started in Great Britain in 10th century followed by France,

    Belgium and USA in 1830, Germany around 1850, Sweden and Japan in 1870 and so on. The

    human society moved from cave age to Information Age and today it is teamed as The Age of

    discontinuity or Turbulent Environment or Technocratic Age. The few important trends of

    nature of Industrial work and life are discussed below :-

    (a) Elimination of physical labour :- Magginson believes that with the increased automation,

    fewer people are required to perform the work, as a single individual can work for a longer


    (b) Mass production at low cost :-

    (c) Specialization of functions:-

    (d) Unhygienically harsh working and living condition :-

    (e) Hard Work, higher capital formation and high savings:-

    (f) Strict Discipline : - The worker lives by the clock. He should report on time, should not

    absent from work, must not disobey the superior, or else he will be fired, fined or otherwise


    (g) Montony and boredom are the results of minute division of labor. Repetitive work cannot

    generate interest in work this results in loss of creativity and motivation at work place.

    (h) Interdependence of specialized functions:-

    (i) Increase in mobility :- Movement of labour class from one Industry to another.

    (j) Social maladjustment and effect on personal life :-

    (k) Alcoholism and Absenteeism from work place :-

    (l) Bigamy :-

    (m) Loss of work ethics :- Disregard forwards employer and superiors.

    Concept of IR

    Industrial relations refer to Industry and Relations. Industry means Any productive activity

    in which an individual is engaged and Relations means A professional interaction which exists

    between employer and workmen.


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    As per Kapoor IR is a developing and dynamic concept and does not limit itself merely to the

    complex of relations between the Union and the Management, but also refers to general web of

    relationships between employees a web which is much more complex then labour capital


    V Agnihotri IR explains the relationship between employees and management which stems

    directly or indirectly from union employer relationship. CB Kumar IR is broadlyconcerned with bargaining between employer and Trade Union on wages and terms of


    The term Industrial Relations commonly denotes employeeemployer relations, in both

    organized ad unorganized sectors of the economy. Without the existence of two parties, labour and

    management, this relationship cannot exist. Industrial relations are characterized by both conflict

    and cooperation. This is the basis of adverse as well as mutual relationship. Industrial relations also

    study the laws, rules, regulations, agreements, awards of courts, customs and traditions, as well as

    policy framework laid down by Government for eliciting cooperation between labour and

    management. Again IR is very broad based, interdisciplinary approach. It draws concepts heavily

    from a variety of disciplines like social sciences, humanities, behavioural sciences, laws, socialpsychology, economics, International Relations etc.

    Objective and Importance of Industrial Relations

    (1) Industrial Relations pattern in organized sectors has an impact orspill over effect on un-

    organized sectors.

    (2) Unions are important force in Indian political system Lobbying activities of the

    unions ot influence legislative process.

    (3) Varying patterns of IRs in organized and unorganized sectors

    (4) Development of healthy labour management relations The spirit of workers

    participation, collective bargaining replaces voluntary arbitration. The collective

    bargaining recognizes equality of status between two conflicting groups and prepares the

    ground in an atmosphere of trust and goodwill, for discussions, consultations and

    negotiations on matters of common interest to both industry and labour.

    (5) Maintenance of Industrial peace Apart from different bipartite and tripartite

    machineries set by Govt. of India through various acts for prevention of Industrial

    Disputes, there are provisions for the bipartite and tripartite forms for settlement ofdisputes. These forums act on the basis of Code of Discipline in industry, the code of

    conduct, the code of efficiency and welfare, model standing orders, grievance procedures

    and granting of voluntary recognition to trade unions by the employer.

    (6) Development of Industrial Democracy :- Establishment of shop councils, JMCS at the

    floor and plant level.

    (7) Recognition of human rights in Industry.

    (8) Increase in labour productivity.

    (9) To maintain industrial democracy and bridge the gap between the unbalanced,

    disordered social order with established mutual relations.


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    (10) To minimize strikes, backouts, gheraos, go slow.

    Scope of Industrial relations:

    (1) Labour Relations :- Relation between different labour and Unions.

    (2) Employer-Employee Relations :- Relation between management and employees.

    (3) Group Relations :- relations between various groups of workmen.

    Community or Public Relation :- Relations between industry and society.

    Chapter 3 & 4


    Over the years, the contractual relationship between employer and employee has undergone several

    changes. The employer can no longer hire and fire employees. He cannot promote/demote someone

    based on personal preferences. He cannot afford to reprimand subordinates openly. He has to act

    within the boundaries set by collective agreements, unions, past practices and court decisions. Thus,

    managerial indiscretions, whimsical actions and one-sided exploitative acts have no place in the

    industrial relations scene-especially when we look at labour management relations (relations

    between employer-employee, employee-employee, employer-union, etc.) in large undertakings.

    Today the relationship between employer and employee is contractual and reciprocal. The rights

    and obligations of employers (frame rules for work, discipline employees who defy commands,

    etc.) are well documented in various pieces of labour legislation. The same cannot be said of the

    rights and obligations of employees which are somewhat imprecise. Stern action against problems

    such as late coming, sleeping, loitering, absenting during working hours, poor workmanship, non-compliance of rules, non-performance of tasks, ignoring superior's instructions would evoke strong

    protests from employees. Collective strength forces employees to sacrifice overall organisational

    interest, turn the issue on hand into a tug-of-war, impairing labour management relations. It has

    become virtually impossible to exercise some of the rights of the employees such as right to strike,

    freedom to associate, right to appeal against injustice in recent years - thanks to the cost saving

    efforts of employers fighting unstoppable ongoing battles with competitive forces. Unions have

    found their base slipping badly on several counts, i.e., disinterestedness of workers in union-related

    work, depleting ranks, cash crunch owing to insufficient funds, shrinking political support, inability

    to sustain organised protest for a long time and more dangerously the threat of employers drawing

    shutters down, when pushed to the wall (like retrenchment, wage cuts, closures)! Lets look into

    these troubling issues more closely in the ensuing sections.

    Definition of Trade Union

    According to Webbs, a trade union is a continuous association of wage earners for the

    purpose of maintaining and improving the conditions of their working lives. Under the Trade

    Union Act of .1926, the term is defined as any combination, whether temporary or permanent,

    formed primarily for the purpose of regulating the relations between workers and employers,

    or for imposing restrictive conditions on the conduct of any trade or business ]and includes

    any federation of two or more unions. Let us examine the definition in parts:

    Trade union is an association either of employees or employers or of independent workers.


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    It is a relatively permanent formation of workers. It is not a temporary or casual combination of


    It is formed for securing certain economic (like better wages, better working and living conditions),

    social (such as educational, recreational, medical, respect for individual) benefits to members.

    Collective strength offers a sort of insurance 'if cover to members to fight against irrational,

    arbitrary and illegal actions of employers. Members can share their feelings, exchange notes andfight the employer quite effectively whenever he goes off the track.


