Management of Industrial Relations

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MANAGEMENT OF INDUSTRIAL RELATIONS (MBA)

COURSE OVERVIEW

This course pack on managing industrial relations is basicallymeant for students. It is concerned with the several factors andissues that go to make up an industrial relations system. Theobjective is to provide a broader outlook of the industrialrelation function. The focus has been on the developmentalaspects rather than on the more traditional control aspects ofthe function. It also provides the reader with a framework foranalysis of industrial relations problems. This would enable thereader to get a broad overview and a good feel of the severalrelated factors that should be considered for an understandingof the industrial relations situation.

The students on completion of the course shall have a goodunderstanding of various aspects of:

1. Industrial Relations (IR) and Trade Unionism.

2. Collective Bargaining Process.

3. Grievance Redress Mechanism.

4. Industrial Conflict.

5. Workers Participation.

SYLLABUS MASTER OF BUSINESS ADMINISTRATION

SPECIALIZATION: HUMAN RESOURCE MANAGEMENT

SEMESTER – III

MANAGEMENT OF INDUSTRIAL RELATIONS

Sub. Code: MBA- HR- 304 Credits-03 Total Marks: 100 Minimum Pass Marks: 40% Internal Assessment: 40 Marks University Examination: 60 Marks BLOCK I Unit 1: Industrial Relations Strategy Evolution of Industrial Relation; Industrial Relations; Relations Strategy; Future of Industrial Relations in India. Unit 2: Types of Unions Historical Evolution and Aspects of Trade U696 nion in India; Approaches to Trade Union, Types of Union, Functions of Trade unions. Unit 3: Industrial Dispute Act Functions of Trade Unions; National Level Federations; The Industrial, Dispute(Central)Rules, Central ID Rules, 1957 BLOCK II Unit 4: Trade Unions Act 1926 The Industrial, Dispute (Central) Rules; Central ID Rules, 1957; The Trade Union Act 1926 Unit 5: Wage Fixation Method Concept of Collective Bargaining; Stages and prerequisites for collective Fixation; Collective Bargaining as a Wage Fixation Method. Unit 6: Collective Bargaining Collective Bargaining as Wage Fixation Method; Types of Collective Bargaining and Studies in Collective Bargaining; Approaches and Nature of Grievances; Causes, Procedure and Grievance; Redress Mechanism; Case Study.

BLOCK III Unit 7: Disciplinary Proceedings Judicial Approaches to Discipline; Disciplinary Proceedings; Domestic Enquiry and Award of punishment, Nature of Conflict and its Manifestations, Labor Administration Machinery Unit 8: Industrial Disputes Act 1947 Inter Industry Propensity for Strikes, Strike Patterns, Environmental Influence: Arbitration, Conciliation, Adjudication, Unfair Labor Practices, Environmental Influence: Arbitration, Conciliation, Adjudication, Unfair Labor Practices, Case Study, Industrial Disputes Act 1947 Evolution and Nature of Participation, Prerequisites for Successful Participation Unit 9: Limitation of Participation Degree of Influence and Involvement, forms of participation, and impact of participation, Degree of influence and Involvement, forms of participation, and impact of participation, Limitation of participation, Current trends in participation in Indian industries Case Study SUGGESTED READINGS:

1. Dynamics of Industrial Relations in India by Mammoria C. B. Himalaya Publishing House;

2. Personal Management by Mammoria C. B. Himalaya Publishing House; 3. Industrial Relations & Labor Laws by Srivastava S. C. Vikas Publishing House; 4. Personal Management & Industrial Relation : R. S Davar, Vikas Publishing

House; 5. Hand Book of Industrial Laws by Kapoor N. D. Publishing House Sultan Chand

& Sons; 6. Personal Management & Industrial Relation : Mittal Kumar- Anmol Publication; 7. Contemporary Industrial Relations by Ian J Beardwell; Oxford University Press

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Unit No. Lesson No. Topic Page No.

1 Lesson 1 Evolution of Industrial Relations 1

Lesson 2 Approches to Industrial Relations 7

Lesson 3 Industrial Relations Strategy 9

Lesson 4 Future of Industrial Relations in India 22

2 Lesson 5 Historical Evolution and Aspects of Trade Union in India 27Lesson 6 Approches to Trade Union 37

Lesson 7 Types of Unions 41

Lesson 8 Growth of Union 45

3 Lesson 9 Functions of Trade Unions 51Lesson 10 National Level Federations 53

Lesson 11 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 56

Lesson 12 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 61

4 Lesson 13 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 65Lesson 14 The Trade Unions Act 1926 71

Lesson 15 The Trade Unions Act 1926 74

5 Lesson 16 Concept of Collective Bargaining 78

Lesson 17 Stages and Prerequisites For collective Bargaining 80

Lesson 18 Collective Bargaining as a Wage Fixation Method 84

Lesson 19 Collective Bargaining as a Wage Fixation Method 93

6 Lesson 20 Collective Bargaining as a Wage Fixation Method 107

Lesson 21 Types of Collective Bargaining and Studies In CollectiveBargaining 117

Lesson 22 Approaches and nature of grievances, causes, procedureand grievance redress mechanism 120

Lesson 23 Case Study 126

7 Lesson 24 Case Study 127

Lesson 25 Judicial Approaches to Discipline 128

CONTENT


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Unit No. Lesson No. Topic Page No.

Lesson 26 Disciplinary Proceedings 133

Lesson 27 Domestic enquires, Charge Sheets, Conduct of enquiry andaward of punishment 136

Lesson 28 Nature of conflict and its manifestations 139

Lesson 29 labour administration machinery 143

8 Lesson 30 lnter industry propensity for strikes, strike patterns 144

Lesson 31 Envionmental influnces: arbitration, conciliation,adjudication,unfair labour practices 148

Lesson 32 Envionmental influnces: arbitration, conciliation,adjudication,unfair labour practices 152


Lesson 34 Industrial Disputes Act 1947 160

Lesson 35 Evolution and nature of participation, Prerequisitesfor successful participation 162

9 Lesson 36 Degree of influnce and involvent, formsof participation, and impact of participation 165

Lesson 37 Degree of influnce and involvent,forms of participation, and impact of participation 167

Lesson 38 Limitation of participation 170

Lesson 39 Current trends in participation in Indian industries 172


CONTENT


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UNIT 1INDUSTRIAL RELATIONS STRATEGY

LESSON 1: UNIT 1EVOLUTION OF INDUSTRIAL RELATIONS

Learning ObjectivesAfter going through this lesson you will be able to comprehendthe following• What are Industrial Relations.• How did the Industrial Relations evolve going through a

series of stages.• The changes brought about by Industrial Revolution and

its effects.• How did we reach the machine age and modern factory

system.

What are Industrial Relations?In order to understand the emergence of Industrial Relations,it is necessary for us to study the process of evolution ofindustry.

Evolution of Industrial RelationsThe evolution of industry has been quite gradual. There was atime in the history of human civilisation when there used to beno industrial activity. During hunting stage, man lived all byhimself. He used to go out for hunting and eat whatever hecould find, even flesh, fish, fruits and roots of trees. He usedtree bark, leaves and animal skins to cover his body. But he hadno fixed residence. After this, man entered into pastoral stageunder which he started domesticating animals to have anassured supply of milk, meat and skin. He lived near the banksof lakes and rivers because of the availability of grass and waterfor the animals. Gradually, man discovered a new use to whichland could be put. He entered the agricultural stage. He begancultivating the land to grow food grains. Some people, who didnot have any work, offered to work in the fields of others. Suchworkers were paid in kind. The exchange of services for goodsmade the background for the evolution of industry.All this is fine but the next question, which comes to our mindis- how did the Industry finally evolve?Well we can classify the various stages in the evolution ofindustry as follows:1. Primitive stage2. Agrarian economy stage3. andicrafts stage.4. Guild system.5. Putting out (or Domestic) system.6. Industrial revolution.As you might know The Machine age started after industrial‘revolution in England which took place between 1760 A.D.and 1820 A.D. The first three stages represent Pre-machine age.Let us look at these stages briefly:

1 Primitive StageThe families at this stage were self-sufficient as their needs werelimited. Hence, there was no problem of exchange of goods.Division of labour was restricted only to the family level. Thiswas mainly because men devoted their time to activities likehunting, fishing and making of weapons, and women engagedthemselves in cooking, bringing up the children, agriculture anddomestication of animals and doing other household chores.In short, all the activities of the family were carried on either toproduce or to procure products for family consumption. In thismanner a family was able to satisfy its needs, and the questionof exchange of goods did not arise.In the course of time, some families started keeping theanimals rather than killing them. This led to domestication ofanimals. Animals were treated as a form of wealth, which couldbe exchanged for other products required by the family. Thisgave birth to the barter economy.

The barter economy…Yeah! The term sounds familiar

Is it something to do with exchange? orSome form of business? To answer the questions barter economy may be defined as thedirect exchange of one commodity for another commodity.“The barter economy developed because of the increase in thenumber of human wants and inability of a family to produceall the things required, by it. The exchange was direct andwithout the use of any common medium of exchange. Everyperson used to exchange his surplus goods with the otherpersons for the goods required. For instance, a farmer, who hadplenty of foodgrains but no cloth exchanged a part of hisfoodgrains with the weaver who had surplus cloth and neededfoodgrains. The main difficulty of the barter system was thelack of double coincidence of wants and a common measure ofvalue. Therefore, the exchange was restricted only to the goodsin which some families were surplus and other families weredeficient.

2 Agrarian Economy StageWell by this time things changed a little. Many tribes settleddown permanently at some place and began to sow seeds andrear cattle on the land, which they shared in common. Agricul-ture became the primary source of maintenance during thisstage. These tribes were self-sufficient as they producedeverything they required. The division of labour confined to thedivision of work between men and women of the tribe.Eventually with the rise of private ownership of propertyinland and cattle, the tribe split up into families. Gradually,human wants also became varied. These families were no moreself-sufficient. Moreover, some families concentrated onoccupations other than agriculture. This led to exchange ofgoods for goods to satisfy needs of various families and the

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establishment of village economy. The village became a unit ofeconomic self-sufficiency. Some families also started using hiredlabour. Later on, traders came into existence that purchased thesurplus products of different families and sold them to thoserequiring these products. The difference in purchase and saleprice was their profit. Emergence of traders led to specialisationin different fields by different families. It was no longernecessary to produce everything a family needed for self-consumption:

3 Handicrafts StageThis is the next stage which we are going to discuss aboutunder this stage, artisans living in villages produced theproducts for the local population and got in exchange variousthings from customers. There was hardly any machinery. Thecraftsman used simple hand tools arid manual skills forproducing the goods. There was no division of labour at thisstage. Thus, the organisation of industry was quite simple. Thecraftsman was responsible for assembling various raw materials,and selling the goods produced by him.

4 Guild StageThe ‘guild stage’ is the next stage what we are going to talkabout. Under this stage two types of guilds were initiated,namely, Merchant Guild, and Craft Guild. A merchant guild wasan association of merchants engaged in trade in a particularlocality. The purpose of a merchant guild was to enforce equalityof opportunity for the members of the guild, to protect theirinterest, to avoid competition among the members and also toregulate the conduct of its members by prohibiting unfairpractices. A craft guild, on the other hand, was an association ofthe skilled artisans engaged in the same occupation. Thus, therewere several guilds in a town. The craft guild regulated entry tothe craft, prescribed standards of workmanship and regulatedthe conduct of the members. The guild system began to declineby the end of 15th century due to the narrow attitude of theguilds and the increasing rivalry among their members.

5 Putting out System.At this stage, the intermediary between the producers andconsumers of goods came to play an important role. Theentrepreneur gave outwork to the artisans who worked in theirhomes. The artisans still owned the means of production. Theentrepreneur came at regular intervals, collected the goods andpaid for them to the artisans. The artisans faced difficulty whenthe scale of production increased and there was a need for newtools of production. The entrepreneur started providing rawmaterials and, tools to the artisans who produced goods andreceived wages on piece wage basis. That is why; this stage wascalled the putting out system. During the beginning of 18thcentury, the entrepreneur followed the practice of employing theartisans and getting work from them at their own premises.The entrepreneur procured raw-materials and equipment,assigned work to the artisans, inspected the quality of products,and found a market for his products. In other words, he wasthe owner and manager of the production system.

6 Industrial RevolutionIndustrial revolution during the later part of the 18th centuryand earlier part of the 19th century had a vital influence on the

development of industry and commerce. It changed radicallythe techniques of production and had an important impact onthe life of mankind.Industrial revolution was the result of the inventions of manyEnglish scientists during 1760 to 1820. The need for inventionsarose because of the increase in the demand of products due towidening of markets followed by the geographical discoveriesof the late 15th and 16th centuries. It was beyond the capacityof the industry using labour intensive techniques to meet theincreasing demand. The inventors in England had set forthemselves the task of finding ways and means to remove thehindrances in production faced by the producers and manufac-turers. James Hargreaves made ‘spinning genny’ in 1764, andRichard Arkwright introduced ‘water-frame’ in 1779. Thereafter,many mechanical inventions came in quick succession such as‘mule spinner’ by Crompton, and ‘power-loom’ by Cartwright.The invention of steam engine enabled man to drive themachines by power.We see that the concept Industrial Relations largely emergedduring the Industrial Revolution.Let us briefly deliberate on some aspects of Industrial Revolu-tion which will help in our understand of the evolution ofIndustrial RelationsWe can sum up as:1. There were a series of mechanical inventions by the English

scientists.2. Production in factories started with the help of machines

run by mechanical power such as steam, oil and electricity:Thus, setting up a factory required huge amount of capital.This gave birth to two classes in industry, namely, capitalistand labour.

3. Introduction of machinery led to mass scale production ofstandardized goods. .

4. The modern factory system provided both direct andindirect employment to a large number of people. Thefactories generated direct employment and trading in rawmaterials and factors products gave indirect employment totraders and mercantile agents.

5. Large scale employment in factories gave birth to labourproblems, which necessitated some steps by employers tocreate good human relations in factories.

Changes brought about by Industrial Revolution.The significant changes brought about by industrial revolutionare listed below:a. Development of engineering. Engineers were required to

design machinery for textiles, coal mining, etc. for makingand repairing steam engines, and making tools andlocomotives.

b. Revolution in iron making. The engineers, who took chargeof important task connected with the industrial change,could succeed in their work only if iron was cast in largequantities and was of fairly good quality.

c. Use of power driven machines. Power driven machines wereused in industry. It began with cotton spinning andweaving and, later on, spread to wool, silk etc.

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d. Rise of chemical industry. The application of power drivenmachines in textile mills made it necessary to developbleaching, dyeing, finishing and printing processes to keeppace with the output of textile mills.

e. Development of coal mining. Coal was needed to refine pigiron and cast it into the form in which it was needed by theengineers. It was also needed for generation of steampower.

f. Development of means of transport. For regular supply ofraw materials, etc., to industry and for the distribution ofgoods produced by the factories, effective transport was amust. The development of the means of transport likerailways and steamships constitutes the most importantimpact of the industrial revolution.

Above you have seen the changes brought about by theindustrial revolution so now going on a little further on thesame topic let us discuss the effects industrial revolution had onthe economic front.

Economic Effects of Industrial RevolutionIndustrial revolution brought about the following economicchanges:i. Large Scale Production. The industrial revolution made

mass production of goods possible by the use of powerdriven machinery in place of hand tools.

ii. Change of form of Ownership. Large-scale productionincreased the size of industrial enterprises soleproprietorship concerns expanded into partnership firmsand further developed into joint-stock companies. Theevolution of joint stock companies was an importantoutcome of the industrial revolution.

iii. Specialization. Industrialization led to a craze forspecialization in every field because of development in themeans of transport and communication. Different parts ofthe country (and even different parts of the world)specialized in producing or manufacturing differentcommodities or parts. Specialization helped in reducing thecost of production.

iv. Rise of Capitalism. Cottage system of production wasgreatly replaced by the factory system. Under the factorysystem capital is the crucial factor. Large-scale productionfurther increased the need and significance of capital. Thisgave birth to capitalistic economy under which there are twoclasses of people, namely, capitalists and workers. The-workers are purely wage earners dependent for their -livingon the capitalist employers. The capitalist system alsoincreased the importance of money as a medium ofexchange, measure of value and store of value.

v. Trade Cycles. Large-scale production accompanied bycapitalism gave birth to trade cycles having successiveperiods of inflation arid depression. During the period ofprosperity, there is high level-of employment and sustainedrise is prices. But during depression, there is large-scaleunemployment decrease in demand and so on. Many weakfirms are eliminated during the depression period.

vi. Standard of Living. Industrial revolution had a positiveimpact on the standard of living of the people. Factoriesproduced goods of better quality and at cheaper rates forthe consumption of the people. This improved theirstandard of living.

Social and Politica1 Effects of Industrial RevolutionIndustrial revolution not only affected the economy but alsocreated certain social and political implications, which in turncreated the need for organization of workers and later paved theway for trade unionism. Here let us discuss a few social andpolitical effects of industrial revolution :i. Urbanization. Industrial revolution led to the

concentration of population in towns because factories andother establishments were located in the towns. This gavebirth to the housing problem. Even now, lakhs of workerscontinue to live in slum areas in the industrial towns.

ii. Rise of Individualism. People from the villages came tothe towns to find employment. Their close ties with thevillage, land and family were broken. The industrialrevolution created conditions under which workers aimed atmaterial progress by working in the factories. This led to thedisintegration of joint family life.

iii. Awareness of Rights. The industrial revolution gave birthto two classes, namely capitalists and workers. There waseconomic inequality between the rich and the poor. Slowlyand slowly class-consciousness came in the minds ofworkers and they organized themselves in the form ofunions to fight for their economic, social and politicalrights.

iv. Poor Working Conditions. The workers were paid lowerwages and they had to work under poor workingconditions. There was no one to convince the factoryowners about the need of good working conditions solong as trade unions did not protest. This was anobstruction in increasing the productivity of the workers.

v. Political Awareness. Industrial revolution increased theincomes and standard of living of the people. The earningpeople started spending more and more on the educationof their children. Press also progressed a lot to air thegrievances of the working class. These factors createdpolitical consciousness among the people. The workersdemanded the right to form unions and to participate inthe management of the industrial undertakings.

After seeing the changes brought about by the industrialrevolution let us now try to examine how did we reach the

Machine Age And Modern Factory SystemThe industrial revolution took place in England and later onspread to other countries of the world. Since the industrialrevolution, many changes have taken place in the industrialsystem. The present age is an era of large-scale production.Many big factories have come into existence and they employ alarge number of workers. They cater to the needs of the peoplenot only in one country but also in many countries of theworld. Thus, machine age has facilitated expansion of interna-tional trade and growth of multi-national corporations.

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During the last 40 years or so, tremendous and rapid develop-ment of science and technology has taken place. That is why, thepresent era is known as ‘atomic age’, ‘space age’ and ‘electronicage’. Some people also call this era as the phase of secondindustrial revolution. In the present machine age, differentcountries of the world are closely inter-related by very fastmeans of transport and communication.

Features of Machine AgeThe main features of the present age, popularly known asmachine age, are as follows:i. Large Scale Production. Modem factories carryon large scale

production to meet the demands of large number ofpeople. Production is carried on in anticipation of demand.

ii. Mechanization. The developments in the fields of scienceand technology have increased the degree of mechanizationin the modern factory system. The efficiency of the factorieshas increased many times because of new innovations.

iii. Automation. In many advanced countries like the U.S.A.and the U.K., automation has been introduced in theproduction system. By automation we mean installation ofone set of machines to run another set of machines. Forinstance, there is automation in oil refineries, chemicalindustrial units and food processing units. A small numberof operators sitting in the control room control the entireoperation.

iv. Management Information System. Introduction ofmanagement information system with the help of electroniccomputers is another highlight of modem machine age.The computers have vast memories. They can store hugeamount of information and make available the requiredinformation within seconds. They help in taking managerialdecisions at the proper time.

v. Specialization. There is greater specialization and division oflabour. Many industrial units specialize in the manufactureof a small number of components or parts of differentproducts. Division of labour has facilitated the workers toconcentrate on limited operations.

vi. Standardization. Standardization brings about uniformityof quality and size, and facilitates large-scale production.Nowadays, many organizations... whether production orservices based, are trying to get themselves standardized asper International Standards called ISO certifications. Thus,overall quality consciousness has increased in industry.

vii.Growth of Industrial Areas. Concentration of industries incertain regions of the country has given rise to the growthof industrial areas which offer special advantages in regardto raw materials, power, access to market, financing,transporting, etc.

viii.Expansion of International Trade. Mass production,standardization of products, and improved means oftransport and communication have increased the volume ofinternational trade among different countries.

ix. Research and Development. Big industrial enterprises haveestablished separate departments for research anddevelopment and they spend a considerable portion of their

earnings for innovating new products and ideas. Researchand development activities have the effect of decreasing cost,increasing quality and consumer satisfaction and raising thestandard of living of the people.

x. Competition. There is cutthroat competition among theproducers of goods in all capitalist economies. Economicrelations between different persons are based on contractrather than on custom and tradition.

Now we can conclude that industrial revolution gave plants andmachinery, which brought about factory system. Entrepreneursestablished factories and employed a large number of workersto work in their factories. This gave rise to two classes, namely,capitalist and workers and the term ‘industrial relations’ wascoined to create and maintain cordial relations between thesetwo classes for the growth of industry. This was the realbeginning of industrialization.As a result of industrial revolution, capital became a criticalfactor of production. With the technological advancements, theuse of out-workers (people working at their homes with theirown tools and machines) declined and employment in factoriesrose up tremendously. The owner of the factory provided rawmaterials, tools and machines and other means of productionin the factory premises and the workers offered their labour inreturn of wages. This led to the emergence of two distinctclasses on the industrial scene, namely, the capitalist class and theworking class. The capitalist class became more powerful as itprovided the most important input of production i.e., capitalin the initial stages of industrialization the workers were largelyuntrained, uneducated and unorganized ; hence didn’t receive afair deal at the hands of employers.In the early stages of industrialization, the trends, whichdominated the scene, were:i. Loss of freedom. Unlike working in their homes, where

the workers had freedom in carrying out work the way theyliked it, in factories they were forced to work under strictdiscipline. They had little say in matters of workingconditions, rest interval, holidays, wages etc. They also losttheir freedom of movement during working hours.

ii. Unhygienic working conditions. The work environmentin the factories was extremely unhygienic and unhealthy.Also it was largely in sanitary badly lit and ill ventilated; littleattention was paid to the health and safety of workers.

iii. Employment of children. Partly due to economic necessityand partly due to pressure of employers, the workers wereforced to put their children to employment. There was nodifference in the hours of work and other workingconditions’ of both the child and the adult workers. Theincidents of the shameless exploitation of child workers bythe employers were not uncommon.

Since the workers were unorganized and had no bargainingpower, the Governments in many countries intervened throughvarious1aws to check the exploitation of workers and tosafeguard their health and welfare. Predominance of massilliteracy among the workers also stood in way of rise of trade

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unionism. But gradually, with the initiative of social andpolitical workers, trade unions were formed to protect theeconomic, social and psychological interest of the, workers. Thefactors, which necessitated the growth of trade unions areas,follow:i. Commanding position of the capitalist or employer;ii. Employment of large number of workers in factories;iii. Introduction of division of labour;iv. Growth of a new class of technical and, professional

employees;v. Migration of labour from rural areas to urban areas;vi. Rise of materialism;vii.Monotony and boredom in jobs increase in accidents, etc.;viii.Employment of children in factories;ix. Payment of lower wages;x. Unhygienic working conditions in factories;xi. Lack of welfare measures for workers etcNow the things were becoming complicated and complex. Tomeet the above challenges, several management thinkers andpractitioners contributed to the thought on human relations inindustry. The contribution of Robert Owen, Charles Babbageand Daniel C. McCallum is worth mentioning here. Thus, weare now going to talk about the role of management thinkers inregard to the human relations in industry.

Role Of Management ThinkersRobert Owen. Robert Owen was an outstanding pioneer ofmanagement thought. He started a factory at Manchester oftextile machinery and in 1800; he became the managing directorof Chorlton Twist Company. He carried out experiments in thegroup of textile mills he managed during the period 1800 and1828 and introduced many social reforms. He also begancooperative movement in 1828 in Rochdale, England.Robert Owen has been referred to as the father of personnelmanagement. Throughout his life, he worked for building up ofa spirit of co-operation between the workers and the manage-ment. He believed and practiced the idea that workers should betreated as human beings. He, made provision for reducedworking hours, housing facilities, education of workers andtheir children, and a system of discipline combined with justicein the factories being managed by him. He also took active partin the introduction of British Factory Act; 1819.He was greatlyadmired for giving human treatment to the workers. Hepreached that personnel management pays dividends to theemployers and is an essential part of every manager’s job.Charles Babbage. Charles Babbage was a leading Britishmathematician at Cambridge University from 1828-1839. Heinvented a mechanical calculator in 1822. He advocated workmeasurement, cost determination, and wage incentives infactories. He is best remembered as the inventor of the‘analytical engine’, which was the for-runner of the moderncomputer. In 1832,’Babbage published his famous book “Onthe Economy of Machinery and Manufacturers.” He stressedthe importance of division of physical and mental labours,suggested the ides of profit sharing, and began observing and

timing work. His vision was that of improving efficiencythrough the application of scientific techniques .Daniel C. McCallim. Daniel C. McCallum tried to findsolutions to managerial inefficiencies, which were plaguing therailroads at that time. His approach to run the railroad, was oneof system, commonsense, reports and control. He insisted jobdescriptions, made promotions on the basis of merit andinsisted that those in charge of specific operations were bothresponsible and accountable for their successes and failures.

Growth of’Trade UnionismDuring the early period of industrialization, workers facedseveral problems in the factories. They got lower wages andworked under poor working conditions. So they organizedthemselves into trade unions to secure better wages and betterconditions of work. The basic philosophy underlying tradeunionism was through strength and collective support, theemployers could be forced to listen to the workers and redresstheir grievances. The weapons used included strikes, slowdowns,walkouts, picketing, boycotts and sabotage. Sometimes, evenphysical force was used. Trade unionism influenced thepersonnel management in such fields of activity as the adoptionof employee grievance handling systems, the acceptance ofarbitration as means of resolving conflict of rights , disciplinarypractices, the expansion of employee benefit programmes, theliberalization of holiday and vacation time clear definition ofjob duties, job rights through seniority and the installation ofrational and defensible wage structures.Because of influence of trade unions, several employers in theU.S.A. appointed Welfare Secretaries and also launched schemesfor workers’ participation. They adopted paternalistic attitudetowards the workers and invested on welfare activities for thebetterment of workers. In several companies, personneldepartments were set up around 1910 to look after functionslike recruitment, training, motion study, record-keeping, welfare,etc.Trade unionism in India developed quite slowly as compared tothe western nations. The main reason for the delayed start ofthe labour movement is the difference in her economic set upfrom those of the United Kingdom and the U.S.A. Though theforeign trading companies helped in the spread of trade andcommerce in the country during the eighteenth and the firsthalf of the nineteenth centuries, they were also instrumental indestroying indigenous industries. They were more interested inselling goods obtained from their own country and not insetting up production centres. It was only during the 19thcentury, and especially during its second half, that a number offactories were set up in Calcutta and Bombay-jute mills inCalcutta and cotton textile mills in Bombay.Industrial capitalism was well established in Europe during the18th and 19th centuries, but in India modern types of indus-tries could be set up only during the middle of the 19th century.Indigo plantations were the first to be started in 1831 followedby a cotton mill in Bombay in 1853, the manufacture of jute inCalcutta in 1855, and the coalfields were connected by rail to theport city of Calcutta. These developments paved the way fordevelopment of industries in India.

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The first indication of industrial unrest and earliest workstoppage came to the fore in 1877 on the initiative of weaversof Empress Mills, Nagpur. Though no trade union existed, therelations between employers and workers cannot be said to bepeaceful. Evidence of short-lived strikes and their frequentoccurrence is found at various centres such as Bombay andSurat. “They ended in suppression of operatives... power onone side and ignorance and mildness on the other are the basison which the present relations, and the relations are quiet, rest.”Lock-outs were completely non-existent. This reveals theunequal strength of the bargainers at that time. The powerlessworkers in mild disputes were intimidated, dismissed andvictimized by the employers. In 1895, probably for the firsttime, the workers struck work at the Budge Jute Mill, as a resultof which the mills suffered a loss of Rs. 18,000.The passing of the Factories Act in 1881 awakened the workingclass towards a concerted approach. In 1884 about 5,000workers presented a memorandum to the Bombay FactoryLabour Commission under Shri N.M. Lokhande. In 1890, thefirst labour association, viz., Bombay Millhands’ Associationwas established. However, till 1895, workers had very little classconsciousness and, therefore, they lacked the power of unitedaction. In 189':’ was formed the Amalgamated Society ofRailway Servants c: India-consisting of Anglo-Indians anddomiciled Europeans employed on railways and acted more as afriendly society than a combination for securing concessions. In1905, another organization was formed in Calcutta under thename of the Printers’ Union. The Postal Union was formed inBombay in 1905. These organizations formed on the lines oftrade unions and may be considered as the pioneer organizedlabour associations in India. Thus, it may be noted that therewere no strong organizations for concerted action.Whatever trade unions emerged, they were of a purely localcharacter at the level of individual mills. The conditions oflabour were severely affected by the World War I and the unionscould not do much to improve the lot of workers. -Though quite a number of workers’ organizations did springup during the early years of the twentieth century, legal recogni-tion to the movement was not forthcoming readily. The firstorganization-The Amalgamated Society of Railway Servants inIndia and Burma-formed in 1897 was registered under theCompanies Act. Specific legislation for registration of tradeunions was enacted only in 1926. As a matter of fact, thepressure exerted by the trade unions movement in the UnitedKingdom facilitated this legislation. However, Mr. B.P. Wadiainitiated the process through introduction of an element ofmilitancy in the movement in India. The Textile WorkersUnions set up by him in Madras in 1918 as an immediatesuccess and through a number of strikes, he was able to get alot of benefits for the workers. But the employers retaliated byfiling a suit for damages against Mr. Wadi a and other leadersand obtained court injunction restraining the union leadersfrom interfering with their business. This led to focusingattention to the need for legislation for protecting trade unionactivities.On the other side of the country, a new experiment on thelabour front was carried out. A strike was launched by the textile

mill workers in Ahmedabad in 1918 whose leadership wastaken over by Mahatma Gandhi who turned it into a Satyagrah.From this was born (in 1920) the famous Textile LabourAssociation of Ahmedabad.Enactment of the Trade Unions Act in 1926 and formation ofthe International Labour Organisation (I.L.O.) gave a fillip tothe trade union movement in India. The immediate result ofthe formation of International Labour Organization was thebirth of the All-India Trade Union Congress in 1920. With theformation of I.L.O., immediate necessity was felt for a forumfor election of the workers’ representatives to that organizationor, at least, of an agency that could tender suitable advice toGovernment regarding selection of the workers’ representatives.This necessity led to the formation of the All-India TradeUnion Congress.The Trade Unions Act gave legal status to registered tradeunions and conferred on them and their members a measure ofimmunity from civil suits and criminal prosecution. The Actgave legal status to unions and enhanced their position in theminds of employers and the general public. This Act was animportant landmark in the history of trade union movement inIndia. The failure of the Bombay Textile Strike of 1929 and theeconomic depression of that period brought a lull in tradeunion activity. But industries faced the problem of effectivehandling of labour-management relations. The managementsdeclared lock-outs to resist pressure by workers while workersresorted to strikes to pressurize managements for higher wageand better facilities. The Government also intervened in manycases to resolve the disputes between the management andworkers. This is how the industrial relations system consistingof three actors, i.e., management, workers and government,evolved.

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LESSON 2:APPROCHES TO INDUSTRIAL RELATIONS

Learning ObjectivesAfter going through this lesson you will be able to comprehendthe following.• Theories and models of conflict for better understanding

of the entire relationship of labour and management.• Differentiate between approaches of Industrial RelationsAfter having discussed at length the ‘evolution of industrialrelations’ let us now enhance our knowledge and know moreabout the IR primarily starting with the ‘approaches to indus-trial relations.’

Approaches To Industrial RelationsTheories/Models of Industrial Conflict.The bases for conflict in industry are no diffident from those inany other area of human endeavor. Most of social and psycho-logical, economic and political factors underly every conflictsituation. Thus, a broader framework of industrial conflict isthe complex of influences of socio-economic and politicalfactors. Means of conflict management or resolution mustincorporate considerations of these dynamics. Some of thetheories/models of conflict are presented below for a betterunderstanding of the entire relationship of labour andmanagement.

1 Classical Approach (Marxist Model)Karl Marx considered industrial conflict as a part of the broadersocial conflict between classes and used it to explain thefundamental historical process of change and-developmentinhuman society. He was concerned with certain macro eco-nomic processes and deep-rooted inequalities in society as a-whole, and not with specific industries or firms. Marx dividedthe society into two classes: (i) capitalists, who own the means ofproduction, and (ii) proletariat, who own nothing but their ownlabour power. These classes are antagonistic groups. Antago-nism and conflict are o f the very essence of Marx’s conceptionof class. The reasons for this fundamental antagonism lie in thecapitalist mode of production.The main drawback of the capitalist mode of production is theexploitation inherent in the system of wage labour. Wagelabour implies that labour is-a commodity which is bought andsold like any other. Labour is bought at the cheapest pricepossible and put to work on means of production owned bythe capitalist. The work_r is paid a wage which is barelysufficient for his subsistence. This gap is the surplus valuewhich the capitalist appropriates. This appropriation of thesurplus by the capitalist employer is not lessened ratherincreases, for the actual distribution of additional increments ofrevenue is determined by the power situation. Workers with nopower may get nothing. There is no automatic distributionbased on a sense of equity. And, thus, the exploitation of theworker by the capitalist increases.

Wage labour is, alienated because of exploitation by thecapitalists. Alienation of a worker arises from the fact that hedoes not own the too1s with which he produces. Whatever isproduced from the contribution of his labour is not exclusivecreation (because of division of labour), it arises from theappropriation of the surplus; finally, it arises from himselfbecause his labour is no longer a form of self-expression or anend itself, but a mere means to an end-the end being the wagewhich is necessary in order to survive.

2 Human Relations or Neo-Classical ApproachThis approach has its origin in the Hawthorne experimentsconducted by Elton Mayo, Roethilsberger, Whitehead, Whyteand Homans, etc. According to this theory, conflict is anaberration and not the natural state of human society. Thisaberration occurs when tendency of the industrial society is totreat worker as an isolated individual, and deprive him of allcontrol over his environment. This loss of mooring andcontrol is a major source of conflict.The core of human relations theory consists in the importance-attributed to the small informal social groups as a source ofhuman satisfaction. This satisfaction results from better humanrelations through the encouragement in creating informal socialgroups and better communic’1ition by providing not onlydownward communication but upward communication also.The key to sound industrial relations lies in achieving betterhuman relations in the organisation. The major criticism of thistheory is that it treats the factory as if it were a self-containedand isolated social system. The sources of conflict lie as muchoutside the factory as within it, and the argument that all thesestrains can bee handled by the management through betterhuman relations within the factory is not convincing. .Neo human religionists like Maslow, Herzberg and McGregorfelt that workers look for satisfaction of their needs from theiremployment. The motivators include both economic and non-economic rewards like appreciation of performance, knowledgeof results, competition, etc:

3 Pluralistic ApproachThe pluralistic theory is based on the premise that the enterprisecontains people with a variety of interests, aims and aspirations;therefore, it is a coalition of different interests. Arthur Rossargued that we should view an organization as a “plural societycontaining many related but separate interests and objectiveswhich must be maintained in some kind of equilibrium.”Given such views, conflict is not abnormal but quite natural.The capitalist is no longer a ruthless exploiter. He is willing tosit down and discuss terms with those who protest. Thus,protest has become institutionalized and has lost its bite. Giventhe nature and distribution of power in industry and society,both labour and management restrain each other to exercise theexclusives of power. Rather, together they construct and

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maintain rules and institutions for the regulation of conflict. .Conflict cannot be wished away in this system. Arbitration,mediation and adjudication emerge as the major regulators ofconflict, and strike becomes a weapon of last resort.Pluralism does not imply the inevitability of compromise andconsensus in all situations. Fox argues that the aim of plural-ism is to combine social stability with adaptability andfreedom-this involves the assumption that on most occasions,conflict will be resolved by collective bargaining-the majorinstitutional apparatus of the pluralist.

4 Social Action ApproachThe social action model has its origins in Weberian sociology.Under this model, the actors own definitions of the situationsin which they are engaged and these are taken as an initial basisfor the explanation of their social behaviour and relationships.This model points but the reciprocal nature of the relationshipbetween social structure and behaviour. Social structure limitssocial action. Thus, a worker’s ability to take strike action or anentrepreneur’s ability to invest may be limited by his personaland by more general economic conditions, and this will help todetermine the environment for similar decisions in future.One of the most important features of the social action modelsis the attitude it adopts towards social theory. The social actionapproach suggests that general explanations of social action arenot possible simply because of the nature of the subject ofsocial sciences-men do not react to the stimuli in the same wayas matter in the natural sciences. The social action approach hasbeen contrasted with the systems approach while the systemsapproach regards behaviour as a reflection of the characteristicsof a social system containing a series of impersonal processeswhich are external to actors and constrain them, the social actionapproach stresses the way in which man influences the socialstructure and makes society.