    The failure of an individual workers to seek solutions to problems, while discharging his duties,

    personal as well as organisational, led them to form a formal group which is identified at present as

    trade union. Thus, the main objective of any trade union is to protect the interest of

    workers/employees in the organisation. However, the workers' interest/welfare is a broad term in

    which various subjects - wages and salaries, working conditions, working hours, transfers,

    promotions, recruitment and classification, training, discipline, leave and holidays, dearness

    allowance, bonus, incentives, quarters, sanitation, employee relations, mechanisation, facilities tounions, welfare, employee relations and the like are included. Thus, a trade union is meant to

    conduct negotiations on behalf of the individual workers in respect of several items. However, trade

    unions specifically concentrate their attention to achieve the following objectives:

    A Wages and salaries: The subject which drew the major attention of the trade unions is wages

    and salaries. Of course, this item may be related to policy matters. However, differences may arise

    in the process of their implementation. In the case of unorganised sector the trade union plays a

    crucial role in bargaining the pay scales.

    b. Working conditions: Trade unions with a view to safeguard the health of workers demands themanagement to provide all the basic facilities such as, lighting and ventilation, sanitation, rest

    rooms, safety equipment while discharging hazardous duties, drinking, refreshment, minimum

    working hours, leave and rest, holidays with pay, job satisfaction, social security benefits and other

    welfare measures:

    c. Discipline: Trade unions not only conduct negotiations in respect of the items with which

    their working conditions may be improved but also protect the workers from the clutches of

    management whenever workers become the victims of managements unilateral acts and disciplinary

    policies. This victimisation may take the form of penal transfers, suspensions, dismissals, etc. In

    such a situation the separated worker who is left in a helpless condition may approach the trade

    union. Ultimately the problem may be brought to the notice of management by the trade union andit explains about the injustice meted out to an individual worker and fights the management for

    justice. Thus, the victimised worker may be protected by the trade union.

    d. Personnel policies: Trade unions may fight against improper implementation of personnel

    policies in respect of recruitment, selection, promotions, transfers, training, etc.

    e. Welfare: As stated earlier, trade unions are meant for the welfare of workers. Trade union

    works as a guide, consulting authority and cooperates in overcoming the personnel problems of

    workers. It may bring to the notice of management, through collective bargaining meetings, the

    difficulties of workers in respect of sanitation, hospitals, quarters, schools and colleges for their

    children's cultural and social problems.


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    f. Employee-employer relation: Harmonious relations between the employee and employer is a

    sine quo non for industrial peace. A trade union always strives for achieving this objective.

    However, the bureaucratic attitude and unilateral thinking of management may lead to conflicts in

    the organisation which ultimately disrupt the relations between the workers and management. Trade

    union, being the representative of all the workers, may carry out continuous negotiations with the

    management with a view to promote industrial peace.

    g. Negotiating machinery: Negotiations include the proposals made by one party and the counter

    proposals of the other party. This process continues until the parties reach an agreement. Thus,

    negotiations are based on give and take' principle. Trade union being a party for negotiations,

    protects the interests of workers through collective bargaining. Thus, the trade union works as the

    negotiating machinery.

    h. Safeguarding organisational health and the interest of the industry : Organisational health

    can be diagnosed by methods evolved for grievance redressal and techniques adopted to reduce the

    rate of absenteeism and labour turnover and to improve the employee relations. Trade unions by

    their effective working may achieve employee satisfaction. Thus, trade unions help in reducing the

    rate of absenteeism, labour turnover and developing systematic grievance settlement proceduresleading to harmonious industrial relations. Trade unions can thus contribute to the improvements in

    level of production and productivity, discipline and improve quality of work life.


    The functions of trade unions can be divided into the following categories, viz.,:

    a. Militant or protective or intra-mutual functions: These functions include protecting the

    workers interests, i.e., hike in wages, providing more benefits, job security, etc., through collective

    bargaining and direct action such as strikes; gheraos, etc.

    b. Fraternal or extra-mural functions: These functions include providing financial and non-

    financial assistance to workers during the periods of strikes and lock outs, extension of medical

    facilities during slackness and causalities, provision of education, recreation, recreational and

    housing facilities, provision of social and religious benefits, etc.

    c. Political functions: These functions include affiliating the union a political party, helping the

    political party in enrolling members, collecting donations, seeking the help of political parties

    during the periods of strikes and lockouts.

    d. Social functions: These functions include carrying out social service activities, dischargingsocial responsibilities through various sections of the society like educating the customers.


    Trade unions in India, .as in most other countries, have been the natural outcome of the modern

    factory system. The development of trade unionism in India has a chequered history and a stormy




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    Early Period

    Efforts towards organising the workers for their welfare were made, during the early period of

    industrial development by social workers, philanthropists and other religious leaders mostly on

    humanitarian grounds.-The first Factories Act, 1881, was passed on the basis of the

    recommendations of the Bombay Factory Commission, 1875. Due to the limitations of the Act,

    the workers in Bombay Textile Industry under the leadership of N M Lokhande demandedreduction of hours of work/weekly rest days, mid-day recess and compensation for injuries.

    Bombay Mill owners' Association conceded the demand for weekly holiday. Consequently,

    Lokhande established the first Workers' Union in India in 1890 in the name of Bombay Mill hands

    Association. A.labour journal called "Dinabandu" was also published.

    Some of the important unions established during the period are: Amalgamated society of Railway

    Servants of India and Burma (1897), the Printers Union, Calcutta (1905) and the Bombay Postal

    Union (1907), the Kamgar Hitavardhak Sabha (1910) and the Social Service League (1910). But

    these unions were treated as ad hoc bodies and could not serve the purpose of trade unions.

    A Modest Beginning

    The beginning of the Labour movement in the modern sense started after the outbreak of .World

    War I in the country. Economic, political and social conditions of the day influenced the growth of

    trade union movement in India. Establishment of International Labour Organisation in 1919

    helped the formation of trade unions in the country, Madras Labour Union was formed on

    systematic lines in 1919. A number of trade unions were established between 1919 and 1923.

    Categorywise unions like Spinners' Union and Weavers' Union came into existence in

    Ahamedabad under the inspiration of Mahatma Gandhi. ]These unions were later federated into an

    industrial union known as Ahmedabad Textile Labour Association. This union has been formed on

    systematic lines and has been functioning on sound lines based on the Gandhian Philosophy of

    mutual trust, collaboration and non-violence.

    All India Trade union Congress

    The most important year in the history of Indian Trade Union movement is 1920 when the All India

    Trade Uriion Congress (AITUC) was formed consequent upon the necessity of electing delegates

    for the International Labour Organisation (ILO). This is the first All India trade union in the

    country. The first meeting of the AITUC was held in October, 1920 at Bombay (now Mumbai)

    under the presidentship of Lala Lajpat Rai. The formation of AITUC led to the establishment of All

    India Railwaymen's Federation (AIRF) in 1922. ]Many company Railway Unions were affiliated to

    it. Signs of militant tendency and revolutionary ideas were apparent during this period.

    a. Period of splits and mergers: The splinter group of AITUC formed All India Trade Union

    Federation (AITUC) in 1929. Another split by the communists in 1931 led to the formation of All

    India Red Trade Union Congress. Thus, splits were more common during the period. ]However,

    efforts were made by the Railway Federation to bring unity within the AITUC. These efforts did

    bear fruit and [All India Red Trade Union Congress was dissolved.] Added to this, All India Trade

    Union Federation also merged with AITUC. ]The unified AITUC's convention was held in 1940 in

    Nagpur.[ But the unity did not last long. The World War II brought splits in the AITUC. There were

    two groups in the AITUC, one supporting war while the other opposing it. The supporting group

    established its own central organisation called the Indian Federation of Labour. ]A further split took

    place in 1947, when the top leaders of the Indian National Congress formed another Centralorganization.


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    b. Indian National Trade Union Congress: The efforts of Indian National Congress resulted in the

    establishment of Indian National Trade Union Congress (INTUC) by bringing the split in the

    AITUC. INTUC started gaining membership right from the beginning.

    c. Other Central Unions: Socialists separated from AITUC had formed Hind Mazdoor Sabha

    (HMS) in 1948. The Indian Federation of Labour merged with the HMS. Radicals formed another

    union under the name of United Trade Union Congress in 1949. Thus, the trade union movement inthe country was split into four distinct centralunions during the short span of 1946 to 1949.

    Some other central unions were also formed. They were Bharatiya Mazdoor Sangh (BMS) in

    1955, the Hind Mazdoor Panchayat (HMP) in 1965 and Centre of Indian Trade Unions (CITU) in

    1970. Thus, splinter group of INTUC formed Union Trade Union Congress - the split in the

    Congress party in 1969 resulted in the split in INTUC and led to the formation of National Labour

    Organisation (NLO).

    Present Position

    There are over 9,000 trade unions in the country, including unregistered unions and morethan 70 federations and confederations registered under the Trade Unions Act 1926. The

    degree of unionism is fairly high in organised industrial sector. It is negligible in the

    agricultural and unorganised sectors.