5 Systems ApproachThe systems approach views the industrial relations system as asub-system of the society or the total social system. The societyis seen as providing certain external influences and constraintsbut not as completely dominating industrial relations. Anindustrial relations system at any particular time is regarded ascomprising of certain actors, certain context and ideology whichbind the industrial relations system together through a body ofrules created to govern the actors at the place of work and workcommunity. The creation of rules is the central aim of theindustrial relations system andDunlop isolates three groups of actors-Workers, Managementand the Government-who take part in the rule-making process.Thus,R= f(a,i,b)Where R = Industrial relations systema = actors i = ideology b = body of rulesFIG. 1(Chhabra T.N Pg.54 )

Since the problem of industrial relations is multifaceted asshown in the Figure above, the first step will be to diagnose asituation in terms of the prevailing circumstance in the organi-zation and then to adopt a strategy of effecting changes atcrucial points. Conflict in industry cannot be completely wipedout, it can only be contained with reasonable limits.

6 Gandhian Trusteeship ApproachGandhiji’s views on industrial relations are based on hisfundamental principles of truth and non-violence and non-possession. Out of these principles evolved the concept oftrusteeship on which his philosophy of industrial relationsrests. This philosophy presumes the peaceful co-existence ofcapital and labour, which calls for the resolution of conflict bynon-violent, non-co-operation (i.e., Satyagraha), which actuallyamounts to peaceful strikes in ordinary parlance. Gandhijiaccepted the workers’ right to strike, but cautioned that thisright is to be exercised in a just cause, and in a peaceful and non-violent manner; and it should be resorted to only afteremployers fail to respond to their moral appeals.The principle of trusteeship propagates that the capitalist ordercan be transformed into an egalitarian one. It does not recog-nize the right to property except to the extent permitted bysociety for its own welfare; the individual does not have anyright to hold or use wealth in disregard of the interests ofsociety; and the character of production is to be determined bysocial necessity rather than by personal whims or greed. Thecapitalist is expected to hold industry in trust for the commu-nity; and the workers should be treated as co-trustees with thecapitalist employer.The trusteeship theory implies that there is no room for conflictof interests between the capitalist and the workers. Thoughwealth legally belongs to its owners, virtually it belongs to thesociety. If capitalists fail to pay minimum living wages toworkers, workers should appeal to their conscience. If this doesnot work, they should resort to non-violent non-co-operation.As a pre-condition to this, two things are expected fromworkers: One is an awakening and other is the unity amongthem. By awakening among workers, Gandhiji meant develop-ing and nurturing faith in their moral strength and theirawareness of its existence which means that the workers shouldrealize the fact that without their co-operation, capitalists cannotwork and when the workers resort to non-co-operation, theirexploitation by capital would stop.For putting the Gandhian concept of trusteeship into practice,the following guidelines should be followed:a. The workers should seek redressal of reasonable demands

only through collective action.b. The workers should avoid strikes as far as possible in

industries of essential services.c. The strikes should be resorted to only as a last resort after

all other legitimate measures have failed.d. As far as possible, workers should take recourse to

voluntary arbitration where efforts at direct settlement havenot succeeded.

e. If they have to organize a strike, trade unions should seekauthority from workers to do so, remain peaceful and usenon violent methods.

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LESSON 3:INDUSTRIAL RELATIONS STRATEGY

Learning ObjectivesAfter going through this lesson you will be able to comprehendthe following.• Different strategies related to industrial relations• Disputes and how to settle it.

Industrial Relations StrategyState intervention in the settlement of industrial disputesstarted with the Trade Disputes Act, 1929. The Act vestedGovernment with powers which could be used whenever itconsidered fit to intervene in industrial disputes. It providedfor only ad hoc conciliation boards and courts of enquiry. Theamending Act of 1938' authorized the Central and ProvincialGovernments to appoint conciliation officers for mediating inor promoting the settlement of disputes. The Act, however,was not used extensively, as the Government policy at that timecontinued to be one of laissez faire and selective intervention atthe most. Where Government intervened, the procedureconsisted of appointing an authority which would investigateinto the dispute and make suggestions to the parties forsettlement or allow the public to react on its merits on the basisof an independent assessment.

Provincial LegislationWhile this was the position in the country as a whole, a morepurposeful intervention in industrial disputes was attempted inone of the industrially advanced Provinces—the BombayPresidency. The Bombay Trade Disputes (Conciliation) Act,19342, introduced for the first time a standing machinery toenable the State to promote industrial peace. A permanent cadreof conciliators was envisaged for settling matters which fellwithin their jurisdiction. The scope of the Act was limited toselected industries. The experience of the working of the Act,though in a limited sphere, led to the enactment of theBombay Industrial Disputes Act, 1938 (BID Act). The impor-tant features of this new Act were the provisions for (a)compulsory recognition of unions by the employer, (b) givingthe right to workers to get their case represented either througha representative union, or where no representative union in theindustry/centre or in the unit existed through elected represen-tatives of workers or through the Government Labour Officer,(c) certification of standing orders which would define withsufficient precision the conditions of employment and makethem known to workmen, (d) the setting up of an IndustrialCourt, with original as well as appellate jurisdiction, to whichparties could go for arbitration in case their attempts to settlematters between themselves or through conciliation did notbear fruit, and (e) prohibition of strike/lock-out under certainconditions. This law was made applicable only to someindustries in the Province.Shortly thereafter, the Government of India promulgated theDefence of India Rules to meet the exigencies created by the

Second World War. Rule 81 A gave powers to the appropriateGovernments to intervene in industrial disputes, appointindustrial tribunals, and enforce the award of the tribunals onboth sides. The BID Act was amended during the war years toprovide for compulsory adjudication in unresolved disputes.The BID Act was replaced by a more comprehensive legislation,viz., the Bombay Industrial Relations Act, 1946 (BIR Act), butwith the basic structure of the BID Act unchanged. At aboutthe same time, the Government of India placed on the statutebook the Industrial Employment (Standing Orders) Act, 1946,which provided for the framing and certification of StandingOrders covering various aspects of service conditions includingthe classification of employees, procedures for disciplinaryactions and the like. In a way, this piece of legislation filled avoid that existed in the Central industrial relations legislation.

The Industrial Disputes Act, 1947The emergency war legislation (Rule 81A of the Defence ofIndia Rules) was kept in operation pending the enactment ofthe Industrial Disputes Act, 1947 (the ID Act), which replacedthe Trade Disputes Act, 1929, from April 1, 1947, Withsubsequent amendments, the I.D. Act still continues to be themain instrument for Government’s intervention in labourdisputes.The I.D. Act provides for settlement of industrial disputesthrough conciliation and adjudication. The Act empowers theappropriate Government to appoint conciliation officers and/orconstitute Boards of Conciliation to mediate in, and promotesettlement of, industrial disputes. It also empowers theappropriate Government to refer disputes for adjudication byan industrial tribunal. The Act makes a distinction betweendisputes arising in public utility services and those in otherindustries and provides for compulsory conciliation andadjudication to resolve the former. Besides, the appropriateGovernment could constitute a Court of Enquiry to enquireinto matters pertaining to an industrial dispute. Restrictions areplaced on strike/lock-out in public utility services, andduring the pendency of conciliation and adjudication proceed-ings. The procedures and machinery provided under the I.D.Act have been modified from time to time in the light of theactual working of these provisions, the decisions of thejudiciary and the influence of the bipartite and tripartiteagreements.The period 1947-50 witnessed some important developmentshaving a hearing on industrial relations, apart from a basicchange in the attitudes of employers and workers. The CentralGovernment was made the appropriate Government fordisputes in Banking and Insurance, as these industries extendedover more than one State/Province. The Trade Unions Act,1926 was amended to provide for compulsory recognition ofunions.1 The Labour Appellate Tribunal was set up. The work

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of the tripartite bodies associated with the Labour Ministrystarted expanding. Comprehensive legislation was drawn up inthe form of a bill for putting industrial relations on a sounderfooting.

Plan PoliciesThe First Plan stressed the need for industrial peace foreconomic progress. While it wanted the State to arm itself withpowers for intervention in labour disputes, the endeavour hadto be to encourage mutual settlement, collective bargaining andvoluntary arbitration to the utmost extent, and thereby toreduce to the minimum, occasions for its intervention inindustrial disputes and exercise of the special powers2. TheIndian Labour Conference which met as these recommenda-tions were formulated, favoured the retention of powers byGovernment to refer matters to industrial tribunals rather thansole reliance on collective bargaining. The I.D Act was amendedin 1953 to provide for compensation in case of lay-off andretrenchment. The working of the Labour Appellate Tribunal(LAT) came up for criticism in tripartite meetings and a decisionwas taken in pursuance of the strong feelings expressed in thesemeetings, particularly by the labour representatives, that theLAT should be abolished.The Second Plan envisaged a marked shift in the industrialrelations policy consequent on the acceptance of the socialistpattern of society as the goal of planning. It emphasizedmutual negotiations as the effective mode of settling disputes.Among the other recommendations in the Plan were demarca-tion of functions between works committees and unions, andincreased association of labour with management. The I.D. Actwas amended in 1956. The LAT was abolished through thisamendment and a three-tier system of original tribunals—viz.,labour courts, industrial tribunals and national tribunals—wasbrought in force. While the labour court would deal with certainmatters regarding the propriety and legality of an order passedby the employer under the standing orders, and discharge anddismissal of workmen including reinstatement, the industrialtribunal adjudicates on matters like wages, allowances, hours ofwork, leave and holidays and other conditions of service. Thenational tribunal, to which matters similar to those adjudicatedupon by a tribunal are referred, is appointed by the CentralGovernment to decide disputes which involve questions ofnational importance and those which affect industrial establish-ments situated in more than one State.The 15th Session of the Indian Labour Conference took noteof these developments and the Second Plan recommendationsand sought to evolve steps for their implementation. The Codeof Discipline3 was drawn up and arrangements were made toeducate workers through a scheme accepted by the tripartite.Complaints about non-implementation of agreements,settlements and awards were in the meanwhile disturbing theindustrial scene. On the administrative side, provision wasmade to examine such complaints and place the conclusionsthereof before a tripartite Evaluation and ImplementationCommittee. The foundations were thus laid for a policy ofgiving to the parties themselves a greater share in ensuringbetter enforcement of agreements, settlements and awards.

The Third Plan did not suggest any major change in policy. Itemphasized the economic and social aspects of industrial peaceand elaborated the concept that workers and management werepartners in a joint endeavour to achieve common ends. Thevoluntary arrangements agreed to in the Second Plan werestrengthened by the Industrial Truce Resolution, 1962, adoptedin the wake of the Chinese aggression. The I.D. Act wasamended in 1965 with a view to giving an individual worker theright to raise a dispute connected with his discharge, dismissal,retrenchment or termination of service, even if the cause of theindividual workman was not espoused by any union or groupof workmen.To sum up, the existing arrangements for the prevention andsettlement of industrial disputes consist of (a) statutoryprocedures and (b) voluntary arrangements. The former arecovered by the Industrial Disputes Act, 1947 and certain similarState enactments. In essential details, the machinery providedfor under the various enactments consists of works/jointcommittee, conciliation, voluntary arbitration, and adjudicationby tribunals or industrial courts. Voluntary arrangementsprovide inter alia for recognition of unions, where no statutoryprovisions for it exist, the framing of a grievance procedure,reference of disputes to voluntary arbitration, settingup of joint management councils, implementation of agree-ments, settlements and awards and the setting up ofindustry-wise wage boards.

Industrial Relations MachineryAs has been mentioned, the present machinery for the settle-ment of industrial disputes comprises: (i) conciliation, (ii)arbitration and (iii) adjudication machinery—tribunals, indus-trial courts, etc. We propose to discuss in what follows thesalient features of some of these existing arrangements for thesettlement of industrial disputes and assess their workingduring the last twenty years with a view to evolving recommen-dations for the future. The topics we have chosen for discussionare (i) collective agreements; (ii) conciliation; (iii) voluntaryarbitration; and (iv) adjudication. The relative merits anddemerits of adjudication and collective bargaining as also issuesconnected with the right, to strike/lockout form part of thediscussion.

Collective AgreementExcept for the industrial relations legislation in some Stateswhere arrangements for recognition of unions exist, there is nostatutory recognition of unions for the country as a whole.Neither are there provisions which require employers andworkers to bargain in ‘good faith’. It is, therefore, no surprisethat collective agreements have not made much headway in thecountry so far. Nonetheless, there have been more of suchagreements than is popularly believed.Some historical factors have also come in the way of collectiveagreements having a greater share in maintaining industrialharmony. The Whitley Commission found that the onlyattempt made to set up machinery for regulating the relationsbetween a group of employers and their work-people was atAhmedabad. Though the assessment of the Whitley Commis-sion was made soon after the Trade Unions Act, 1926 was

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enforced, the situation did not change significantly in the period1931 to 1947. Since Independence, however, trade unions havebeen growing and agreements with employers have becomemore common. The changing attitude of employers and theemergence of a new generation of employers and workers havealso helped. Legal measures, in spite of their limitations, havelent as much support to collective agreements as joint consulta-tions in bipartite and tripartite meetings at the national andindustry levels. Even so, a sample study made by the Employ-ers’ Federation of India for the years 1956-1960 reveals that thenumber of disputes settled by collective agreements during theperiod in question varied between 32 per cent and 49 per cent inthe units studied.Broadly, the agreements have been of three types: (i) agreementswhich have been drawn up after direct negotiations between theparties and are purely voluntary in character for purpose of theirimplementation; (ii) agreements which combine the elementsof voluntariness and compulsion i.e., those negotiated by theparties but registered before a conciliator as settlements; and (iii)agreements which acquire legal status because of successfuldiscussion between the parties when the matters in disputewere under reference to industrial tribunals/courts and could beconsidered sub judice, the agreements reached being recorded bythe tribunals/courts as consent awards.Most of the collective agreements have been at the plant level,though in important textile centres like Bombay andAhmedabad, industry level agreements have been common.These have a legal sanction under the State 322 Acts and have tobe distinguished from others where no statutory sanctionprevails. Such agreements are also to be found in the plantationindustry in the South and in Assam, and in the coal industry.Apart from these, in new industries like chemicals, petroleum,oil refining and distribution, aluminium, manufacture ofelectrical and other equipment, and automobile repairing,arrangements for settlement of disputes through voluntaryagreements have become common in recent years. In ports anddocks, collective agreements have been the rule at individualcentres. On certain matters affecting all ports, all-India agree-ments have been reached. In the banking industry, after a seriesof awards, the employers and unions are in recent years comingcloser to reach collective agreements. In the Life InsuranceCorporation of India, except for the employers’ decision tointroduce automation which has upset industrial harmony insome centres, there has been a fair measure of discussion acrossthe table by the parties for settling differences. On the whole,the record of reaching collective agreements has not beenunsatisfactory, though its extension to a wider area is certainlydesirable.

Conciliation

The aim of conciliation under the I.D. Act and under similarState Acts is to bring about a settlement in disputes throughthird party intervention. The conciliation machinery can takenote of a dispute or apprehended dispute either on its own orwhen approached by either party. Under the I.D. Act, concilia-tion is compulsory in all disputes in public utility services andoptional in other industrial establishments. Over the years, theoptional provisions appear to be acquiring compulsory status in

non-public utilities also. With a view to expediting conciliationproceedings, time-limits have been prescribed—14 days in thecase of conciliation officers and two months in the case of aboard of conciliation. A settlement arrived at in the course ofconciliation is binding for such period as may be agreed uponbetween the parties or for a period of six months and willcontinue to be binding until revoked by either party. The Actprohibits a strike/lockout during the pendency of conciliationproceedings before a Board and for seven days after theconclusion of such proceedings. While the conciliation officer isgiven the powers of a civil court under the Code of CivilProcedure, 1908 only for the purposes of compelling theproduction of documents, a Conciliation Board, like a LabourCourt or an Industrial Tribunal, is in addition given the powersof a civil court to enforce attendance of persons, examine themon oath and call witnesses.The performance of the conciliation machinery as indicated bystatistics does not appear to be unsatisfactory. During the years1959—66, out of the total disputes handled by the CentralIndustrial Relations Machinery each year, the percentage ofsettlements has varied between 57 and 83. The remainingdisputes, it is reported, were settled mutually, referred tovoluntary arbitration or arbitration under the I.D. Act or toadjudication, or were not pursued by the parties. While such hasbeen the performance of the Central Industrial RelationsMachinery, the success achieved in the States seems to be varied.In some it is impressive; in others disappointing. During theperiod 1965—67, the percentage of settlements reached in Biharranged from 51.0 to 86.0; in Orissa from 27.5 to 35.8 and inAssam from 65.5 to 92.3. In U.P., Punjab and Delhi, in the year1966, the percentage of disputes settled during conciliation was60, whereas in Rajasthan it was 40. In the southern region,conciliation is reported to be more successful in Kerala, wherethe percentage of disputes settled ranged around 80.1 Thoughstatistics are not available for Maharashtra and Gujarat, theopinion evidence in these States shows that the machinery onthe whole has given a fair measure of satisfaction. It suggeststhat in many cases the success attributed to conciliation is duemerely to the legal requirement to register the agreement. Also, asection of employers’ and workers’ organisations feels thatmany settlements reached in conciliation are over minor issues.As against this mixed reaction to the working of the concilia-tion machinery, both employers and workers have expresseddissatisfaction over certain specific aspects of its functioning,such as the delays involved, the casual attitude of one or theother party to the procedure and lack of adequate background inthe officer himself for understanding major issues.Delays in conciliation are attributed partly to excessive work loadon officers and partly to procedural defects. The evidence showsthat delays occur in conciliation often for reasons which arebeyond the control of the officer. Initially the parties supplyscanty information and adjournments are sought to collectadditional information. On occasions, proceedings are ad-journed at the instance of one or the other party or even both,to enable them to settle the matter. Since conciliation involves agood deal of persuasion and is a process of give and takehelped by a third party, such adjournments become inevitable

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and have to be allowed. There are several cases, however, wherea party seeks adjournment and the other acquiesces in itinformally. And this causes some difficulty in sticking to thetime-limit set for conciliation. While on the basis of thestatistical information we have, it is difficult to establish theextent of such delays, it would be unfair to criticize the machin-ery on this account.We feel, however, that the attitude of the panics to conciliationis extremely important for the success or failure of the officers’efforts. Conciliation is looked upon very often by the parties asmerely a hurdle to be crossed for reaching the next stage. Thereis, therefore, a casualness about it in the parties and a habitualdisplay of such casualness conditions the conciliator also intothat attitude. The representatives sent by the parties to appearbefore him are generally officers who do not have the power totake decisions or make commitments; they merely carry thesuggestions to the concerned authorities on either side. Thisdampens the spirit of a conciliator. We have been told byemployers’ and workers’ organizations alike that the conciliationmachinery is weakened because of its falling into this type ofdisuse in recent years. Such disuse has hindered the officers inacquiring a breadth of interest and depth of understanding inthe disputes before them.Reverting to the other aspect of delays in conciliation, it isdifficult to devise a yardstick for measuring the work-load of anofficer and to prescribe work norms for him. Work normssuggested to the Commission, such as 25 disputes of a generalnature and 50 individual disputes to be completed in a monthas proposed by one Stale, and 300 to 400 disputes per annumas suggested by one of our Working Groups, if applied to thenumber of cases dealt with at present in conciliation, would infact mean increasing the strength of the personnel manifold;and this may not be a practicable proposition.Among the other suggestions for improving the effectivenessof conciliation officers are: (i) prescribing proper qualificationsfor a conciliation officer and improving his quality by properselection and training; (ii) enhancing his status appropriately fordealing with persons who appear before him; (iii) givingadditional powers to the conciliator; and (iv) keeping him abovepolitical interference. While (i) is a general point which runsthroughout the administration, (ii) is a matter for a body likethe Pay Commission the appointment of which we haverecommended for Central Government employees.1 No directevidence of the effect of (iii) and (iv) on the officers’ efficiency isavailable and yet it would be prudent to recognize opinionevidence in this regard and give satisfaction to parties on thesepoints.We are in favour of a more basic rearrangement of conciliationwork which will bring about a qualitative change in the set-up.We recommend that the conciliation machinery, in order to befree from other influences—and we reiterate that such influenceshave not been proved before us—should be part of theIndustrial Relations Commission which we are recommending.This will introduce important structural, functional andprocedural changes in the working of the machinery as it existstoday. The independent character of the ‘Commission willinspire greater confidence in the conciliation officers. This will

also, in due course, improve the attitude of the parties towardsthe working of the conciliation machinery. We expect the partieswill be more willing to extend their co-operation to theconciliation machinery as now proposed and working indepen-dently of the :nor-mal labour administration. Apart from thisbasic change in the set-up of the conciliation machinery, there isneed for certain other measures to enable the officers of themachinery to function effectively. Among these are (i) properselection of personnel, (ii) adequate pre-job training and (iii)periodic in-service training through refresher courses, seminarsand conferences and for most of these, there is a good measureof support in the evidence.

Voluntary ArbitrationVoluntary arbitration as a method of resolving industrialconflicts came into prominence with the advocacy by MahatmaGandhi of its application to the settlement of disputes in thetextile industry in Ahmedabad. The BID Act and the BIR Actrecognised voluntary arbitration along with the machinery setup by the State for composing differences between employersand workers. The policies recommended in the Plans specificallymention voluntary arbitration. The I.D. Act was amended tomake a provision (Section 10-A) for joint reference of industrialdisputes to voluntary arbitration. But apart from the statutoryarrangement for recourse to voluntary arbitration, considerableemphasis is placed on this mode of setting disputes in officialpronouncements.In spite of all these Governmental efforts, resistance to the ideacontinues. The Code of Discipline (1958) reiterated the faith ofparties in voluntary arbitration and enjoined on employers andworkers to resort to it on failure of other methods of resolvingdifferences. In view of the continued reluctance of the parties,more particularly of the employers, the matter came up fordiscussion at various tripartite forums; but barring stray efforts,the situation of indifference to the idea continued throughoutthe period 1951—61. The Indian Labour Conference in August,1962 reiterated the need for a wider acceptance of voluntaryarbitration. But, as” against the emphasis in the Third Planwhich considered that voluntary arbitration should be thenormal practice in preference to recourse to adjudication, theConference felt “whenever conciliation fails arbitration will bethe next normal step except in cases where the employer feelsthat for some reasons1 he would prefer adjudication”. Aproviso, similar to the one which nullified in effect the opera-tion of the need-based minimum2, was added to thisresolution of the Conference also in the following words:The reasons for refusal to agree to arbitration must be fullyexplained by the parties concerned in each case and the matterbrought up for consideration by the implementation machineryconcerned.”the Industrial Truce Resolution, November 1962, while re-emphasizing voluntary arbitration, specified certain items whichwere amenable to this way of settling disputes. These werecomplaints pertaining to dismissal, discharge, victimization andretrenchment of individual workmen not settled mutually.To make voluntary arbitration more acceptable to the partiesand to coordinate efforts for its promotion Government hasrecently set up a National Arbitration Promotion Board

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(NAPB) with a tripartite composition. The Board will reviewthe position, examine the factors inhibiting wider acceptance ofthis procedure and suggest measures to make it more popular.The NAPB is also to evolve principles, norms and procedurefor the guidance of arbitrators and the parties. It would lookinto the causes of delay and expedite arbitration proceedings,wherever necessary, and also specify from time to time the typeof disputes which would normally be settled by arbitration inthe light of tripartite decisions. While we wish that the NAPBwill achieve its objectives, we are constrained to observe thatvoluntary arbitration has not taken root in spite of the influen-tial advocacy for it in different policy making forums. Factorswhich have contributed to the slow progress of arbitration, asmentioned in the evidence before us, inter alia, are: (i) easyavailability of adjudication in case of failure of negotiations; (ii)dearth of suitable arbitrators who command the confidence ofboth parties; (iii) absence of recognized unions which couldbind the workers to common agreements; (iv) legal obstacles;(v) the fact that in law no appeal was competent against anarbitrator’s award; (vi) absence of a simplified procedure to befollowed in voluntary arbitration; and (vii) cost to the parties,particularly workers.With little progress made in collective bargaining, which pre-supposes the existence of a recognized union representing allthe employees and a responsive employer, who together buildup over a period an attitude of mutual trust and an acceptanceof bona fides on the two sides, it is perhaps not a matter forsurprise that voluntary arbitration has so far had little success inIndia. We feel that with the growth of collective bargaining andthe general acceptance of recognition of representative unionsand improved management attitudes, the ground will becleared, at least to some extent, for wider acceptance of volun-tary arbitration. The National Arbitration Promotion Boardmay then have a better chance of success in the task of promot-ing the idea. The NAPB should pay special attention topreparing and building up suitable panels of arbitrators.

AdjudicationThe ultimate legal remedy for the settlement of an unresolveddispute is its reference to adjudication by the appropriateGovernment. The Industrial Disputes Act, 1947, currentlyempowers the appropriate Government to constitute a labourcourt, industrial tribunal or national tribunal to adjudicate in adispute. Association of assessors with a tribunal is permissiblefor expert advice.Matters to be referred to a labour court under the I.D. Act arebroadly: the propriety and legality of an order of the employer,application and interpretation of the Standing Orders, thelegality or otherwise of a strike or a lock-out, and discharge/dismissal including reinstatement, as listed in the SecondSchedule to the Act. Labour courts set up under State legislationalso deal with similar issues. Legal practitioners are permitted toappear before the labour courts or tribunals with the consent ofthe other party and with the permission of the court/tribunal.In the latter case, according to experience so far, the consent hasbecome a mere formality. Unlike the BIR Act, the I.D. Act doesnot provide for appeal against an order of the labour court. In

certain respects, a labour court/industrial tribunal has the powerof a civil court under the Code of Civil Procedure, 1908.Any matter listed in the Second or Third Schedule of the I.D.Act can be referred to an industrial tribunal/national tribunal,the authority for constituting the latter being the CentralGovernment. The Industrial Court under State legislation has,apart from adjudication functions, the power to entertainappeals against the decisions of the Registrar/ Labour Com-missioner/Labour Court/Wage Board constituted under therespective Acts.It cannot be denied that during the last twenty years theadjudication machinery has exercised considerable influence onseveral aspects of conditions of work and labour-managementrelations. Adjudication has been one of the instruments forimprovement of wages and working conditions and forsecuring allowances for maintaining real wages, for standardiza-tion of wages, bonus and introducing uniformity in benefitsand amenities. It has also helped to avert many work stoppagesby providing an acceptable alternative to direct action and toprotect and promote the interests of the weaker sections of theworking class, who were not well organized or were unable tobargain on an equal footing with the employer. As against theseadvantages, certain procedural detects and indeed fundamentalcriticism have been brought to our notice. On the proceduralplane we were told that adjudication is dilatory, expensive, andeven discriminatory as the power of reference vests with theappropriate Government. Most of the analysis which has beenmade in detail with reference to conciliation applies to adjudica-tion as well. On fundamentals, the objections are that thesystem of adjudication has failed to achieve industrial peace,that it has inhibited the growth of unions and has preventedvoluntary settlement of industrial disputes and growth ofcollective bargaining. We are of the view that while there arecertain procedural deficiencies in the present system which needto be remedied, there is some substance also in each of thefundamental objections mentioned above against the system.At the same time. we cannot help feeling that the disadvantagesare overstated. Adjudication was not conceived to prevent allwork stoppages; the fact that Government may not refer adispute to adjudication means that it should be settled, it needbe, by direct action. Trade unions have certainly been growingduring the period the adjudication system has been in vogue,and where conditions were favourable, voluntary settlement ofdisputes and collective agreements have been adopted in the lasttwenty years.The moot point is whether adjudication inhibits collectivebargaining and is antithetical to it. It certainly represents theavailability of a third party to settle disputes. But the system, asit has been applicable in our country, did not exclude bipartiteagreements. The parties have not been eligible to have suchthird party intervention directly and hence it could not inculcatein all cases a tendency to avoid mutual agreements. Theinfrequency of mutual negotiations cannot therefore be allaccounted for by the system of adjudication as it has developed.In fact, a major handicap has been the absence of a recognizedbargaining agent. But these issues cannot be decided on thebasis of empiricism, as we have no means of ascertaining what

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would have happened in the absence of adjudication. We have,therefore, to analyze its efficacy on a broader plane and in termsof its alternative viz., collective bargaining.The place of collective bargaining as a method of settlement ofindustrial disputes has been debated in India since long, almostsince the days of the Whitley Commission. The best justifica-tion for collective bargaining is that it is a system based onbipartite agreements, and as such, superior to any arrangementinvolving third party intervention in matters which essentiallyconcern employers and workers. This is recognized even in oursystem in principle, but in practice, there seems to be a prefer-ence for adjudication.The evidence appears to favour the increasing adoption ofcollective bargaining to settle disputes, and a gradual replace-ment of adjudication. The desire for a shift to collectivebargaining has, however, been tempered by a concern in somequarters for avoidance of work-stoppages and of unwarranteddisturbances in industrial peace; and in others, by the organiza-tional weakness of labour which cannot yet meet therequirements of effective collective bargaining. There is thus ageneral preference for collective bargaining with a built-inprovision for arbitration in the event of failure of collectivebargaining. The idea of leaving a certain area of disputes i.e.,public utility services and cases where national interests areinvolved—where adjudication should be permitted enjoys alarge measure of support. The majority view appears to favourthe introduction of collective bargaining subject to the abovesafeguards, in the organized sector, while retaining third partyintervention in sectors mentioned earlier and where workers arenot organized and conditions of work and wages have yet toreach a satisfactory level.The advocates of collective bargaining argue that the presentsystem, although giving lip sympathy to collective bargaining,has only perpetuated adjudication; that adjudication, which wasexpected to be a temporary measure till such time as labourcame of age and could bargain with employers on an equalfooting has failed to fulfill the expectations; and that it has, bythe very logic of its functioning, inhibited the growth of tradeunions and made them litigious. The only way, it is argued, is awholesale rejection of reliance on a third party for settlement ofdisputes and acceptance of collective bargaining with all itsimplications, including the right to strike/lockout. In suggest-ing this, it is conceded that collective bargaining in the initialstages may give rise to industrial strife and work-stoppages on asomewhat larger scale than at present, but there is confidencethat this is bound to be a temporary phase and the situationwill stabilize after an initial period of uncertainty.Equally strong arguments have been urged in favour ofcontinuing adjudication. It is staled that while adjudication hasits defects, it has by and large succeeded in bringing about somemeasure of industrial peace in the country; that industrialrelations would have been worse, and work-stoppages longerand indeed, what is more important, conditions of workwould have been less attractive than what they are today, ifthings had been left to be settled by collective bargaining. Thosewho argue on these lines feel that the best course in the presentsituation is to carry on with the existing procedures, trying at the

same lime to remove the obvious defects in the system throughsuitable improvements/modifications to make it moreacceptable. Four specific points made in this connection are: (i)the circumstances which necessitated the provision of compul-sory adjudication when the industrial disputes law was enactedin 1947, still continue; (ii) the parties, particularly unions, arestill unprepared and incapable, because of organizational andother weaknesses, to shoulder full responsibilities of collectivebargaining; (iii) immediate withdrawal of State interventionthrough adjudication will lead to chaos in the industrial field,which the country can ill afford; and (iv) there is always the thirdparty to the dispute, viz., the community; and the State, asrepresenting the community, must have the right to interveneand compel the parties to submit to the decision of anadjudicator. For reasons stated in an earlier paragraph, empiricaldata can be no guide to settle this controversy.The arguments in favour of either system cannot be settled ona theoretical plane nor on the basis of foreign experience. Withreference to the latter, it could be said that the system adoptedin any country will depend on a complex of circumstanceswhich cannot be easily classified. The figures (Table below) ofman days lost due to work stoppages per 1,000 personsemployed in mining, manufacturing, construction and trans-port industries for two five-year periods, in three countrieswhich have a political democracy functioning and also a similarsystem for settlement of industrial disputes, seem to point tothe same fact.

TABLE: Man days lost due to Work-stoppages per 1,000Persons EmployedThe variations are, indeed, striking. For Australia, comparablefigures for the two periods are 406 and 350 respectively. Onecannot on this basis accept collective bargaining, because theSwedish data are more favourable than the Australian; nor canone accept adjudication, because Australia makes ;a bettershowing than the U.S.A.Country 1955—59 1960—64(1) (2) (3)Sweden 21 6UnitedKingdom 346 242 U.S.A. 1366 722In finding a way out, we recognize that adjudication as it hasdeveloped in India has tended to prolong disputes; allegationsof political pressures, though often without foundation, havebeen there. Discretion, though used by the appropriateGovernment in a fair manner, may appear to the workers/employers affected to have been unfairly used. On the otherhand, collective bargaining as it has developed in the West maynot be quite suitable for India; it cannot appropriately co-existwith the concept of a planned economy where certain specifiedproduction targets have to be fulfilled. Though we are notconvinced that collective bargaining is antithetical to consumerinterests even in a sheltered market, we envisage that in ademocratic system pressure on Government to intervene or notto intervene in a dispute may be powerful. It may hardly be ableto resist such pressures and the best way to meet them will beto evolve a regulatory procedure in which the State can be seenin the public eye to absolve itself of possible charges of politicalintervention. The requirements of national policy make itimperative that State regulation will have to coexist withcollective bargaining. At the same time, there are dangers in

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maintaining status quo. There is a case for shift in emphasis andthis shift will have to be in the direction of an increasinglygreater scope for, and reliance on, collective bargaining. But, anysudden change replacing adjudication by a system of collectivebargaining would neither be called for nor practicable. Theprocess has to be gradual. A beginning has to be made in themove towards collective bargaining by declaring that it willacquire primacy in the procedure for settling industrial disputes.It follows that conditions have to be created for the success ofthis proposed change-over. An important pre-requisite of it isthe grant of union recognition. We have to evolve satisfactoryarrangements for- union recognition by statute as also to createconditions in which such arrangements have a chance to succeed.Apart from this, we have to indicate the place which strike/lock-out will have in the scheme we propose. Collective bargainingcannot exist without the right to strike/lock-out. We discussthese two aspects but in the reverse order.

Strike/Lock-outConceptually, the right to strike/lockout is recognized in alldemocratic societies; reasonable restraint on the use of this rightis also recognized. The degree of freedom granted for itsexercise varies according to the social, economic and politicalvariants in the system. For safeguarding public interest, theresort to strike/lockout and, in some cases, the duration ofeither are subject to rules and regulations either voluntarilyagreed to by the par-tics or statutorily imposed. This has beenthe criterion underlying the earlier legislation for regulatingindustrial relations in the country. In our current context, theconnected issues have to be viewed against the requirements ofa planned economy.Under the Industrial Disputes Act, 1947, a distinction is madebetween a strike/ lock-out in public utilities and in otheremployments. Industries such as Railways, Posts and Tele-graphs, those which supply power, light or water and anysystem of public conservancy or sanitation are defined as publicutility services under the Act, and in respect of certain othersenumerated in the First Schedule to the I.D. Act, the appropri-ate Government is given the discretion to declare them as publicutility services. The Industrial Disputes Act, 1947, makes astrike (or lock-out) in the public utility service illegal if it takesplace (i) without giving to the employer a notice of strike withinsix weeks before striking; (ii) within fourteen days of givingsuch notice; (iii) before the expiry of the date of strike specifiedin any strike notice, and (iv) during pendency of conciliationproceedings—and seven days after the conclusion of suchproceedings. In industries in general, a strike or lock-out isprohibited during the pendency of conciliation, arbitration oradjudication proceedings. Besides, the appropriate Governmentis empowered to issue an order prohibiting the continuance ofany strike or lockout in respect of any dispute when a referenceis made to a Court/Board/Tribunal.These provisions by themselves do not seem to have succeededin curtailing work-stoppages;’ indeed they were not meant toprevent all stoppages. Annexure I gives data on work-stoppagesdue to industrial disputes since 1946. Labour has also devisednew forms of agitation such as go-slow work-to-rule etc whichfall beyond the purview of statutory provisions relating to

strikes. A suggestion has been made to us to circumscribe allsuch forms of agitation by suitably widening the definition ofstrikes. We do not consider that legal restrictions alone will beof any help in reducing strikes or containing the new forms oflabour protest. Unless the Government is prepared to takeeffective action against illegal strikes, and Government may notfind it expedient to do so in several cases, a mere classificationof concerted action on the part of workers/employers as illegalwill only bring the law into disrepute. If, on the other hand,Government is to enforce penalties for an illegal strike/lock-out,it is necessary to make the definition as simple as possible. Newforms of labour protests should be treated as misconductpunishable under the service rules or under the standing orders.We would like to refer here to a form of industrial unrest,namely, ‘gherao’ which came to be increasingly resorted to inone part of the country in recent years. Our Study Group onIndustrial Relations (Eastern Region) which examined thisproblem came to a majority conclusion, one member dissent-ing, that ‘gheraos’, apart from their adverse effects on industryand economy of the country, strike at the very root of tradeunionism. We endorse this view and deprecate resort to gheraoswhich invariably tend to inflict physical duress on the person(s)affected and endanger not only industrial harmony but alsocreate problems of law and order. If such means are to beadopted by labour for realization of its claims, trade unionsmay come into disrepute. It is the duty of all union leaderstherefore to condemn this form of labour protest as harmful tothe interests of the working class itself. Gheraos cannot betreated as a form of industrial protest since they involve physicalcoercion rather than economic pressure. In the long run, theymay affect national interest.The general view regarding strike/ lock-out as revealed in theevidence before us is that the right to direct action should beallowed following the failure of all the procedures available forsettlement of disputes, except in the case of specified indus-tries/services wherein a stoppage of work may endanger publicinterest or affect the nation’s economy or threaten the securityof the State. Even those who are opposed to any State interfer-ence in industrial disputes concede this point.The democratic ideals of the State prevent it from abridgingindividual freedom, hut its socialist objectives justify theGovernment’s regulation of such freedom to harmonize it in areasonable measure with the interests of the society. Whatseems called for, therefore, is a reconciliation of these twopoints of view, While we are not in favour of a ban on the rightto strike/lock-out, we are also not in favour of an unrestrictedright to direct action. In our view the right to strike is ademocratic right which cannot be taken away from the workingclass in a constitutional set-up like ours. Even from the practicalpoint of view, we will not favour such a step. Taking away theright of the workers to strike, may only force the discontent togo underground and lead to other forms of protest which maybe equally injurious to good labour-management relations. Atthe same time, there are certain essential industries/serviceswherein a cessation of work may cause harm to the community,the economy or the security of the nation itself and as such,even this right may justifiably be abridged or restricted, pro-

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vided, of course, a specific procedure is laid down for remediesand redressal of grievances. Therefore, in such industries, theright to strike may be curtailed but with the simultaneousprovision of an effective alternative like arbitration or adjudica-tion to settle disputes. We do not wish to enumerate theindustries/services that should be classified as ‘essential’; thelisting of ‘essential’ industries should be left to the Parliamentto decide.It has been brought to our notice that there are instanceswherein the leadership of a union has called for a strike withoutconsulting the membership and sometimes even whenmembers were known to be against the strike. No statisticalevidence is available to show how widespread this situation is.It can be remedied only by providing for a compulsory strikeballot before a call for direct action is given. One cannot also becertain that once a dispute has gone on to the stage of a strikenotice, the leadership will not be in a position to influence thebulk of their members to vote in favour of it. We are inclinedto think that our situation in regard to the effects that flowfrom cessation of work and consequent losses, direct andindirect, warrants the imposition of certain restrictions onrecognized unions before launching a strike. We, therefore,suggest that every strike should be preceded by a strike ballot,open to all members of the union concerned and that the strikedecision must be supported by 2/3rd of members present andvoting. The notice of strike should contain a clause to showthat such ballot has been taken and the requirement, about theneeded majority has been satisfied.In this connection, we would attach importance to the issue ofa prior notice of strike/lock-out. At present, the law providesfor such a notice in case of public utility services only. We wouldrecommend its extension to all industries/services.The present provisions in the I.D. Act about other restrictionson strike/lock-out and their regulation seem to meet thesituation subject to some modifications that may be called forin the light of our other recommendations.

Recognition of UnionsWe attach considerable importance to the matter of recognitionof unions. Industrial democracy implies that the majorityunion should have the right to sole representation i.e., the rightto speak and act for all workers and to enter into agreementswith the employer. That the need for a provision for unionrecognition has been realized is evident from the provision inthe BID Act and its successor the BIR Act and certain otherState Acts (Madhya Pradesh and Rajasthan), the amendmentincorporated (but not enforced) in the Trade Unions Act, andthe Code of Discipline.Since we will have occasion to refer to the scheme of recognitionoutlined in the BIR Act later, we propose to mention it in somedetail. The BIR Act, 1916 provides for the classification ofregistered trade unions as (i) Representative Unions (having amembership of not less than 15 per cent employees in anyindustry in a local area); (ii) Qualified Unions (5 per centmembership in any industry in a local area); and (iii) PrimaryUnions (15 per cent of employees in an undertaking). Amongthe unions in a ‘local area’, the order in which the unions willget representation will be the same as indicated above. Unions

in each category enjoy certain privileges, as indeed they haveobligations. The Act further stipulates that in case no union hasthe recognised status, workers can either elect their ownrepresentatives or allow the Government Labour Officer tospeak on their behalf to the employer. Legislation in MadhyaPradesh and Rajasthan has corresponding provisions forrecognition. In Bihar, a tripartite committee decides howrecognition should be granted to a union.The need for a provision for recognition of unions was stressedin the Second Plan.1 Because of the desire to go slow onlegislation, recognition was provided for on a voluntary basis inthe Code of Discipline. According to the criteria in the Code, aunion claiming recognition should have been functioning atleast for a period of one year as a registered union and shouldhave the specified membership. In case more than one union isfunctioning in an establishment, the membership of all eligibleunions is verified by the Chief Labour Commissioner (Central)if the establishment falls under the Central sphere, or the StateImplementation Officer/the State Labour Commissioner inother cases, in accordance with the procedure evolved at thetripartite Standing Labour Committee. Once a union isrecognized under the Code, it is entitled to enjoy this status forat least two years from the date of recognition. A union whichdoes not observe the Code can be de-recognized.We have thus, over the last ten years, the experience of securingrecognition for a union both on a statutory and on a voluntarybasis. It shows that the former has distinct advantages. On thispoint there is a fair measure of support in the evidence beforeus. It would be desirable to make union recognition compul-sory under a Central law, in all undertakings employing 100 ormore workers, or where the capital invested is above a stipulatedsize. A trade union seeking recognition as a bargaining agentfrom an individual employer should have a membership of atleast 30 per cent of the workers in the establishment. If it is foran industry in a local area, the minimum membership shouldbe 25 per cent. Where more unions than one contend forrecognition, the union having a larger following should berecognized.Serious differences exist, however, on the manner in which thefollowing of a union is to be determined: whether it should beby (a) verification of the fee-paying membership of the unions,or (b) election by secret ballot. The issue has long been debatedin Central and State Legislatures, tripartite forums and publicplatforms, but without reaching unanimity. In the evidencebefore us, we find support in every interest—Governments,employers, workers and independent observers— to one or theother procedure evenly balanced. Advocates of one method orthe other did not seem to recognize the ‘whip’ of their centralorganizations. That is also the reason why the issue has acquiredmore importance.Those in favour of verification of membership base theirpreference on the premise that (i) it is the support of fee paying,stable membership of a registered trade union that aloneshould entitle it to the representative status, and (ii) a regularcheck by a competent authority can satisfactorily determinewhether or not the membership claims are genuine. Regularpaying membership ensures financial viability of a union and

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enables it to discharge effectively its other responsibilities. Theyconcede that membership could be open to inflation and evenmanipulation, but contend that the remedy should be tointroduce a greater measure of vigilance in verification arrange-ments, if necessary by entrusting them to an independentauthority They oppose secret ballot on the ground that it wouldintroduce topical political issues about which a union may notbe directly concerned as a union and create an election atmo-sphere, with some leaders making promises which they willnever fulfill. Workers in our country, according to this view, arenot yet used to making a rational choice of what is good andcreative when confronted with demagogic slogans and rousingof emotional sentiments which can be whipped up over anyindustrial or non-industrial issue. Moreover, regular paymentof union dues, on which verification relies, is itself an openvote of workers in favour of a union which submits toverification. Supporters of this line of thought question theappropriate-ness of the analogy of political choice throughadult franchise, because there can be no ‘Government andopposition’ in the running of industry. Also secret ballot, inthis view, will give a severe blow to the trade union movementitself. In the absence of any qualification prescribed for eligiblevoters, there can be no incentive for workers to join a union.The supporters of secret ballot, on the other hand, base theircase primarily on the ground that it is the most democratic wayof expressing a choice. Membership verification as a basis forselection of the representative union is considered unsatisfac-tory as it is at best an indirect method. When membershiprecords and accounts of subscriptions received are often in anunsatisfactory state, and there are admittedly many questionableways of boosting membership claims, the task of verification,according to this view, becomes complex. There is the addeddisadvantage of delay built into the procedure itself. Samplingmethod. however, effective in other aspects of human activity,should not be used in the sensitive area of union recognition.Processes similar to those used in choosing the Government ofa country are well recognized by workers; the basis of represen-tation in industrial democracy need be no different from that ofany other institution. In this view, the Indian worker is nowgrown up to know what is good for him and to make a rationalchoice. If he can be discerning in the choice of political leaders, itwould not be right to deny him the responsibility of choosingrepresentatives who will give him economic satisfaction. Thefear of wild promises and rousing of passions swaying theworker can be exaggerated. Such false promises cannot beexpected to win ballots all the time.The Council of Indian Employers has suggested an alternativewhich provides for verification as also election by secret ballot incertain circumstances. According to this proposal, the member-ship of the contending unions has to be verified by theconcerned authority and the majority union which should haveat least 30 per cent membership is to be given recognition. Incase, however, two or more unions have 30 per cent or moremembership, and the difference between the membership ofany two of them is less than 10 per cent, a secret ballot of allworkers in the establishment should be arranged to determinethe most representative union.

But whether it is verification or secret ballot, the trend of theevidence is unmistakably in favour of an independent authorityto deal with various matters relating to recognition. Such anauthority alone would be able to inspire confidence among theunions/parties and eliminate suspicions of favoritisms in thisvital area. Although State Governments, public sector employ-ers and some others have suggested the continuation of thepresent arrangement, viz., verification through governmentmachinery, they do not seem to object to the setting up of anindependent agency for this purpose. Several study groupsincluding the Study Group on Labor Legislation and theIndustrial Relations Study Groups and a number of employersand trade union organizations have expressed a strong prefer-ence for the setting up of an independent authority to deal withthese matters. As regards the basis for recognition, however, theEastern and Western Region (Industrial Relations) StudyGroups have favored secret ballot by all workers while theSouthern Region Group has favored verification of member-ship. The Northern Region Study Group and the Study Groupon Labor Legislation did not express themselves in favor ofcither, but left the choice of method to the authority concerned.Several Industry Study Groups have shown preference for secretballot.Much of the opposition to membership verification today isthe outcome of fears of manipulation and interference by theadministrative authority fears which are not always unfounded.It is reasonable to expect that verification will become moreacceptable, if entrusted to an independent quasi-judicialauthority Similarly, election by secret ballot may find favour withthose who now oppose it, when an independent authorityconducts it, strictly according to accepted regulations. The bestcourse, therefore, seems to be to leave the choice of method, inany particular case, to the discretion of an independent author-ity. We suggest that this task should be entrusted to theIndustrial Relations Commission(s) proposed by us. TheCommission will have the power to decide the representativecharacter of unions either by examination of membershiprecords, or if it considers necessary, by holding an electionthrough secret: ballot open to all employees.1 We are confidentthat this proposal would be welcomed by all parties. theCommission would deal with the recognition work in itsvarious aspects: (i) determining the level of recognition—-whether plant industry, center-cum-industry—-to decide themajority union, (ii) certifying the majority union as the recog-nized union for collective bargaining, (iii) generally dealing withother related matters. The union thus recognized will retain itsstatus for a period of two years and also thereafter till its statusis effectively challenged.

Rights of Recognized and Other UnionsA union recognized as the representative union under anyprocedure, should be statutorily given, besides the right of solerepresentation of the workers in any collective bargaining,certain exclusive rights and facilities to enable it to effectivelydischarge its functions. Among these are the rights:i. To raise issues and enter into collective agreements with

employers on general questions concerning the terms ofemployment and conditions of service of workers in an

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establishment or, in the case of a representative union, in anindustry in a local area;

ii. To collect membership fees/subscriptions payable bymembers to the union within the premises of theundertaking; or demand check-off facility;

iii. To put up or cause to be put up a notice board on thepremises of the undertaking in which its members areemployed, and affix or cause to be affixed thereon, noticesrelating to meeting’s, statements of accounts of its incomeand expenditure and other announcements which are notabusive, indecent, inflammatory or subversive of discipline;

iv. To hold discussions with the representatives of employeeswho are the members of the union at a suitable place orplaces within the premises of office/factory/ establishmentas mutually agreed upon;

v. To meet and discuss with an employer or any personappointed by him for the purpose, the grievances of itsmembers employed in the undertaking;

vi. To inspect, by prior arrangement, in an undertaking, anyplace where any member of the union is employed;

vii.To” nominate its representatives on the grievance committeeconstituted under the grievance procedure in anestablishment;

viii.To nominate its representatives on statutory or non-statutory bipartite committees, e.g.. works committees,production committees, welfare committees, canteencommittees, and house allotment committees. On most ofthese points there is a fair measure of unanimity in theevidence before us.

We consider that industries, in which workers are organized onan industry/area basis and in which collective bargaining hasdeveloped at the industry/area level, should maintain andencourage this practice of recognizing unions at the industry/area level. Such recognition may give rise to certain problems inregard to the circumstances in which it should be granted and inregard to the rights and functions of plant-wise unions vis-avisthe industry/area unions, particularly when the majority unionat the plant level has no affiliation with the recognized industry/area union. It has been brought to our notice that employersof units in which the industry level recognized union has nofollowing, find themselves in a difficult situation whenconfronted by the demands of the plant union, which theycannot ignore. This situation can only be set right by a properdemarcation of the rights and functions of the industry/arearecognized unions and plant-wise unions, and by ensuring thatrecognition at the industry/area level is conferred subject tocertain well defined conditions. We consider that industry-wiserecognition is desirable, wherever possible. We are, therefore,not in favour of recognition being granted to plant unions inan area/industry wherein a union has been recognized for anindustry/area as a whole.We now come to the related question of the rights to be givento the minority (unrecognized) unions. The view taken by theIndian Labour Conference in 1964 was that minority unionsshould enjoy the light to represent individual grievances relatingto discharge, dismissal and other conditions of service of their

members. It was argued by some that. the grant of this rightmight to a certain extent, reduce the strength of the majorityunion. When the majority union is recognized as the solebargaining agent on behalf of all the employees in the under-taking, the question of some employees being represented by aminority union should not arise in so far as general demands/issues are concerned. However, in regard to certain matters ofindividual rights and grievances and their representation, theopinion has been in favour of giving some rights, though of avery limited nature, to the minority unions. We recommendthat the minority unions should be allowed only the right torepresent the cases of dismissal and discharge of their membersbefore the labour court .

Our ApproachWhile we discuss the arrangements for the settlement ofindustrial disputes when they arise, we must emphasize thatreal industrial harmony is possible only when conditions arecreated for avoidance/prevention of disputes. While noprocedure, however carefully worked out, can entirely eliminateindustrial disputes and conflict, frequent discussions betweenthe employer and the representatives of workers will be ofconsiderable assistance in reducing the areas of conflict. Thesystem of industrial relations as it has developed since Indepen-dence has kept avoidance of conflict/disputes as one of its twobasic objectives, the other being expeditious settlement ofdisputes when they do arise. The role of Government inpursuit of the former objective cannot be gainsaid. Emphasishas been laid on the creation of the necessary atmosphere forthe development of labour management cooperation throughthe adoption of a suitable institutional frame-work for jointconsultation, redress of grievances and the like. It is perhapstrue that these procedures which will be discussed in the nextchapter in detail were not as effective as expected and thisobjective could only be partly realized. This is due as much tothe absence of certain important factors, such as the existence ofa united trade union movement and the provision for recogni-tion of unions as to the emphasis laid on compulsoryadjudication for the settlement of disputes. Whatever be thenature or causes of disputes, most of them can be amicablysettled, given the goodwill and desire to come to a settlementon the part of the employers and the employees. It is in thiscontext that we emphasize the adoption of procedures whichwill promote effective bipartite consultations and collectivebargaining between the parties.

Industrial Relations CommissionWe have referred earlier to certain weaknesses in the working ofthe existing industrial relations machinery viz., the delaysinvolved, the expenditure, the largely ad hoc nature of themachinery, and the discretion vested in the Government in thematter of reference of disputes. There have also been allega-tions of political pressures and interference While many of theallegations may not be true, we cannot be oblivious to the factthat in some cases the decisions of Government. though fair,have not appeared to be so to the aggrieved parties. And thisaspect cannot be entirely ignored in training our recommenda-tions. The evidence before us is strongly in support ofreforming the industrial relations machinery, so as to make it

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more effective and more acceptable. What is called for, therefore,is a formal arrangement which is independent in character,expeditious in its functioning and which is equipped to buildup the necessary expertise. We consider that it would not beenough to secure some of these improvements throughsuitable modifications in the existing machinery . A more basicchange is called lor, and this can be ensured only through thereplacement of the present ad hoc machinery, by permanentmachinery, which will be entirely independent of the adminis-tration. We. therefore, recommend the setting up of anIndustrial Relations Commission (IRC) at the national andState levels, for settling interest disputes, broadly coveringmatters listed in the Third Schedule to the I.D. Act.1The IRC would combine in itself both the conciliation andadjudication functions. We believe that there is a definiteadvantage in having the conciliation machinery working withinthe IRC, since both will be concerned with ‘interest’ disputesthough at different stages. An interchange of knowledge,information and expertise can thus be ensured. We have alsorecommended in an earlier section that all matters concerningrecognition of a union as a representative union for purposesof collective bargaining should be entrusted to an independentauthority. We consider that it would he advantageous to entrustthis function also to the proposed IRC. It would obviate theneed for creating another independent body. In addition to theIRC, we also suggest the setting up of Labour Courts whichwould be entrusted with the judicial functions of interpretationand enforcement of all labour laws, awards and agreements.The set up of the proposed machinery will broadly be on thefollowing lines:

A The Industrial Relations Commission (IRC):

i. There should be a National Industrial RelationsCommission appointed by the Central Government forindustries for which that Government is the appropriateauthority. The National IRG would deal with such disputeswhich involve questions of national importance or whichare likely to affect or interest establishments situated inmore than one State, i.e., disputes which are at present dealtwith by National Tribunals.

ii. There should be an Industrial Relations Commission ineach State for settlement of disputes for which the StateGovernment is the appropriate authority;

iii. The National/State IRC will have three main functions: (a)adjudication in industrial disputes, (b) conciliation and (c)certification of unions as representative unions.

iv. The strength of the National/State Commission should bedecided taking into account the possible load on it and theneed for expeditious disposal of cases; its membershipshould not exceed seven.

v. The Commission should be constituted with a personhaving prescribed judicial qualifications and experience as itsPresident and equal number of judicial and non-judicialmembers; the non-judicial members need not havequalifications to hold judicial posts, but should beotherwise eminent in the field of industry, labour ormanagement;

vi. Judicial Members of the National Indus ~ trial RelationsCommission, including its President, should be appointedfrom among persons who are eligible for appointment asJudges of a High Court;

vii.The terms and conditions of service and the age ofsuperannuation of the judicial members of the National/State IRC should be similar to those of the judges of theHigh Courts.

viii.The President of the National Industrial RelationsCommission will be appointed by the Union Governmentin consultation with a committee consisting of the ChiefJustice of India, the Chairman of the Union Public ServiceCommission (UPSC) and the senior most Chief Justice inthe High Court

ix. The other members of the National Industrial RelationsCommission will be appointed by the Union Governmentin consultation with the Chief Justice of India, theChairman of the U.P.S.C and the President of the NationalIndustrial Relations Commission;

x. In regard to the State Industrial Relations Commission, thePresident of a State IRC will be appointed by the StateGovernment in consultation with the Chief Justice ofIndia, the Chief Justice of the State and the Chairman ofthe State Public Service Commission;

xi. The other members (of a State Industrial RelationsCommission will he appointed by the State Government inconsultation with the Chief Justice of the State High Court,the Chairman of the State Public Service Commission andthe President of the State Industrial RelationsCommission;

xii. The Conciliation Wing of the Commission will consist ofconciliation officers with the prescribed qualifications andstatus. In the cadre of conciliators, there will be personswith or without judicial qualifications. Those who havejudicial qualification would be eligible for appointment asjudicial members of the Commission after they acquire thenecessary experience and expertise. Others could aspire formembership in the nonjudicial wing;

xiii. The Commission may provide arbitrators from amongst,its members/officers, in case parties agree to avail of suchservices;

xiv. The Commission may permit its members to serve asChairmen of the Central/ Stale Wage Boards/Committeesif chosen by the Government. for such appointment

xv. The functions relating to certification of unions asrepresentative unions will vest with a separate wing of theNational State IRC. The National IRC may, where itconsiders necessary, get the following of the contendingunions determined by the State IRCs.

The procedure for the settlement of disputes would be asfollows:i. After negotiations have failed and before notice of strike /

lock-out is served, the parties may agree to voluntaryarbitration and the Commission will help the parties inchoosing an arbitrator mutually acceptable to them.

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ii. After negotiations have failed and notice of strike/lock-outhas been served, cither party may approach the Commissionfor naming a conciliator within the Coin-mission to helpthem in arriving at a settlement during the period coveredby the said notice.

iii. In essential industries/services, when collective bargainingfails and when the parties to the dispute do not agree toarbitration, either party shall notify the IRC, with a copy tothe appropriate Government, of the failure of suchnegotiations, whereupon the IRC shall adjudicate upon thedispute and its award shall be final and binding upon theparties.

iv. 1 In the case of “Others” (non-essential industries/’services), following the failure of negotiations and refusalby the parties to avail of voluntary arbitration, the IRC, afterthe receipt of notice of direct action (but during the noticeperiod), may offer to the parties its good offices forsettlement. After the expiry of the notice period, if nosettlement is reached, the parties with be free to resort todirect action. If direct action continues for 50 days. It will beincumbent on the IRC to intervene and arrange forsettlement of the dispute.’

v. 1 When a strike or lock-out commences, the appropriateGovernment may move the Commission to call for thetermination of the strike/lock-out on tile ground that itscontinuance may affect the security of the State, nationaleconomy or public order, and if after hearing theGovernment and the parties concerned the Commission isso satisfied, it may for reasons to be recorded call on theparties to terminate the strike/lock-out and file theirstatements before it. Thereupon the Commission shalladjudi-cate on the dispute.

vi. (a) If a State IRC. is seized of any dispute and it appears tothe Central Government that the decision on the saiddispute is likely to have an impact on similar industrialundertakings in other States, it will be open to the CentralGovernment to move the National IRC; to take the saiddispute on its file. When such an application is made theNational IRC shall hear the parties concerned, and if itcomes to the conclusion that it is necessary to take the caseon its file. it shall call for the papers in relation to the saiddispute from the State TRC and shall proceed to deal withand decide the dispute.

b. Similarly if a State IRC is seized of any dispute and itappears to the National IRC that the decision on thedispute is likely to have an impact on similar industrialundertakings in other States, and if after hearing the partiesthe National IRC comes to the conclusion that it isnecessary to take the case on its file, it will be open to theNational IRC to call for the papers in relation to the saiddispute from the State IRC and decide the dispute onmerits.

vii. When a State IRC is possessed of any dispute, and duringthe hearing it comes to the conclusion that the decision onthe said dispute will have an impact on similar industrialundertakings in other States and that it is desirable that thedispute should be tried by the National IRC, it may, after

hearing the parties concerned transmit the case to theNational IRC which with thereupon try the said dispute.

viii. Where a dispute is brought before the National IRC, andthe Commission after hearing the parties comes to theconclusion that it may be desirable or expedient that thesaid dispute should be dealt with by the appropriate StateIRC it may remit the case to the said State IRC for disposaland on receiving the record of the said dispute, the StateIRC shall proceed to deal with it.

ix. If the Commission substantially grants the demands insupport of which the strike was called and comes to theconclusion that the said strike was justified because of therefusal of the employer to grant the said demands, theCommission while making its award may direct theemployer to pay the employees their wages during the strikeperiod.

x. In case a strike becomes necessary as a result of the changessought to be introduced by the employer in the terms andconditions of employment of his employees and theCommission comes to the conclusion that the change(s)was/ were not justified and the strike was justified, theemployees with be entitled to wages for the period ofstrike.

xi. If the demands in support of which the strike was calledare not granted by the Commission and it holds that thestrike was unjustified, wages for the period of the strikewith not be granted.

xii. If the Commission holds that demands which led to thelock-out were justified and the lock-out was not justified,the Commission in granting the demands may order thatthe employees should be paid their wages during the periodof the lock-out.

xiii. If the Commission holds that the demands were notjustified and the lockout was justified the employees willnot he entitled to claim wages for the period of the lock-out.

xiv. If during the pendency of the strike or thereafter, theemployer dismisses or discharges an employee because hehas taken part in such strike, it would amount to unfairlabour practice’ and on proof of such practice, the employeewill be entitled to reinstatement with back wages.

xv. All collective agreements should he registered with the IRC.xvi. An award made by the IRC in respect of a dispute raised by

the recognised union should be binding on all workers inthe establishments) and the employer(s).

B Labour CourtsIn addition to the Industrial Relations Commission, we alsosuggest the setting up of standing Labour Courts which wouldbe entrusted with judicial functions of interpretation andenforcement of all labour laws, awards and agreements Thesecourts with deal broadly with disputes relating to mattersmentioned in the Second Schedule of the ID. Act, in respect ofthe industrial relations issues brought to them.

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i. There will be a labour court in each State constituted ofjudicial members only. The strength and location of suchcourts will be decided by the appropriate Government;

ii. Members of the labour court will be appointed byGovernment on the recommendations of the High Court.Generally, the Government should be able to choose from apanel given by the High Court in the order in which thenames are recommended;

iii. Labour courts will deal with disputes relating to rights andobligations, interpretation and implementation of awardsof either the National or State IRC and claims arising outof rights and obligations under the relevant provisions oflaws or agreements, as well as disputes in regard to unfairlabour practices and the like.

iv. Labour courts will thus be the courts where all disputesspecified in clause (iii) will be tried and their decisionsimplemented. Proceedings instituted by parties asking forthe enforcement of rights falling under the aforesaidcategories will be entertained by labour courts which will actin their execution jurisdiction in that behalf. Appropriatepowers enabling them to execute such claims should beconferred on them

v. Appeals over the decisions of the labour court in certainclearly defined matters, may lie with the High Court withinwhose area/jurisdiction the court is located;

Unfair Labour PracticesProvision of legal protection to unions is a corollary to thepromotion of healthy industrial relations and recognition ofunions as the sole representatives of workers. It is, therefore,important to write into the law provisions to prohibit andpenalise unfair labour practices, on the part of both theemployer and the recognised union. An attempt was made todefine these practices both in the Trade Unions (Amendment)Act, 1947 (not enforced) and in the industrial Relations Bill,1950. The Code of Discipline (1958) contained a reference tounfair labour practices to be avoided by unions and manage-ments. In February, 1968, the Government of Maharashtra setup a Committee on Unfair Labour Practices’ to define activitieswhich should be treated as unfair labour practices on the part ofemployers and workers and their organisations and to suggestaction to be taken. In its unanimous report presented to theMaharashtra Government in July, 1969, the Committee listedvarious arts of omission and commission which constituteunfair labour practices. The lists are at Annexure II. These couldform a suitable basis for the enumeration of unfair labourpractices.We recommend that the law should enumerate various unfairlabour practices on the part of employers and on the part ofworkers’ unions; and provide for suitable penalties for commit-ting such practices. Complaints relating to unfair labour practiceswill be dealt with by the labour courts. They shall have thepower to impose suitable punishments/penalties which mayextend to de-recognition in case of unions and heavy fine incase of an employer found guilty of such practices.Having made these recommendations, we think it is necessaryto emphasise the fact that the main consideration which has

influenced our decision in making these recommendations isthat the setting up of the Industrial Relations Commissionwith two wings will, in the long run, make negotiationsbetween the parties more earnest and serious and thus intro-duce a new era of successful collective bargaining: We recognisethat in the initial stages of the working of this scheme, mutualnegotiations may not always succeed; but we hope that wherethis happens, sustained effort by the Commission’s conciliationwing will materially assist the parties in reaching satisfactorysolutions to their problems amicably. If this process continuesfor some time, the number of industrial disputes which will gobefore the Comission for its adjudication will gradually decreaseand that is the end which we have in mind. We have made theseseveral recommendations in I the confident hope that the endwould be achieved if the scheme which we have recommendedis accepted by the Government. These recommendationsconstitute one integral scheme and, for their success, must begiven effect to as a whole.

Notes -

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LESSON 4:FUTURE OF INDUSTRIAL RELATIONS IN INDIA

Learning ObjectivesAfter going through this chapter you will be able to compre-hend the following:• The current industrial scenario in India• How the industrial scenario and the industrial worker are

going to influence the economy in the days to come.We link industrial relations with industrial development andcomplexity of the work organisation. The earliest and simplestorganisations had little industrial relations in the sense that weunderstand it today. But as organisations grew in complexity,size and number, industrial relations emerged. In this relationlet us now look into the ‘future of industrial relations in India.’

Future of Industrial Relations in IndiaThe future of industrial relations in India can be reviewed fromreports of the commissions constituted by the government forthis purpose. From these, certain issues are emerging which areposing challenges to the three ‘actors’ in the system.I. The first is the issue of strengthening collective bargaining

by trying to determine a sole bargaining agent fornegotiations. The State of Maharashtra has already passed alaw for the creation of a sole bargaining agency in every unitand industry. Collective bargaining is advocated where theparties involved have a fuller understanding. This will helpto arrive at a speedier settlement of disputes, betweenthemselves.

2. The second issue relates to the gaps that are occurring as aresult of the variations that occur in Central and Statelegislation as far as labour matters are concerned. In India,labour falls under the Concurrent List though NCL hasmade a recommendation for forming a common labourcode which is yet to be adopted. Adoption of thisrecommendation will go a long way in solving some of theproblems that India’s legislation process is facing.

3. Another issue is that of workers’ participation inmanagement. India has already experienced the working ofmany forms of worker-participation schemes but none ofthem seems to have made any headway. The reasons for thefailure of these schemes need to be probed into.

The three ‘actors’ in the system need to take into account theeffect of their actions on the consumers and society in general,owing to the growing inter-linkages between industry and itsenvironment. They have to evaluate and decide on the appropri-ate alternatives in terms of the ‘strategy’ they are going to adoptin managing the personnel and industrial relations func-tions.The environment is fast changing and the pressures fromvarious groups involved are starting to get more vocal andintense. The strategy chosen for the attainment of the goals will

have to depend on the objectives, values, structures availableand the environment in which they have to operate.

We sum up with a Quotation:Its strategic importance extends beyond the limited frontiers ofunion-manage-ment relationship and overlaps with the futureprospects for Indian democracy on one hand, and the basicconcepts and assumptions of economic develop-ment on theother. The set of strategic choices must be made in the midstof economic and political difficulties that the country isundergoing.In relation to the future of industrial relations in India let usfirst get to know our Indian industrial worker.

The Indian Industrial WorkerThere can be no study of industrial relations without ananalysis of indus-trial workers, who are the prime-movers ofcommerce and industry. Most recent studies point to the newindustrial worker being more ‘adjusted’ to his work environ-ment than his predecessors. However, the simmeringdis-content among labour which now and again manifests itselfin strikes and other forms of labour unrests, proves that thenew industrial worker is still in a state of flux. He is not fullyaware of his problems, his aspirations are his vague, and he isunsure of his identity. The aim of this lesson will be tocharacterise, from available data, the new industrial worker-thevarying influences on his life and, in turn, his own commitmentto industry.Owing to the increasing mechanisation of industry today, therecruits to in-dustry have to possess the appropriate skill andqualification necessary for the job, unlike their counterparts inthe past.In spite of the government’s commitment to rural develop-ment, the lot of the average farmer is still decidedly poor. As aresult, many of them have migrated to urban centres in searchof work. These constitute the ‘surplus’ work force “who arepermanent and semi-permanent urban settlers with nonostalgic attachment to the romantic surroundings of theIndian village. “ Studies of census reports indicate that between1961 and 1971, on an average, more than 2 million farmers weremoving out of their villages every year.To say that the new industrial worker has a ‘traditional bias’which is responsible for his maladjustment, if any, is not truebecause of the fact that the majority of the work force, in anycase, have an urban background, while the ‘surplus’ work forceconstituting the migrants from rural areas are not inclined toleave their present jobs in the factories-nor is the ‘full hierarchy’of the traditional caste structure evident in the factory. In fact,Slotkin concluded that the rural workers migrated because ofthe inadequacy of their ‘traditional culture’. Systematic studiesof the Indian labour force have shown that factories attract

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labour from all levels of traditional society (Morris, 1960;Lambert and Vaid, 1968; Sheth, 1968; and Sharma, 1974).The new industrial worker’s educational background andaspirations are much higher than those of his predecessors. Astudy of industrial workers by Vaid revealed that 78% of themwished to increase their incomes. As has been already pointedout, a rural background does not inhibit them from enteringindustry. In fact, once they do, they prefer to stay on andimprove their prospects. But is this an indication of theworker’s commit-ment to his work or is it, as some researchersindicate, actually an interest in matters such as wages, housing,security and advancement in work rather than the fulfilment oftheir needs, e.g. ‘ego satisfaction’ or ‘self-actualisa-tion’? Shethfeels that by imparting theories of ego satisfaction and self--actualisation and putting forward schemes to hum aniseworking conditions, one may only be substituting “devices forthe satisfaction of the actual needs”.True, the worker may not be aware of self-actualisation, andego-satisfac-tion may not be of primary importance to him, buta study by Holmstrom indicates he is definitely movingtowards the “concept of equality and free-dom of choice in hiswork behaviour.” A recent study by Sharma’ states that for theworkers in the organized sector, the nature of work forms oneof the determinants of job-satisfaction. It is natural that aworker would prefer human working conditions. As it is, “thesheer alienation and drudgery of the worker’s machine-dominated work at the factory is what makes his life dull,unrewarding and poor in a sense in which a school teacher’s isnot. Within the confines of an individual work situation overwhich he has no control the worker will always be disoriented.After all, in the present social structure, workers are in the finalanalysis ‘wage slaves’. Yet he is willing to work hard and acceptthe monotony of routine if it enables him to earn more andmake his life outside the factory better. Herein lies the problem.Industrial skilI alone is not of the greatest impor-tance-acommitted labour force demands adjustment in both theworking and social environment.The idea of the industrial man in terms of committed labourforce has to be reconceptualised in the context of the unevendevelopment of the whole process of our industrialisation.Mere wilIingness to work cannot boost the morale of a worker,unless he has the kind of socially accepted position required forthe industrial way of life. The Indian worker is deprived ofsuch a position (Sengupta) particularly in the areas of small in-dustrial activities.The number of mandays lost due to industrial disputes inIndia during 1980 and 1981 is as follows: 1980-21,925,026; and1981-25,503,6541. What are the reasons for the high rates ofabsenteeism and the increasing number of mandays lost? If theworker is committed to his job, why does he stay away? Why isthe labour force like a nuclear dump waiting for a match to set itaflame?Absenteeism has always been a major problem in the Indianindustry. An official of Bharat Cooking Coal Ltd’s planningdepartment points out that often as much as 40% of thelabour force stays away from work. Myers is of the view thatabsenteeism is encouraged owing to the lenient policies of the

management. Sickness and social or religious reasons are theusual excuses given for being absent. A study by Pais of thecotton textile industry in Bombay on absenteeism shows thatthere are a large number of badli force in these industries, andthis factor contributes to the high rate of absenteeism in theindustry. Bhatia and Valecha in their study on absentee-ism in alarge manufacturing plant conclude that chronic absentees havegreater indebtedness and are found more among those in thehigher age bracket having longer length of service, and in theunskilIed and semiskilled work force. Managements aregenerally quite helpless, especially with the increasing militancyof trade unions who use minor issues to prove their bargainingpower. The new industrial workers are more “articulate,confident and capable” and aware of their rights. The factorysystem initiates changes in the attitudes and values of its workforce making them more “cosmopolitan, anticasteist, secularand radical in their outIook”. The worker is also aware of hishigh level of productivity and his tremendous power to crippleindustry.As discussed earlier, workers today have greater aspirations thanthose in the past. Earlier, the mobility among workers was poorand their aspirations undoubtedly low. The present trend ofcompetitiveness could be because of greater skills and educationamong workers. In an Indian enterprise workers are motivatedby the expectation of higher wages once they acquire more skills.Vaid et al. found that superior technology contributes to betterwork adjustment. Lambert also found that the level of,aspiration of workers varied from factory to factory but it wasthe highest in the most technically advanced factory. This newclass of labour with higher aspirations and greater awareness ofjob security and wages is to be found in the most modern andtechnically advanced industries that demand greater skills.However, even earlier studies indicate that wages always playedan impor-tant part in a worker’s choice of job. Vaid reports inhis study that the workers’ current jobs gave them a betterincome than any of the previous jobs and 45% of the total jobchanges are due to the search for ‘higher wages’. Lambert andDesai’s studies also indicate similar findings.The rise of this new working class (though it does not domi-nate yet it greatly influences the industrial labour force) has alsonecessitated changes in the method of operation of tradeunions, some of which are not even affiliated to national unionfederations, and yet are most ‘active and militant’. Ketkar feelsthat “the reason for the disproportionately high influencewithin which it works are the critical industries in the manufac-turing sector as a whole. ... The new working class is not onlythe wage leader in the sense that it sets the trends for higherwages but also influences other workers in industry and evenwhite-collar workers in their methods of struggle, styles oftrade unionism, social habits, language, etc. In a definite sense itconstitutes the opinion maker within the working class as awhole.” The workers’ awakening to trade unions is a fairlyrecent phenomenon since older studies reported the workers’general disinterest in trade union activities. Ashraf, in his studyof workers at Kanpur, found socio-political consciousness andtrade union affiliation to be interdependent. With the emer-gence of the new worker who is confident and aware, tradeunions have come to play an important role. The trade union is

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considered a protector in general terms. Thankappan feels that“some of the most important events in trade unionism duringthe last 5-8 years whether they are strikes or solidarity strugglesin support of other workers’ struggles, are directly related to theinitiatives taken by the new working class”. But are these strikeswarranted? With such strict government regulations, is theworker truly underpaid? In spite of the fact that workers’ wageshave increased, there has been an ‘erosion’ of wages owing tothe sharp increase in the consumer price index. The workingclass is aware of this and attributes “the stagnation or erosionof its standard of living directly to its increased exploitation atthe hands of the employers. That is one of the reasons for themilitancy of even the better paid workers”, opines Thankappan.Is the trade union movement in India efficient enough tohandle the problems of workers? Most of the larger tradeunions have definite political affiliations, and act or reactaccording to political trends, the workers being mere pawns inthe game. But the new worker seems determined not to beused as a crutch by political activists. This is not always the case.With their new found power, trade union leaders often seek toput pressure on managements with no legalistic base to theirdemands, aided as they are, often, by political clout. To add tothe already complex scene, there is the pressure of inter-unionrivalry with each union claiming sole bargaining rights. Some-times, to divide the workers and thus weaken them, rivalunions are patronised by the management. The credibility ofthe trade union move-ment in Kanpur rated rather low, in theeyes of the working population, during the strike at SwadeshiCotton Mills where “the trade union leader-ship proved to beineffective in organizing the workers’ struggle for securing thevery basic demand of the workers, for their very wage”.Legitimate claims become mixed up with demonstrations,arson and looting and in this melee the workers’ demands areoften forgotten, making the whole thing seem badly conceivedand illegal. Mehta, himself a trade union leader, puts it suc-cinctly when he says, “even with so much inter-union rivalrythere are hardly any ideological differences. It is more a scramblefor power.” If effective leadership is not forthcoming amongtrade unions in the future, the already prominent trend ofindependent plant-based unions, which generally involve a largenumber of workers, is sure to dominate the indus-trialrelations scene.In its March-April issue, 1979, Business India reported thatindependent plant-based unions have been so successful ininfluencing other workers that the decline or stagnation of oncepowerful unions ,such as the CPI led AITUC and the Socialistled HMP and HMS in the major industrial areas is directlyrelated to their influence. Ketkar, labour correspondent of theEconomic Times, feels that labour is moving away frompolitically motivated groups and “has begun to constitute itselfas a new estate in society not under the tutelage of another classor political party but on its own initiative”. This is primarilybecause of the lack of effective leadership and corruption intrade union politics. Tulpule, however, feels that there is “ampleleadership material” in the generation that has come intoindustry in the last 15 years. Only if trade unions can prove theirmettle will they last out the next generation though they haveample scope as the worker really considers his union the last

resort to settle his grievances and he usually supports it in acrisis, sometimes in spite of his personal misgivings.