    Though the number of unions has greatly increased in the last four decades, the union membership

    per union has not kept pace. The National Commission on labour has stated that only 131 unions

    had a membership of over 5,000. More than 70% of the unions had a membership of below 500.

    Over the years the average membership figures per union have fallen steadily from about 1387 in

    1943 to 632 in 1992-93 (Pocket Book of Labour Statistics 1997). Unions with a membership of

    over 2000 constitute roughly 4 per cent of the total unions in the country.

    There is a high degree of unionisation (varying from 30% to over 70%) in coal, cotton, textiles, iron

    and steel, railways, cement, banking, insurance, ports and docks and. tobacco sector. White collar

    unions have also increased significantly covering officers, senior executives, managers, civil

    servants, self employed professions like doctors, lawyers, traders, etc., for safeguarding their

    interests. There are as many as 11 central trade union organisations in the country (as against one or

    two in UK, Japan, USA). The membership figures of each such union, naturally are not very

    impressive - AITUC had 9.24 lakh; INTUC has 27.06 lakh; HMS had 14.77 lakh and UTUC 8.3

    lakh (Lenin group); and CITU had 17.98 lakh members in 1995. The membership figures have not

    changed significantly over the years. Just about 10% of the total workforce in India is unionised.

    The last membership survey was carried out in 1989, the results came in 1992 suggesting thesupremacy of BMS as the union having maximum union members in the country of about 31 lakh.

    A lot of benefits in the form of representation in various government committees, PSU

    'boards, wage negotiation committees would be available to the BMS as a result of this survey.

    In the 1980 survey INTUC emerged as the topper among the national trade unions in the

    country. The survey results of 1989 had been leaked to the press in 1992, but not officially

    endorsed by the government till recently. What about the figures of members claimed by

    INTUC and others after 1989 survey? A meeting held on 2.10.1994 did not resolve the

    conflicting claims of RSS- affiliated BMS and Congress supported INTUC and the stalemate




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    The Trade Unions Act, 1926, legalises the formation of trade unions by allowing employees the

    right to form and organise unions. It permits any 7 persons to form their union and get it

    registered under the Act. They must agree to abide by the provisions of the Act relating to

    registration and submit a copy of the rules of the trade union in their application to the Registrar of

    Trade Unions. If the union has been in existence for more than one year, the application must beaccompanied by a statement of assets and liabilities of the union. The application must contain (a)

    the names, occupations and addresses of the members (b) name of the union, its head office (c)

    details about office bearers. After verifying the particulars, the Registrar will issue a certificate of

    registration in the prescribed form.

    Status of a Registered Union

    A trade union enjoys the following advantages after registration.

    It becomes a body corporate.

    It gets a common seal.

    It can buy and hold movable and immovable property .

    It can enter into contracts with others.

    It can sue and be sued in its name.

    Cancellation of Registration

    The Registrar of Unions can cancel the registration of a union on the following grounds:

    On the application by the union

    Where the application was obtained by fraud or mistake

    Where the union has ceased to exist.

    Where it has willful and after notice from the Registrar contravened any provisions of the

    Act or alowed any rule to continue in force which is inconsistent with any provision of theAct.

    Where the union has rescinded, any rule providing for any matter, provision which is

    required by Section.

    Where the primary objects of the union are no longer in agreement with statutory objects.


    Under the act it is obligatory for the union to:

    allow anyone above the age of 15 years to be a member of the union;


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    collect membership fees not less than 25 paise per month and per member;

    specify that 50% of office bearers must be from the persons actually employed;

    maintain membership register, get the books of account audited and make them available to


    state the procedure for change of its name, its merger with other unions and its dissolution;

    spend uniform funds for the purposes specified in the Act.


    Claim immunity from civil and criminal prosecution for bonafide trade union activities.

    Create a political fund.

    Spend general funds on salaries of staff and meet certain other expenses as stated in the Act.

    If a union is formed by giving wrong information or registration is obtained through

    fraudulent means, the Registrar of Trade Unions can cancel such registration giving 2

    months notice stating reasons.


    One of the long pending problems of Indian Industrial Relation System is to evolve satisfactory and

    acceptable means to settle the problem of recognising a bargaining agent from out of rival unions.Collective bargaining cannot exist and function without recognising the bargaining agent. Since

    there is no law for compulsory recognition of trade unions it is left to the choice of the employers.

    In view of the union rivalry and if multiple unions agree the employer finds it is difficult to

    recognise a union in the context of a political affiliation. The employer may recognise those unions

    with the highest number of members. But more than one union may claim the highest number of

    membership in view of dual and multiple membership. Efforts have been made to bring about,

    legislative measures for compulsory recognition of unions immediately after the Independence. In

    fact some of the State Acts provide for the registration of unions as representative unions subject to

    fulfillment of certain conditions. These acts include Bombay Industrial Relations Act, 1946, the

    Madhya Pradesh Industrial Relations Act 1946 and the Industrial Dispute (Rajasthan Amendment)

    Act, 1958.

    The Bombay Industrial Relations Act, 1946, classified the registered unions as:

    i. Representative union having not less than 25% of membership in an industry

    ii. Qualified union having at least 5% of membership in an industry; and

    iii. Primary union having at least 15% of membership in an undertaking.

    The rights of a Representative union under the Act are:

    i. First preferences to appear or act in any proceedings under the Act as the representative of



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    ii. Right to submit a dispute for arbitration;

    iii. To make a special application to the Labour Court to hold an inquiry; and

    iv. Office-bearers of the union cannot be dismissed or discharged.

    The need for suitable provision for recognition was stressed by the Second Five Year plan.The National Commission on Labour examined all the aspects of trade union recognition and

    recommended that:

    i. It would be desirable to make recognition compulsory under a central law in all undertakings

    employing 100 or more or where the capital invested is above a stipulated size;

    ii. A trade union seeking recognition as a bargaining agent from an individual employer should

    have a membership of at least 30% of workers in the establishment;

    iii. The minimum membership should be at least 25% if recognition is sought for in an industry in a

    local area; and

    iv. The minority unions should be allowed only the right to represent cases of dismissal and

    discharge of their members before the Labour Court.


    Over the years, trade unions in India have been taken for a ride by outside, political leaders. In the

    process, the interests of workers and their aspirations have been totally neglected. The Trade Unions

    Act, 1926, did not clearly specify the procedure for recognising a representative union. As a result

    multiple unions have cropped up, often with blessings from management. The union finances havenot been very sound from the beginning. The average membership figures for each union remain

    poor and have not improved. The forces of liberalisation unleashed in early 90s have strengthened

    the hands of employers in closing down unviable units. The new Corporate mantras -

    productivity, performance, efficiency, survival of the fittest have virtually pushed them to the wall-

    where their very survival looks uncertain. Let's recount the factors responsible for their even-

    increasing woes and depreciated status thus:

    A]Trade union leadership : The nature of leadership significantly influences the union-

    management relations as the leadership is the lynch-pin of the management of trade unions. The

    leadership of most of the trade unions in India has been outside leadership mainly drawn from

    political parties. As the labour movement in is deeply involved in the politics and politicians, mostof the politicians also come from trade unions. For example, Lok Nayak Jayaprakash Narain,

    former President of India V V Giri, George Fernandes, all worked as trade union lead In fact

    political parties invented Trade Unions in India.