Profile of the New WorkerThe picture of today’s industrial workers emerging from mostaccounts is in contrast to the one depicting the workers of the1940s and 50s. This change is basically because of the growth ofindustry, demanding more technological and industrial skilIs.This in turn means, the workers inducted into this kind ofestablishment would have a higher level of education ascompared to those in the more traditional industries, saytextiles. These ‘new workers’ tend to be second or even third-generation workers, unlike the half-peasants who found itdifficult to overcome their parochial attitudes and chauvinism.They realise their indispensability and bargaining power and areready to move on and improve their educational qualificationsto better themselves. Most often these new workers have jobsin the critical industries and hence will not allow themselves tobe exploited. Even though the trade union movement has notproved wholly effective, without clear programmes or organiza-tion, workers today are no longer docile, inarticulate anddiffident. They are definitely a class to contend with, who willintensify their efforts in the future and whose attitudes andaspirations are of utmost importance to industrial peace.The new workers are definitely committed to the industrial wayof life even if some are prone to look back with nostalgia andreminisce about the clean environment of the villages. Thereseems an imminent need for the government, throughlegislation and for managements, through discussions, toseriously consider issues that concern workers and work out anamenable solution. Most accounts of their daily life indicate thepoor quality of their living conditions, which seem to have agreater impact indirectly on them as individuals than thedrudgery of their jobs. There is definitely the need to improveworkers’ living conditions and provide basic amenities in orderto make their lives more meaningful. Mere revision of wagesand bonuses will not help to raise his standard of living orimprove his commit-ment, but rather drive him to the bottle orthe gambling den in an attempt to escape his immediate socialenvironment.The new worker is not an individual to be taken for granted.Workers unable to press their demands by legitimate means arefinding recourse in militant action and are being attracted toleaders with militant ideals. The key to the industrial relationsscene in the country rests in the hands of the workers, and theirwell-being and commitment is crucial to the progress ofmodern India. Mansara is not a typical example of the newindustrial worker. However, it is workers like him who form amajority of the indus-trial work force-greatly influenced by thenew industrial workers who though in a minority, dominate thegeneral trend of industrial practices.To Wana Mansara, a 55-year-old unskilled labourer working in afactory in North Bombay, modern industrial life has givenprecious little satisfaction. Mansara scarcely fits the image of themodern industrial worker. One look at his thin emaciatedframe, soiled clothes and troubled eyes, convinces one that lifeso far has had little to offer him.

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“There is really nothing I can say about my daily routine,”Mansara says cynically. Mansara lives in a small 20' x 10' room inone of the foulest slums in the eastern suburbs along with hisfamily of nine. His working hours are 7.15 a.m. to 3.45 p.m.Mansara has to be up before 6 o’clock and stand in a long queueat the municipal tap for water although there are enough peoplein his family who can perform that hour-long chore--his wife,his 24-year-old daughter, his son-in-law, his 22-year-old son,daughter-in-law, another son, age 14, and another daughter. Allof them and Mansara’s young grandson live in the hut. Assoon as he gets dressed, Mansara sets out on foot for thefactory without any breakfast but with a lunch dabba in his hand.He cannot afford to buy his lunch in the factory canteenalthough it is subsidised. Mansara’s monthly wage works out toless than Rs 600 which barely ensures the hand-to-mouthexistence of the entire family. In the factory where he has been adaily wage (bigari) worker for 23 years, his job is to load andunload trucks with finished goods and raw materials and carryout sundry errands.

Boring and Bad“My job is boring and bad. I’m glad to get off at 3.45 p.m.”says Mansara. “Then I go home and that is all. What else isthere to do? Think about the stink in the slum? Well, it’s there.The quarrels over the municipal tap, traffic in illicit liquor, thefloods and the slush in the monsoons, the leaking hut and allthat? Well. . . that is life.”Mansara feels that his brothers whom he left 24 years ago inNasik district to till a few acres of dry land, are leading a“relatively better life”. But Mansara could not live in the villagebecause the land was not enough to sustain the family. So hecame to Bombay in search of a livelihood and found a job atthe factory. Ever since then Mansara has lived in the hut whichhe had built himself. “Today I have to pay Rs. 40 to the muni-cipal authority as rent for the land I occupy. Why should I haveto pay this rent? It’s absurd. The bloody municipal authoritieshave no right to ask me for rent. . . The whole thing is sounjust.”Mansara’s bitterness and grievances are not confined to themunicipal authorities. As a scheduled caste turned Budhist, anda worker, Mansara feels he has had to suffer in-justice all his life.“People in my situation tend to, lose all hope in life, to give up,to become, tame, submissive and fatalistic. Many of them taketo gambling and alcohol. But fortunately I’m free of suchaddictions and stilI have some control over myself. I can stillfight.”In fact, Mansara is a militant trade unionist and was the victimof an assault in January by members of a rival trade union.Mansara, inarticulate and incoherent when speaking about hisfamily and his house, suddenly comes to life while talkingabout his union and removes the head cloth he dons like anumber of his fellow workers, to show a long raw scar on hisforehead.“See this?” he asks with visible anger on his face. “This is theprice I have had to pay for supporting Datta Samant and forbeing with his association of Engineering Workers. Employersand the government loathe those unions which really are for theworkers. They only want unions they can pocket. They try to

break up the honest unions. That’s why there is violence. I wasattacked because I refused to become a member of a rival unionwhich is a stooge of the bosses was stabbed three times by arogue and the doctor had to put 18 stitches. My son, who alsoworked in the factory was removed just because he supportedDr. Samant”, says Mansara in a Marathi which retains theflavour of a rural accent even after 24 years of exposure to urbanlife.

Menacing ToolBut what is so special about Dr. Datta Samant? Why doesMansara believe that Samant is an honest unionist? Mansara issomewhat offended that his leader’s integrity is challenged. Hisnostrils flare up. There is almost a menacing look in his eyes.But then, he controls himself and explains: “Look, I have beenin the Godrej factory since 1956. Do you know what the annualincrement in my daily wage scale was then?-12 paise. Dr. Samantcame to our factory in 1972 and the annual increment became 40paise.”“Before Dr. Samant, the union was led by several people. Butwe never know what agreement was signed by our union andwhen. We knew it only when the workers read it on the noticeboard. Not so with Dr. Samant. Long before making anyagreement with the owners, Dr. Samant tells us in a meetingwhat he is going to do. He never goes alone to the owner tomake an agreement. We know he is honest. We know he is nota chamcha of the management.”Mansara is also bitter about the management’s attitude towardsmilitant workers. “If you are in favour of the management, youget all the facilities. If you fight for or assert your rights, thenGod help you. Don’t you think I want to live in a better place?But I can’t because I can’t afford it. And I would never get thecompany’s quarters because I support Dr. Samant . . .”Mansara has many complaints against the management. Herecalls: “When I joined the factory in, 1956, the company wasproducing 26 refrigerators a day. I remember because I used toload them on to trucks. Today the company manufac-tures 222refrigerators daily and sells them at much higher prices. And yetour living conditions have not changed though apparently ourearnings have increased. Even this increase is not at all propor-tionate to the increased production of the fac-tory. Why shouldnot I gain anything when the factory has expanded so much?”“Really, what we need is leaders like Dr. Samant who can give usjustice”, Man-sara ruminates. “Management or the governmenton their own wi1l never give any-thing to workers.”Does it mean that good leaders are all that is needed? “Look, allleaders are not like Dr. Samant. . . Owners and big people likethose in the government are angry with him not because heinstigates violence-in fact, he does not, big people do vio-lenceto break him-because he cannot be bought or corrupted, . . .because he does not become their chamcha. . . So we need leaderslike him... and of course we must have our own organizedstrength. Without a militant organization We’ll get nowhere.“As long as there is injustice in society, we’ll have to remainorganized and vigi-lant to fight it, whether it is economic,political or social injustice”, says Mansara. In Mansara’s viewwhile there is a great deal of social injustice in India, based on

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caste differences, he has not experienced it since he left hisvillage, even though he is a neo--Buddhist. “I am never madeto feel that I belong to an inferior caste. All workers who workshoulder to shoulder with me live in the same way as I do, treatme as a comrade, a mate never thinking of caste. . . . But thereare castes amongst workers. Two castes: the chamchas, scaps,blacklegs, who are a minority, and the rest who are in the majo-rity. The first lot belongs to the upper caste and get many specialfavours and advanta-ges. The people like me, the majority,belong to the lower caste and life’s rough for us. But I’m happyhere. I would rather remain here.”Notes -

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LESSON 5: Unit 2HISTORICAL EVOLUTION & ASPECTS OF TRADE UNION IN INDIA

Learning ObjectivesAfter reading this lesson you will be able to understand thefollowing.• The need for trade Union and its effect in the Industrial

India since its evolution.Trade unions. How are unions born? What do they do? To getall these answers and yet to learn many more attributes aboutthe trade unions let us first look into as to how the tradeunions evolved.

Historical Evolution and Aspects of Tradeunions in IndiaAfter discussing much about industrialization the trade unionmovement can be said to be an offshoot of industrialisation.The growth of modern industrial organisations involving useof modern technology and employment of large number ofthe workers has been followed by growth in trade unionsthroughout the world. This phenomenon has not only beenobserved in advanced countries of the world, but is also beingwitnessed in developing economies. “The emergence of tradeunionism is spontaneous and inherent in the growth ofcapitalism. The origin of trade unionism lies in the IndustrialRevolution which disrupted the older way of life and created anew society forged by the shop, the factory, the mine and theindustry.” Trade unionism has become a vigorous force notonly in advanced economies like U.K. and U.S.A. but also indeveloping economies like India.

What Is a Trade Union?Dale Yoder has defined a trade union as continuing, long-termassociation of employees formed and maintained for thespecific purpose of advancing and protecting the interests ofmembers in their working relationships. A trade, union is acontinuous association of workers, which is formed with thepurpose of protecting the interests of workers. To quote Webband Webb, “A trade union is continuous association of wageearners for the purpose of maintaining or improving theconditions of their working live” According to Flippo, “Alabour union or trade union is an organisation of workers.formed to promote, protect, and improve, through collectiveaction, the social ,economic, and political interests of itsmembers”.From an analysis of the above definitions, the followingfeatures of trade union emerge:i. It is an organisation formed by employees or workers.ii. It is formed on a continuous basis. It is a permanent body

and not a casual or temporary one.iii. It is formed to protect and promote all kinds of interests-

economic, political and social-of its members. Thedominant interest with which a union is concerned is,however, economic.

iv. It includes federations of trade unions also.v. It achieves its objectives through collective action and group

effort.Thus, a trade union is generally referred to as an organisation ofworkers. It is a voluntary, democratic and continuingorganisation of workers to protect their socio-economicinterests. However, under law, the term ‘trade union’ includesboth the associations of workers and those of employers. Sec.2(h) of the Trade Unions Act, 1926 has defined union as “anycombination, whether temporary or permanent, formedprimarily for the purpose of regulating the’ relations betweenthe workmen and employers, or between workmen andworkmen, or between employers and employers, or forimposing restrictive conditions on the conduct of any trade orbusiness, and includes any federation of two or more tradeunions.” This definition is very exhaustive as it includesassociations of both workers and employers and the federa-tions of their associations. But in this book we will use theterm ‘trade union’ in a narrow sense to mean the associationsof workmen and their federations.

Why do we need Trade Unions?Trade unions are essentially organisations for the protection andpromotion of the interests of their members in particular andworkers in general. The primary functions of trade unions areto protect the workers against the excesses committed byemployers and to satisfy the needs of the workers. To bespecific, however, the trade unions generally pursue thefollowing broad objectives:1. Steady employment. Steady employment is something,

which the employer by himself may not be able toguarantee to the workers. His ability to provide it is limitedby the state of the marl et, which in large part is beyond hiscontrol. Achievement of this aspiration may thus involveworkers in political action, through their unions, for themaintenance of full employment. Thus, this objectivestands for enough jobs with good pay.

2. Rationalisation of personnel policies. The economicsecurity of an employee is determined not only by the levelof wages and duration of his employment, but also by themanagement’s personnel policies in its selection ofemployees for layoff, retirement, transfer and promotion,the assignment of employees to jobs, and in thedisciplining of employees. If the decisions of this type arethe result of subjective evaluation and capriciousness, thereis no security for the workers. If such decisions are,however, governed by statutory rules and rational policies,there is greater assurance of fair treatment and equal justice.

3. Voice in decisions affecting workers. The workers maysuccessfully pressurise for higher wages. He may achieve asatisfactory rationalization of personnel policies. But if the

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vital decisions as to the scale and schedule of production,introduction of labour saving devices, the closing orrelocation of plant etc. remain outside the effective influenceof workers, there is no real security for them. Each workerwants to know if the new machinery would reduce himfrom a skilled operative to a machine attendant or amember of custodial force. He wants to know what hischances are for continued attachment to the company. Whatis “the success of the company” to him if in transferringthe plant from Delhi to Ghaziabad he is laid off? Theintervention of the union in such decisions ofmanagement is the only way by which the worker is able toachieve any degree of control over the affairs that concernhim.

4. Recognition and participation. Another objective thatunions seek to achieve is winning recognition for the factthat they are equal partners with management in the task ofproduction. This equality is something more than theequality at bargaining table. It is an intellectual quality. Thatis, the intellectual faculties of workers are no inferior tothose of management.

5. Gaining legislative enactments. To provide legalsanctions to its demands, the unions attempt to get theseframed in the form of Acts so that they become permanentfeatures of the contract between the employers and theworkers. For this purpose, unions may take recourse ofpolitical action in terms of supporting any political party orforming their own political party.

6. Miscellaneous services. Modern trade unions also engagein providing educational, medical, recreational and otherfacilities for the development and welfare of their membersand their families, if they have sufficient funds at theirdisposal.

Social Responsibilities of a Trade UnionTrade unions are a part of society and so they must keep thewell-being and progress of the community constantly beforethem in the midst of their endeavors to help the working class.Unions have a stake in the success of national plans foreconomic development, since these are formulated andimplemented as much for maximizing_ production as fordistributing the product in equitable manner. Unions have toadapt themselves to changing social needs and rise abovedivisive forces of caste, religion and language. It is only thusthat they can progressively become instruments for constructivepurposes; in this context, some important social responsibilitiesof trade unions appear to be in the field of:i. Promotion of national integration;ii. Generally influencing the socio-economic policies of the

community through active participation in theirformulation at various levels and

iii. Instilling in their members a sense of responsibilitytowards industry and the community.

Aspects and Importance of Trade UnionsIn the modem industrial society trade unions are a force inthem. No managers of working organisations can ignore “theinfluence of trade unions on the behavior of their work force

and on the environment of management. As Yoder wrote “Existence of strong trade unions is a precondition for industrialpeace-and stability of the industrial economy. Decisions takenthrough the process of collective bargaining and negotiationbetween the employers and trade unions are bound to berespected by both employers and workers. By insisting uponpayment of standard rates of wages for their members, tradeunions ensure efficient functioning of the industrial units. Byorganising fraternal functions, they improve the efficiency ofworkers. Effective trade unions are helpful in avoiding inarticu-late unrest of workers involving extensive absenteeism,frequent job changes, fighting; wandering from one plant orlocality to another.Trade unions can play an important role in the plannedeconomic development of a nation. They can help in theaccelerated pace of economic development in many ways, moreimportant of which are as under:1. By helping in the recruitment and selection of workers.2. By inculcating discipline among the work-force.3. By enabling settlement of industrial disputes in a rational

rather than erratic and chaotic manner.4. By helping social adjustments. Workers. have to adjust

themselves with the new working conditions, the new rulesand the new orders. Workers coming from the traditionalsociety (agricultural economy) to the modern society(industrial economic) left to themselves may becomepersonally disorganized, unsatisfied, and frustrated. Tradeunions help them in such adjustment.

5. By creating a committed industrial work force.

Criticism of Trade UnionsParticularly the employers have subjected trade unions to severecriticism. At times, they even resist the formation strong tradeunions because of the following reasons:i. Increased Potential for Strikes. Trade union leaders serve

the threat of strike to the management quite frequently toget their demands accepted. When a trade union fails to getits demand accepted by the management through collectivebargaining and negotiations, it may adopt militant methodsincluding a strike blockade or work stoppage. Thus, thepotentiality for strikes is more in an unionised firm.

ii. Narrow Perspective. Lack of education makes the workersnarrow-minded, and prevents them from taking long-termviews. Thus, anything, which does not result in animmediate reward, becomes unattractive to them. Thisattitude is responsible for many strikes and lockouts inindustrial concerns.

iii. Resistance to Change. Trade unions do _ not welcomerationalisation and improved methods of production forthe fear that some of the workers will be put out of work.They often show resistance to introduction to changes inwork methods, procedures and working conditions.

iv. Fear of Increased Costs. All efforts of a trade union togain concessions from management in the form of higherpay, better working conditions, better retirement benefits,etc. for its members imply higher costs to management.

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Obviously higher costs, if not accompanied by increases inemployees’ productivity, are not desirable for theorganisation as it will not be able to face competition in themarket in the long-run.

v. Social Costs. When labour unions strike on flimsygrounds, incalculable losses occur to producers, communityand the nation. Strikes are harmful to the workers also asthey have to suffer loss of wages and other benefits.

vi. Lack of Employee Commitment. In an unionised firm,the employees loyalty is often shifted from the organisationto the union. This can result in reduced employeecommitment, lower morale, resistance to change, andsublimation of the organisations goals to those of thetrade union.

vii.Artificial Scarcity of Labour . It is alleged that the labourunions may create artificial scarcity of labour by demandingthat only union members should be employed. In such asituation, an employer may prefer not to fill the vacanciesbecause of fear of trouble by the union. AF, a result,employment gets restricted among ‘the most widelyaccepted general policies of trade unions, the following areworth-noting:

1. To bargain collectively and to expand and increase the scopeof the collective bargaining system.

2. To maintain and expand the security and survival capacityo f unions and their ability to withstand attacks, and toback up demands with solidarity

3. To gain and maintain exclusive control of labour suppliesin particular labour markets as a means of enforcingunion demands for what are regarded as appropriateworking conditions.

4. To improve the economic status and welfare of unionmembers, increasing their earnings and relative share innational income and their influence, both in employmentand in the larger societies in which they are members.

5. To develop and improve the union’s programs, practices,and techniques to be used in conflict and defence of theorganisation and in expanding its power. .

6. To represent member in the area of political action,identifying candidates and office holders who are friendly orunfriendly, lobbying and securing political concessions forunions and their members.

7. To maintain a strong organisation, democraticallycontrolled, but with enough internal discipline toimplement such policies as have been described above.

8. To facilitate irnproved member understanding of unionpolicies and programmes and’ increase skills andcompetence on the part of union officers by appropriateeducational programs.

These major policies lead unions into a complex. assortment ofprogrammes and detailed , practices-from preparing- negotiat-ing strategies to designing pressure tactics and to developingcooperative programmes with management.

Impact of a Union on Management

The existence of a union affects not only the overall organiza-tion, but also the management in many ways. For the personnelmanager, the existence of a union means that all personneldecisions shall be subject to union’s checks and controls. Apartfrom a union’s effect on policy making, there are several otherareas, which are affected by the existence of unions. These aresummarized below:1. Union policy affects the structure of labour employed.

Though this factor is related to management decision, yet italso affects the overall organization.

2. The existence of a union does affect the level of wages andthe terms of their employment. A union may not tolerateunjust attitude of management with regards to paymentsof increments, overtime, promotion, paid vocations, leave,holidays, insurance plans, pension plans, medicalreimbursement, etc.

3. A union’s existence may affect the prices of the productsmanufactured by the rganisation.

4. A union’s policy in an organisation affects the position ofindividual workers in the organisation. Generally it has apositive effect on the workers. -

5. It also affects industrial relations and industrial peace.6. A union might also try to have control over scarce job

opportunities. Generally, unions take the stand that a fixedproportion of new jobs should be given to the bloodrelation of the existing employees of the organization .

The mere presence of the union restricts management’sfreedom of action in many areas. In dealing with labourunions, it is important for the -management to recognise thatimproved union-management relations play a vital role in thesuccess of an organization

Causes of Emergence of Trade Union MovementThe trade unionism in one country is not comparable to that inanother country because of varying approaches, roles andfunctions assumed by it from time to time. For instance,Tannenbaum observed, “Machine is the cause and the labourmovement is the result.” Hoxie observed, “Trade unionappears as a group interpretation as the social situation in whichworkers find themselves, and as a remedial programme in theform of aims, policies and methods.” Perlman came to theconclusion that “Trade unionism arises from the job-conscious-ness and scarcity of job opportunities.” According to Marx,“Trade unions owe their origin to class struggle between thecapitalist employers and their workers. To get more and moreprofits, the employers exploit the workers, who because of theircommon interest to get more wages, unite in trade unions andthen resist the employers,

Aspects of Trade Unions in IndiaTrade unions are a major component of the modern industrialrelations system. A trade union of workers is an organizationformed by workers to protect their interests, improve theirworking conditions, etc. All trade unions have objectives orgoals to achieve, which are contained in their constitution, andeach has its own strategy to reach those goals.

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Trade unions are now considered a sub-system, which seeks toserve the specific sub-group’s interest (i.e. the workers’) and alsoconsiders itself a part of the organization, in terms of thelatter’s viability and contribution to the growth of the commu-nity of which it is a part. Therefore, there are trade unions ofblue-collar workers, white-collar employees and also employers.Trade unions came into being for a variety of purposes.Individual workers found it more advantageous to bandtogether and seek to establish their-terms and conditions ofemployment. They realised that if they bar-gained as individu-als, the employer would have a better leverage, for an individualwould not matter as much as a group in terms of the runningof the enterprise. Since a group’s contribution is much largerthan an in-dividual’s, so are the effects of its withdrawal. Also,an individual may not be able to organize and defend hisinterests as well as a group can. There-fore, workers saw theadvantages of organizing themselves into groups to improvetheir terms and conditions of employment.Employers also found it advantageous to deal with a group, ora repre-sentative of a group rather than go through the processof dealing with each individual over a length of time.With the changed political, social and educational environmentin terms of awareness of rights-the right to organize, the rightto bargain, and settle terms and conditions of employment-labour or worker unions sprang up in order to protect andfurther worker interests. Additionally, the influence of politicalparties interested in acquiring a foothold in the labour move-ment also provided the impetus for the formation of labourunions.In India, the foundation of modern industry was laid between1850 and 1870. This was also the period of emergence of theIndian working class. Indian enterprises started growing side byside with the British ones in all spheres of the nationaleconomy. During this period of the growth of Indian capitalistenterprises, the working and living conditions of the labourwere poor and their working hours were long. This was testifiedby commissions like the Indian Factory Labour Commission(1908) and the Royal Commission of Labour (1931). Inaddition to the long working hours, their wages were low andthe general economic condition was poor in industries. In orderto regulate the working hours and other service conditions ofthe Indian textile labourers, the Indian Factories Act wasenacted in 1881. As a result, employment of child labour wasprohibited. This Act required the formation of a machinery forthe inspection of factories. Another factor, which provided thebackground for the Indian trade union movement, was thebirth of the Indian National Congress in 1885. The trade unionmovement in India can be divided into three phases. The firstphase falls between 1850 and 1900 during which inception oftrade unions took place. Guided by educated philanthropistsand social workers, the growth of the trade union movementwas slow in this phase. During this period workers possessedno trade union in the true sense of the term.As a result of the prevailing poor working conditions and longhours of work, many strikes took place in the two decadesfollowing 18803 in all industrial cities. These strikes taughtworkers to understand the power of united action even though

they had no unions. Small associations came up in Bombay (e.g.the Bombay Mill-hands Association) and in Calcutta.The second phase of the Indian trade union movement fallsbetween 1900 and 1947. This phase was characterised by thedevelopment of orga-nized trade unions and political move-ments of the working class. It also witnessed the emergence ofmilitant trade unionism. The period 1900 to 1915 was thepreparatory phase for organized trade union movement. Laterthe First World War (1914-1918) and the Russian Revolution of1917 gave a new turn to the Indian trade union movement andled to organized efforts on the part of workers to form tradeunions. It was esti-mated that in 1920 there were 125 unions,with a total membership of 250,000. In 1920, the first nationaltrade union organization (the All India Trade Union Congress)was established. Many of the leaders of this organization wereleaders of the national movement.The third phase began with the emergence of independentIndia (in 1947), and the. Government sought the cooperationof the unions for planned economic development.The working class movement was also politicised along thelines of the political parties. For instance, Indian National TradeUnion Congress is the trade union arm of the Congress Party.The All India Trade Union Congress is the trade union arm ofthe Communist Party of India and sub-sequently the socialistsleft to set up another national worker federation, the HindMazdoor Sabha. The Centre of Indian Trade Unions organizedin 1970, has close links with the Communist Party of India-Marxist (CPI-M). Besides workers, white-collar employees,supervisors and mana-gers are also organized by the tradeunions, as for example in the banking, insurance and petroleumindustries.

Why Unions Lack Cohesion and PowerThe large number of federations and plant level unions tosome extent detract from cohesion and unity of trade unions.It can be argued that it is of advantage to have big and powerfulunions for they can behave like respon-sible and high levelagencies in the development of our economic systems. Largeunions would also be in a better position to prospect andfurther the workers’ interests.The strength of trade unions both in the UK and the USA hasbeen traced to powerful national and international unions. Therole of the cen-tral organizations of labour such as the Ameri-can Federation of Labour--Congress of IndustriaIOrganisations (AFL-CIO) in the USA and the Trade UnionCongress (TUC) in the UK has been seen as one of largelysecuring the enactment of legislation and enhancing the legalstatus of trade unions and of influencing public opinion infavour of organized labour. As national unions, their strengthin terms of number and finance makes them strong and viable,and this enables them to wield considerable amount of powerand influence in industrial relations at the national level. Thesefederations also guide the policy formulation of the affiliatedunions, taking into account the national perspective, and thusact as a restraining influence. The kind of linkage that the plantlevel local has with its apex body in the US is not the same thatits counterparts in India have with their national level federa-tions. Indian trade unions are characterised by a three-tier

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structure, the national, the state and the unit level where whilethe policy flows from the top downwards, the state level unitsare generally more influential. The inter-relationship andmeshing between the two has somehow not evolved into a fineknit network, with the parts being greater than the whole inquite a few instances. Owing to paucity of funds and dearth ofexperienced trade union leaders these state committees tend tobecome mere co-ordination bodies for independent unionsinstead of being in themselves powerful bodies hayingdemocratic control. The existing pattern of trade unionstructure has created organizational problems at all levels. Theproblem originates at the lowest level i.e. plant unions, whichare so small in size that they cannot pay their dues regularly tothe state committees. Moreover, in the existing set-up owing tothe dearth of union organisers the same functionaries work atthe local as well as the state level.

Growth of Trade UnionsWith the changed political atmosphere in the country and thespreading of ideas about democracy socialism, the right to aliving wage, leveling of inequalities, the building of a welfarestate and similar thoughts, there is no doubt that a steadilyincreasing number of workers, particularly in the large metro-politan centres, have begun to realise that a trade unionorganization is very essential for the protection and advance-ment of the working classes and their interests. However, thisrealization alone cannot account for the vast expansion that hastaken place in the movement (Table ). The more importantfactors that have led to this development are the creation ofnew central organizations, the growth of political parties at thenational and regional levels, the encouraging labour policies ofthe government after independence and the propagation of thephilosophy of trade unionism.Certainly, one of the effects of this mushroom growth hasbeen the pro-blems at the plant level, especially in situationswhere more than one union exists. What is the manager to doin such a situation? The law provides, as was noted above, for

TABLE Membership of Workers' Trade Unions

Number of Number of Membership Average

unions of unions Year registered

submitting submitting membership

unions returns returns per union

1951-52 4,505 2,509 19,88,120 792

1956-57 8,478 4,370 23,73,000 543

1961-62 11 ,416 6,954 39,60,000 569

1969* 18,460 8,254 48,66,000 589

1970* 20,282 7,692 48,50,000 631

1971* 22.121 8,909 54,31,000 610

1972* 23,882~ 8,011 52,77,000 659

1973* 25,208~ 7,472 52,81,000 707

1974* 25,776 5,662 41,97,000 741

1975* 24,554~ 56,211 41,29,000 734

1976 (P) 28,910 (E) 8,589 (54.4) - 686

1977 (P) 29,390 (E) 8,286 (55.8) - 660

any 7 workmen to band together and form a union. Whatwould be the repercussions?• Changed method of reporting for the year.~Estimated.(P) Provisional.(E) Estimated, repeated the previous year figures in respect of

those states for which information was not recorded.Sources: 1. Pocket Book of Labour Statistics, Labour Bureau,

Ministry of Labour, Government of India, 1976, p. 122.2. Indian Labour Statistics, Labour Bureau, Ministry of Labour,

Government of India, 1975, p. 167.3. Digest of Labour Statistics, Labour Bureau, Ministry of

Labour, Govern-ment of India, 1961, p. 112. 4. IndianLabour Year Book 1979, Labour Bureau, Ministry ofLabour, Govern-ment of India: 1982, p. 74, Table 4.1.

Recognition of a UnionThere are two issues of concern here: The first is the issue ofrecognition of a union per se, especially in a non-unionisedsituation. The first question that arises is: Which union is oneto recognise, or should more than one union be recognised?Related to this is the problem of verification, the pro-cess bywhich the contending unions’ claim to membership is cross-checked, to enable one to seek representative status.The two issues are related to: (i) the need to recognise a union;and (ii) the process to be employed for verification when aunion stakes its claim, either in a new union situation or inmulti-union situations. This problem arises because at themoment there is no uniform legislation available in all the statesand union territories with regard to the recognition issue. Therehave been attempts time and again at restructuring andstreamlining the system but nothing has been effected so far. Itis only in states where the Bombay Industrial Relations Act is inforce, e.g. Gujarat and Maharashtra, that there are elaborateprovisions regarding recognition. The Act classifies trade unions

into three categories:1. Representative union,2. Qualified union,3. Primary union,The basis of this classification is thepercentage of membership that a union hasat the industry level (e.g. chemical industry)or at the lowest level, the primary union.The representative union should be able tomuster 15% of the total number ofemployees, employed in anyone industry ina contiguous area. The qualified unionshould have 5% of the employees in anindustry enrolled as members and finally theprimary union should have 15% or moreemployees enrolled in a unit or a plant.Therefore it is apparent that there is a scalingdown of numbers in terms of the statusaccorded. The idea is to provide some basis

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to assess the relative strength of a union seeking recognition.

The Verification Process Under the Code of DisciplineIn a situation where a union puts forth a claim to be recognisedunder the Code of Discipline the Labour Department satisfiesitself about the union’s representation. The department wouldcollect the following:1. Particulars of existing unions in the plant, registration

number and date of registration, whether the existingrecognised union has com-pleted a two-year period, whetherany of the unions committed a breach of the Code ofDiscipline as established by an enquiry of theimplementation machinery. Within 10 days the aspirantunions and other existing unions wiII have to producedocumentary evidence to the verification officer in respect ofthe list of members who have paid subscriptions for threemonths out of the preceding six months.

2. Membership and subscription.3. Money receipt counterfoils.4. Books of accounts.5. Bank account books (statements).6. A copy of the constitution of the union.If there are two unions then both need to furnish the requireddata. However, if the unions abstain from providing data, theverification officer, after giving 10 days notice, will go ahead withthe verification process and come to a judgement.The verification officer scrutinises the documents in the presenceof the union(s) submitting the above data. If both the unionshave claimed any member then an explanation is called for. Themuster roll of the firm will also be checked to ensure that thenames tally in terms of employment and union membership.After this process of checking and rechecking, the unionsconcerned can themselves go through the verified list ofmembers and notify their objec-tions, if any. Only specificobjections will be considered. The objections will then have tobe verified. In order to establish this, a systematic sample ofemployees will be selected for personal interrogation. Theproportion of interviews varies from a figure as high as 29% ora minimum of 100 when the number of names objected to is500 to 2% or 250 when the number is above 5000 or more.The verification officer will then submit his report to thegovernment as well as to the management of the firm. Thisverification process is according to the Code of Discipline.However, since the code is not a statute, his findings have to beaccepted in good faith by both the management and unionsduring their bilateral talks. Many agreements incorporate theacceptance of such voluntary codes.

Rights and Responsibilities of Registered Unions

While the main clauses of the Trade Union Act of 1926,concern the forma-tion of unions, certain other features are alsoworth noting. Registration, which means ‘formal recognition ofa representative body, also entails certain preconditions. Aregistered union must allow membership to anyone over 15years of age and have 50% of the office bearers from within theindustry. It must keep its books of account in order and send

its income and expen-diture statements to the registrar of tradeunions on or before 31st March.The union can spend its funds on salaries of office bearers,prosecution, defence, etc. for protecting its trade union rights, toprovide compensation to members, Ievy subscription fees,publish periodicals, etc. More important, a registered union canclaim protection from being prosecuted for legitimate tradeunion activities. This protection is under Section 120B, subsec-tion 2 of the Indian Penal Code.The issue that arises, therefore, is the distinction between arecognised union under the Code of Discipline and a registeredunion under the Trade Union Act of 1926. The former is avoluntary act and may well concern a representative union, whilethe latter may not always cover a representative union, especiallyin multi-union situations where there are many small unions ortwo or three factions. In the absence of any statute, the recogni-tion of a majority bargaining union of the workers still remainsa cumber-some process.

Multiplicity of UnionsThis plethora of onions, as Table 3.5 indicates, has led toproblems at the plant level. In India, many of the unions aregeneral unions. In this environ-ment, a combination of factorsseems to operate-the first being the demo-cratic principle of anyseven members being able to form arid register a union. In ademocracy, even a minority is given an opportunity to organizeand further its interests. The Trade Union Act of 1926, alsogives sanction to this principle of seven members forming aunion. Secondly, given the large number of trade unionfederations at the national and regional level, which are vyingwith each other for increased membership there is bound to bedisunity among the workers. There is no single federation towhich all the other federations belong. The trade union leaders,some of whom are outsiders while others have come up fromwithin the trade union move-ment, have different approachesto the problems at hand and hence there may, and does come aparting of ways on many occasions.In multi-union situations at the plant level, the problem ofinter-union rivalry frequently poses a managerial problem.Disagreement among unions to technological changerationalisation, automation or terms and conditions ofemployment cause work stoppage. Sometimes one union agreeswhile the other does not, for a variety of reasons. These rifts arealso due to the rivalry among leaders, or to differences instrategy to be adopted or to differences in ideology. A clash ofpersonalities and egos also plays its part.One of the effects of industrialisation, which has meant thestepping up of the rate of capital formation, has been a strainon the living standards of workers. This has been coupled withanother side effect, i.e. job insecurity--a problem that workersusually face in the initial stages of industrialisation. The growthof unions in such cases has generally been to protect the interestof the working class. The process of industrialisation itselfmakes for increase in the rate of unionisation. In India thisprocess has not followed the pattern that existed in thedeveloped countries. The merchant-craftsman’s stage ofcapitalism was bypassed and we had instead an abrupt transi-tion from the agricultural pattern of production to the factory

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pattern of production. In the process the emphasis oncraftsmen and their skills got de-emphasised. This, whencoupled with the low level of skill formation, not only meant agreater number of unskilled industrial workers, but, also as aconsequence, led to the growth of several general industrialunions and hence the pro-blems of inter-union rivalry.Another factor was the political linkage with unionisation.Unions through their collective action are organizationsconcerned with the interest of a particular class. Hence they arealso concerned with the distribution of power. Since distribu-tion of power and decision-making is linked with the politicalprocess, the interrelationship between politics and unionism ispart of this process which is perpetual. Both political partiesand unions have a vested interest in each other as the effect oftheir actions and strength is of interest to each other. Unionshave a vital stake in the political process and the decisions thatwiII change or restructure the balance of power within theirsociety.The growth of the four major national federations can be traceddirectly to the growth of the major political parties, which havedifferent ideologies and approaches to the distribution ofpower and the role of labour in society. The ideological linksbetween these federations and the political parties are, therefore,responsible for cleavages in the union movement.Another phenomenon has been the role of the ‘outside leaders’in the union. This is partly due to the low level of education ofthe workers, their lack of opportunities to gain experience andtherefore their dependence on a small elite of educated andinfluential people. All these factors have led to the dominationof the trade union positions by ‘outside’ leaders. The technicaldemands in terms of understanding the voluminous and all-embracing legislation are formidable and a legalistic approachseems to be all-pervading. Therefore familiarity with the variouspieces of legislation does play a part in getting things done. Thesocial distance between the manager and the worker has alsoplayed its part. In a tradition-bound society which gives duedeference to authority, the distance between the manager andthe worker has been substantial. Politicians turned unionexecutives have therefore filled the gap.

Detrimental Effect of Multiple UnionismThe large number of national federations at the macro levelmeans that the ‘unit’ level concept has been considerably de-emphasised. It leads to the diffusion of union power at the topand therefore damages the political leverage of labour. It alsoleads to inefficient efforts to change or introduce new legislationin order to improve the lot of workers, which could have beenpossible if there was one cohesive body at the macro level.Similarly at the micro or plant level the unions have an ‘extra-plant’ orientation of the unions which is inherent in theirpolitical groupings. This restricts their ability to judge a plantissue on its own merits without adding an ‘extra’ (political)dimension to it. The different unions are unable to cometogether to submit a common charter of demands as theirdiffering ideologies make it impossible to take a united stand,with each individual union seeking to gain more leverage foritself from the particular situation. Managements also find it

difficult to respond to these union demands as they are notplant-oriented and thus outside the management’s control.Multiple unionism also leads to multiple enrolment in unionsand non--subscribing members, causing delay or failure to getrecognition. This restrains a union’s bargaining power during aperiod of prolonged strife while the unions are squabblingamong themselves for dominance, the workers are deprived oftheir wages and the plant suffers a loss of produc-tion. One cansay that the effect of multiple unions has by and large beendetrimental to the objectives of the trade union movement.Again, at the plant level, multiple unionism qualitativelyweakens the movement resulting in the formation of small-sized unions without effective organization, a precariousfinancial position and an inability to achieve significant benefitsor rights to the members through their own efforts. Collectivebargaining is not possible and there is greater dependence ongovernment machinery in labour-management relations. Thisconstant power struggle and jostling for the position of beingthe major trade union results not only in propaganda amongstfellow workers to gain support for a particular union but attimes in violence and disharmony.The primary role of a union is to protect the workers and tochannelise their efforts into more rational directions so that theviability of the plant is also enhanced. The effect of havingmultiple trade unions both at the macro-and-micro-levelsserves only to weaken the workers’ power base while at thesame time negatively affecting the viability of the plant. Avariety of remedies have been suggested, which will be dis-cussed later.However, it must be noted that in spite of the foregoing thereare many organizations where multiple unions exist and themanagement does effect-ively negotiate, and conclude agree-ments. In many plants, workers are unionized-on a craftbasis-their special skills or training bonding them together.Multi-unionism is more a problem where general unions exist,for whom all categories can be organized in one general union.

Union LeadershipOne of the most crucial factors in this sphere is the leadershipthat is pro-vided. The leadership provides the direction andgoals for a particular union. The leader’s task is to make theunion effective, by improving the terms and conditions ofemployment of the worker and also by being con-cerned withthe viability of the enterprise. The trade union organizationbased as it is, in many cases on individuals or the nationalfederations and their ideologies, has not been able to evolve aprofessional cadre of leader-ship at the grass roots to thedesired extent. In fact, quite often, a single union executiveleader is responsible for running a large number of unions. “Asurvey of trade union leadership in Bombay in 1960 showedthat one leader was president pf 17 unions and secretary of twomore. Another was an office bearer of 20 unions. R. J. Mehta isPresident of the Free Trade Unions, which control more than14 unions. This brings us to a consideration of the next issue,i.e. outside leadership vs. internal leadership. In fact, the TradeUnion Act of 1926 makes a provision for this and allows for10% of the leadership to be from outside the sphere of theorganization. An outside leader is one who is not a full time

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employee of the organization, whereas the internal leader issuch a person. Many lawyers and politicians have been unionleaders in the early part of their careers. The former President V.V. Giri was one such example, so were former Central ministerslike G. L. Nanda and Khadilkar. There are advant-ages anddisadvantages in both the systems. The ‘outsider’ leader hasknowledge of industrial practices in comparable organizationsand therefore has more experience when he comes to thenegotiating table to bargain. If he is a politician or a personwith strong political links then he may be able to get someadvantages either in terms of policy or in terms of implemen-tation of administrative action, especially if he belongs to or haslinkages with the ruling party. On the other hand his involve-ment with the plant level problems is much less as he is not onthe shop floor to understand the intricate issues applicable to aparticular plant. Not being an employee of the enterprise or aninsider, he lacks the required depth of understand-ing of localissues and specifics. The outsider is a professional who hasmany units under his wing all of which demand his time,including the larger function of liaison. The insider would notonly have greater know-ledge of the enterprise specifics but alsohave more time for sustained work, being concerned as he iswith just one enterprise. Also, external issues and ideologies arenot unnecessarily inducted, which could happen when outsideleaders are in control for whom ideology may be more im-portant than getting the best deal under the circumstances.The leadership role in a trade union has a variety of demandsplaced on it. Not only does it require a certain amount oftechnical knowledge of the nature of business of the particularorganization, but also a sympathetic understanding of theworkers, their attitudes and their problems. A certain amountof commitment and empathy for a cause, even in uncertaincondi-tions, is necessary. Till now the attraction for personsentering this occu-pation has been the possibility of a politicalcareer in the future. However, there have been some plantunions, which have been run very professionally and have at thesame time been concerned with the viability of the firm or theenterprise as well as the good of the workers. The erstwhileSimpson Workers Union under the stewardship ofGurumurthy was an example, and TLA is an example of anindustry level federation. .

Trade Union FinancesIf an organization is to grow, survive and meet the needs of itsrank and file members in terms of attaining their objectives etc.it needs money. For a variety of reasons, the finances of manytrade unions have not been very bountiful. It must be notedthat to every general statement, there are a number of excep-tions and so is the case with some financially strong unions.Funds are needed for attracting and retaining competent stafffor, however idealistic the cause, people do need to survive. It isonly with competent staff that some of the objectives likeresearch, comparative data generation, company studies,presenting demands and resolving workers problems can beachieved. Again, funds are necessary for political lobby-ing; forsending union representatives to the local bodies, state andcentral legislatures. If inertia sets in, an organization will witheraway or the rank and file will shift to a more active and useful

organization. Funds there-fore are needed to pursue activities,which will in turn benefit the members who will then contrib-ute, not only financially but also in terms of their services andsustain their membership. Activities resulting in somethingworthwhile will arouse the enthusiasm of the members andmake them concerned for the allocation and proper utilisationof scarce resources. The divisive nature of Indian trade union-ism bas also led to the dissipation of funds amongst a largenumber of organizations, with the result that there are manysmall unions without much financial backing and withoutmuch staff to do any substantial work. The generation offunds has been wholly inadequate. In some cases, subscriptionsare not collected promptly or are paid by members only whenthey have a problem. In the former case, the trade unionmanagement for fear of losing membership overlooks it. Onthe other hand, there are according to some trade unionexecutives, shrewd members who do not mind paying sub-scription to more than one union in order to protect theirinterest in times of need.One other mechanism employed nowadays besides the usualcollection is the special levy at the time of distribution ofbonus. Some national federa-tions and independent unionsoften generate some reserves to pay at the time of strike asstrike fund or to employ research staff to keep abreast withcurrent trends, but this is not the case with all unions. Tablebelow gives the financial position of trade unions.

• Excludes J&K and West Bengal.• Excludes J&K, Kerala, Nagaland, Rajasthan and West

Bengal.• Incomplete. Assam, Bihar, H.P., J&K, Kerala, M.P.,

Rajasthan, and West Bengal are excluded.(P) Provisional.Source: Indian Labour Year Book, Labour Bureau, Ministry of

Labour, Government of India, Simla, 1979, p. 58, Table4.04.

Many researchers have written about the woeful lack of fundsamong trade unions resulting in poor organization, and hencethe inability to cope with problems. Also, it is felt that there arenot enough field workers or union officials to cope with the

TABLE Income and Expenditure of Workers Unions

No. of unions Average income-

Income Expenditure

per annum per Year submitting

(in lakhs) (in lakhs) trade union in

returns rupees

1951-52 2509 50.84 45.32 2026.32

1956-57 4390 80.17 71.81 1826.19

1961-62 6954 171.13 151.34 2460.89

1969 8254 340.71 299.98 4127.82

1970 7692 395.83 331.00 5145.99

1971 8909 426.91 408.55 4791.89

1972 8011 461.97 402.87 5766.69

1973 7472 491.37 416.67 6576.15

1974 5662 499.35 449.34 8819.32

1975*(P) 9690 715.08 628.55 N.A.

1976*(P) 8719 646.90 579.13 N.A.

1976**(P) 8177 711.75 611.54 N.A.

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problems of workers and to protect their interests, especially atthe time of wage negotiations.There are, however, some notable exceptions especially in-termsof finan-ces. The Simpson Workers Union under the steward-ship of Gurumurthy was an organization which built upsubstantial financial reserves besides ventur-ing into a variety ofpioneering worker welfare activities when Gurumurthy and hiscolleagues resigned from the stewardship of the SimpsonWorkers Union after 22 years he distributed a sum of Rs. 16lakhs among the 15,000 members of the union as ‘UnionGratuity’.Two factors with regard to union finances are especially worthnoting. First, craft unions, which are usually smaller in numberand composed of skilled workers, whose average earnings arehigh, are usually better funded because of higher contributions.Therefore, they are able to provide better service to theirmembers. On the other hand, the bigger unions with lesscontribution from their members (but the quantum of moneyis made up by the larger numbers) are able to organize moreservices, in terms of depart-ments etc. in their organizations.Often, the large size itself provides the necessary momentum.The range of services and organizations provides an attractiveimpetus for the merger of smaller unions with the larger ones.

Ancillary Functions of Trade UnionsBesides their main function, which basically consists oforganizing workers and improving their terms and conditionsof employment, many trade unions provide a variety ofservices to their members and sometimes to the commu-nityof which they are a part. These ancillary functions can be catego-rised into four groups: (i) communication; (ii) welfare activities;(iii) educa-tional activities; and (iv) research.

CommunicationMany large unions publish a newsletter of a magazine. Theirmain aim is to clarify the union’s policy or stand on certainprincipal issues and also to pass on information about theunion and its activities. Much could be done to improve thecontents and quality of such publications. There is a need toprofessionalise such publications by hiring specialised personsto handle the activity. If necessary, these publications could alsobe sold to generate addi-tional revenue to augment unionfinances. However, the main function remains that of commu-nication so that the rank and file are aware of the activities ofthe union.

Welfare ActivitiesMany unions provide a number of welfare activities to improvethe quality of the workers’ lives. Included in this sphere are theprovision of housing, cooperative societies and in the case ofTLA (Ahmedabad) it has ventured into the area of organizingworking or self-employed women and has even started abanking activity for this purpose. This separate organization iscalled the Self Employed Women’s Association (SEWA). Someunions also offer training in craft activity, especially for women,who can then supplement their husbands’ income with acottage industry type of activity, such as sewing.

Education

Education helps create awareness on the part of the workers inthe environ-ment around them. Many workers cannot affordformal education or given the system as it exists, they are unableto utilise it to their advantage. While the government too hasworker education schemes, the trade unions in some cases havecooperated and added their own contributions to tailor it to thespecific requirements of the workers. Such educational schemesare meant to enhance the worker’s knowledge of his workenvironment and to inform him fully about the issues thatconcern him, particularly with reference to his rights andresponsibilities, procedures and systems that exist in the workplace for redressal of grievances, worker participation schemesand so on.

ResearchThis is an activity, which is gaining significance only in recentyears. Yet it is important for many reasons. The union negotia-tors need updated infor-mation systematically collected andanalysed at the bargaining table, where the terms and conditionsof employment of their rank and file are negotiated. They needto back up their wage claims with knowledge of the industry,productivity, and comparative industry practices. Therefore theemphasis is much less on academic research and more on thepractical problems, especially those issues concerning the day-to-day affairs of the union and its activities and unionmanagement relations. Some of the research activities are: (i)collection and analysis of wage data including fringe andpension benefits through surveys of comparative practices. Thiscould also include data on working conditions and welfareactivities; (ii) preparation of background notes and positionpapers for union officials; (iii) preparation of background notesetc. for court cases; (iv) collection and analysis of macro datarelating to the economy, industry, sectors etc; (v) maintainingcontacts with other unions, research bodies and universities;and (vi) to examine the current organization structure, proce-dures etc. with a view to understanding its relevance to thecurrent situation.This function could be carried out at the headquarters of theunion or the central office but involvement of local officials togather data on local practices etc. would be useful.

Wage Policy of UnionsIt is often remarked that the only wage policy of unions is theirdemand for more and more economic benefits. Of course,unions do seek more for their members, and wage increases areunquestionably the most common goal in negotiations.Nevertheless, such a. generalization can be misleading; unionpolicy is much more complex.As a part of the general policy to improve the living conditionsof workers, unions endorse a policy proposing rising real wagesand living scales so that wage rates and earnings advance morerapidly than costs.of living. They may propose to relate wagesto productivity and hence to ensure employee participation inthe increased profits. They seek to protect labour’s share ofincome, to see that rents, interest, and proprietary and manage-rial shares are not increased at the expense of workers. They mayeven propose that a larger overall share of income distributed toworkers, on the ground that such a changed distribution is

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necessary to maintain purchasing power of workers, preventstagnation, and assure continued growth in the economy.In some cases, union policy has been concerned with anemployer’s ability to pay. In others, policy has proposed toignore this consideration. Union policy has sometimes argued-as”, for example, in the requirement of minimum wages-thatthe economy will be better off without employers who are soinefficient, that they cannot afford to pay. In the advancedcountries, most union officials and probably a majority ofmembers are keenly aware of the realities of competitivebusiness and favour a policy that protests the goose that laysthe golden egg. They seek to avoid wage rates that are likely tohave adverse effects on member’s employment. They under-stand the economic facts of life and recognise elasticities indemands for labour.

Notes -

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Learning ObjectivesAfter going through this chapter you will be able to compre-hend the following.• The relevance of the different theories of trade union

Approaches to Trade UnionismTrade unionism is the child of industrialization, which caughtmomentum after industrial revolution in England during themid nineteenth century. The evolution of the trade unions hasbeen interpreted in different ways by different authorities. Theirviews are expressed in the form of ideologies, approaches,theories, etc. The purpose of such approaches and theories hasbeen to explain the basic motivating factors behind uniongrowth and bargaining policies. Unions engage in a wide varietyof functions, ranging from organization of workers tomaintaining and protecting their rights.John T. Dunlop has been of the view that a useful theory oftrade unionism must provide answers to the followingquestions:i. What factors lead to the organization of a union?ii. What conditions are favorable to bring a union into

existence?iii. What different patterns of growth and development in

different industries and different geographical areas arefound in the unions?

iv. What are the ultimate goals of the unions? How will theseaffect the political, economic and social structure of thecountry in the long run? To these, Arthur D. Butler addedtwo more questions, namely:

v. How do unions decide which goals to seek throughcollective bargaining? When a union knows it cannot wineverything at a particular bargaining session, how does itdecide whether to fight harder for wage increases orfor a better grievance procedure?

vi. How do unions decide which techniques to use inaccomplishing their goals? What determines whetherunions will select economic or political methods?

The questions are inter-dependent and the answer to one willdetermine answer to others. To answer these questions, thefollowing theories of labour movement might prove useful:1. Marxian class struggle theory.2. Webbs’ theory of industrial democracy.3. Cole’s theory of industrial unionism.4. Hoxie’s theory of business union.5. Tannenbaum’s anti-technology theory.6. Common’s pragmatic approach.7. Perlman’s theory of scarcity consciousness.8. Kerr and Associates’ protest theory.

9. Mahatma Ghandhi’s Sarvodaya theory.

The Marxian TheoryKarl Marx was the founder of “Scientific Socialism” popularlyknown as Communism. In the eyes of Marx, the organisedlabour movement is an intermediate step in the class struggle,the fight for power by the proletarian class (workers) tooverthrow the capitalist class (bourgeois). Karl Marx traced theorigin of trade unionism to the growth of industrial capitalism.And in his views, trade unions represent a prime instrument ofclass struggle between proletarian workers and capitalists. ToKarl Marx, the trade union is an “organising centre.” Withoutorganisation, workers compete with each other for availableemployment. Trade unions developed out of the attempts ofthe workers to do away with this competition for the purposeof obtaining at least such contractual-conditions as would raisethem above the status of bare slaves. The labour organisationprovides the locus of the working class towards a change in thestructure of the society, and it was to be the center , fororganising the working class for its political emancipation.According to Marx, with the emergence of trade union move-ment, the decay of capitalism would be inevitable.Trade unions are essentially political institutions, a means ofconsolidating the workers’ position on a parity with, andeventually superior to, that of any other member of thecommunity. The motives which drive workers into joining tradeunions are economic insecurity, political exploitation and socialdegradation. The labour movement is a collective movement onan international scale in which the interests of the workers areidentical and always in opposition to those of their masters.

Webbs’ Theory of Industrial DemocracyWebbs’ theory is the classic statement of the assumptions,purposes and methods of labour organisation. The husband-wife team of Sidney Webb and Beatrice Webb were dominantleaders of the labour party in Great Britain during 1920s and1930s. According to Webbs, trade unionism is an extension ofdemocracy from the political sphere to that of industry and toovercome the dangers of managerial dictatorship. This functionof representing and protecting the working class is not just atemporary-obligation, arising from the current state of modemindustrial development, nor does it lead eventually to the allembracing ‘dictatorship of the proletariat of Marx and Engles.They rejected emphatically the “classless society”. Webbs as“fabian socialists” saw a different outcome in the evolution ofpolitical form. In their analysis of the causes of trade Union-ism, the Webbs’ placed major emphasis upon the adverseeffects of competition. In the “Higgling” market the ruthlessstruggle for commercial and industrial survival based oncomparative prices, with its long chain of pressures extendingfrom the consumer through the retailer to the wholesaler to themanufacture, is to be found the explanation of the workers

LESSON 6:APPROCHES TO TRADE UNION

UNIT IMANAGEMENT OF INDUSTRIAL RELATIONS

CHAPTER 2: INDUSTRIAL RELATIONS ANDTRADE UNIONISIM

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misery. Trade unions perform greatest service in the capitalist ,free enterprise society by lifting from the individual employeethe heavy pressure of competition over wage rates, hours andconditions of work. Webbs talked of the class struggles as “thelong drawn-out battle of interests between capitalist employersand manual working wage earners.In order to improve their members economic status, theunions seek to require each firm to pay at least a minimum rateof wages and to provide minimum working conditions, interms of hours, sanitation, safety, etc. Further, to Webbs, tradeunionism may extend democracy to the industrial sphere. Itmay equalize the bargaining power of labour and capital.18Hence, it would be possible to establish uniform rules, whichthey called as common rules, in respect of wages, workinghours and working conditions, etc.According to Webbs, trade union movement is not an instru-ment of revolution to overthrow the capitalistic order. In fact,they saw the solution of class conflict in equality of bargainingpower and collective negotiation. They did not think it necessaryto accomplish complete overthrow and liquidation of businessclass. It was merely to eliminate industrial autocracy and replaceit with industrial democracy.To improve the economic status of the working class and toinfuse industrial democracy, Webbs advocated the methods ofmutual insurance, collective bargaining and legal enactment.According to them, the special function of the’ trade union isthe democratic administration of the industry.

Cole’s Theory of Industrial Unionism and Control ofIndustry

Cole’s views of the proper function of organised labour and itsrole in the world of the future were clearly stated in “The Worldof Labour.” published in 1913. As a socialist, he visualized thatin future-the goal of labour as something more than theWebbs’ representation of the interests of workers and some-thing less than the Marxian dictatorship of the proletariat. Itwas the “control of the industry” by the true producers, theworkers, in partnership with the State. The theory of producercontrol, which Cole endorsed with some qualification, was the“syndicatist” dogma of ownership and means of production.The principle of union development necessary to this end’ ’tisindustrial unionism, of which he has been one of the leadingpropounder.Like Webbs, Cole had no doubt about the assumption that(trade Unionism exists to carry on the class struggle. He said“the class struggle is preached not on the ground that it isdesirable, but on the ground that it is monstrous.and irrefutable fact.” The class struggle is established in oursocial institutions, and it is only by means of the class strugglethat we can escape from it. This in turn implies great power,which can be attained only through universal membership ofthe labour class in trade Unions and improved Organisation.Cole gave the intermediate and ultimate stages of the classstruggle and remarked, “the control of industry may be thefuture destiny of the trade unions, the direct control of thewhole national life is most emphatically not for them.

Hoxie’s theory of Business UnionRobert F. Hoxie explained the origin of trade unionism interms of group psychology. According to him, workers who aresimilarly situated economically and socially, closely associatedand not too divergent in temperament and training will tend todevelop a common interpretation’ of their social situation and acommon solution of their problems ofliving.23 This meansthat to understand the nature of trade unionism one has totake into account not only environmental conditions but alsotemperamental characteristics of the workers concerned. Thus,differences in group psychology cause different types of unionsto appear.Hoxie’s greatest contribution to the theory of unionism was toclassify labour organisation according to their functionaloperations and to identify the principal types to be morecommon. The main types of trade. unions according to Hoxiewere five, Business, Uplift, Revolutionary, Predatory andDependent. A fundamental type is the result of a “commoninterpretation of the social situation” which produces agree-ment among the group as to the problem forcing its membersand the kind of remedial programmes, which will solve it. ToHoxie, trade unionism was a pragmatic, shifting grass-rootsmovement. He rejected implicitly the assignment of a fixedbasic “Cause, economic or political or historical, as the explana-tion of workers’ combination. This amounted to a denial ofthe class struggle theory of Marx or Cole and brought him closeto Common’s environmental adaptation theory without thelatter’s underlying class commitment.The five types of unionsdescribed’ by Hoxie are as follows:1. Business Unions. Also known as ‘Bread and Butter

unions’, These unions are trade conscious rather than classconscious. They accept the existing economic system andaim at bringing about improvement in the wages andworking conditions of their members. Collective bargainingis the usual method followed by these unions with heavyreliance on strike as a weapon.

2. Friendly or Uplift Unions. Such unions are essentiallyidealistic in viewpoint. They may be trade, class or societyconscious. These aspire to elevate the moral, intellectual andsocial life of the workers. To realise this aim, these unionsadvocate use of political methods such, as setting up ofcooperative enterprises, profit sharing, mutual insurance,etc. They are law abiding and employ the methods ofcollective bargaining for securing benefits for the workers.

3. Revolutionary Unions. Such unions are extremely radicalboth in view point and in action. They are distinctly classconscious rather than trade conscious. They reject privateownership of productive resources and the wages system.Their weapons are either political action or direct action inthe form of strikes, boycotts, sabotage and violence.Collective bargaining is also used in so far as the main aim isnot overlooked. Their aim is to overthrow the capitalisticsystem and install socialistic system.

4. Predatory Unions. Unions of this kind do not subscribeto any ideology. Such unions are characterized by their

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ruthless pursuit of immediate ends. Their methods includecollective bargaining, secret bribery and violence.

5. Dependent Unions. A dependent union is parasitic innature relying upon the support of the employers or otherlabour groups. Unions of this type appear in two forms-company union and union label union. The formerdepends entirely on the employer for its support and doesnot really represent the interest of the workers in so far as itis not opposed to the interest of the management. Thesecond type depends upon the union label being imprintedon the products made by the union members.

Hoxie predicted that with the rise of union power, collectivebargaining would develop into a form of industrial democracyand bring an end to the profit system.

Tannenbaum’s Anti-Technology TheoryThe machine is the centre of gravity in present-day industrialcommunity-what land did for the noble in the days of feudal-ism and what the competitive market and free bank connectionsdo for the merchant, the factory does for the workers.,,24 It isthe dominance of machine that gave rise to trade unionism.Frank Tannebaum, a Professor of History of ColumbiaUniversity, U.S.A., saw the emergence of trade union move-ment as labour’s reaction to the dominance of the machine inmodern industrial society. The industrial revolution destroyedthe older way of life and left the individual industrial worker tothe mercy of the employer “who became the catalytic agent thatcrystalised the workers into a self-conscious group. The workersbecame completely dependent upon the machine and theemployer degraded them and made them insecure. The tradeunion movement aims at control over the machine so as toovercome insecurity. Thus, according to Tannenbaum, theemergence of unionism is spontaneous and inherent in thegrowth of capitalism. It reflects the urge of the human beingsto have control over machine. Tannenbaum saw the labourmovement ultimately displacing the capitalistic system byindustrial democracy.

Common’s Pragmatic ApproachCommon advanced a theory of labour. movement based on aset of basic premises which are mostly environmental factors.That is why, his theory is also called “environmental theory oflabour movement.” The basic premises of his theory wereMarxian, although the conclusions, being those of carefulobserver and a restrained reporter, would hardly have satisfiedthe German revolutionary philosopher.Common regarded the labour movement in America as delayedand thwarted by a number of factors, the first of which was freeland. Ranking next as a major influence upon. the labourmovement of the nineteenth century was the tremendousexpansion of markets, the third factor is effect of the newcompetition upon labour movement, which were much like asdescribed by the Webbs. It is the function of manufacturer-employer to drive hard wage earners to their first consciouscombination with others of their class in trade unions and awayfrom the-guild like associations of earlier days. The fourthimportant influence of great importance has been immigration,with its influx of races, nationalities and languages, thrown

together in a single competitive era and cycles of property anddepression, which Common found to have a positive correla-tion with the rise and fall of union activity. The outcome ofCommon’s theory of labour unionism is non-revolutionaryand implies non-acceptance of capitalism which fell considerablyshort of even the Webbs’ expectations of political evolution.

Perlman’s Theory of Scarcity ConsciousnessSelig Perlman (1888-1959) was the inheritor of Common’sintellectual leadership in labour economics at Winconsin School.Perlman wrote extensively on the labour: movement, being theauthor of “A History of Trade Unionism in United States”(1922)-and “A Theory of the Labour Movement” (1928)among others. According to Perlman, unionism developedbecause of the workers’ scarcity consciousness, which arose inthe minds of the workers because of the fact that their eco-nomic position cannot improve beyond that which is barelysufficient to cover minimum essential of an ordinary standardof living. Out of this scarcity consciousness grew a job-conscious unionism, a unionism “which controls the jobopportunities. The union establishes certain job rights which itthen rations among the members through regulations applyingto overtime, seniority, etc.

Kerr and Associates’ Protest TheoryKerr, Dunlop, Harbison and Myers observed that labourprotest is inherent in industrialisation. Organised from ofprotest, according to them, is labour organisation. The-natureand role of such organisation depend upon theindustrialisation process, the industrializing elite and the specificculture and environment of a country. These authors used themore general term “labour organisation” in place of tradeunion. One of the universal responses of labour force toindustrialisation is protest against it, because “industrialisationmakes a universal demand; it requires a-basic change in relation-ship between man and his work and inevitably also betweenman and his cultural setting, and the new recruit to the indus-trial labour force resents the imposed discipline.” The workeroften finds his work distasteful and his compensation nevercommensurate with his contribution. The type of labourorganisation that develops in a country is related to the type ofindustrializing elite; there are certain universals, and thediversities which can be explained in terms of strategies ofindustrializing elites and cultures and environments;

Mahatma Gandhi’s Sariodya TheoryAccording to Mahatma Gandhi, unions are not anti-capitalisticorganizations. They are in the least degree political. Their mainaim is to increase their internal strength to work conscientiouslyand to take from the employers no more than that what is“rightfully due to the workers.Mahatma Gandhi’s philosophy is’ based upon the “Sarvodaya”principles of Truth, Non-violence and Trusteeship, in whichclass harmony prevails. He considered trade unions as essentiallyreformist organisations and economic institutions, which mustbe organised the basis that capital and labour are not antagonis-tic but ate supplementary to each other. He observed: “My idealis that capital and labour should supplement and help eachother. They should be a great family living in unity andharmony; capital not only looking to the material welfare of the

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laborers but their moral welfare also-capitalists being trustees ofthe welfare of the labouring classes under them.Gandhiji felt that trade unions should not only undertake thefunctions concerned with improving the economic conditionsof workers, but must also try to raise their moral and intellec-tual standards and should bring about an all rounddevelopment through internal efforts. They should alsoundertake programmes for teaching supplementary occupationsto their members so that uncertainty of employment duringstrike period may be reduced to the minimum. -Regarding the aims and objectives of trade unionism, Gandhijiobserved, “Trade unionism is not anti-capitalist. The idea is totake from capital labour’s due share and no more, and this, notby paralyzing capital but by reform among labourers fromwithin and by their own self-consciousness; not again throughthe cleverness of non-labour leaders, but by educating labour toevolve its own leadership and its own-self-restraint, self-existingorganisation. Its direct aim is not ill the least degree political. Itsaim is internal reform and evolution of internal strength. Theindirect result of this evolution when, and if, it even becomescomplete, will naturally be tremendously political.It should be noted that Gandhiji was never against strikes assuch. He had himself led some strikes in Ahmedabad anddeclared that strike was an “inherent right of the working men.for the purpose of securing justice, but strike must be consid-ered a crime immediately the capitalists accept the principle ofarbitration.

Strikes could Succeed if the following conditions arefulfilled:

a. The cause of strike must be just and only for redressal ofgenuine grievances that strikes ‘should be organised.

b. Workers should go on strike only after the capitalists havefailed to respond to moral appeals and only as a last resortafter exhausting all other means of persuading thecapitalists to concede to their just demands.

c. Strike should be resorted to after a ‘fair notice’ being givento the employers.

d. There should be practical unanimity among the strikers.e. Strikes should be peaceful and non-violent, i.e., the workers

should refrain from assaulting or abusing capitalists or theiragents and also avoid violence against the non-strikers.Gandhiji as violence considers even damaging capitalists’property.

Gandhiji did not favour unions taking part in political activitiesfor two reasons. First, because the workers were not enlight-ened, and second, because the political parties exploit theworkers for their own ends. Regarding sympathetic strikes, headvocated that such strikes should be organised in sympathy ofworkers who were seeking, for a just cause after exhausting allother means of settling disputes and there following the non-violent path. He, however, disapproved strikes organised byworkers doing essential services. He conceded that “One hadevery right to lay down conditions of service (but) the layingdown of conditions is not an absolute right. Even if such anabsolute right would be permitted, it might not be proper touse it under certain circumstances.”

Thus, it would be evident that Gandhlji insisted that strikesshould be undertaken only after adopting the legitimate meansof settling disputes. These means in his views were (a) themoral appeals to the conscience of the employers to concede totheir just demands and (b) when moral appeals failed, resort tovoluntary arbitration. Gandhiji would not like the parties todeclare strike or lockout without first trying to refer the disputeto an umpire who would give a decision on the dispute, whichwould be binding on the parties. Broadly speaking, the originand growth of trade unionism is the result of the increasedcomplexities of economic structure. Industrial Revolutionmade it all the more essential to organize workers to protecttheir economic rights and secure better working environment.Thus, trade unionism is the child of industrialization born outof the stresses and strains of Industrial Revolution.Individual workers have little bargaining power arising due tovarious factors such as their dependence on employers for theirlivelihood, lack of reserve funds and the Perishability of thelabour. But when they unite, their bargaining power is strength-ened, and these handicaps are reduced. Trade unions are animportant indication of social unrest and social progress-whichare the result of large-scale industrialization. Further, somenon-economic factors too have influenced the growth of tradeunionism in any country. As Pigou has observed, “Theconditions necessary for the growth of organized action amongthe workers are the differentiation of separate wage earningclass, some stability of status within that class and some powerof intercommunication among members;” Common national-ity and language, uniformity in the work performed byconsiderable members, improvement of education, andpolitical activities also influence the growth of trade unions. Therole of State in giving support to the trade union movementcan’t be undermined. In most of the countries, the govern-ments have passed laws for the registration of trade unions andto grant immunity to the trade union leaders against criminalproceedings in the course of their genuine trade union activities.

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LESSON 7:TYPES OF UNIONS

Learning ObjectivesAfter going through this lesson you will be able to analyze thefollowing:• Characteristics of different Unions and their applicability in

the Indian industries.Now that we have closely examined the approaches of the tradeunions and have understood the concept of trade unions wemove on to the different types of trade unions.

Types Of UnionTo begin with we will first discuss Craft and General Unions.This type of union is more prevalent in developed westernsocieties, where the industrial way of life has had a longerhistory. A craft union is built around a certain specialized skill,which has necessitated a special type of training. Craft unions aretherefore open, to members of a certain trade/ skill, like AirIndia’s navigator’s union. On the other hand, a general union isopen to all members irrespective of their skills cutting acrosstrades/ skills and could include unskilled, semi-skilled, andskilled workers.

Closed Shop/Union ShopIn such situations the union makes employment conditionalon union membership, one variation being that employment isrouted through the union, where it acts as a labour supplierand, in another, once employed, an employee is required to jointhe union.

Check OffThe check-off system is a practice where the managementcollects an employee’s union dues, as a wage deduction andgives a lump sum amount to the union. This is a facility thatensures totality of collection of union dues, with no excuse foremployees to desist from paying for one reason or the other, asit could happen in a voluntary system. Such a facility is providedonly to a recognised union.

Blue-Collar and White-Collar WorkersA distinction is made on the basis of the level and status of theemployee for membership of the unions. All shop floorworkers (part of the produc-tion system who operate machinesand related systems) are termed blue--collar workers, and allclerical or office staff, who do not work on the shop floor aretermed white-collar workers.White-collar workers or non-manual workers form a distinctsocial group characterised by divergent socioeconomic back-grounds, levels of education, manner of speech, social customsand ideology. They are paid on a monthly basis unlike theirblue-collar colleagues, enjoy longer holidays and differentprivileges as compared to the blue-collar workers. But the mostimportant feature is their nature of work.The white-collar worker is usually involved in a desk job orproviding services over the counter. They are generally better

educated and working at jobs, which involve utilisation of theirmental capabilities to a greater extent. The members of thesegroups usually seem more inclined towards management thanblue-collar workers.At one time because of their professional skills and socialstanding they were better paid, and had better terms andconditions of employment, including more perquisites andfringe benefits. However, of late, blue-collar workers, especiallythe highly skilled categories, who are in greater demand, havehigher wage incomes and perhaps better union protection andjob security. This is not only because of the efforts made by theunions but also because of the socialist orientation of thegovernment, which has been manifested, in its labour legisla-tion.The white-collar workers are concentrated in the fields ofcommerce, transport, storage and communication. The workersengaged in different occupations that fall under this category areprofessional, administrative, executive and managerial workers,clerical and related workers, sales staff, farm managers, technical,supervisory and other workers engaged in trans-port andcommunication services or in sports and recreation facilities,artists, musicians.Regardless of the group’s position in the organization structureof an industry, they are linked with their employers by beingassociated with that part of the productive process whereauthority is exercised and decisions are taken.It has been found that white-collar unionism is expanding.These wor-kers have begun to fight for better pay scales, morefringe benefits, internal promotions, etc. following the methodof agitation and litigation. Their strong points are a largemembership, sound finance, internal leadership.Today, trade unions wield a lot of power. The trade unionleaders play an important role so much so that they “influencevital channels of pro-ductive and strategic functions. Economicand social decisions affecting working class people are taken bythe Government in consultation with the leaders of the tradeunion movement.” For instance, the trade union leadersparticipate in the meetings of the Indian Labour Conference,con-sultative bodies, wage boards, etc.Another recent development as far as white-collar unions areconcerned is the militancy among workers. They realise that byexerting pressure on employers through union power theirdemands will be met sooner.Table White-Collar Workers

Sample of occupational groupsNumbers

Professional, technical and related workers4,083,300Administrative and managerial personnel 670,300

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Clerical and related workers5,231,600Sales workers1,620,400Service workers3,614,500Farm sectors, supervisors and workers1,958,600Production, transport and communication11,990,300Workers not classifiable by occupation1,290,500Source: International Labour Office, Year Book of LabourStatistics, Geneva, 1977, p. 222.In the post-Second World War period, there has been atremendous increase in the number of white-collar workers inIndia moving to the growth of industries, increase in thenumber of banks, insurance com-panies, commercial officesand increase in the number of government and semi-govern-ment offices. According to the 1951 census the number ofper-sons engaged in non-manual operations was 23 million outof a total working population of 139 million. In 1961, out of188 million workers 28 million were white-collar workers.According to the 1971 census the population of India was 540million of which the total working population was 180 million,(32.92%), white-collar workers being 31 million. Table abovegives the occupational distribution of white-collar workers.