    Reasons for emergence of outside leadership: Outside leadership has been playing a pivotal role

    in Indian Trade Union Movement due to the inability of inside to lead their movement. In view of

    low education standards and poor command over English language which is still the principal

    language of labour legislation and negotiations, low level of knowledge about labour legislation,

    unsound financial position, fear of victimisation by the employer and lack of leadership qualities -

    outside leaders have come to stay. The main reason for this trend is that the-Trade Unions Act,

    1926, itself provided the scope for outside leadership Section 22 of the Act requires that ordinarilynot less than half of the officers of the registered union shall be actively engaged or employed in an

    industry which the union relates. Thus, this provision provides the scope for outsiders to the tune of


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    50% of the office bearers. The Royal Commission on Labour (RCL) 1931, recommended for the

    reduction of the statutory limit of outsiders from 1/2 to 1/3 but no efforts were taken in this


    The evil effects of outside leadership: The evil effects of outside leadership analysed by National

    Commission on Labour are as follows:

    1. Outside leadership undermined the purposes of Trade Unions and weakened their

    authority. Personal benefits and prejudices sometimes weighed more than unions.

    2. Outside leadership has been responsible for the slow growth of Trade Unions.

    3. Internal leadership has not been developed fully.

    4. Most of the leaders cannot understand the workers problems as they do not live the life of

    a worker.

    Even though outside leadership is permissible in the initial stages it is undesirable in the long run

    because of many evils associated with it. Political difference of leaders has been inhibiting the

    formation of one union in one industry. Most of the Trade Union leaders fulfill their personal

    aspirations with their knowledge and experience gained in the Trade Unions.

    Measures to minimise the evil effects of outside leadership: In view of the limitations outside

    leadership, it is desirable to replace the outside leaders progressively the internal leaders. The

    National Commission on Labour, 1969, also stated h outsiders in the Trade Unions should be

    made redundant by forces from with rather than by legal means.

    Both the management and trade unions should take steps in this direction. These steps may be:

    Management should assure that the victimisation will be at zero level, if the trade unions are

    led by insiders;

    Extensive training facilities in the areas of leadership skills, management techniques and

    programmes should be provided to the workers;

    Special leave should be sanctioned to the office bearers. Union rivalry has been the result of

    the following factors:

    1. The desire of political parties to have their basis among the-industrial workers;

    2. Personnel cum factional politics of the local union leaders;

    3. Domination of unions by outside leaders;

    4. Attitude and policies of the management, i.e., divide and rule policy; and

    5. The weak legal framework of trade unions.

    Measures to minimise union rivalry: In view of the evil effects of inter-union rivalry and the problem of formation of one union in one industry, it may be necessary to consider the

    recommendations of National Commission on Labour, 1969. The recommendations of NCL to

    minimise union rivalry are:


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    Elimination of party politics and outsiders through building up of internal leaders

    Promotion of collective bargaining through recognition of sole bargaining agents

    Improving the system of union recognition

    Encouraging union security

    Empowering labour courts to settle inter-union disputes if they are not settled within the


    b. Multiple unions: Multiple unionism both at the plant and industry levels pose a serious threat to

    industrial peace and harmony in India. The situation of multiple - unions is said to prevail when two

    or more unions in the same plant or industry try to assert rival claims over each other and function

    with overlapping jurisdiction. The multiple unions exist due to the existence of craft unions,

    formations of two or more unions in the industry. Multiple unionism is not a phenomenon unique to

    India. It exists even in advanced countries like UK arid USA. Multiple unionism affects the

    industrial relations system both positively and negatively. It is sometimes desirable for the healthy

    and democratic health of labour movement. It encourages a healthy competition and acts as a check

    to the adoption of undemocratic practice, authoritative structure and autocratic leadership. However,

    the negative impacts of multiple unions dominate the positive impacts. The nature of competition

    tends to convert itself into a sense of unfair competition resulting in inter-union rivalry. The rivalry

    destroys the feeling of mutual trust and cooperation among leadership. It is a major cause for

    weakening the Trade Union Movement in India. Multiple unionism also results in small size of the

    unions, poor finances, etc.

    C. Union rivalry: The formal basis for Trade Union Organisation is provided by the Indian Trade

    Union Act, 1926. The relevant article reads as follows:

    Any seven or more members of a trade union may be subscribing their names to the roles of the

    trade union and by otherwise complying with the provision this act with respect to the registration,

    apply for registration of the trade union under this Act."

    This provision has led to the formation of multiple unions and resulted inter union rivalry in

    different industries. But the inter-union rivalry breaks the very purpose of the trade unions by

    weakening the strength of collective bargaining. On the other hand, the existence of a single, strong

    union not only protects tip" employee interests more effectively but also halts the various

    unproductive activities of the unions and forces the leaders to concentrate on the strategic issues.

    Further, it helps to bring about congenial industrial relations by bringing about a system oforderliness in dealing-with the employees and by facilitating" expeditious settlement of disputes.

    The state of rivalry between two groups of the same union is said to be inter! union rivalry. Inter

    and intra-union rivalries have been a potent cause of industri disputes in the country. They are

    responsible for weak bargaining power of trade unions in collective bargaining. These rivalries are

    responsible for slow growth of trade union movement in the country.

    d. Finance: Sound financial position is an essential ingredient for the effective functioning of

    trade unions, because in the process of rendering services fulfilling their goals, trade unions have to

    perform a variety of functions organise programmes which require enormous financial

    commitments. Hence, it is imperative on the part of a trade union to strengthen its financialposition.


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    vi. Absence of paid office bearers: Weak finances do not permit unions to engage the services of

    full time, paid office bearers. Union activists, who work on a part time basis, neither have the time

    nor the energy to take up union activities sincerely and diligently.

    Measures to Strengthen Trade Union Movement in India

    The trade union movement in India has been facing several problems as discussed earlier.Moreover, the problems of trade unions are like a vicious circle. It is not possible to put an end to

    all their problems, or mitigate them to a reasonable level. Hence, managements, trade unions,

    political parties should take steps to reduce the effects of these problems. The following are some of

    the measures to minimise trade union problems and to strengthen the Trade Union Movement in


    United Labour Front

    Unions must put a joint front. Splinter groups, multiple unions dissipate their energies, dilute their

    power and reduce their effectiveness.

    Efficient Leadership

    Outside political leadership has developed due to the absence of internal leadership. Outside

    leadership is the main cause for the multiple problems of the trade unions. These problems can be

    eradicated through the development of leadership talents, from within. Management should

    encourage internal workers to lead their own movement. Management and trade unions should

    provide educational and training! facilities for the development of internal leadership.

    Membership Fees

    The membership fees should be raised as the amount of wages of the workers increased

    significantly, compared to the situation in 1926 when Trade Union Act provided for the collection

    of 25 paise per month per member as subscription fee.

    Other Measures

    Trade unions should extend welfare measures to the members and actively pursue social


    The Trade Union Act, 1956, should be amended and the number of members required to form a

    trade union should be increased from 7 to 50% of the employees of an organisation. Similarly, thescope for the outside leadership should be reduced from 50% to about 10%. The membership

    subscription should be enhanced from 25 paise to 1% of the monthly wage of the worker.

    The Trade Union Act should be amended in order to avoid dual membership.

    There should be legal provision for the recognition of the representative union.

    Unions should not intervene in day-to-day matters. They must focus on important issues affecting


    Trade unions should form a labour party and all the trade unions in the country should be affiliated

    to it. It gives adequate strength to the trade unions both in industry and Parliament.


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    Employers Associations


    Employers Associations came into existence as a result of the formation of ILO and the growing

    presence of Trade Unions, especially after the First World War. The Royal Commission on Labour,

    1929, recommended that the Indian employers need an organisation "to deal with labour problemsfrom the employer's point of view". As rightly pointed out by Mr Naval Tata, employers'

    organisations are required to:

    Develop healthy and stable industrial relations;

    Promote collective bargaining at different levels;

    Bring a unified employers' viewpoint on the issues of industrial relations to the government in a

    concerted manner;

    The different employees Associations are FICCI, CII, ASOCHEM etc.

    Chapter 5

    3. Write in brief the causes of Industrial disputes. Explain the classification of Industrial

    disputes. What are the impacts of industrial disputes in organizations.

    Ans. According to Industrial Disputes Act, 1947, Section 2 (K), Industrial dispute means any

    dispute or difference between employers and employers, or between employers and workmen or

    between workmen and workmen, which is connected with the employment or non-employment or

    terms of employment or with the conditions of labour of any person.

    Some of the principles are laid down by the court to identify one dispute as industrial dispute

    (a) A workman does not draw wages exceeding Rs.1600 per month.

    (b) The dispute must affect a large group of workman who have a community of interest.

    (c) The rights of those workmen must be affected as a class.

    (d) The dispute should be invariably taken up by an appreciable no. of workmen.

    (e) There must be concerted demand by the workers for redress and the nature of grievance

    becomes such that individual complaint turns to be a general complaint.

    (f) The parties to the dispute should have direct and substantial interest in the dispute.

    Causes of Industrial Dispute / Conflict

    (A) Industry Related Factors :-

    (1) The industry related factors pertaining to employment, work, wages, house of work,privileges, the rights and obligations of employees and employers, terms and conditions of


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    Classification of Industrial Dispute

    (1) Interest Disputes :- These disputes are also called conflicts of interest or economic disputes or

    collective labour disputes. In general, they relate to the determination of new terms and conditions

    of employment for general workers, in must cases, this dispute arises when trade union demands for

    improvement in wages, fringe benefits, job security or other terms or conditions of employment.

    (2) Grievance or Rights Disputes :- These disputes are also called conflicts of rights or legal

    disputes or individual disputes. They generally raise from day to day working relations and

    conditions in any undertaking. The grievances arise on such questions as discipline or dismissal, the

    payment of wage and other fringe benefits, working time, overtime, promotion, demotion, job

    classification, safety and health conditions, the work rules to the collective barraging.

    (3) Disputes over Unfair Labour Practices :- Management practices these unfair labour practices.

    Examples are :-

    (a) Discrimination against workers on the ground that they are TU members or participate in trade

    Union activity or in strikes.

    (b) Interference, restraint or coercion of employees when they exercise their rights to organize, join

    or assist a Union.

    ( c) Establishment and promotion of employer sponsored unions.

    (d) Refusal to bargain collectively, in good faith, with the recognized union.

    (e) Recruiting new employees during a strike which is not an illegal strike.

    (f) Failure to implement an award, settlement or agreement.

    (g) Indulging in acts of force or violence.

    (4) Recognition Dispute : This type of dispute arises when the management of an undertaking or

    employers organization refuses to recognize a registered Trade Union for the purpose of collective

    bargaining. This is called Trade Union Victimization.

    Criteria for Recognition of Union(s) ANNEXURE A

    (1) When there is more than one union, a union should have been functioning forat least one year after registration; where there is only one union, this condition

    would not apply.

    (2) The membership of the union should cover at least 15 percent of the workers in

    the establishment. Membership should be limited of those workers who have

    paid their subscriptions for at least three months during the period of six

    months immediately preceding the reckoning.

    (3) The membership of the Union should cover at least 25 percent of the workers

    in a local area to be recognized as a represented union for an industry.

    (4) When a union has been recognized, there should be no change in its position

    for a period of two years.


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    (5) When there are several unions in an industry or establishment the union having

    largest membership should be recognized.

    (6) If Trade unions are not affiliated to any of the four central organizations of

    labour, the question of recognition would have to be dealt with separately.

    (7) Only those unions which follow the code of Discipline would be entitled torecognition.

    Rights of recognized unions under the code of discipline ANNEXURE A

    (1) To raise issues and enter into collective agreements with employers on general questions

    concerning the terms of employment and conditions of service of workers in an


    (2) To collect membership fees / subscriptions payable by members to the Union within the

    premises of the undertaking.

    (3) To put up a notice board on the premises of the undertaking where notice relating to

    meetings, statements of accounts of its income and expenditure and other

    announcements which are not abusive or subversive of discipline or otherwise contrary

    to the code should be affixed or cause to be affixed.

    (4) To hold discussing and to meet and discuss with employer or any person appointed by him

    for the purpose of settlement of grievance of its members.

    (5) To nominate its representatives on grievance committee. JMCS, non statutory bipartite

    committees for smoothening the functioning and for quick settlement of grievances or disputes.

    Chapter 6



    Before the Industrial Revolution, the employer, more or less, enjoyed unquestioned powers on

    matters relating to wages, working conditions arid other matters affecting employees. The weak

    bargaining strength of employees tempted them, on occasions to exploit the vulnerable situation to

    their advantage. Workers as a result became restless and widespread protests followed.Governmental intervention was of little help. Workers realised the importance of fighting jointly on

    all work-related matters! This collective fighting spirit is behind the back of collective bargaining.

    Concept of Collective Bargaining

    Collective bargaining is a procedure by which the terms and conditions of workers are regulated by

    agreements between their bargaining agents and basic objective of collective bargaining is to arrive

    at an agreement other conditions of employment. Both the employer and the employees may begin

    the process with divergent views but ultimately try to reach a compromise, making some sacrifices.

    As soon as a compromise is reached, the terms of agreement start operating.

    The underlying idea of collective bargaining is that the employer and employee relations should not

    be decided unilaterally or with the intervention of any third party. Both parties must reconcile their


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    The main objectives of collective bargaining are given below:

    a. To settle disputes/conflicts relating to wages and working conditions.

    b. To protect the interests of workers through collective action.

    c. To resolve the differences-between-workers and management through voluntary negotiations andarrive at a consensus.

    d. To avoid third party intervention in matters relating to employment.


    Which are the issues that could be bargained across the table? Practically speaking If any issue that

    has relevance to management and workers becomes the subject matter of bargaining. However, in

    certain specific cases both management and workers are reluctant to yield ground. Traditionally,

    management is not willing to negotiate work a method, arguing that it is managements exclusive

    right to decide how the work is done. Likewise unions do not want negotiations on production

    norms and disciplinary matters, because any agreement in this regard would put limits on their

    freedom. However over the years, the nature and content of collective bargaining has changed quite

    dramatically, thanks to the pulls arid processors exercised by the bargaining parties.

    Traditionally wages and working conditions have been the primary focus areas of collective

    bargaining. However, in recent times, the process of bargaining has extended to almost any area that

    comes under the employer-employee relations, covering a large territory .

    The Substance of Bargaining

    1. Wages and working conditions

    2. Work norms

    3. Incentive payments

    4. Job security

    5. Changes in technology

    6. Work tools, techniques and practices

    7. Staff transfers and promotions

    8. Grievances

    9. Disciplinary matters

    10. Health and safety

    11. Insurance and benefits

    12. Union recognition


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    13. Union activities / responsibilities

    14. Management rights


    Four distinct types of bargaining have evolved overtime, namely conjunctive cooperative,productivity and composite bargaining. These are discussed below.

    a. Conjunctive / distributive / bargaining : The parties try to maximise their respective gains. They

    try to settle economic issues such as wages, benefits, bonus, etc, through a zero-sum game (where

    my gain is your loss and your gain is my loss) Unions negotiate for maximum wages. Management

    wants to yield as little as possible - while getting things done through workers.

    b. Cooperative bargaining: When companies are hit by recession, they cannot offer the kind of

    wages and benefits demanded by workers. At the same time they cannot survive without the latter's

    support. Both parties realise the importance of surviving in such difficult times and are willing to

    negotiate the terms of employment in a flexible way. Labour may accept a cut in wages in return

    for job security and higher wages when things improve. Management agrees to modernize and bring

    in new technology and invest in marketing efforts in a phased manner In India companies like

    TELCO, Ashok Leyland resorted to cooperative bargaining in recent times with a view to survive

    the recessionary trends in the automobile sector.