White-Collar UnionsIn India unionization among white-collar workers began asearly as 1897 and in 1897, the National Union of Railway menof India and Burma was formed. However, unionizationamong the workers did not have any signi-ficant growth beforethe Second World War. Since 1947, the growth of unionizationamong white-collar workers has been due to inflation, therealization of effectiveness of collective bargaining, etc.Of the 31 million white-collar workers, 1.1 million are union-ized and there are 1,448 trade unions of white-collar workers(Table).TABLE Membership of registered trade unions in certainindustry groups in India.

Number of Membershipunions sub- in lakhsmitting returns (for 1971)

Commerce 593

2.23

Transport, Storage,

Communication 147

6.10

Services 708

226

Total 1448

10.59

Source: Indian Labour Statistics, Labour Bureau, Ministry ofLabour, Government of India, Simla, 1976, pp. 169-181.Some of the important trade unions of white-collar employeesare the All India Bank Employees Union, the All India DefenceEmployees Federation, the National Federation of P&TWorkers, the Confederation of Central Government Employeesand the Indian. Federation of Working Journalists. All white-collar unions are independent in that they are not affiliated toany central trade union organization. Their leadership is largelyendogenous.

Agricultural LabourAgricultural labourers are those whose main source of incomeis farm wage employment. According to the agricultural labourenquiries, an agricultu-ral labourer is one who is employed notonly in crop production but also hired in employment in otheragricultural occupations such as dairy farming, horticulture,raising of livestock, bees, poultry, etc.Agricultural labour consists of two such categories (Chart)namely (i) landless agricultural labour; and (ii) small cultivators,whose main source of income, due to their small holdings, iswage employment. Landless labour is again divided into: (i)permanent labour attached to a cultivating house-hold; and (ii)casual labour. Casual labour in turn consists of three groups:cultivators, share croppers and households.

Chart

It has been found that agricultural labour forms some of themost dep-rived and underprivileged segments of Indiansociety. Some of the difficulties are that:1. Their wages are low,2. They perform difficult tasks,3. They are faced with irregular employment,4. They lack social security,5. They do not have assets of great value,6. Their working and living conditions are poor,

AGRICULTURAL LABOUR

Landless agricul-

Small

tural labour cultivators

(Those who mainly work on

their own

farms but who also work as

wage

Permanent Casual earners in agricultural and related

labourers labourers activities. This is more so

with marg-

inal cultivators. Because

their land

resources are not capable of

provi-

Culti- Share- House- ding then income

throughout the

vators croppers holds year so they take up wage

emplo yment during the

lean season.)

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7. They are illiterate and thus exploited by the employers,8. They borrow funds from their employers to support the

family which leads to their becoming bonded labour.Though the wages of casual labourers are better than the othergroups, their job prospects are uncertain because they do not getwork throughout the year.According to the Rural Labour Enquiry (1963-65), the wageemployment of the agricultural labourer is 247 days a year.Because of this low span employment the casual labourers faceacute hardship.Their poor income is obvious by the fact that a large percentageof them fall below the poverty line-82% of the marginalfarmers in Orissa, 79% in Madhya Pradesh, 75% in UttarPradesh, 69% in Maharashtra and Tamil Nadu, 68% inRajasthan and Mysore, and 66% in Gujarat are living below thepoverty line. About 50-60% of agricultural labour fall into thiscategory. Faced with these problems they need improvement in twodirections. One hand, wages and working conditions need to beimproved and on the other, there is the necessity of finding jobopportunities and obtaining benefits to which they are entitled.Thus there is a need for organizing agricultural labour tosafeguard their interests.In this regard it is felt that there is a strong case for the union-ization of, agricultural labour, but progress in this direction isnot very satisfying. According to the 1971 census, agriculturallabourers numbered 47.49 million, the membership of theirunions submitting returns was 93,000 which show poorlyorganized agricultural labour is some of the constraintsthat come in the way of organizing this group are that they arescattered, often dependent on their landlords, their lack ofcohesiveness because of their diverse cultures and the illiteracyamong them.As such, formation of trade unions by the unorganized andilliterate agricultural labour could lead to class conflict. Hence itis proposed that in order to solve these problems rural labourcooperatives be organized instead of trade unions, whoseobjectives could be to bring the agricultural labourer the fold ofsome organization similar to trade unions. This would have inadvantages. Local leaders who know the problems of thelabourer and could therefore provide the necessary leadership aswell would run their co-operatives. Efforts have been made inthis direction in Kerala and Gujrat.In India, a distinction is made between agricultural labour andplantation labour. The latter have been within the pale ofspecial legislation and have organized trade unions, whichprotect and further their interests through collective bargaining.Some of the plantations are those of tea, coffee, rubber andcardamom and they are generally considered an industry. Theyhave been well deve-loped and organized since colonial times.The United Planters Association south India (UPASI) located atCoonoor is an example of an industry--level employersorganization, which among other things negotiates industry-wise -agreements with trade unions covering plantations in thesouthern states of Karnataka, Kerala and Tamil Nadu. Besidessettling the terms and conditions of employment and acting as

an employer’s spokesman and de it has also ventured intowelfare-oriented activities for the workers like the Family andHealth and Dairy Development Project in the Nilgiris.Table below gives the break up of the total population and theworking population in the several categories. The table belowgives a break up of the various occupational categories of theworking population.Table: Classification of India’s Population and Workers inOrganized Industry1. Labour Force Structure 1960-1980 (in percentage):

Agriculture IndustryServices

1960-1980 1961-19801960-1980

74.0 62.2 11.3 17.2 14.720.6India2. Population of India (in millions):

1981 19711961Population 685 548439Workers (main) 223 180189Main workers as % tototal population 33.4% 32.92%43%3. Employment in Organized Sector (in millions):Cent. Govt. State Govt. Quasi Govt. Total Pvt. Sector G.Total1980 3.18 5.48 4.34 15.08 7.23

22.311981 3.20 5.75 4.55 15.48 7.40

22.881982 3.25 5.85 4.81 15.95 7.55

23.49Sources: 1. ILO World Labour Report, Geneva, 1984, p. 5.

2. Statistical Outline of India, 1984.Tata Services Ltd., Bombay, p. 30, 132.

Note: In the 1981 Census, ‘Main Workers’ were defined asthose who were engaged in any economically productive activityfor a minimum 183 days during the year preceding the date ofenumeration.Table: Economic Classification of Main Workers, 1981*

Total main % distribution Workers(in million)

Cultivators 92.5 Cultivators 41.6Agricultural labourers 55.5 Agricultural labourers 24.9Livestock,forestry, etc 5.0 Livestock,forestry, etc 2.2Mining and quarrying 1.3 Mining and quarrying 0.6Household industry 7.7 Household industry 3.5

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Other industry 17.4 Other industry 7.8Construction 3.6 Construction 1.6Trade and commerce 13.9 Trade and commerce 6.3Transport, commn, etc. 6.1 Transport, commn. etc. 2.7Other services 19.5 Other services 8.8Total 222.5 Total 100

• Based on 5% sample data of the 1981 Census & excludesAssam statistical out line of India 11984 Total Securities ltd.Bombay.

This data will provide a useful background to understandingthe process and extent of unionisation, which is discussedsubsequently.

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LESSON 8:GROWTH OF UNION

Learning ObjectivesAfter going through this lesson you will be able to compre-hend:• Of how the trade unionism spread in India and why.

Growth Of UnionsWhy do Workers Join Unions?Workers or employees join trade unions for a variety of reasonsthough they may not be conscious of their motive of joiningunions. These are as follows:i. Economic benefit. Every employee wants to increase his

income and to have better working conditions. But theindividual employee has very little bargaining power incomparison with that of his employer. If he joins theunion, the union will take care of his economic interestsbecause the union has great bargaining power to get itsdemands accepted by the management.

ii. Platform for self-expression. The desire for self-expressionis a fundamental human drive for most people. The unionprovides a mechanism through which employees can maketheir voice heard by the top management. Union serves as avia media of communication between the employees andthe top management.

iii. Check on arbitrary actions of management. The employeesmay join the unions to ensure a just and fair dealing bymanagement on the basis of a predetermined policy, andthrough collective strength restrain the management fromtaking any action which may be irrational, illogical,discriminatory or contrary to their general interests.

iv. Security. The employees may join the unions because oftheir belief that it is an effective way to secure adequateprotection from various types of Hazards and income. Insecurity such as accident injury, illness, unemployment, etc.For example, trade unions ensure compensation to theinjured workers under the Workmen’s Compensation Actand secure retirement benefits for the workers and compelthe management to undertake welfare services for thebenefit of the workers.

v. Employer-employee relations. Another reason ofemployees joining some union may be the broaderrealisation on their part that unions fulfill the importantneed for adequate machinery for proper maintenance ofemployer-employee or labour-management relations.

vi. Sense of participation. The employees can. Participate inmanagement of matters affecting their interests only if theyjoin trade unions. They can influence the decisions, whichare taken as. a result of collective bargaining between theunion and the management.

vii. Sense of belongingness. Many employees join a unionbecause their fellow workers are the member of the union.

At times, an employee joins a union under group pressure;if he does not, he often has a very difficult time at work. Onthe other hand, those who are members of a union feel thatthey gain respect in the eyes of their fellow workers. Theycan also discuss their problems with the trade union leaders.

viii. Background factors. Historical background factors also playapart in the disposition of employees to join a union. Forthose who have been raised in a working classneighborhood where one’s father and indeed all theworking members in the community belong to the unionacceptance of the union as a normal part of theemployment life seems natural.

You ca refer the following information related to the V.V. GiriNational Labour Institute research center for many of therelated issues. See the following:

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NLI Research Studies Series is the most important medium for disseminating the outputs of the research projects undertaken by the Institute. They are circulated to all the leading National and International institutions/organisations dealing with labour studies. The publication serves as as a means to obtain the feedback on the research being undertaken by the Institute from renowned scholars and practitioners.

Recent Publications under NLI Research Studies Series

No. : 033/2002

Title : Labour Contracts and Work Agreements in Tea Plantations of Assam

Author : Kalyan Das

Introduction:

The study compares the profile of workers in the large tea estates vis-a-vis that of their counterparts in the small-scale plantations. Based on the interactions with workers in four plantation estates and fourteen small tea gardens, the paper analyses the labour recruiting mechanisms, socio-economic backgrounds, work history profiles and the evolution of various enactments and agreements in the plantation sector. Further, the study assesses the working and living conditions, health and sanitation aspects, wages and employment benefits and the degree of mobilisation of workers in the plantations.

The efficacies of the provisions in the Plantation Labour Act, 1951 and Assam Plantation Labour Rules of 1956 are also examined in the study. It is observed that the provisions of Plantation Labour Act, 1951 and the bilateral agreements between workers representative and employers association have ensured well-being to the workers in the estate sector. However, this is not so in the case of unorganised small-scale plantations sector. Thus, it is concluded that there is an urgent required need to extend social and economic security to the workers of the emerging small-holding plantations in Assam

No. : 034/2002

Title : Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil Nadu

Author : Babu P. Remesh Introduction:

The essay by Babu P. Remesh titled “ Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil Nadu” is based on the author’s experience of coordinating an action-research project in Tamil Nadu. The study forms the part of an integrated project of the National Labour Institute of Organising Rural Labour of Effective Participation in Development, which was carried out in four states viz., Uttar Pradesh, Madhya Pradesh, Rajasthan and Tamil Nadu. The essay by Babu P. Remesh titled “ Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil Nadu” is based on the author’s experience of coordinating an action-research project in Tamil Nadu. The study forms the part of an integrated project of the National Labour Institute of Organising Rural Labour of Effective Participation in Development, which was carried out in four states viz., Uttar Pradesh, Madhya Pradesh, Rajasthan and Tamil Nadu.

The methodology of the project is based on holding Rural Labour Camps, a unique approach of participatory action-research and worker conscientisation that has been designed and refined at the Institute , over the past few decades. The essence of the method is to develop self-action for sustainable development, which inter alia aims at capacity building among rural workers through: (a) awareness generation on relevant socio-economic and legal issues; and (b) leadership development via organization building.

Apart from discussing the learning from the Kancheepuram experience, the paper provides a detailed account of the temporal changes in the organinsing tactic of Rural Labour Camps. The process of holding camps as well as the attitudinal /behavioural transformation of the campers are also discussed at length. Most importantly, the author has made an earnest attempt to critically analyse the outcome of the project, to suggest possible measures for strengthening the contemporary strategy.

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No. : 035/2002

Title : Child Labour in Chrompet Leather Manufacturing Units of Tamil Nadu Author : J. Jeyaranjan Introduction:

The study, Child Labour in Leather Manufacturing Units, is a collaborative effort of the National Resource Centre on

Child Labour at the V.V. Giri National labour Institute, NOIDA and the Institute of Development alternatives, Chennai. This is one of the series of studies conducted on child Labour in Hazardous industries.

The findings of the study show that there is no gender selectivity in child labour. Adults earn wages that are only marginally higher than what the children earn. Irrespective of the experience, skill and family size and requirements the wage payment system remains insensitive and relatively inelastic. Children contribute 20 to 40 per cent of the family income. The labour in the leather industry is defined by the caste location. While market forces predominantly govern all other aspects of the industry, the labour is drawn exclusively from the most downtrodden section of the Tamil Society. As heads of 60 per cent of the households are engaged in leather work, the study establishes the incidence of child labour in leather flaying as an intergenerational phenomenon.

No. : 036/2002

Title : Trade Unionism in South Indian Film Industry Author : S. Theodore Baskaran Introduction:

The essay, Trade Unionism in South Indian Film Industry, forms a part of the research activities carried out by Shri

Theodore Baskaran at the Roja Muthia Research Library, Chennai for the Integrated Labour History Research Programme of the V.V. Giri National Labour Institute. This project primarily aimed at indexing, documenting and preserving the source material relating to the trade union movement in South Indian Film Industry, to enrich the regional collections acquired in the Archives of Indian Labour. The Roja Muthia Research Library was identified as the appropriate organisation to entrust this unique assignment, as it is the world's largest collection of Tamil film magazines and due to its established reputation in conservation of sources on social and cultural history.

Trade union activities in film industry of south India have been slow and spasmodic. However, the events connected with labour activities were reported in the magazines and the discourse on the subject was reflected in the trade journals and film magazines. Theodore Baskaran's essay effectively utilises these source materials, to portray the growth of trade union movement and related activities in south India. The study warrants scholarly attention not only due to the fact that the trade union movement in film industry in South India is a rather unattended area, but also because of the simple but scholarly narration and analysis adopted by the author.

No. : 037/2002

Title : Migration, Social Networking and Employment: A Study of Domestic Workers in Delhi

Author : Neetha N.

Introduction:

Domestic service is a major and growing informal sector activity in the urban centres. The conditions of work in

domestic service are deplorable with long working hours, low pay and absence of job security. Women from certain areas or regions with specific socio economic backgrounds are found concentrated in this informal sector occupation. This has been seen as an outcome of the transformations in class relations and developments of new styles and patterns of living. Of late, the demand for domestic workers has increased, with the changed life styles of the middle class. On the supply side, employment in domestic service appears to be the only promising option for many of the disadvantaged groups or sections that are faced with limited opportunities. Notwithstanding the growing importance of the occupation in the urban informal sector in India, no comprehensive data is available on the magnitude and pattern of domestic work, migration aspects, recruiting systems, working conditions and so on. The essay by Neetha, Migration, Social Networking and Employment: A Study of Domestic Workers in Delhi, fulfills this long felt requirement.

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The essay, through a detailed micro-empirical study of a few worker-settlements and placement organisations provides a detailed understanding on the work arrangements and employment aspects of domestic service in Delhi. The essay also invites rethinking on the conventional migration theories. It is argued that female migrants are powerful agents in building and maintaining social and personal structures pertaining to migration and in the survival of the family in the city. Further, it is established that social networking is the mechanism through which domestics (re)construct and maintain cultural and social identities, which are otherwise lost in the urban living.

No. : 038/2002

Title : Study of Child Labour in the Zardosi and Hathari Units of Varansi

Author : J. John & Ruma Ghosh

Introduction:

In India, millions of children enter the labour market at an early age as part of the family’s subsistence strategies. Although the Child Labour (Prohibition and Regulation) Act, 1986 bans the working of children in some listed occupations and processes, yet there are several studies which indicate the incidence of child labour in the prohibited occupations and processes. Besides, studies have also indicated that there are many hazardous occupations and processes which are still not included under the CLPR Act due to lack of any comprehensive data. The present study therefore focuses on one such industry – the zardosi and hathari (embroidery) industry of Varanasi, in which although a large number of children are involved at a very early age, yet no comprehensive data is available on the magnitude and pattern of working.

The present essay, through a detailed micro-empirical study of the worker settlements provides an understanding of the structure and functioning of this industry and delineates the factors that perpetuate child labour. The study looks into the demand as well as the supply side factors and argues that the organisation of production through subcontracting and home based production lies central to the existence of child labour in this industry. The study reveals that the strong kinship and neighborhood networks in which the industry operates, makes it doubly easy for the entry of children at an early age.

• List of Other Publications under NLI Research Studies Series

No. 001/2000 Labour Market Institutions in Globalized Economy: Some

Issues in the Indian Context — C.S.K. Singh 002/2000 Dynamics of Labour Market in Kerala — S.K. Sasikumar & S. Raju 003/2000 Women and Labour Market: A Macro Economic Study — Neetha N. 004/2000 Mode of Payment of Minimum Wages in Bihar — Navin Chandra & Nikhil Raj 005/2000 Payment of Minimum Wages in Kind and Perceptions

Regarding the Mode of Payment — S.S. Suryanarayanan & Rajan K.E. Varghese 006/2000 Minimum Wages and Mode of Payment:

The Case of Punjab — Ruma Ghosh 007/2000 Rural Wages: On Developing an Analytical Framework — Babu P. Remesh 008/2000 Employment in Food Processing Industries — S.S. Suryanarayanan & B.V.L.N. Rao 009/2000 Determinants of Rural Wages: An Inquiry Across Occupations

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009/2000 Determinants of Rural Wages: An Inquiry Across Occupations — Babu P. Remesh, J. Jeyaranjan & A.C.K. Nambiar 010/2000 Adverse Sex Ratio and Labour Market Participation of

Women: Trends, Patterns and Linkages — Neetha N. 011/2000 Children of Carpet Looms: A Study of Home-based

Productions of Carpet in Uttar Pradesh — Nikhil Raj and Ravi Srivastava 012/2000 Child Labour in Slate Industry of Markapur in the Wake of

Legislation — K. Suman Chandra, R. Vidyasagar and Y. Gangi Reddy 013/2000 Child Labour in Moradabad Home-Based Industries in the

wake of Legislation — Ashish Ghosh, Helen R. Sekar 014/2000 Child Labour in Bulandshahar District of Uttar Pradesh — Tapan Kumar Pachal 015/2001 Outline of a History of Labour

in Traditional Small-Scale Industry in India — Tirthankar Roy 016/2001 Gender and Class: Women in Indian Industry, 1920-1990 — Samita Sen 017/2001 The Politics of the Labour Movement: An Essay on

Differential Aspirations — Dilip Simeon 018/2001 Child Labour in Home Based Lock Industries of Aligarh — Helen R. Sekar, Noor Mohammad 019/2001 Child Labour in Diamond Industry of Surat — Kiran Desai, Nikhil Raj 020/2001 Gender and Technology: Impact of Flexible Organisation and

Production on Female Labour in the Tiruppur Knitwear Industry — Neetha N. 021/2001 Organisational Structure, Labour Relations and Employment in

Kancheepuram Silk Weaving — Babu P. Remesh 022/2001 International Labour Migration from Independent India — S.K. Sasikumar 023/2001 Cine Workers Welfare Fund in India — M.M. Rehman 024/2001 Child Labour In Knitwear Industry of Tiruppur — J. Jayaranjan 025/2001 Child Labour in the Home Based Gem Polishing Industry of

Jaipur — Kanchan Mathur, Ruma Ghosh 026/2001 Unorganised Workers of Delhi and the Seven Day Strike of

1988 — Indrani Mazumdar 027/2001 Death of an Industrial City: Testimonies of Life Around

Bombay Textile Strike of 1982 — Hemant Babu

PRATEEK NEPALIYA

PRATEEK NEPALIYA

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— Hemant Babu 028/2001 Child Labour in the Home Based Match Industries of Sivakasi — R. Vidyasagar, Girija Kumarababu 029/2001 Migration in the North Eastern Region during 1901-1991 and

Emerging Environmental Considerations: A Case Study

Deforestation of Assam — Pushpam Kumar and Suresh Agarwal 030/2001 Women Weavers of Saulkuchi The Silk Town of Assam — OKD Institute 031/2002 Cash and in-kind Modes of Wages Payment in

Maharashtra __ C. S. K. Singh 032/2002 Child Labour in the Knife Industry of Rampur __ Ashish Ghosh & Helen R. Sekar

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LESSON 9: UNIT 3FUNCTIONS OF TRADE UNIONS

Learning ObjectivesAfter going through this lesson you will be able to comprehend• Of how the trade unions in India functionsTo attain the objectives, the trade unions generally perform thefollowing functions:i. Collective bargaining with the management to settle terms

and conditions of employmentii. Advise the management on personnel policies and practices.iii. Taking up the individual and collective grievances of the

workers with the managementiv. Work for achieving better say of workers in the

management of affairs of the enterprise which influence thelives of the workers directly.

v. Organising demonstrations, strikes, etc. to press thedemands of the workers.

vi. Education of workers and their children,vii. Welfare and recreational activities for their members.viii. Representing of worker in various national and

international forums. .ix. Securing legislative protection for the workers from the

Government.The functions performed by the trade unions may be broadlyclassified into three categories, viz., (i) militant functions, (ii)fraternal functions, and (iii) political functions. .Militant Functions. The chief purpose of the trade unions isto secure better conditions of work and employment. Theunions also endeavor to secure some share in productivity gainsand a greater share in the management or even control ofindustry. When the unions fail to accomplish these ends by themethod-of collective bargaining and negotiations, they adoptimitational methods and put up a fight with the managementin the form of strike, boycott, gherao; etc. - a situation thatoften turns into fierce antagonism.Faternal Functions. A trade union is a fraternal association ora mutual-benefit organisation supporting the members out oftheir own funds during the period of work-stoppage due to astrike or lockout. It also provides financial assistance to themembers during the period when they are unfit for workbecause of illness or employment injury or when they aretemporarily unemployed.Political Functions. Many trade unions seek to improve thepolitical status of the union, the leader, and the union mem-bers. They contest political elections and try to acquire politicalpower. In many countries, some strong labour parties havegrown up e.g., in the United Kingdom, many times, labourparty has been in power. In India, such activities of tradeunions are not important, though sometimes they have beensuccessful in influencing the labour policy of the government.

Methods Of -trade UnionsIn order to achieve their goals; trade unions may adopt any or acombination of the following methods:1. Method of Mutual Insurance.2. Method of Collective Bargaining.3. Method of Legal Enactment/Political Action.4. Method of Direct Action.Let us now briefly look into these methods so as to know whatthese methods really speak of.

1 Mutual InsuranceWhen we talk about ‘mutual’ it relates that this methodconsists mainly of welfare activities, conducted by trade unionsfor their members. Activities like medical aid, educational loans,recreational activities, cooperative societies, credit facilities,sickness aid, etc. come in the form of mutual insurance ormutual aid. These amenities and aids are provided out of thefunds that its members contribute in the shape of membershipsubscriptions and donations, etc. Thus, the effectiveness of thismethod is directly dependent upon the income of trade unions.The Indian trade unions have lagged far behind their counter-parts in U:K. and U.S.A. in taking recourse to mutual insuranceprimarily because of their poor financial position.

2 Collective BargainingAnother prevalent method used by trade unions for improvingthe economic and social conditions of their members iscollective bargaining. This is essentially a bi-partite methodunder which trade union as a representative organisation ofworkers bargains with the employers over the various issuessuch as terms and conditions of employment, wages, bonus;hours of work, working conditions, welfare facilities, etc. andenter into agreement, called collective agreement, with theemployer.Since individual worker is a weak bargainer, the method ofcollective bargaining is preferred. Bargaining may be made at thelocal level (i.e., a factory or a plant), at the regional level or at theindustry or national level.The process of collective bargaining is bi-partite, that is,between employers/management and the trade unions. Itshould be free of external agencies as government. However,for various reasons, the bargaining power of the union is weak,which they have secured by statute and bargaining is often donein courts. For this reason, we have in India judicially controlledbargaining rather than free bi-partite collective bargaining. Thereare certain prerequisites of free collective bargaining. Whichinclude mutual recognition and the will to bargain and come tosettlement. Since unions are weak and there is no uniform lawfor the recognition of a representative union, collective bargain-ing has not made much headway in India.

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3 Legal Enactment/Political ActionUnder this method, trade unions engage in political action forsecuring working and living conditions for the workers.Exerting pressure for getting progressive labour laws passed bythe legislature and to get them enforced properly does this. Forgetting protective and pro-labour legislation passed by thelegislatures, the unions send competent representatives of theworkers to the Legislative Assembly and the Parliament.Unlike mutual insurance and collective bargaining, which aredesigned to benefit only the trade union members or employ-ees of a particular plant, region or industry, political action isintended to benefit the working class in general.

4 Direct ActionWhen the trade unions fail to achieve their goals by themethods described above, they resort to direct action. It ismanifested in several forms like strikes, gheraos, bandhs, etc.Since this method is harmful to all concerned in terms of lossof production, - loss of wages, scarcity or non-availability ofgoods, etc every effort should be made to avoid the use of thisweapon in the armory of trade unions. What is required iscooperation and not conflict.Under the diversity of objectives and methods of trade unions,which ones can be said to be “legitimate and which others,‘illegitimate’? There is no objective standard by which- one canjudge the legitimate functions and methods of trade union ingeneral. Trade unionism is essentially a pragmatic movement,which constantly reshapes its organisation structure, reformu-lates its policies and objectives and reexamines and evaluates itsmethods, keeping all the time in its view the welfare of theworking class as its goal.

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LESSON 10:NATIONAL LEVEL FEDERATIONS

Learning ObjectivesAfter going through this chapter you will be able to compre-hend the following:• Where lies the place of national level federation in the

context of Indian Trade Unionism

Unionisation: Law and EnvironmentTwo factors are relevant to the process of unionisation in India.They relate to trade union law and to political parties and theirlabour strategy.The Trade Union Act, 1926, states as follows:Any seven or more members of a trade union may, by subscrib-ing their names to the rules of the trade union and byotherwise complying with the provisions of this Act withrespect to registration, apply for registra-tion of the trade unionunder this Act.Undoubtedly, this provision in labour legislation has contrib-uted to the formation of many unions as the data on thenumber of registered trade unions shows. Needless to add,there are many more unregistered trade unions.Another factor to be taken note of is that the major politicalparties such as the Congress, Communist, the CPI and theSocialist each has a federa-tion at the apex or national level towhich unions at the plant and state level are affiliated.The organization pattern of a trade union federation is usuallythree-tiered. Units exist at the plant or shop, state and thenational level. We shall now examine the three levels in somedetail.

National Level FederationsHistorically, four major federations have been in existence andhave estab-lished a national network of federated unions. Theyare the All India Trade Union Congress (AITUC), IndianNational Trade Union Congress (INTUC), United Trade UnionCongress (UTUC), and Hind Mazdoor Sabha (HMS). TheUTUC has to a certain extent merged with the Centre of IndianTrade Unions (CITU) and therefore we shall examine the CITUFederation.

All India Trade Union Congress (AITUC)This national federation was established in 1921. Ideologically itis linked with the communist philosophy and thereforeespouses a more radical approach, as compared to some of theother federations, in attaining the workers’ interests and goals.In 1979 it had a total of 1,307,471 members.

Organizational StructureThe organizational set up is as follows: (i) The affiliated unions(unit/local level); (ii) provincial bodies (state level); (iii) thegeneral council including office bearers (which incorporates theworking committee of the general council); and (iv) thedelegates to the general or special session.

The general council consists of the president, seven vice-presidents, a general secretary, a treasurer and not more than fivesecretaries and mem-bers elected by the AITUC on the basis ofthe total affiliated membership of unions in each state, roughlyat the rate of one representative for every 5000 members.The working committee consists of all office bearers of theAITUC as ex-officio members and 35 elected by the generalcouncil by a system of cumu-lative voting.The general session of the AITUC meets once in two years, thegeneral council meets once a year, and the working committee atleast twice a year. The General Secretary and his administrativestaff at the national and state levels carry out the day-to-dayoperation and implementation.

ObjectivesThe major objectives of AITUC are:• To establish a socialist state in India and the nationalisation

of the means of production, distribution and exchange asfar as possible.

• To improve the economic and social conditions of theworking class, by securing better terms and conditions ofemployment.

• To safeguard and promote the workers’ right to free speech,freedom of association and assembly and the right to strike.

MethodsFor the furtherance of these objectives the means to be adoptedby AITUC are to be legitimate, peaceful, and democratic, viz.legislation, education, propagation, mass meeting, negotiations,demonstrations, and as a last resort the staging of a strike.

Membership and FinanceThe source of funds is: (i) an annual contribution of Rs.15 forunions with 500 members and less; (ii) affiliation fees at the rateof 5 paise per member with a minimum of Rs.20 for unionswith a membership above 500; (iii) a delegate fee of Rs.12 perdelegate; and (iv) any other levy which may be fixed by a two-thirds majority of the General Council. The levy is fixed at therate of Rs.5 per 1000 members.

Indian National Trade Union Congress (INTUC)This union was organized in 1947 with active support andencouragement from Congress leaders. It wanted to bringabout a peaceful and non-violent solution to industrialdisputes.It has a total membership of 2,388,451 which makes it thelargest national federation.

Organizational Structure (See Chart )The basic pattern of organization in the INTUC is the industrylevel federation. In other words, units are grouped together forthe purpose of negotiating the terms and conditions ofemployment, such as wage rates hours of work and other

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related fringe benefits and working conditions at the industrylevel which are to be implemented at the lower level. Thismethod enables a perspective being taken for the entire industry,rather than a piecemeal approach unitwise. The regionalbranches and the councils provide the support services. Theapex body, which is representative of the federation, takes anoverall point of view, regarding the broader issues, such asenvironment, legislation and governmental policies, and givesdirections to the regional branches.

Chart Organizational Structure of INTUC

ObjectivesIt seeks to establish a society in which there is an opportunityfor the development of individuals and the eradication of anti-social concentration of power in any form and therefore tonationalise industry. The main objectives are:• To ensure full employment.• To secure greater participation of workers in the

management of enter-prises.• To secure complete organization of all categories of workers

including agricultural labour. -To organize workers on anindustry-wise basis.

• To improve the conditions at work and to provide varioussocial security measures.

• To develop among the workers a sense of responsibilitytowards industry and the community.

MethodsThe means to be adopted for the furtherance of these objectivesare to be peaceful through due process of law and negotiations.

Membership and FinanceAny organization of workers accepting the constitution of theINTUC and with a subscription rate of not less than 25 paiseper month is entitled to affiliation with the INTUC provided itis not affiliated with any rival organization or any of itsexecutive committee members are not members of a rivalunion. All the unions affiliated to INTUC and belonging to thesame industry are required to join the corresponding industrialfederation, e.g. the Indian National Textile Workers Federation,the National Federation of Indian Railwaymen, etc.Every affiliated organization is required to pay the Congress anannual affiliation fee at the rate of 10 paise per member on itsrolls subject to a minimum of Rs.15.

• INTUC

General Council

Working Committee and Other

Committees

Assembly of Delegates

State Level

Regional Branches and Council

Industry Level Federation

Unit Level

Hind Mazdoor Sabha (HMS)This national federation came into being in 1948. It had anaffiliated membership of 852,558 in 1979. This federationespouses the socialist philosophy and has linkages with socialistparties. However, there has been a division within the socialistranks with the emergence of the Hind Mazdoor Panchayat,another federation with socialist leanings.

Organizational StructureThe general council is composed of the president, not morethan five vice presidents, a general secretary, not more than twosecretaries, a treasurer and other members representing variousindustrial sections. The office bearers are elected at the annualconvention.

ObjectivesThe main aims of the Hind Mazdoor Sabha are:• To promote the economic, political and social interests of

the workers and to improve their terms and conditions ofemployment.

• To form a federation of unions from the same industry oroccupation at the national level.

• To promote the formation of co-operative societies and tofoster workers’ education.

MethodsThe method employed shall be legitimate, peaceful anddemocratic.

Membership and FinanceThe membership of HMS is open to all bonafide trade unions,including federations of trade unions. The general council ofthe Sabha has authority to accept or reject any application.The collection of funds of HMS is carried out through: (i)affiliation fees of 5 paise per member per annum subject to aminimum of Rs. 20; (ii) a delegate fee of Rs. 3 per delegate; and(iii) any other levy that may be fixed by the general council.

Centre of Indian Trade Unions (ClTU)This is a national federation which was established in 1971 as aresult of the split in the AITUC which was a sequel to the splitin the CPI a new centre, the Centre of Indian Trade Unions(CITU) emerged owing to its allegiance to the CPI(M). In 1979it had 817,805 members.

ObjectivesIt is animated by the goal of organizing workers to further theirinterests in economic, social and political matters.

Organizational StructureThe organizational set-up is as follows: (i) central committee(national level, general council, including office bearers); (ii) astate committee (state level); and (iii) affiliated unions (unitlevel) (the Primary unions).The General Council consists of the president, four vice-presidents, the general secretary, not more than four secretaries,and the treasurer. Mem-bers are elected by CITU on the basis ofthe total affiliated membership of unions in each state, at therate of one delegate for every 500 members. The general councilof CITU meets once in two years, and the state committee at

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least twice a year. The general secretary and his staff at the statelevel carry out the day-to-day operations and administra-tion.

MethodsTo further its objectives the methods to be adopted by CITUare legislation, demonstrations, agitations and intensification ofthe class struggle.

Membership and FinanceAny union can be affiliated to CITU by paying a subscription(affiliation fee) of 20 paise per year per member (minimum ofRs. 40 per union if it is small). Each union applies to the statecommittee, which after scrutinising recommends its acceptanceto the central committee.The funds of CITU are derived from: (i) the affiliation fees of20 paise per member per year to a minimum of Rs. 40; (ii) thedelegate fee of Rs. 5 per delegate; (iii) any other levy that may befixed by the general council.

Other National Trade UnionsBesides these three federations at the national level, there areothers like the United Trade Union Congress (UTUC), theNational Labour Organization (NLO), the Bhartiya MazdoorSangh (BMS), and the Hind Mazdoor Panchayat (HMP)-an off-shoot of the Socialist Party. Some of these have strongerregional affiliations than a national coverage.

Industry Level UnionsWe will now examine the pattern of an industry level union-theTextile Labour Association, Ahmedabad (TLA). Though TLAhas diversified into an unorganized sector, its strength andmajor contribution has been in the textile industry.The Textile Labour Association was formally launched in 1920and is substantially influenced by Gandhian philosophy in itstrade union activities. It started as a craft union, with thewarpers informally negotiating a wage increase. Subsequently itgrew into a confederation of several craft unions (occupationalgroupings functioning under the aegis of TLA). With the pas-sage of time, the craft unions, and the confederations have allmerged into one single entity: The organizational structurereveals the pyramidal type of organization with a federation orthe joint representative board of the vari-ous occupations beingformed on the basis of member strength. The Textile LabourAssociation has a shop steward system, where the unionfunctionary on the shop floor takes an active role with regard tothe rights and interests of the worker. There is also a com-plaints cell where grievances of workers vis-a-vis their job rolesare recorded and followed up. Moreover, there is another cellwhich takes up employee claims and problems with regard tothe operation of the ESI scheme. Many welfare activities areconducted including the setting up of a special cell for women.Of late it has ventured into organizing the workers in backwardrural areas in what is termed the unorganized sector. Theirapproach is non-violent, i.e. peaceful strategies are adopted tofurther their objectives. Consequently the textile industry inAhmedabad has an industry level union. Similarly the mill-owners also bave an industry association to represent them inall matters concerning nego-tiations with TLA. These twoorganizations mutually agree to the terms and conditions ofemployment, including welfare, leave, etc. for the indus-try as a

whole. Hence all the textile mills who are members of the Mill-owners Association and workers who are a part of TLA aregoverned by this agreement. By and large, the majority of boththe categories are covered by these agreements.

Local UnitsMany Indian unions are not affiliated to an industry levelfederation and in many cases may not have any affiliation to thenational federation. They are thus independent local unionscentred around a particular plant or a multi-plant organization.These plant firm-wise unions embrace all employees of a plant/unit irrespective of occupational groups. They vary in numericalstrength from small units to medium and large ones. In somecases, in times of crisis, they do seek the assistance or guidanceof the larger federations or other large unions in relatedindustries. At times many union functionaries may havepolitical loyalties but no union affiliation to a natio-nal labourfederation. Such political loyalties may be to a particular regio-nalparty or to a certain ideology. Typically, the union has a presi-dent, a secretary, a treasurer and some committee members.Membership is on the basis of employment and payment ofdues. At certain times of the year extraordinary collections aremade, as at the time of disbursement of bonus. These unionsare more concerned with specific issues regarding the workersand their terms and conditions of employment in a particularorganization.