    C. Productivity bargaining: In this method workers wages and benefits are linked to productivity. A

    standard productivity index is finalised through negotiations initially. Workers do not have to

    perform at exceptionally high levels to beat the index. If they are able to exceed the standard

    productivity norms workers will get substantial benefits. Management gains control over work

    place relations and is able to tighten the norms still further in future negotiations. Without suchproductivity bargaining agreements, workers may not realise the importance of raising productivity

    for organisational survival and growth. Backed up by powerful unions they may fail to read the

    danger signals from the market and respond quickly.

    d. Composite bargaining: It is alleged by workers that productivity bargaining KU - agreements

    have increased their workload. Rationalisation, introduction of high technology, tight productivity

    norms have made the life of a worker somewhat uneasy. All these steps have started hitting the

    unions and workers below the belt. As an answer to such problems, labour has come in favour of

    composite bargaining. In this method labour bargains for wages as usual but goes a step further

    demanding equity in matters relating to work norms, employment levels, manning standards,

    environmental hazards, sub-contracting clauses, etc! When unions negotiate manning standards theyensure the workload of workers does not increase, this helps to maintain the status quo as far as

    employment level is concerned. By negotiating sub-contracting clauses, unions prevent

    management from framing out business to ancillaries. If permitted, such an action may result in

    lower employment in some other plant diluting the bargaining powers of unions substantially.

    Workers are no longer interested in monetary aspects to the exclusion of work related matters.

    There is no doubt that wages, bonus and-other monetary aspects continue to occupy the centre-stage

    in bargaining sessions. But there is a definite shift towards composite bargaining. Without such a

    proactive stand, workers may not be able to withstand the forces of liberalisation, automation,

    farming out business to outsiders and survive. Through composite bargaining unions are able to

    prevent the dilution of their powers and ensure justice to workers by putting certain limits on the

    freedom of employers. For the employer this is lesser evil when compared to strikes and lockouts.Apart from periodic wages hikes and day-to-day tussles over productivity norms and other related

    issues there is at least no danger of workers striking work every now and then. Of course, even this


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    situation may not continue for long. In companies like SAIL, Philips, Bata, GKW and even TISCO

    work force reductions have to come if they have to survive in a high-tech environment. The

    compulsions of a free market economy cannot be put aside just for the sake of maintaining the

    labour force. It is small wonder despite serious warnings from unions; companies in the recession-

    hit automobile sector (Hindustan Motors, Premier Automobiles, Maruti, TVS Suzuki, Hero Honda)

    have either reduced the work force or cut down their benefits.


    The whole process of collective bargaining takes place mainly in two stages:

    1. Negotiations and

    2. Implementation

    In collective bargaining carrying out negotiations and reaching an agreement If; constitute only half

    of the process. The other equally important part is implementation of the contract. However, briefly

    the following steps are involved in the Collective Bargaining process:

    a. Identification of the problem: The nature of the problem influences whole process. Whether the

    problem is very important that is to be discussed immediately or it can be postponed for some other

    convenient time, whether the problem is a minor one so that it can be solved with the other party's

    acceptance on its presentation and does not need to involve long process of collective bargaining

    process, etc. It also influences selection of representatives, their size, period of negotiations and

    period of agreement that is reached ultimately. As such it is important for both the parties to be

    clear about the problem before entering into the negotiations.

    b. Preparing for negotiations: When it becomes necessary to solve the problem through collectivebargaining process, both the parties prepare themselves for negotiations. The preparation starts with

    selection of representatives. Such representatives should be selected who can carry out negotiations

    with patience, composure and who can present their views effectively. After selection they should

    be educated about the complete problem and its pros and cons. Their powers and authority during

    negotiations also should be clearly spelt out. Other preparations include fixing up time for

    negotiations, period of negotiations, etc. But once the parties enter into negotiations the period of

    negotiations may vary depending upon circumstances.

    c. Negotiation of agreement: Usually there will be a chief negotiator who is from the management

    side. He/she directs and presides the process. The chief negotiator presents the problem, its intensity

    and nature and the views of both the parties. Then he/she allows the representatives of both partiesto present their views. During negotiations, the representatives should be attentive as to find out

    what the other party is arguing for. The-representatives tend to think about what counter arguments

    they can present and how to say 'no' effectively, while the other party is presenting its own views.

    This is a major obstacle in the bargaining process. The representative should be attentive to the

    other parties' problems. By understanding their problems and weighing them, sometimes a better

    situation may be reached, which is more acceptable to both parties. So, it is important that

    representatives should reach negotiating table with positive frame of mind. In j Arnold F Canpo's

    words - "both the parties should strive to maintain an objective attitude. They should think rather

    than feel their way through the problem under consideration". With this objective mind both the

    parties should try to reach an amicable solution. When a solution is reached at, it is put on paper

    taking concerned legislations into consideration. Both parties concerned sign the agreement which,in turn, becomes a binding contract for both the parties. If inspire of all these efforts, no amicable

    solution could be reached, both parties; resort to arbitration.


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    Implementation of contract: The agreement can be made on a temporary basis. In such cases, before

    its expiry both parties consult each other and can terminate or; renew the agreement depending

    upon the circumstances. The union may always demand the renewal of such agreements which

    benefit workers before their expiry. Management on the other hand, may reject this demand taking

    the financial position of the organisation into consideration. As a result, this may again lead to

    negotiations. As such, collective bargaining is not a temporary accommodation, but is a continuous


    Collective Bargaining VS Negotiation Skills

    Collective bargaining is a procedure by which the terms and conditions of employment of workers

    are regulated by agreements between their bargaining agent and employers.

    It is a kind of rule making exercise. Both labour and management agree to a set of rules that govern

    workplace relations from time to time. Negotiation, on the other hand, is process of resolving

    conflicts between two or more parties wherein both or all modify their demands to reach a workable

    compromise. Thus negotiation aims to settle disputes/differences between two or more parties;

    achieve an acceptable compromise, which in turn, is based on the power equation of the partiesconcerned. Parties to the conflict have a common interest in binding a negotiated settlement is a

    deliberate, explicit event.

    While negotiating issues, parties shift their stand from an ideal position to a settlement point, which

    is mutually agreed upon. The position of this settlement point depends on the relative bargaining

    strength and skill of the negotiator. The sacrifices to be made and the concessions to be yielded

    depend on the negotiating skills of the bargaining agent to a large extent. If he is powerful, he will

    have his way. If this power is challenged on justifiable grounds where other people see reason, he

    may have to yield ground.


    The story of collective bargaining is the story of the rise and growth of trade unionism itself. It had

    its roots in Great Britain and developed in response to conditions created by the Industrial

    Revolution. In early part of 18th century when trade unions come into existence, the idea of

    bargaining collectively gained strength. Initially the negotiations were carried out at plant level. By

    early 1900, industry and national level agreements were quite common. Slowly but steadily the idea

    spread to France, Germany, USA. After a century of rapid growth, collective bargaining has more

    or less, become the gospel of industrial relations. It is being increasingly viewed as a social

    invention that has institutionalised industrial conflict. In other words it is through the process of

    collective bargaining organisations have learnt to cope with industrial conflict.

    In India trade unions have come to occupy the centre stage only after 1900. In 1918, Gandhiji, as

    the leader of the Ahmedabad Textile workers' advocated the resolution pi; of conflict through

    collective bargaining agreements. For another 10 years, this method of setting disputes did not gain

    popularity. The legal steps taken by the government after the Second World War revived interest in

    the subject once again. The legislative measures included the setting up of a machinery for

    negotiations, conciliation and arbitration. Basic conflicting issues concurring wages and conditions

    of employment were sought to be resolved through voluntary means.

    After Independence, with the spread of trade unionism, collective bargaining agreements have

    become popular. A large majority of disputes were resolved through this mechanism. Mostagreements were concluded at the plant level. In centres like Mumbai, Ahmedabad industry level

    agreements were quite common - thanks to the legal blessings extended by the respective State


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    Acts. The agreements were found in industries such as chemicals, petroleum, tea, coal, oil,

    aluminum, etc. In ports and dorks, banking and insurance collective agreements at the national level

    were also arrived at.

    Changing Scenario

    In most industrialised economies company unions and centralized bargaining is giving way todecentralised bargaining carried out at the plant level. Local factors have become more important to

    unions than political ideology or nation-wide workers solidarity across several industries.