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LESSON 11:THE INDIUSTRIAL DISPUTE (CENTRAL)

RULES, CENTRAL ID RULES, 1957

Learning Objective:The study of this lesson will help you identify:• Of how different industrial disputes can be settled with the

help of the Central Govt. rules.You know this lesson is fully with the Acts. You can pick upthese Acts on the basis of the given chapters as is shown below:

Chapter: PreliminarySection 1: Title and Application

1. These rules may be called the Industrial Disputes (Central)Rules, 1957.

2. They extend to Union territories in relation to all industrialdisputes and to the States in relation only to an industrialdispute concerning-

a. Any industry carried on by or under the authority of theCentral Government or by a railway company; or

b. A banking or an insurance company, a mine, an oilfield, or amajor port;or

c. Any such controlled industry as may be specified underSection 2(a)(i) of the Act by the Central Government:

Chapter: Preliminary

Section 2: Interpretation

In these rules, unless there is anything repugnant in the subjector context-a. ‘’Act’’ means the Industrial Disputes Act, 1947 (14 of

1947);b. “Chairman” means the chairman of a Board or Court or, if

the Court consists of one person only, such person;c. ‘’committee’’ means a Works Committee constituted under

sub-section (1) of section 3 of the Act;d. ‘’form’’ means a form in the Schedule to these rules;e. ‘’section’’ means a section of the Act;f. In relation to an industrial dispute in a Union territory, for

which the appropriate Government is the CentralGovernment, reference to the Central Government or theGovernment of India shall be construed as a reference tothe Administrator of the territory, and reference to theChief Labour Commissioner (Central), Regional LabourCommissioner (Central), Assistant Labour Commissioner(Central) shall be construed as reference to the appropriateauthority, appointed in that behalf by the Administrator ofthe territory;

g. With reference to clause (g) of section 2, it is herebyprescribed that-

i. In relation to an industry, not being an industry referred toin sub-clause (ii), carried on by or under the authority of aDepartment of the Central or a State Government, the

officer in charge of the industrial establishment shall be the‘employer’ in respect of that establishment; and

ii. In relation to an industry concerning railways, carried on byit under the authority of a Department of the CentralGovernment,-

a. In the case of establishments of a Zonal Railway, theGeneral Manager of that Railway shall be the ‘employer’ inrespect of regular railway servants other than casual labour;

b. In the case of an establishment independent of a ZonalRailway, the officer in charge of the establishment shall bethe ‘employer’ in respect of regular railway servants otherthan casual labour; and

c. The District Officer in charge or the Divisional PersonnelOfficer or the Personnel Officer shall be the ‘employer’ inrespect of casual labour employed on a Zonal Railway orany other railway establishment independent of a ZonalRailway.

Chapter: Procedure for Reference ofIndustrial Disputes to Boards ofConciliation etc

Section 3: ApplicationAn application under sub-section (2) of section 10 for thereference of an industrial dispute to a Board, Court, LabourCourt, Tribunal or National Tribunal shall be made in Form Aand shall be delivered personally or forwarded by registered postto the Secretary to the Government of India in the Ministry ofLabour and Employment (in triplicate), the Chief LabourCommissioner (Central), New Delhi, and the Regional LabourCommissioner (Central), and the Assistant Labour Commis-sioner (Central) concerned. The application shall beaccompanied by a statement setting forth-a. The parties to the dispute;b. The specific matters in disputes;c. The total number of workmen employed in the

undertaking affected;d. An estimate of the number of workmen affected or likely

to be affected by the dispute; ande. The efforts made by the parties themselves to adjust the

dispute.

Chapter: Procedure for Reference ofIndustrial Disputes to Boards ofConciliation etcSection 4: Attestation of ApplicationThe application and the statement accompanying it shall besigned-a. In the case of an employer by the employer himself, or

when the employer is an incorporated company or other

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body corporate, by the agent, manager or other principalofficer of the Corporation;

b. In the case of workmen, either by the President andSecretary of trade union of the workmen, or by fiverepresentatives of the workmen duly authorised in thisbehalf at a meeting of the workmen held for the purpose;

c. In the case of an individual workman, by the workmanhimself or by any officer of the trade union of which he is amember or by another workman in the same establishmentduly authorised by him in this behalf: Provided that suchworkman is not a member of a different trade union.

Chapter: Procedure for Reference ofIndustrial Disputes to Boards ofConciliation etc

Section 5: Notification of appointment of Board,court, Labour Court, Tribunal or National TribunalThe appointment of a Board, Court, Labour Court, tribunal orNational Tribunal together with the names of person constitut-ing the Board, Court, Labour Court, Tribunal or NationalTribunal shall be notified in the Official Gazette.

Chapter: Procedure for Reference ofIndustrial Disputes to Boards ofConciliation etcSection 6: Notice to Parties to NominateRepresentatives

1. If the Central Government proposes to appoint a Board, itshall send a notice in form B to the parties requiring themto nominate within a reasonable time persons to representthem on the Board.

2. The notice to the employer shall be sent to the employerpersonally, or if the employer is an incorporated companyor a body corporate, to the agent, manager or other principalofficer of such company or body.

3. The notice to the workmen shall be sent-a. In the case of workmen who are members of a trade union,

to the president or Secretary of the trade union; andb. In the case of workmen who are not members of a trade

union, to any one of the five representatives of theworkmen who have attested the application made underrule 3; and in this case a copy of the notice shall also be sentto the employer who small display copies thereof on noticeboards in a conspicuous manner at the main entrance to thepremises of the establishment.

Chapter: Arbitration Agreement

Section 7: Arbitration AgreementAn arbitration agreement for the reference of an industrialdispute to an arbitrator or arbitrators shall be made in form Cand shall be delivered personally or forwarded by registered postto the Secretary to the Government of India in the Ministry ofLabour (in triplicate), the Chief Labour Commissioner(Central), New Delhi, and the Regional Labour Commissioner(Central) and the Assistant Labour Commissioner (Central)concerned. The agreement shall be accompanied by the consent,in writing, of the arbitrator or arbitrators.


Section 8: Attestation of the Arbitration AgreementThe arbitration agreement shall be signed-a. In the case of an employer, by the employer himself, or

when the employer is an incorporated company or otherbody corporate by the agent, manager, or other principalofficer of the Corporation;

b. In the case of workmen,by any officer of a trade union ofthe workmen or by five representatives of the workmenduly authorised in this behalf at a meeting of the workmenheld for the purpose;

c. In the case of an individual workman, by the workmanhimself or by any officer of a trade union of which he ismember or by another workman in the same establishmentduly authorised by him in this behalf:Provided that such workman is not a member of a differenttrade union.

Explanation - In this rule “officer” means any of the followingofficers, namely-a. The President;b. The Vice-President;c. The Secretary (including the General Secretary);d. A Joint Secretary;e. Any other officer of the trade union authorised in this

behalf by the President and Secretary of the Union.


Section 8-A: Notification Regarding ArbitrationAgreement by Majority of each Party.Where an industrial dispute has been referred to arbitration andthe Central Government is satisfied that the persons makingthe reference represent the majority of each party, it shall publisha notification in this behalf in the Official Gazette for theinformation of the employers and workmen who are notparties to the arbitration agreement but are concerned in thedispute.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 9: Conciliation Proceedings in Public utilityService

1. The Conciliation Officer, on receipt of a notice of a strike orlockout given under rule 71 or rule 72, shall forthwitharrange to interview both the employer and the workmenconcerned with the dispute at such places and at such timesas he may deem fit and shall endeavour to bring about asettlement of the dispute in question.

2. Where the Conciliation Officer receives no notice of a strikeor lockout under rule 71 or rule 72 but he considers itnecessary to intervene in the dispute he may give formalintimation in writing to the parties concerned declaring hisintention to commence conciliation proceedings with effectfrom such date as may be specified therein.

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Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and Arbitrators

Section 10: Conciliation Proceedings in Non-publicutility ServiceWhere the Conciliation Officer receives any information aboutan existing or apprehended industrial dispute which does notrelate to public utility service and he considers it necessary tointervene in the dispute, he shall give formal intimation inwriting to the parties concerned declaring his intention tocommence conciliation proceedings with effect from such dateas may be specified therein.


Section 10-A: Parties to Submit StatementsThe employer or the party representing workmen or in the caseof individual workman, the workman himself involved in anindustrial dispute shall forward a statement setting forth thespecific matters in dispute to the Conciliation Officer concernedwhenever his intervention in the dispute is required.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 10-B: Proceeding before the Labour Court,Tribunal or National Tribunal.

1. While referring an industrial dispute for adjudication to aLabour Court, Tribunal or National Tribunal, the CentralGovernment shall direct the party raising the dispute to filea statement of claim complete with relevant documents, listof reliance and witnesses with the Labour Court, Tribunalor National Tribunal within fifteen days of the receipt ofthe order of reference and also forward a copy of suchstatement to each one of the opposite parties involved inthe dispute.

2. The Labour Court, Tribunal or National Tribunal afterascertaining that copies of statement of claim are furnishedto the other side by party raising the dispute shall fix the fisthearing on a date not beyond one month from the date ofreceipt of the order of reference and the opposite party orparties shall file their written statement together withdocuments, list of reliance and witnesses within a period of15 days from the date of first hearing and simultaneouslyforward a copy thereof to the other party.

3. Where the Labour Court, Tribunal or National Tribunal, asthe case may be, finds that the party raising the disputethough directed did not forward the copy of the statementof claim to the opposite party or parties, it shall givedirection to the concerned party to furnish the copy of thestatement to the opposite party or parties and for the saidpurpose or for any other sufficient cause, extend the time-limit for filing the statement under sub-rule (1) or writtenstatement under sub-rule (2) by an additional period of 15days.

4. The party raising a dispute may submit a rejoinder if itchooses to do so, to the written statement(s) by theappropriate party or parties within a period of fifteen daysfrom the filing of written statement by the latter.

5. The Labour Court,Tribunal or National Tribunal, as the casemay be, shall fix a date for evidence within one month fromthe date of receipt of the statements, documents, list ofwitnesses, etc., which shall be ordinarily within sixty days ofthe date on which the dispute was referred for adjudication.

6. Evidence shall be recorded either in Court or on affidavitbut in the case of affidavit the opposite party shall have theright to cross-examine each of the deponents filing theaffidavit. As the oral examination of each witness proceeds,the Labour Court, Tribunal or National Tribunal shall makea memorandum of the substance of what is beingdeposed. While recording the evidence the Labour Court,Tribunal or National Tribunal shall follow the procedurelaid down in rule 5 of order XVIII of the First Schedule tothe Code of Civil Procedure,1908.

7. On completion of evidence either arguments shall be heardimmediately or a date shall be fixed for arguments/oralhearing which shall not be beyond a period of fifteen daysfrom the close of evidence.

8. The Labour Court, Tribunal or National Tribunal, as thecase may be, shall not ordinarily grant an adjournment for aperiod exceeding a week at a time but in any case not morethan three adjournment in all at the instance of the partiesto the dispute:

Provided that the Labour Court, Tribunal or National Tribunal,as the case may be, may for reasons to be recorded in writing,grant an adjournment exceeding a week at a time but in any casenot more than three adjournments at the instance of any oneof the parties to the dispute.9. In case any party defaults or fails to appear at any stage the

Labour Court, Tribunal or National Tribunal, as the casemay be, may proceed with the reference ex parte and decidethe reference/application in the absence of the defaultingparty:Provided that the Labour Court, Tribunal or NationalTribunal, as the case may be, may on the application ofeither party filed before the submission of the award revokethe order that the case shall proceed ex parte, if it is satisfiedthat the absence of the party was on justifiable grounds.

10. The Labour Court, Tribunal or National Tribunal, as thecase may be, shall submit its ward to the CentralGovernment within one month from the date of oralhearing/arguments or within the period mentioned in theorder of reference whichever is earlier.

11. In respect of reference under section 2A, the Labour Court,Tribunal or National Tribunal, as the case may be, shallordinarily submit its awards within a period of threemonths:

Provided that the Labour Court, Tribunal or National Tribunalmay, as and when necessary, extend the period of three monthsand shall record its reasons in writing to extend the time forsubmission of the award for another specified period.

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Section 11: OmittedThe Conciliation Officer may hold a meeting of the representa-tives of both parties jointly or of each party separately.


Section 12: OmittedThe Conciliation Officer shall conduct the proceedings expedi-tiously and in such manner as he may deem fit.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 13: Place and Time of hearingSubject to the provisions contained in rule 10A and 10B, thesittings of a Board, Court, Labour Court, Tribunal or NationalTribunal or of an Arbitrator shall be held at such times andplaces as the Chairman or the Presiding Officer or the Arbitra-tor, as the case may be, may fix and the Chairman, PresidingOfficer or Arbitrator, as the case may be, shall inform the partiesof the same in such manner as he thinks fit.


Section 14: Quorum for Boards and CourtsThe quorum necessary to constitute a sitting of a Board orCourt shall be as follows:i. In the case of a Board-QuorumWhere the number of members is 3 2Where the number of members is 5 3ii. In the case of a Court-Where the number of members is not more than 2 1Where the numbers of members is more than 2 but less than 5 2Where the number of members is 5 or more 3


Section 15: EvidenceA Board, Court, Labour Court, Tribunal or National Tribunalor a arbitrator may accept, admit or call for evidence at any stageof the proceedings before it/him and in such manner as it/hemay think fit.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 16: Administration of OathAny member of a Board or Court or Presiding Officer of aLabour Court, Tribunal or National Tribunal or an Arbitratormay administer an oath.


Section 17: SummonsA summons issued by a Board, Court, Labour Court, Tribunalor National Tribunal shall be in form D and may require anyperson to produce before it any books, papers or otherdocuments and things in the possession of or under thecontrol of such person in any way relating to the matter underinvestigation or adjudication by the Board, Court, LabourCourt, Tribunal or National Tribunal which the Board, Court,Labour Court, Tribunal or National Tribunal thinks necessaryfor the purposes of such investigation or adjudication.


Section 18: Service of Summons or NoticeSubject to the provisions contained in rule 20, any notice,summons, process or order issued by a Board, Court, LabourCourt, Tribunal, National Tribunal or an arbitrator empoweredto issue such notice, summons, process or order, may be servedeither personally or by registered post and in the event ofrefusal by the party concerned to accept the said notice, sum-mons, process or order, the same shall be sent again undercertificate of posting.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 19: Description of Parties in Certain CasesWhere in any proceeding before a Board, Court, Labour Court,Tribunal or National Tribunal or an Arbitrator, there arenumerous persons arrayed on any side, such persons shall bedescribed as follows-1. All such persons as are members of any trade union or

association shall be described by the name of such tradeunion or association; and

2. All such persons as are not members of any trade union orassociation shall be described in such manner as the Board,Court, Labour Court, Tribunal, National Tribunal orArbitrator, as the case may be, may determine.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 20: Manner of Service in the Case ofNumerous Persons as Parties to a Dispute.

1. Where there are numerous persons as parties to anyproceeding before a Board, Court, Labour Court, Tribunalor National Tribunal or an arbitrator and such persons aremembers of any trade union or association, the service ofnotice on the Secretary, or where there is no Secretary, on theprincipal officer, of the trade union or association shall bedeemed to be service on such persons.

2. Where there are numerous persons as parties to anyproceeding before a Board, Court, Labour Court, Tribunal

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or National Tribunal or an arbitrator and such persons arenot members of any trade union or association, the Board,Court, Labour Court, Tribunal, National Tribunal orArbitrator, as the case may be, shall, where personal serviceis not practicable, cause the service of any notice to be madeby affixing the same at or near the main entrance of theestablishment concerned.

3. A notice served in the manner specified in sub-rule (2) shallalso be considered as sufficient in the case of such workmenas cannot be ascertained and found.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 21: Procedure at the First SittingAt the first sitting of a Board, Court, Labour Court, Tribunal orNational Tribunal, the Chairman or the Presiding Officer, as thecase may be, shall call upon the parties in such order as he maythink fit to state their case.


Section 22: Board, Court, Labour Court, Tribunal,National Tribunal or Arbitrator may proceed ex parteIf without sufficient cause being shown, any party to proceed-ings before a Board, Court, Labour Court, Tribunal, NationalTribunal or Arbitrator fails to attend or to be represented, theBoard, Court, Labour Court, Tribunal, National Tribunal orArbitrator may proceed as if the party had duly attended or hadbeen represented.


Section 23: Power of entry and Inspection.A Board, or Court, or any member thereof, or a ConciliationOfficer, a Labour Board, Court, Labour Court, Tribunal orNational Tribunal in this behalf may, for the purposes of anyconciliation, investigation, enquiry or adjudication entrusted tothe Conciliation Officer, Board, Court, Labour Court, Tribunalor National Tribunal under the Act, at anytime between thehours of sunrise and sunset and in the case of a personauthorised in writing by a Board, Court, Labour Court,Tribunal or National Tribunal after he has given reasonablenotice, enter any building, factory, workshop, or other place orpremises whatsoever, and inspect the same or any work,machinery, appliance or article therein or interrogate any persontherein in respect of anything situated therein or any matterrelevant to the subject-matter of the conciliation, investigation,enquiry or adjudication.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 24: Power of Boards, Courts, Labour Courts,Tribunals and National Tribunals.In addition to the powers conferred by the Act, Boards, Courts,Labour Courts, Tribunals and National Tribunals shall have the

same powers as are vested in a civil court under the Code ofCivil Procedure, 1908, when trying a suit, in respect of thefollowing matters, namely-a. Discovery and inspection;b. Granting adjournment;c. Reception of evidence taken on affidavit; and the Board,

Court, Labour Court, Tribunal, or National Tribunal maysummon and examine any person whose evidence appearsto it to be material and shall be deemed to be a civil courtwithin the meaning of sections 480 and 482 of the Code ofCriminal Procedure, 1898.


Section 25: AssessorsWhere assessors are appointed to advise a Tribunal or NationalTribunal under sub-section (4) of section 7-A or sub-section (4)of section 7-B or by the Court, Labour Court, Tribunal orNational Tribunal under sub-section (5) of section 11, theCourt, Labour Court, Tribunal or National Tribunal, as the casemay be, shall, in relation to proceeding before it, obtain theadvice of such assessors, but such advice shall not be bindingon it.

Notes -

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LESSON 12:THE INDIUSTRIAL DISPUTE (CENTRAL)RULES, CENTRAL ID RULES, 1957


help of the Central Govt. rules.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 26: Fees for copies of awards or otherdocuments of Labour Court, tribunal or NationalTribunal.

1. Fees for making a copy of an award or an order of a LabourCourt, Tribunal or National Tribunal or any document filedin any proceedings before a Labour Court, Tribunal orNational Tribunal shall be charged at the rate of Re.1 perpage.

2. For certifying a copy of any such award or order ordocument, a fee of Re. 1 shall be payable.

3. Copying and certifying fees shall be payable in cash inadvance.

4. Where a party applies for immediate delivery of a copy ofany such award or order or document, an additional feeequal to one-half of the fee leviable under this rule shall bepayable.


Section 27: Decision by MajorityAll question arising for decision at any meeting of a Board orCourt, save where the Court consists of one person, shall bedecided by a majority of the votes of the members thereof(including the Chairman) present at the meeting. In the eventof an equality of votes the Chairman shall also have a castingvote.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 28: Correction of ErrorsA Board, Court, Labour Court, Tribunal, National Tribunal orarbitrator may at any time correct any clerical mistake or errorarising from an accidental slip or omission in any proceedings,report, award or decision either of its or his own motion or onthe application of any of the parties.


Section 29: Right of Representatives

The representatives of the parties appearing before a Board,Court, Labour Court, Tribunal or National Tribunal or anarbitrator shall have the right of examination, cross-examina-tion and of addressing the Board, Court, Labour Court,Tribunal or National Tribunal or arbitrator when an evidencehas been called.

Chapter: Powers, Procedures and Dutiesof Conciliation Officers, Boards, Courts,Tribunals and ArbitratorsSection 30: Proceedings before a Board, Court,Labour Court, Tribunal or National TribunalThe proceedings before a Board, Court, Labour Court, Tribunalor National Tribunal shall be held in public. Provided that theBoard, Court, Labour Court, Tribunal or National Tribunal mayat any state direct that any witness shall be examined or itsproceedings shall be held in camera.

Chapter: Remuneration of Chairman andMembers of Courts Presiding Officers ofLabour Courts and Tribunals etc

Section 31: Travelling AllowanceThe Chairman or a member of a Board or Court or thePresiding Officer or an Assessor of a Labour Court, Tribunal orNational Tribunal, if a non-official, shall be entitled to drawtravelling allowance and halting allowance, for any journeyperformed by him in connection with the performance of hisduties, at the rates admissible and subject to the conditionsapplicable to Government servant of the first grade under theSupplementary Rules issued by the Central Government fromtime to time.

Chapter: Remuneration of Chairman andMembers of Courts Presiding Officers ofLabour Courts and Tribunals etc

Section 32: FeesThe Chairman and a member of a Board or Court, thePresiding Officer and an Assessor of a Labour Court, Tribunalor National Tribunal wherever he is not a salaried officer ofGovernment may be granted such fees as may be sanctioned bythe Central Government in each case.

Chapter: Remuneration of Chairman andMembers of Courts Presiding Officers ofLabour Courts and Tribunals etcSection 33: Expenses of WitnessesEvery person who is summoned and duly attends or otherwiseappears as a witness before a Board, Court, Labour Court,Tribunal or National Tribunal or an Arbitrator shall be entitledto an allowance for expenses according to the scale for the timebeing in force with respect to witnesses in civil courts in the

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State where the investigation, enquiry, adjudication or arbitra-tion is being conducted.

Chapter: Representation of PartiesSection 34: Notice of ChangeAny employer intending to effect any change in the conditionsof service applicable to any workmen in respect of any matterspecified in the Fourth Schedule to the Act shall give notice ofsuch intention in Form E.

Chapter: Notice of Change

Section 35: OmittedOmitted.

Chapter: Representation of Parties

Section 36: Form of Authority under Section 36The authority in favour of a person or persons to represent aworkman or group of workmen or an employer in anyproceeding under the Act shall be in Form F.

Chapter: Representation of PartiesSection 37: Parties bound by Acts of RepresentativeA party appearing by a representative shall be bound by the actsof that representative.

Chapter: Works Committee

Section 38: ConstitutionAny employer to whom an order made under sub-section (1)of section 3 relates shall forthwith proceed to constitute aWorks Committee in the manner prescribed in this part.


Section 39: Number of MembersThe number of members constituting the Committee shall befixed so as to afford representation to the various categories,groups and classes of workmen engaged in, and to the sections,shops or departments of the establishment:Provided that the total number of members shall not exceedtwenty:Provided further that the number of representatives of theworkmen shall not be less than the number of representativesof the employer.

Chapter: Works CommitteeSection 40: Representatives of EmployerSubject to the provisions of these rules, the representatives ofthe employer shall be nominated by the employer and shall asfar as possible be officials in direct touch with or associated withthe working of the establishment.


Section 41: Consultation with Trade Unions

1. Where any workmen of an establishment are members of aregistered trade union, the employer shall ask the union toinform him in writing-

a. How many of the workmen are members of the union;and

b. How their membership is distributed among the sections,shops or departments of the establishment.

2. Where an employer has reason to believe that theinformation furnished to him under sub-rule (1) by anytrade union is false, he may, after informing the union, referthe matter to the Assistant Labour Commissioner (Central)concerned for his decision; and the Assistant LabourCommissioner (Central), after hearing the parties, shalldecide the matter and his decision shall be final.

Chapter: Works CommitteeSection 42: Groups of Workmen’s RepresentativesOn receipt of the information called for under rule 41, theemployer shall provide for the election of workmen’s represen-tatives on the Committee in two groups-1. Those to be elected by the workmen of the establishment

who are members of the registered trade union or unions,and

2. Those to be elected by the workmen of the establishmentwho are not members of the registered trade union orunions, bearing the same proportion to each other as theunion members in the establishment bear to the non-members:

Provided that where more than half the workmen are membersof the union or any one of the unions, no such division shallbe made:Provided further that where a registered trade union neglects orfails to furnish the information called for under sub-rule (1) orrule 41 within one month of the date of the notice requiring itto furnish such information such union shall for the purposeof this rule be treated as if it did not exist:Provided further that where any reference has been made by heemployer under sub-rule (2) of rule 41, the election shall beheld on receipt of the decision of the Assistant LabourCommissioner (Central).

Chapter: Works CommitteeSection 43: Electoral ConstituenciesWhere under rule 42 the workmen’s representatives are to beelected in two groups, the workmen entitled to vote shall bedivided into two electoral constituencies, the one consisting ofthose who are members of a registered trade union and theother of those who are not:Provided that the employer may, if he thinks fit,sub-divide theelectoral constituency or constituencies, as the case may be anddirect that workmen shall vote in either by groups, sections,shops or departments.


Section 44: Qualification of Candidates for ElectionAny workman of not less than 19 years of age and with aservice of not less than one year in the establishment may ifnominated as provided in these rules be a candidate for electionas a representative of the workmen on the Committee:Provided that the service qualification shall not apply to the firstelection in an establishment which has been in existence for lessthan a year.

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Explanation: A workman who has put in a continuous serviceof not less than one year in two or more establishmentsbelonging to the same employer shall be deemed to havesatisfied the service qualification prescribed under this rule.

Chapter: Works CommitteeSection 45: Qualifications for VotersAll workmen, who are not less than 18 years of age and whohave put in not less than 6 months continuous service in theestablishment shall be entitled to vote in the election of therepresentative of workmen.Explanation: A workman who has put in a continuous serviceof not less than 6 months in two or more establishmentsbelonging to the same employer shall be deemed to havesatisfied the service qualification prescribed under this rule.


Section 46: Procedure for Election

1. The employer shall fix a date as the closing date for receivingnominations from candidates for election as workmen’srepresentatives on the Committee.

2. For holding the election, the employer shall also fix a datewhich shall not be earlier than three days and later thanfifteen days after the closing date for receiving nominations.

3. The dates so fixed shall be notified at least seven days inadvance to the workmen and the registered trade union orunions concerned. Such notice shall be affixed on the noticeboard or given adequate publicity amongst the workmen.The notice shall specify the number of seats to be elected bythe groups, sections, shops or departments and the numberto be elected by the members of the registered trade unionor unions and by the non-members.

4. A copy of such notice shall be sent to the registered tradeunion or unions concerned.

Chapter: Works CommitteeSection 47: Nomination of Candidates for Election

1. Every nomination shall be made on a nomination paper inForm ‘G’ copies of which shall be supplied by the employerto the workmen requiring them.

2. Each nomination paper shall be signed by the candidate towhom it relates and attested by at least two other votersbelonging to the group, section, shop or department thecandidate seeking election will represent, and shall bedelivered to the employer.


Section 48: Scrutiny of Nomination Papers1. On the day following the last day fixed for filing

nomination papers, the nomination papers shall bescrutinised by the employer in the presence of thecandidates and the attesting persons and those which arenot valid shall be rejected.

2. For the purpose of sub-rule (1), a nomination paper shallbe held to be not valid if (a) the candidate nominated is

ineligible for membership under rule 44 or (b) therequirements of rule 47 have not been complied with:

Provided that where a candidate or an attesting person is unableto be present at the time of scrutiny, he may send a dulyauthorised nominee for the purpose.

Chapter: Works CommitteeSection 48-A: Withdrawal of Candidates ValidlyNominatedAny candidate whose nomination for election has been acceptedmay withdraw his candidature within 48 hours of the comple-tion of scrutiny of nomination papers.


Section 49: Voting in Election

1. If the number of candidates who have been validlynominated is equal to the number of seats, the candidatesshall be forthwith declared duly elected.

2. If in any constituency the number of candidates is morethan the number of seats allotted to it, voting shall takeplace on the day fixed for election.

3. The election shall be held in such manner as may beconvenient for each electoral constituency.

4. The voting shall be conducted by the employer, and if anyof the candidates belong to a union such of them as theunion may nominate shall be associated with the election.

5. Every workman entitled to vote at an electoral constituencyshall have as many votes as there are seats to be filled in theconstituency:

Provided that each voter shall be entitled to cast only one votein favour of any one candidate.

Chapter: Works CommitteeSection 50: Arrangements for ElectionThe employer shall be responsible for all arrangements inconnection with the election.


Section 51: Officers of the Committee

1. The Committee shall have among its office bearers aChairman, a Vice-Chairman, a Secretary and a Joint Secretary.The Secretary and the Joint Secretary shall be elected everyyear.

2. The Chairman shall be nominated by the employer fromamongst the employer’s representatives on the Committeeand he shall, as far as possible, be the head ofestablishment.

2A. The Vice-Chairman shall be elected by the members on theCommittee representing the workers, from amongstthemselves:

Provided that in the event of equality of votes in the election ofthe Vice-Chairman, the matter shall be decided by draw of a lot.3. The Committee shall elect the Secretary and the Joint

Secretary provided that where the Secretary is elected fromamongst the representatives of the employers, the JointSecretary shall be elected from amongst the representatives

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of the workmen and vice versa:Provided that the post of the Secretary or the Joint Secretary,as the case may be, shall not be held by a representative ofthe employer or the workmen for two consecutive years.Provided that the representatives of the employer shall nottake part in the election of the secretary or joint secretary, asthe case may be, from amongst the representatives of theworkmen and only the representatives of the workmenshall be entitled to vote in such elections.

4. In any election under sub-rule (3), in the event of equalityof votes, the matter shall be decided by a draw of lot.

Chapter: Works CommitteeSection 52: Term of Office

1. The term of office of the representatives on the Committeeother than a member chosen to fill a casual vacancy shall betwo years.

2. A member chosen to fill a casual vacancy shall hold office forthe unexpired term of his predecessor.

3. A member who without obtaining leave from theCommittee, fails to attend three consecutive meetings ofthe Committee shall forfeit his membership.


Section 53: VacanciesIn the event of workmen’s representative ceasing to be amember under sub-rule (3) of rule 52 or ceasing to be em-ployed in the establishment or in the event of his ceasing torepresent the trade or vocation he was representing, or resigna-tion or death,his successor shall be elected in accordance with theprovisions of this Part from the same category, group,section,shop or department to which the member vacating the seatbelonged.

Chapter: Works CommitteeSection 54: Power to Co-optThe Committee shall have the right to co-opt in a consultativecapacity persons employed in the establishment havingparticular or special knowledge of a matter under discussion.Such co-opted member shall not be entitled to vote and shall bepresent at meetings only for the period during which theparticular question is before the Committee.

Notes -

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LESSON 13: UNIT 4THE INDIUSTRIAL DISPUTE (CENTRAL)RULES, CENTRAL ID RULES, 1957


help of the Central Govt. rules.


Section 55: Meetings1. The Committee may meet as often as necessary but not less

often than once in three months (a quarter).2. The Committee shall at its first meeting regulate its own

procedure.

Chapter: Works CommitteeSection 56: Facilities for Meeting, etc.

1. The employer shall provide accommodation for holdingmeetings of the Committee. He shall also provide allnecessary facilities to the Committee and to the membersthereof for carrying out the work of the Committee. TheCommittee shall ordinarily meet during working hours ofthe establishment concerned on any working day and therepresentative of the workmen shall be deemed to be onduty while attending the meeting.

2. The Secretary of the Committee may, with the priorconcurrency of the Chairman, put up notice regarding thework of the Committee on the notice board of theestablishment.

Chapter: Works CommitteeSection 56-A: Submission of returnsThe employer shall submit half-yearly returns as in Form G-I intriplicate to the Assistant Labour Commissioner (Central)concerned not later than the 20th day of the month followingthe half-year.


Section 57: Dissolution of Works CommitteeThe Central Government, or where the power under section 3has been delegated to any officer or authority under section 39,such officer or authority may, after making such inquiry as it orhe may deem fit, dissolve any Works Committee at any time, byan order in writing, if he or it is satisfied that the Committeehas not been constituted in accordance with these rules or thatnot less than two-thirds of the number of representatives ofthe workmen have, without any reasonable justification failed toattend three consecutive meetings of the Committee or that theCommittee has, for any other reason, ceased to function:Provided that where a Works Committee is dissolved underthis rule the employer may, and if so required by the CentralGovernment or, as the case may be, by such officer or authority,shall take steps to re-constitute the Committee in accordancewith these rules.

Chapter: Miscellaneous

Section 58: Memorandum of Settlement

1. A settlement arrived at in the course of conciliationproceedings or otherwise, shall be in form H.

2. The settlement shall be signed by-a. In the case of an employer, by the employer himself, or by

his authorised agent, or when the employer is anincorporated company or other body corporate, by theagent, manager or other principal officer of the corporation;

b. In the case of the workmen, by any officer of a trade unionof the workmen or by five representatives of the workmenduly authorised in this behalf at a meeting of the workmenheld for the purpose.

c. In the case of the workman in an industrial dispute undersection 2A of the Act, by the workman concerned.

Explanation.- In this rule ‘’officer’’ means any of the followingofficers, namely:-a) The President;b. The Vice-President;c. The Secretary (including the General Secretary);d. A Joint Secretary;e. Any other officer of the trade union authorised in this

behalf by the President and Secretary of the Union.3. Where a settlement in arrived at in the course of conciliation

proceeding the conciliation officer shall send a reportthereof to the Central Government together with a copy ofthe memorandum of settlement signed by the parties tothe dispute.

4. Where a settlement is arrived at between an employer andhis workmen otherwise than in the course of conciliationproceeding before a Board or a Conciliation Officer, theparties to the settlement shall jointly send a copy thereof tothe Central Government, the Chief Labour Commissioner(Central) New Delhi, and the Regional LabourCommissioner (Central) and to the Assistant LabourCommissioner (Central) concerned.

Chapter: MiscellaneousSection 59: Complaints Regarding Change ofConditions of Service etc.

1. Every complaint under section 33-A of the Act shall bepresented in triplicate in Form ‘I’ and shall be accompaniedby as many copies of the complaint as there are oppositeparties to the complaint.

2. Every complaint under sub-rule (1) shall be verified at thefoot by the workmen making it or by some other personproved to the satisfaction of the Labour Court, Tribunal or

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National Tribunal to be acquainted with the facts of thecase.

3. The person verifying shall specify, by references to thenumbered paragraphs of the complaint, what he verifies ofhis own knowledge and what he verifies upon informationreceived and believed to be true.

4. The verification shall be signed by the person making it andshall state the date on which and the place at which it wassigned.


Section 60: Application under Section 33

1. An employer intending to obtain the express permission inwriting of the Conciliation Officer, Board, Labour Court,Tribunal or National Tribunal, as the case may be, undersub-section (1) or sub-section (3) of section 33 shall presentan application in Form J in triplicate to such ConciliationOfficer, Board, Labour Court, Tribunal or National Tribunaland shall file along with the application as many copiesthereof as there are opposite parties.

2. An employer seeking the approval of the ConciliationOfficer, Board, Labour Court, Tribunal or NationalTribunal, as the case may be, of any action taken by himunder clause (a) or clause (b) of sub-section (2) of section33 shall present an application in Form K in triplicate tosuch Conciliation Officer, Board, Labour Court, Tribunal orNational Tribunal and shall file along with the application asmany copies thereof as there are opposite parties.

3. Every application under sub-rule (1) or sub-rule (2) shall beverified at the foot by the employer making it or by someother person proved to the satisfaction of the ConciliationOfficer, Board, Labour Court, Tribunal or National Tribunalto be acquainted with the facts of the case.

4. The person verifying shall specify by reference to thenumbered paragraphs of the application, what he verifiesof his own knowledge and what he verifies uponinformation received and believed to be true.

5. The verification shall be signed by the person making it andshall state the date on which and the place at which it wasverified.


Section 61: Protected Workmen

1. Every registered trade union connected with an industrialestablishment, to which the Act applies, shall communicateto the employer before the 30th April every year, the namesand addresses of such of the officers of the union who areemployed in that establishment and who, in the opinion ofthe union should be recognised as ‘’protected workmen’’.Any change in the incumbency of any such officer shall becommunicated to the employer by the union within fifteendays of such change.

2. The employer shall, subject to section 33, sub-section (4) ,recognise such workmen to be “protected workmen” for thepurposes of sub-section (3) of the said section andcommunicate to the union, in writing, within fifteen days

of the receipt of the names and addresses under sub-rule(1), the list of workmen recognised as protected workmenfor the period of twelve months from the date of suchcommunication.

3. Where the total number of names received by the employerunder sub-rule (1) exceeds the maximum number ofprotected workmen, admissible for the establishment,under section 33, sub-section (4), the employer shallrecognise as protected workmen only such maximumnumber of workmen:

Provided that, where there is more than one registered tradeunion in the establishment, the maximum number shall be sodistributed by the employer among the unions that thenumbers of recognised protected workmen in individualunions bear roughly the same proportion to one another as themembership figures of the union. The employer shall in thatcase intimate in writing to the President or the Secretary of theunion the number of protected workmen allotted to it:Provided further that where the number of protected workmenallotted to a union under this sub-rule falls short of thenumber of officers of the union seeking protection, the unionshall be entitled to select the officers to be recognised asprotected workmen. Such selection shall be made by the unionand communicated to the employer within five days of thereceipt of the employer’s letter.4. When a dispute arises between an employer and any

registered trade union in any matter connected with therecognition of ‘protected workmen’ under this rule, thedispute shall be referred to any Regional LabourCommissioner (Central) or the Assistant LabourCommissioner (Central) concerned,whose decision thereonshall be final.