    In India also the role of national level federation of unions and employers organisations is limited

    in collective bargaining. Strictly speaking, the process is centred around a handful of employers'

    associations and trade unions. For example the Confederation of Indian Industry till the early 90s

    represented the claims of member employers from the Engineering Industry. In traditional

    industries such as jute the entrepreneurs themselves conduct the negotiations with unions. In places

    like Bangalore and Hyderabad unions and employers have preferred to set up joint coordination

    committees to deal with collective bargaining. In sectors like coal, steel, ports and docks such

    coordination committees are quite common while carrying out the nation-cum-industry-widebargaining. As far as steel industry is concerned there are 240 trade unions organised into several

    trade union federations within the public sector steel company, Steel Authority of India Ltd (SAIL).

    Every three or four years the National Joint Consultative forum for Steel Industry (NJCS) enters

    into agreements (so far 5 such agreements were concluded since early 70s) on behalf of SAIL,

    Rashtriya Ispat Nigam (Visakhapatham) and TISCO (which incidentally has only one recognised

    trade union.) A plant level agreement supplements the above national agreement to cover those

    unique aspects concerning the plant which were not covered at the national level. Public sector

    collective bargaining in India refers to collective bargaining in industrial and commercial

    undertakings owned by Central and State Governments including those in finance and banking

    sector. Employees in departmental undertakings (Railways, Post and Telegraphs, etc.) are governed

    by pay commission awards. The average wages and benefits bargained at the national level for

    lower level public sector employees were found to be higher when compared to the employees in

    the organised private sector. Of course, at higher levels of management the private sector employees

    got relatively better wages.

    In some sectors (media, sugar, etc.) the wage boards still decide the wages and working conditions.

    In the Cement industry arbitration has replaced collective bargaining over wage-related issues.

    There are interesting contradictions in the collective bargaining scene in India. Over 80 different

    unions may represent a single firm. Some large multi-plant firms such as BHEI, SAIL, and

    departmental undertakings such as Railways have to live with over a hundred unions each. Thebargaining process in public sector especially has become quite coercive and demanding so as to

    appease the claims of different sections (workers having ties with different unions. Due to

    recession, computerisation, cut throat competition many large firms have resorted to productivity

    bargaining limited extent and unions had to yield ground owing to their own helplessness in

    fighting till the end in a fruitless battle. Some of the drastic measures mutually agreed as essential

    for survival in recession-hit companies (Jaipur Metal and Electricals Ltd, Kamani Tubes, Kirloskar

    Oil Engines, Bata India Ltd, Philips, Walchandnagar Industries, Metal Box, etc.) included:

    Cut in pay and allowances;

    Freeze in DA, changes in incentive payments;

    Lay off / retrenchment;


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    Early retirement;

    Change in work norms;

    Retraining, relocating, etc.

    in future, trade unions and management may have to be guided by market forces (survival of thefittest, cost effective global manufacturing, high-tech/high quality service oriented approach,

    customer centered marketing and manufacturing processes) while sharing the gains from industry.

    Political, ideological concerns may have to take the back seat. The full potential and gravity of

    technology-led-growth needs to be appreciated by both management and labour while they try to

    draw concessions from each other at the negotiating table. Concession bargaining may-rule the

    scene till industry gains stature and status in the global market place.

    Factors those hinder Collective Bargaining process

    Collective bargaining has not made much headway in India when compared to other industrialised

    nations. The reasons for this sorry state of affairs may be listed thus:

    a. Employers' reluctance: Employers have failed to read the writing on the wall. They do not

    appreciate the fact that unions have come to stay with almost equal & bargaining strength. Such

    negative attitudes have come in the way of negotiating fete with unions voluntarily

    b. Weak unions: Just about 10 per cent of total workforce in India is unionised, a figure which is

    much lower in comparison to developed countries. The trade union membership rarely includes a

    majority of workers. For instance, union membership as a share of the labour force in India along

    with Pakistan, Kenya is less than 10 per cent (Business India, Nov. 4-17, 1996). In addition to poor

    membership figures, unions have to live with poor finances as well. To complicate matters furtherthere are multiple unions with multifarious political affiliations. All these factors have cumulatively

    reduced the bargaining strength of unions in India.

    c. Inadequate interventions: The regulatory framework covering the industrial relations scene is

    quite tight, leaving very little room for bargaining to flourish on a voluntary basis. In case there is a

    war of nerves between management and labour (as is the case with Philips, Bata in West Bengal)

    government steps in to resolve the issue. The legislative means offered through conciliation or

    adjudication did not help matters either. The absence of appropriate legislative provisions

    recognising a bargaining agent has added fuel to the fire on a number of occasions. No attempt has

    been made by the Government to rationalise or simplify the multifarious laws covering labour

    management relations even after half a century of inactivity.

    Employers in India face certain practical problems as well. Quite often they are not very sure about

    who is the recognised bargaining agent. When there are multiple unions, bargaining with one union

    may prove to be a tough battle. The awards of Wage Boards come in the way of negotiating freely,

    keeping the plant industry conditions in mind.

    The areas of collective bargaining have not grown in view of the encouragement given to wage

    boards, pay commissions, statutory fixation of other conditions^ work and social security measures.


    Not all the collective bargaining processes are successful and effective. There are certain

    prerequisites for an effective collective bargaining process which are as follows


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    a. Unanimity among workers: Before centering into negotiations, there must be unanimity among

    workers. At least the representatives of workers should be able to present the opinion or demands of

    majority of workers or else, the management can take advantage of diverse demands of the workers.

    b. Strength of both the parties: Both the parties in negotiations should be equal in strength. One

    party dominating the other is against the whole nature of collective bargaining. It should always be

    a give and take process and should not be a you give and we take or you bargain and we collectprocess from either side.


    The attitudes of the parties (involved) should be positive. Both parties should reach the negotiating

    table with an intention to find better solutions.

    The parties involved in collective bargaining should be prepared to give away something in order to

    gain something. As already mentioned both the parties of collective bargaining meet with highly

    divergent interests. They are at far ends of the rope. As such to reach a middle point, both parties

    should be prepared to give away something.

    Both parties to collective bargaining should observe and follow the terms and conditions of

    previous agreements that are reached. Collective bargaining, being a continuous process, can be

    effective only with the successful implementation of previous agreements. Any lapse on the part of

    any party concerned shows its effect on the present process.

    The representatives of both parties should fully understand and be clear about the problems and

    their implications. They should be given some authority in the process of negotiations like altering

    minor terms and conditions if necessary. The collective bargaining process cannot be effective if the

    representatives have to consult back concerned parties often on minor issues.

    The workers' can make effective use of collective participative management and good working com

    collective bargaining to monetary benefits alone.

    The parties concerned should have mutual trust and confidence and respect for each other and also

    show willingness to settle matters through negotiations.

    The process of bargaining should be free from unfair practices and conflict.

    Each party should respect rights and responsibilities of the other party.


    1. Unions should be made strong by creating awareness among workers.

    2. Interference of political leaders should be avoided. The unions should separate themselves from


    3. Government should make efforts for the growth of collective bargaining. Adjudication should be

    used only as a last resort. Government can make legislation for compulsory collective bargaining

    before resorting to adjudication.

    4. Management should develop a positive attitude towards unions. Much headway has already been

    made in this direction. Presently, managers are mostly aware of the rights of workers. They are also


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    realising how important is cooperation between management and workers for the effective

    functining of an organisation. As such, they are now encouraging negotiations and amicable



    In 1969, National Commission on Labour made the following recommendations after consideringthe problem.

    Government intervention in industrial relations, particularly in the settlement of industrial disputes,

    should be reduced gradually to the minimum possible extent. Compulsory adjudication of disputes

    should be used only as a last resort.

    Trade unions should be strengthened both organisationally and financially by amending the Trade

    Union Act of 1926 to make registration of unions compulsory, enhance the union membership fee,

    reduce the presence of outsiders in the union executive and among the office-bearers and increase

    the minimum number of members in respect of the union applying for registration.

    3. Legal provision may be made either by a separate legislation or by amending an existing

    enactment for:

    Compulsory recognition of trade unions and certification of unions as bargaining agents.

    Prohibition and penalisation of unfair labour practices.

    Bargaining in good faith by both employers and unions.

    Conferring legal validity and legitimacy on collective agreements.

    These are such provisions in the Maharashtra Recognition of Trade unions and Prevention of Unfair

    Labour Practices Act of 1972, but as this Act is applicable only to Maharashtra, there is the need for

    making such legislation applicable to the whole country.

    4. Intensification of worker's education for building up internal union leadership and making

    workers more knowledgeable and conscious about their rights and obligations. This may help to de-

    politicise unions and also reduce union rivalry.

    Chapter 7

    Q. Explain the term Workers participation in Management. What are the directives of

    workers participation in Management? Explain different forms of workers participation in India.

    Ans. In the words of Keith Davis, Workers participation is a mental and emotional involvement of

    a person in a group situation which encourages him to contribute to goals and share responsibilities

    with them. The Trade Unions view workers participation as economic and social nature of

    operation. The objective is to gain control over the decision making process within an enterprise.

    The concept of workers participation crystallizes the concept of industrial democracy and the

    essence of this concept lies in the belief and confidence on the subordinates that they com

    constructively contribute to growth of productivity and discipline of the organization and avoid

    disharmony in IR areas. Through this concept a continuum of men-management relationship can be



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    Dorothea has given these stages of development of labour management cooperation

    (1) Information Sharing In joint committee, management provides and shares information

    about business condition and company outlook with workers representatives.

    (2) Problem Sharing management discusses different work related problems with workers

    representatives like reduction of material costs, improving wastes, etc.

    (3) Idea Sharing management discusses different labour related ideas in any kind of

    operation, production, personnel and labour related activities.

    Ernest Dale describes for kinds of participation (1) Informal cooperation, (2) Advisory

    cooperation, (3) Constructive Cooperation (4) Joint Determination.

    Mamoria describes four stages of participation (1) Informative and Associative

    participation Initial stage. (2) Consultative participation Higher degree of sharing of views. (3)

    Administrative participation At Administrative level in the matters, welfare, safety, vocational

    training and apprenticeship schemes, schedules of working hours, breaks and holidays, payment of

    reward; etc. (4) Decision participation Economic, financial and administrative policies where

    decisions are mutually taken.


    (1) Works Committee(set up under ID Act, 1947)

    (2) The Joint Management Councils (Set up as a result of labour Management Cooperation

    seminar, 1958)

    (3) Shop Council (1975)

    (4) Unit Council (1977)

    (5) Plant Council

    (6) Workers participation on Board of Management

    (7) Workers participation in Share Capital


    In any industrial establishment wherein 100 or more workmen are employed, the appropriate

    Government may require the employer to constitute a works committee consisting of equal number

    of representatives of the workmen and management. The objectives of formation of works

    committee are:-

    (1) To prevent and settle industrial disputes at unit level.

    (2) To remove the causes of friction in day today work situation

    (3) To preserve amity and good relations between employers and workmen


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    The composition of works committee is so fixed that there is representation of various

    categories of workmen, groups and classes of workmen from all sections, shops and departments of

    the establishment. The total membership shall not exceed 20. The representatives of the employer

    shall be nominated from the technical, managerial and supervisory capacity, who should be in direct

    touch with the working of the establishment. The representatives of workers shall be elected fromamong themselves. If the workmen are members of registered trade union, the employer shall ask

    the detailed information regarding membership, the distribution of the members among the sections,

    shops or departments of the establishment. This list shall be referred to conciliation officer. There

    shall be proportionate representation of the recognized and unrecognized unions.

    Qualification for Election and voting

    Any workmen of not less than 19 years of age and with a service of not less than one year in

    the establishment may seek election on the committee. All workmen who have completed 6

    months continuous service shall be entitled to vote.-

    Officers of the Committee and their terms of Office

    The committee has its office bearers a chairman, a vice-chairman, secretary and a joint

    secretary. The secretary and joint secretary shall be elected every year. The chairman shall be

    nominated by the employer and the vice chairman shall be elected by the member on the committee.

    The term of office of the representatives of the committee shall be two years, except the casual


    Meetings and Submission of Returns

    The Committee may meet as and when it is necessary but not less than once in three months.

    It shall ordinarily meet during the working hours of the establishments. The employer shall submit

    half yearly progress report on the constitution and functioning of the works committee in a

    prescribed form in triplicate to the concerned conciliation officer not later than 20th day of the

    month following the half year.


    The Central Government or an appropriate authority, after making the necessary enquiry,

    may dissolve any works committee at any time by an order in writing, provided the authority is

    satisfied that :-

    (1) The committee has not been constituted in accordance with the prescribed rules or

    (2) Not less than two thirds of the members of the representatives of workmen, without

    reasonable justification, have failed to attend three consecutive meetings of the committee,


    (3) The committee has ceased to function for any other reason.

    Functions of works committee on the basis of decisions of 17th session of the Indian Labour

    Conference, 1959

    List of items which works committee will normally deal with :-


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    (1) Conditions of work, such as ventilation, lighting, temperature and sanitation, including

    latrines and urinals.

    (2) Amenities such as drinking water, canteens, dinning rooms, crches, rest rooms, medical

    and health services.

    (3) Safety and accident prevention.

    (4) Prevention of occupational diseases.

    (5) Festival and National holidays.

    (6) Administration of welfare and fine funds.

    (7) Educational and recreational facilities such as libraries, reading rooms, sports and games,

    community welfare and celebrations.

    List of items which works committee will not normally deal with :-

    (1) Wages and allowances.

    (2) Bonus and profit sharing schemes

    (3) Fixation of workload of a standard labour force.

    (4) Matters connected with retrenchment and lay-off.

    (5) Provident fund, gratuity schemes and other retiring benefits.

    (6) Incentive schemes

    (7) Quantum of leaves.

    (8) Housing and Transport services.


    The concept of Joint Management Councils (JMCs) first came in Industrial Policy Resolution, April


    There should be joint consultation, workers and technicians should be associated progressively in


    Functions of JMCs

    The Indian Labour Conference, at its 15th session in July, 1957, accepted the idea of setting

    op JMCs in India. First the scheme came as a result of evolution of a LIC sub committee. The JMCs

    have following features

    (1) There should be equal representation of workers and management.


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    (2) The council shall be entitled.

    (i) To consult with certain specific matters such as administration of standing orders

    and their amendments, when needed; retrenchment, rationalization and closure;

    reduction in or cessation of operations.

    (ii) To receive information , to discuss and to give suggestions on general economicsituation of the concern, like the state of the market, production and sales

    programs, methods of manufacture and work, the annual balance sheet, P/L

    statements, long term plans for expansion.

    (iii) To be entrusted with responsibility in respect of Administration of welfare and

    safety measures, operational measures of vocational training and apprenticeship

    schemes schedule of working hours and breaks and of holidays.

    All matters, i.e. wages, bonuses, etc. which are subjected to collective Bargaining, creation of new

    rights which is a matte of negotiation for Bargaining, individual grievances are completely excluded

    from the scope of JMCs.


    It is scheme of workers participation in management in commercial and service

    organizations in public sector. It was introduced on 5th Jan, 1977. It is an unit level council

    consisting of an equal number of representatives of management and workers. Actual numbers

    should be determined by the management in consultation with recognized union. In an industrial

    establishment of public sector, wherein 100 or more workmen are employed, the unit council may

    be formed in each unit to discuss day to day problems and find solutions. But wherever necessary, a

    composite council may be formed to serve more than one unit. The PSUS include hotels,restaurants, hospitals, air, sea, railway and road transport services, ports and docks, ration shops,

    schools, research institutions, PF and pension organizations, municipal and milk distribution

    services, post and telegraph of