Section 62: Application for Recovery of Dues

1. Where any money is due from an employer to a workmanor a group of workmen under a settlement or an award orunder the provisions of Chapter V-A or Chapter V-B, theworkman or the group of workmen, as the case may be,may apply in Form K-1 for the recovery of the money due:Provided that in the case of a person authorised in writingby the workman, or in the case of the death of theworkmen, the assignee or heir of the deceased workman,the application shall be made in Form K-2.

2. Where any workman or a group of workmen is entitled toreceive from the employer any money or any benefit whichis capable of being computed in terms of money, theworkman or the group of the workmen, as the case may be,may apply to the specified Labour Court in Form K-3 forthe determination of the amount due or, as the case maybe, the amount at which such benefit should be computed:Provided that in the case of the death of a workman,application shall be made in form K-4 by the assignee orheir of the deceased workman.


Section 63: Appointment of Commissioner

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Where it is necessary to appoint a Commissioner under sub-section (3) of Section 33-C of the Act, the Labour Court mayappoint a person with experience in the particular industry, tradeor business involved in the industrial dispute or a person withexperience as a judge of a civil court, or as a stipendiary magis-trate or as a Registrar or Secretary of a Labour Court, or Tribunalconstituted under any Provincial Act or State Act or of a LabourCourt, Tribunal or National Tribunal constituted under the Actor of the Labour Appellate Tribunal constituted under theIndustrial Disputes (Appellate Tribunal) Act, 1950.

Chapter: MiscellaneousSection 64: Fees for the Commissioner, etc.

1. The Labour Court shall, after consultation with the parties,estimate the probable duration of the enquiry and fix theamount of the Commissioner’s fees and other incidentalexpenses and direct the payment thereof, into the nearesttreasury, within a specified time, by such party or parties andin such proportion as it may consider fit. TheCommissioner shall not issue until satisfactory evidence ofthe deposit into the treasury of the sum fixed is filed beforethe Labour Court:

Provided that the Labour Court may from time to time directthat any further sum or sums be deposited into the treasurywithin such time and by such parties as it may consider fit:Provided further that the Labour Court may in its discretion,extend the time for depositing the sum into the treasury.2. The Labour Court may, at any time, for reasons to be

recorded in writing, vary the amount of theCommissioner’s fees in consultation with the parties.

3. The Labour Court may direct that the fees shall bedisbursed to the Commissioner in such installments andon such dates as it may consider fit.

4. The undisbursed balance, if any, of the sum deposited shallbe refunded to the party or parties who deposited the sumin the same proportion as that in which it was deposited.


Section 65: Time for Submission of Report

1. Every order for the issue of a Commission shall appoint adate, allowing sufficient time, for the Commissioner tosubmit his report.

2. If for any reason the Commissioner anticipates that thedate fixed for the submission of his report is likely to beexceeded, he shall apply, before the expiry of the said date,for extension of time setting forth grounds thereof and theLabour Court shall take such grounds into consideration inpassing orders on the application:

Provided that the Labour Court may grant extension of timenotwithstanding that no application for such extension hasbeen received from the Commissioner within the prescribedtime-limit.

Chapter: MiscellaneousSection 66: Local InvestigationIn any industrial dispute in which the Labour Court deems alocal investigation to be requisite or proper for the purpose of

computing the money value of a benefit, the Labour Court mayissue a Commission to a person referred to in rule 63 directinghim to make such investigation and to report thereon to it.

Chapter: MiscellaneousSection 67: Commissioner’s Report

1. The Commissioner after such local inspection as he deemsnecessary and after reducing to writing the evidence taken byhim, shall return such evidence together with his report inwriting signed by him to the Labour Court.

2. The report of the Commissioner and the evidence taken byhim (but not the evidence without the report) shall beevidence in the industrial dispute and shall form part of therecord of the proceedings in the industrial dispute; but theLabour Court or, with the permission of the Labour Court,any of the parties to the industrial dispute may examine theCommissioner personally before the Labour Courtregarding any of the matters referred to him or mentionedin his report or as to his report, or as to the manner inwhich he has made the investigation.

3. Where the Labour Court is for any reason dissatisfied withthe proceedings of the Commissioner it may direct suchfurther enquiry to be made as it shall think fit.

Chapter: MiscellaneousSection 68: Powers of CommissionerAny Commissioner appointed under these rules may, unlessotherwise directed by the order of appointment-a. Examine the parties themselves and any witnesses whom

they or any of them may produce, and any other personwhom the Commissioner thinks proper to call upon to giveevidence in the matter referred to him;

b. Call for and examine documents and other things relevantto the subject of enquiry;

c. At any reasonable time enter upon or into any premisesmentioned in the order.

Chapter: MiscellaneousSection 69: Summoning of Witnesses, etc.

1. The provisions of the Code of Civil Procedure, 1908 (5 of1908) relating to the summoning, attendance, examinationof witnesses and penalties to be imposed upon witnesses,shall apply to persons required to give evidence or toproduce documents before the Commissioner under theseRules.

2. Every person who is summoned and appears as a witnessbefore the Commissioner shall be entitled to payment bythe Labour Court out of the sum deposited under rule 64,of an allowance for expenses incurred by him in accordancewith the scale for the time being in force for payment ofsuch allowances to witnesses appearing in the civil courts.

Chapter: MiscellaneousSection 70: Representation of Parties before theCommissionerThe parties to the industrial dispute shall appear before theCommissioner, either in person or by any other person who is

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competent to represent them in the proceedings before theLabour Court.

Chapter: MiscellaneousSection 70-A: Preservations of records by theNational Industrial Tribunals, Industrial Tribunals orLabour Courts.

1. The records of the National Industrial tribunals, IndustrialTribunals or Labour Courts specified in Column 1 of theTable below shall be preserved, for the periods specified inthe corresponding entry in column 2 thereof after theproceedings are finally disposed of by such NationalTribunals,Industrial Tribunals Labour Courts.

TABLE————————————————————————Records Number of years forwhich the records shall be preserved--------------------------------------------------------------------------------

----------------------------------------------------------------------- 1 2i. Order and judgements of NationalIndustrial Tribunals,Industrial Tribunalsor Labour Courts. 10 yearsii. Exhibited documents in the abovementioned Tribunals or Courts 10 yearsiii. Other papers. 7 years—————————————————————————2. Notwithstanding anything contained in sub-rule (1), the

records of the National Industrial Tribunals, IndustrialTribunals or Labour Courts, connected with writ petitions,if any, filed in the High Courts or Supreme Court, orconnected with appeals by special leave, if any, filed in theSupreme Court shall be preserved at least till the finaldisposal of such writ petitions or appeal by special leave.


Section 71: Notice of Strike

1. The notice of strike to be given by workmen in a publicutility service shall be in Form L.

2. On receipt of a notice of a strike under sub-rule (1), theemployer shall forthwith intimate the fact to theConciliation Officer having jurisdiction in the matter.


Section 72: Notice of Lock-outThe notice of lock-out to be given by an employer carrying on apublic utility service shall be in form M. The Notice shall bedisplayed conspicuously by the employer on a notice board atthe main entrance to the establishment and in the Manager’sOffice:Provided that where a registered trade union exists, a copy ofthe notice shall also be served on the Secretary of the Union.

Chapter: MiscellaneousSection 73: Report of Lock-out or Strike

The notice of lock-out or strike in a public utility service to besubmitted by the employer under sub-section (3) of Section 22,shall be in Form N.

Chapter: MiscellaneousSection 74: Report of Notice of Strike or Lock-outThe report of notice of a strike or lock-out to be submitted bythe employer under sub-section (6) of section 22 shall be sentby registered post or given personally to the Assistant LabourCommissioner (Central) appointed for the local area concerned,with copy by registered post to-1. The Administrative Department of the Government of

India concerned,2. The Regional Labour Commissioner (Central) for the Zone,3. Chief Labour Commissioner (Central),4. Ministry of Labour of the Government of India,5. Labour Department of the State Government concerned,

and6. The District Magistrate Concerned.


Section 75: Register of SettlementsThe Conciliation Officer shall file all settlements effected underthis Act in respect of disputes in the area within his jurisdictionin a register maintained for the purpose as in Form O.

Chapter: MiscellaneousSection 75-A: Notice of lay off

1. If any workman employed in an industrial establishment asdefined in the Explanation below section 25A not being anindustrial establishment referred to in sub-section (1) ofthat section is laid off, then, the employer concerned shallgive notices of commencement and termination of suchlay-off in Forms O-1 and O-2 respectively within seven daysof such commencement or termination, as the case may be.

2. Such notices shall be given by an employer in every caseirrespective of whether, in his opinion, the workman laid-off is or is not entitled to compensation under section 25-C.

Chapter: MiscellaneousSection 75-B: Application for Permission for Lay-offunder Section 25-M

1. Application for permission to lay-off any workman undersub-section (1), or for permission to continue a lay-offunder sub-section (3) of section 25-M shall be made inForm O-3 and delivered to the authority specified undersub-section (1) either personally or by registered postacknowledgment due and where the application is sent byregistered post the date on which the same is delivered tothe said authority shall be deemed to be the date on whichthe application is made, for the purposes of sub-section (5)of the said section.

2. The application for permission shall be made in triplicateand copies of such application shall be served by theemployer on the workmen concerned and a proof to that

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effect shall also be submitted by the employer along withthe application.

3. The employer concerned shall furnish to the authority towhom the application for permission has been made suchfurther information as the authority considers necessary forarriving at a decision on the application, as and when calledfor by such authority, so as to enable the authority tocommunicate the permission or refusal to grant permissionwithin the period specified in sub-section (5) of section25M.

4. Where the permission to lay-off has been granted by thesaid authority, the employer concerned shall give to theRegional Labour Commissioner (Central) concerned, anotice of commencement and termination of such lay-offin Forms O-1 and O-2 respectively and where permission tocontinue a lay-off has been granted by the said authority,the employer shall give to the Regional LabourCommissioner (Central) concerned, a notice ofcommencement of such lay-off in Form O-1, in case such anotice has not already been given under sub-rule (1) of rule75A, and a notice of termination of such lay-off in FormO-2.

5. The notice of commencement and termination of lay-offreferred to in sub-rule (4) shall be given within the periodspecified in sub-rule (1) of rule 75-A.


Section 76: Notice of RetrenchmentIf any employer desires to retrench any workman employed inhis industrial establishment who has been in continuous servicefor not less than one year under him (hereinafter referred to as‘workman’ in this rule and in rules 77 and 78), he shall givenotice of such retrenchment as in Form P to the CentralGovernment, the Regional Labour Commissioner (Central) andAssistant Labour Commissioner (Central) and the Employ-ment Exchange concerned and such notice shall be served onthat Government, the Regional Labour Commissioner(Central), the Assistant Labour Commissioner (Central), andthe Employment Exchange concerned, by registered post in thefollowing manner:a. Where notice is given to the workman, notice of

retrenchment shall be sent within three days from the dateon which notice is given to the workman;

b. Where no notice is given to the workman and he is paid onemonths wages in lieu thereof, notice of retrenchment shallbe sent within three days from the date on which suchwages are paid; and

c. Where retrenchment is carried out under an agreementwhich specifies a date for the termination of service, noticeof retrenchment shall be sent so as to reach the CentralGovernment, the Regional Labour Commissioner (Central),the Assistant Labour Commissioner (Central), and theEmployment Exchange concerned, at least one monthbefore such date:

Provided that if the date of termination of service agreed uponis within 30 days of the agreement, the notice of retrenchment

shall be sent to the Central Government, the Regional LabourCommissioner (Central), the Assistant Commissioner (Cen-tral), and the Employment Exchange concerned, within 3 daysof the agreement.

Chapter: MiscellaneousSection 76-A: Notice of, and Application forPermission for, Retrenchment.

1. Notice or, as the case may be, the application under sub-section (1) of Section 25N for retrenchment shall be servedin Form PA and served on the Central Government or suchauthority as may be specified by that Government under thesaid clause either personally or by registered postacknowledgment due and where the notice is served byregistered post, the date on which the same is delivered tothe Central Government or the authority shall be deemed tobe the date of service of the notice for the purposes ofsub-section (4) of the said section.

2. The notice or, as the case may be, the application, shall bemade in triplicate and copies of such notice, or as the casemay be, the application, shall be served by the employer onthe workmen concerned and a proof to that effect shall alsobe submitted by the employer along with the notice or, asthe case may be, the application.

3. The employer concerned shall furnish to the CentralGovernment or the authority to whom the notice forretrenchment has been given or the application forpermission for retrenchment has been made, under sub-section (1) of Section 25-N, such further information as theCentral Government or, as the case may be, the authorityconsiders necessary for arriving at a decision on the noticeor, as the case may be, the application, as and when calledfor by such authority so as to enable the CentralGovernment or the authority to communicate itspermission or refusal to grant permission within the periodspecified in sub-section (4) of Section 25-N.

Chapter: MiscellaneousSection 76-B: Notice of Closure

If an employer intend to close down an undertaking he shallgive notice of such closure in Form Q to the Central Govern-ment, the Regional Labour Commissioner (Central), theAssistant Labour Commissioner (Central), and the Employ-ment Exchange concerned, by registered post.


Section 76-C: Notice of, and application forpermission for, closure1. Notice under sub-section (1) of Section 25-O of intended

closure shall be given in Form QA and served on theCentral Government either personally or by registered postacknowledgement due.

A copy of such application shall be served simultaneously byregistered post on the President or Secretary of registered tradeunion(s) functioning in the establishment and a notice in thisregard shall also be displayed conspicuously by the employer ona notice board at the main entrance to the establishment for the

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information of all the concerned workmen at the same timewhen applications are served on the Central Government.2. The notice, or, as the case may be, the application shall be

made in triplicate.3. The employer concerned shall furnish to the Central

Government to whom the notice of intended closure hasbeen given or the application for permission to close downhas been made such further information as thatGovernment considers necessary, for arriving at a decisionon the notice, or, as the case may be, the application, andcalls for from such employer.


Section 77: Maintenance of Seniority List ofWorkmenThe employer shall prepare a list of all workmen in theparticular category from which retrenchment is contemplatedarranged according to the seniority of their service in thatcategory and cause a copy thereof to be pasted on a notice boardin a conspicuous placed in the premises of the industrialestablishment at least seven days before the actual date ofretrenchment.

Chapter: MiscellaneousSection 78: Re-employment of Retrenched Workmen

1. At least ten days before the date on which vacancies are to befilled, the employer shall arrange for the display on a noticeboard in a conspicuous place in the premises of theindustrial establishment details of those vacancies and shallalso give intimation of those vacancies by registered post toevery one of all the retrenched workmen eligible to beconsidered therefor, to the address given by him at the timeof retrenchment or at any time thereafter:

Provided that where the number of such vacancies is less thanthe number of retrenched workmen, it shall be sufficient ifintimation is given by the employer individually to theseniormost retrenched workmen in the list referred to in rule 77the number of such seniormost workmen being double thenumber of such vacancies:Provided further that where the vacancy is of a duration of lessthan one month there shall be no obligation on the employerto send intimation of such vacancy to individual retrenchedworkmen:Provided also that if a retrenched workman, without sufficientcause being shown in writing to the employer, does not offerhimself for re-employment on the date or date specified in theintimation sent to him by the employer under this sub-rule, theemployer may not intimate to him the vacancies that may befilled on any subsequent occasion.2. Immediately after complying with the provisions of sub-

rule (1), the employer shall also inform the trade unionsconnected with the industrial establishment, of the numberof vacancies to be filled and names of the retrenchedworkmen to whom intimation has been sent under thatsub-rule:

Provided that the provisions of this sub-rule need not becomplied with by the employer in any case where intimation issent to every one of the workmen mentioned in the listprepared under rule 77.

Chapter: MiscellaneousSection 79: PenaltiesAny breach of these rules shall be punishable with fine notexceeding fifty rupees.

Chapter: MiscellaneousSection 80: RepealThe Industrial Disputes (Central) Rules, 1947, are herebyrepealed:Provided that any order made or action taken under the rules sorepealed shall be deemed to have been made or taken under thecorresponding provisions of these rules.

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LESSON 14:THE TRADE UNIONS ACT 1926

ObjectiveThe study of this lesson will help you identify:

Chapter: PreliminarySection 1: Short Title, Extent and Commencement

1. This Act may be called the [* * * ] Trade Unions Act, 1926.2. It extends to the whole of India [* * * ].3. It shall come into force on such date as the [Central

Government] may by notification in the [Official Gazette],appoint.

Chapter: PreliminarySection 2: Definitions

In this Act, the appropriate Government’ means, in relation toTrade Unions whose objects are not confined to one [State], theCentral Government, and in relation to other Trade Unions, the[State] Government, and, unless there is anything repugnant inthe subject or context, -a. “executive” means the body, by whatever name called, to

which the management of the affairs of the Trade Union, isentrusted;

b. “office-bearer” in the case of a Trade Union, includes anymember of the executive thereof, but does not include anauditor;

c. “prescribed” means prescribed by regulations made underthis Act;

d. “registered office” means that office of a Trade Union,which is registered under this Act as the Head Officethereof;

e. “registered Trade Union” means a Trade Union registeredunder this Act;

f. “Registrar” means -i. A Registrar of Trade Unions appointed by the appropriate

Government under Section 3, and includes any additional orDeputy Registrar of Trade Unions ; and

ii. In relation to any Trade Union, the Registrar appointed forthe State in which the head or registered office, as the casemay be, of the Trade Union is situated] ;

g. “trade dispute” means any dispute between employers andworkmen or between workmen and workmen, or betweenemployers and employers which is connected with theemployment or non-employment, or the terms ofemployment or the conditions of labour, of any person,and “workmen” means all persons employed in trade orindustry whether or not in the employment of theemployer with whom the trade dispute arises ; and

h. “Trade Union” means any combination, whether temporaryor permanent, formed primarily for the purpose of

regulating the relations between workmen and employers orbetween workmen and workmen, or between employersand employers, or for imposing restrictive conditions onthe conduct of any trade or business, and includes anyfederation of two or more Trade Unions ; Provided thatthis 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 ; oriii. Any agreement in consideration of the sale of the goodwill

of a business or of instruction in any profession, trade orhandicraft.

Chapter: Registration of Trade Unions

Section 3: Appointment of Registrars

1. The appropriate Government shall appoint a person to bethe Registrar of Trade Unions for each State.

2. The appropriate Government may appoint as manyAdditional and Deputy Registrars of Trade Unions as itthinks ft for the purpose of exercising and discharging,under the superintendence and direction of Registrar, suchpowers and functions of the Registrar under this Act as itmay, by order, specify and define the local limits withinwhich any such Additional or Deputy Registrar shall exerciseand discharge the powers and functions so specified.

3. Subject to the provisions of any order under sub-section(2), where an Additional or Deputy Registrar exercises anddischarges the powers and functions of a Registrar in anarea within which the registered office of a Trade Union issituated, the Additional or Deputy Registrar shall bedeemed to be the Registrar in relation to the Trade Unionfor the purposes of this Act.]


Section 4: Mode of Registration

1. Any seven or more members of a Trade Union may, bysubscribing their names to the rules of Trade Union and byotherwise complying with the provisions of this Act withrespect to registration, apply for registration of the TradeUnion under this Act.

2. Where an application has been made under sub-section (1)for the registration of a Trade Union, such application shallnot be deemed to have become invalid merely by reason ofthe fact that, at any time after the date of the application,but before the registration of the Trade Union, some of theapplicants, but not exceeding half of the total number ofpersons who made the application, have ceased to bemembers of the Trade Union or have given notice in

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writing to the Registrar dissociating themselves from theapplication.

Chapter: Registration of Trade UnionsSection 5: Application for Registration

1. Every application for registration of a Trade Union shall bemade to the Registrar, and shall be accompanied by a copyof the rules of the Trade Union and a statement of thefollowing particulars, namely-

a. The names, occupations and addresses of the membersmaking the application ;

b. The name of the Trade Union and the address of its headoffice ; and

c. The titles, names, ages, addresses and occupations of theoffice-bearers of the Trade Union.

2. Where a Trade Union has been in existence for more thanone year before the making of an application for itsregistration, there shall be delivered to the Registrar,together with application, a general statement of the assetsand liabilities of the Trade Union prepared in such formand containing such particulars as may be prescribed.


Section 6: Provisions to be Contained in the Rules ofa TradeUnion A Trade Union shall not be entitled to registration underthis Act, unless the executive thereof is constituted on accor-dance with the provisions of this Act and the rules thereofprovide for the following matters, namely-a. The name of a Trade Union ;b. The whole of the objects for which the Trade Union has

been established ;c. The whole of the purposes for which the general funds of

the Trade Union shall be applicable, all of which purposesshall be purposes to which such funds are lawfullyapplicable under this Act ;

d. The maintenance of a list of the members of the TradeUnion and adequate facilities for the inspection thereof bythe [office-bearers] and members of the Trade Union ;

e. The admission of ordinary members who shall be personsactually engaged or employed in an industry with which theTrade Union is connected, and also the admission of thenumber of honorary or temporary members as [office-bearers] required under Section 22 to form the executive ofthe Trade Union ;

ee. The payment of a subscription by members of the TradeUnion which shall be not less than twenty-five naye paiseper month per member] ;

f. The conditions under which any member shall be entitledto any benefit assured by the rules and under which any fineor forfeiture may be imposed on the members ;

g. The manner in which the rules shall be amended, varied orrescinded ;

h. The manner in which the members of the executive and theother [office-bearers] of the Trade Union shall be appointedand removed ;

i. The safe custody of the funds of the Trade Union, andannual audit, in such manner as may be prescribed, of theaccounts thereof, and adequate facilities for the inspectionof the account books by the [office-bearers]and membersof the Trade Union ; and

j. The manner in which the Trade Union may be dissolved.


Section 7: Power to call for Further Particulars andto Require Alteration of Name

1. The Registrar may call for further information for thepurpose of satisfying himself that any application complieswith the provisions of Section 5, or that the Trade Union isentitled to registration under Section 6, and may refuse toregister the Trade Union until such information is supplied.

2. If the name under which a Trade Union is proposed to beregistered is identical with that by which any other existingTrade Union has been registered or, in the opinion of theRegistrar, so nearly resembles such name as to be likely todeceive the public or the members of either Trade Union,the Registrar shall require the persons applying forregistration to alter the name of the Trade Union stated inthe application, and shall refuse to register the Union untilsuch alteration has been made.


Section 8: Registration

The Registrar, on being satisfied that the Trade Union hascomplied with all the requirements of this Act in regard toregistration, shall register the Trade Union by entering in aregister to be maintained in such form as may be prescribed, theparticulars relating to the Trade Union contained in the state-ment accompanying the application for registration.

Chapter: Registration of Trade UnionsSection 9: Certificate of RegistrationThe Registrar, on registering a Trade Union under Section 8,shall issue a certificate of registration in the prescribed formwhich shall be conclusive evidence that the Trade Union hasbeen duly registered under this Act.


Section 10: Cancellation of RegistrationA certificate of registration of a Trade Union may be withdrawnor cancelled by the Registrar-a. On the application of the Trade Union to be verified in

such manner as may be prescribed, orb. If the Registrar is satisfied that the certificate has been

obtained by fraud or mistake, or that the Trade Union hasceased to exist or has wilfully and after notice from theRegistrar contravened any provision of this Act or allowedany rule to continue in force which is inconsistent with anysuch provision, or has rescinded any rule providing for anymatter provision for which is required by Section 6:

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Provided that not less than two months’ previous notice inwriting specifying the ground on which it is proposed towithdraw or cancel the certificate shall be given by theRegistrar to the Trade Union before the certificate iswithdrawn or cancelled otherwise than on the application ofthe Trade Union.

Chapter: Registration of Trade UnionsSection 11: Appeal

1. Any person aggrieved by any refusal of the Registrar toregister a Trade Union or by the withdrawal or cancellationof a certificate of registration may, within such period asmay be prescribed, appeal-

a. Where the head office of Trade Union is situated within thelimits of a Presidency town [* * *], to the High Court, or

b. Where the head office is situated in any other area, to suchCourt, not inferior to the Court of an additional orassistant Judge of a principal Civil Court of originaljurisdiction, as the [appropriate Government] may appointin this behalf for that area.

2. The appellate Court may dismiss the appeal, or pass anorder directing the Registrar to register the Union and toissue a certificate of registration under the provisions ofSection 9 or setting aside the order for withdrawal orcancellation of the certificate, as the case may be, and theRegistrar shall comply with such order.

3. For the purpose of an appeal under sub-section (1) anappellate Court shall, so far as may be, follow the sameprocedure and have the same powers as it follows and haswhen trying a suit under the Code of Civil Procedure, 1908,and may direct by whom the whole or any part of the costsof the appeal shall be paid, any such costs shall be recoveredas if they had been awarded in a suit under the said Code.

4. In the event of the dismissal of an appeal by any Courtappointed under clause (b) of sub-section (1), the personaggrieved shall have a right of appeal to the High Court,and the High Court shall, for the purpose of such appeal,have all the powers of an appellate Court under sub-sections (2) and (3), and the provisions of those sub-sections shall apply accordingly.


Section 12: Registered OfficeAll communications and notices to a registered Trade Unionmay be addressed to its registered office. Notice of any changein the address of the head office shall be given within fourteendays of such change to the Registrar in writing, and the changedaddress shall be recorded in the register referred to in Section 8.

Chapter: Registration of Trade UnionsSection 13: Incorporation of Registered Trade UnionsEvery registered Trade Union shall be a body corporate by thename under which it is registered, and shall have perpetualsuccession and a common seal with power to acquire and holdboth movable and immovable property and to contract, andshall by the said name sue and be sued.


Section 14: Certain Acts not to Apply to RegisteredTrade UnionsThe following Acts, namely-a. The Societies Registration Act, 1860 (29 of 1860),b. The Cooperative Societies Act, 1912 (2 of 1912). [* * *] andc. The Companies Act, 1956 (1 of 1956), shall not apply to

any registered Trade Union, and the registration of any suchTrade Union under any such Act shall be void.

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LESSON 15:THE TRADE UNIONS ACT 1926

Objective:The study of this lesson will help you identify:• Rights, liabilities and regulations of registered TU• Penalties and Procedure

Chapter: Rights and Liabilities ofRegistered Trade Unions

Section 15: Objects on which General Funds may beSpentThe general funds of a registered Trade Union shall not bespent on any other objects than the following, namely-a. The payment of salaries, allowances and expenses to office-

bearers of the Trade Union ;b. The payment of expenses for the administration of the

Trade Union, including audit of the accounts of the generalfunds of the Trade Union ;

c. The prosecution or defence of any legal proceeding to whichthe Trade Union or any member thereof is a party, whensuch prosecution of defence is undertaken for the purposeof securing or protecting any rights of the Trade Union assuch or any rights arising out of the relations of anymember with his employer or with a person whom themember employs ;

d. The conduct of trade disputes on behalf of the TradeUnion or any member thereof ;

e. The compensation of members for loss arising out of tradedisputes ;

f. Allowances to members of their dependants on account ofdeath, old age, sickness, accidents or unemployment ofsuch members ;

g. The issue of, or the undertaking of liability under, policiesof assurance on the lives of members, or under policiesinsuring members against sickness, accident orunemployment ;

h. The provision of educational, social or religious benefits formembers (including the payment of the expenses offuneral or religious ceremonies for deceased members) orfor the dependants of members ;

i. The upkeep of a periodical published mainly for thepurpose of discussing questions affecting employers orworkmen as such ;

j. The payment, in furtherance of any of the objects on whichthe general funds of the Trade Union may be spent, ofcontributions to any cause intended to benefit workmen ingeneral, provided that the expenditure in respect of suchcontributions in any financial year shall not at any timeduring that year be in excess of one-fourth of thecombined total of the gross income which has up to thattime accrued to the general funds of the Trade Union

during that year and of the balance at the credit of thosefunds at the commencement of that year ; and

k. Subject to any conditions contained in the notification, anyother object notified by the appropriate Government in theOfficial Gazette.

Chapter: Rights and Liabilities ofRegistered Trade UnionsSection 16: Constitution of a Separate Fund forPolitical Purposes

1. A registered Trade Union may constitute a separate fund,from contributions separately levied for or made to thatfund, from which payments may be made, for thepromotion of the civic and political interests of itsmembers, in furtherance of any of the objects specified insub-section (2).

2. The objects referred to in sub-section (1) are -a. The payment of any expenses incurred, either directly or

indirectly, by a candidate or prospective candidate for electionas a member of any legislative body constituted under [* **] the Constitution or of any local authority, before, during,or after the election in connection with his candidature orelection ; or

b. The holding of any meeting or the distribution of anyliterature or documents in support of any such candidate orprospective candidate ; or

c. The maintenance of any person who is a member of anylegislative body constituted under [* * *] the Constitutionor of any local authority ; or

d. The registration of electors or the selection of a candidatefor any legislative body constituted under [* * *] theConstitution or of any local authority ; or

e. The holding of political meetings of any kind, or thedistribution of political literature or political documents ofany kind.

2-A. In its application to the State of Jammu and Kashmir,references in sub-section (2) to any legislative bodyconstituted under the Constitution shall be construed asincluding references to the Legislature of that State.

3. No member shall be compelled to contribute to the fundconstituted under sub-section (1); and a member who doesnot contribute to the said fund shall not be excluded fromany benefits of the Trade Union, or placed in any respecteither directly or indirectly under any disability or at anydisadvantage as compared with other members of the TradeUnion (except in relation to the control or management ofthe said fund) by reason of his not contributing to the saidfund ; and contribution to the said fund shall not be madea condition for admission to the Trade Union.

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Section 17: Criminal Conspiracy in Trade DisputesNo office-bearer or member of a registered Trade Union shallbe liable to punishment under sub-section (2) of Section 120-Bof the Indian Penal Code (45 of 1860), in respect of anyagreement made between the members for the purpose offurthering any such object of the Trade Union as is specified inSection 15, unless the agreement is an agreement to commit anoffence.


Section 18: Immunity from Civil Suit in CertainCases

1. No suit or other legal proceeding shall be maintainable inany Civil Court against any registered Trade Union or anyoffice-bearer or member thereof in respect of any act donein contemplation or furtherance of a trade dispute to whicha member of the Trade Union is a party on the ground onlythat such act induces some other person to break a contractof employment, or that it is in nterference with the trade,business or employment of some other person or with theright of some other person to dispose of his capital or ofhis labour as he wills.

2. A registered Trade Union shall not be liable in any suit orother legal proceeding in any Civil Court in respect of anytortious act done in contemplation or furtherance of a tradedispute by an agent of the Trade Union if it is proved thatsuch person acted without the knowledge of, or contrary toexpress instructions given by, the executive of the TradeUnion.


Section 19: Enforceability of AgreementsNotwithstanding anything contained in any other law for thetime being in force, an agreement between the members of aregistered Trade Union shall not be void or voidable merely byreason of the fact that any of the objects of the agreement arein restraint of trade :Provided that nothing in this section shall enable any CivilCourt to entertain any legal proceeding instituted for the expresspurpose of enforcing or recovering damages for the breach ofany agreement concerning the conditions on which any mem-bers of a Trade Union shall or shall not sell their goods, transactbusiness, work, employ or be employed.

Chapter: Rights and Liabilities ofRegistered Trade UnionsSection 20: Right to Inspect Books of Trade UnionThe account books of a registered Trade Union and the list ofmembers thereof shall be open to inspection by an office-beareror member of the Trade Union at such times as may beprovided for in the rules of the Trade Union.


Section 21: Rights of Minors to Membership ofTrade UnionsAny person who has attained the age of fifteen years may be amember of a registered Trade Union subject to any rules of theTrade Union to the contrary, and may, subject as aforesaid, enjoyall the right of a member and execute all instruments and givenall acquittance necessary to be executed or given under the rules :

Chapter: Rights and Liabilities ofRegistered Trade UnionsSection 21-A: Disqualifications of Office-bearers ofTrade Unions

1. A person shall be disqualified for being chosen as, and forbeing, a member of the executive or any other office-bearerof a registered Trade Union if-

i. He has not attained the age of eighteen years ;ii. He has been convicted by a Court in India of any offence

involving moral turpitude and sentenced to imprisonment,unless a period of five years has elapsed since his release.

2. Any member of the executive or other office-bearer of aregistered Trade Union who, before the commencement ofthe Indian Trade Unions (Amendment) Act, 1964, has beenconvicted of any offence involving moral turpitude andsentenced to imprisonment, shall on the date of suchcommencement cease to be such member or office-bearerunless a period of five years has elapsed since his releasebefore that date.

3. In its application to the State of Jammu and Kashmir,reference in sub-section (2) to the commencement of theIndian Trade Unions (Amendment) Act, 1964, shall beconstrued as reference to the commencement of this Act inthe said State.


Section 22: Proportion of Office-bearers to beConnected with the IndustryNot less than one-half of the total number of the office-bearers of every registered Trade Union shall be persons actuallyengaged or employed in an industry with which the TradeUnion is connected :Provided that the appropriate Government may, by special orgeneral order, declare that the provisions of this section shallnot apply to any Trade Union or class of Trade Unions specifiedin the order.

Chapter: Rights and Liabilities ofRegistered Trade UnionsSection 23: Change of NameAny registered Trade Union may, with the consent of not lessthan two-thirds of the total number of its members andsubject to the provisions of Section 25, change its name.


Section 24: Amalgamation of Trade Unions

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Any two or more registered Trade Unions may becomeamalgamated together as one Trade Union with or withoutdissolution or division of the funds of such Trade Unions oreither or any of them, provided that the votes of at least one-half of the members of each or every such Trade Union entitledto vote are recorded, and that at least sixty per cent of the votesrecorded are in favour of the proposal.

Chapter: Rights and Liabilities ofRegistered Trade UnionsSection 25: Notice of Change of Name orAmalgamation

1. Notice in writing of every change of name and of everyamalgamation, signed, in the case of a change of name, bythe Secretary and by seven members of the Trade Unionchanging its name, and, in the case of an amalgamation, bythe Secretary and by seven members of each and every TradeUnion which is a party thereto, shall be sent to the Registrar,and where the head office of the amalgamated Trade Unionis situated in a different State, to the Registrar of such State.

2. If the proposed name is identical with that by which anyother existing Trade Union has been registered or in theopinion of the Registrar, so nearly resembles such name asto be likely to deceive the public or the members of eitherTrade Union, the Registrar shall refuse to register the changeof name.

3. Save as provided in sub-section (2), the Registrar shall, if heis satisfied that the provisions of this Act in respect ofchange of name have been complied with, register thechange of name in the register referred to in Section 8, andthe change of name shall have effect from the date of suchregistration.

4. The Registrar of the State in which the head office of theamalgamated Trade Union is situated shall, if he is satisfiedthat the provisions of this Act in respect of amalgamationhave been complied with and that the Trade Union formedthereby is entitled to registration under Section 6, registerthe Trade Union in the manner, provided in Section 8, andthe amalgamation shall have effect from the date of suchregistration.


Section 26: Effects of Change of Name and ofAmalgamation

1. The change in the name of a registered Trade Union shallnot affect any rights or obligations of the Trade Union orrender defective any legal proceeding by or against the TradeUnion, and any legal proceeding which might have beencontinued or commenced by or against it by its formername may be continued or commenced by or against it byits new name.

2. An amalgamation of two or more registered Trade Unionsshall not prejudice any right of any such Trade Unions orany right of a creditor of any of them.


Section 27: Dissolution

1. When a registered Trade Union is dissolved, notice of thedissolution signed by seven members and by the Secretaryof the Trade Union shall, within fourteen days of thedissolution, be sent to the Registrar, and shall be registeredby him if he is satisfied that the dissolution has beeneffected in accordance with the rules of the Trade Union,and the dissolution shall have effect from the date of suchregistration.

2. Where the dissolution of a registered Trade Union has beenregistered and the rules of the Trade Union do not providefor the distribution of funds of the Trade Union ondissolution, the Registrar shall divide the funds amongstthe members in such manner as may be prescribed.


Section 28: Returns

1. There shall be sent annually to the Registrar, on or beforesuch date as may be prescribed, a general statement, auditedin the prescribed manner, of all receipts and expenditure ofevery registered Trade Union during the year ending on the3lst day of December next preceding such prescribed date,and of the assets and liabilities of the Trade Union existingon such 3lst day of December. The statement shall beprepared in such form and shall comprise such particulars asmay be prescribed.

2. Together with the general statement there shall be sent tothe Registrar a statement showing all changes of office-bearers made by the Trade Union during the year to whichthe general statement refers, together also with a copy of therules of the Trade Union corrected up to the date of thedespatch thereof to the Registrar.

3. A copy of every alteration made in the rules of a registeredTrade Union shall be sent to the Registrar within fifteendays of the making of the alteration.

4. For the purpose of examining the documents referred to insub-sections (1), (2) and (3), and Registrar, or any officerauthorized by him, by general or special order, may at allreasonable times inspect the certificate of registration,account books, registers, and other documents, relating to aTrade Union, at its registered office or may require theirproduction at such place as he may specify, in this behalf,but no such place shall be at a distance of more than tenmiles from the registered office of a Trade Union.

Chapter: Regulations

Section 29: Power To Make Regulations1. The appropriate government may make regulations for the

purpose of carrying into effect the provisions of this Act.2. In particular and without prejudice to the generality of the

foregoing power, such regulations may provide for all orany of the following matters namely :-

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a. The manner in which trade unions and the rules of tradeunions shall be registered and the fees payable onregistration;

b. The transfer of registration in the case of any registeredtrade union which has changed its head office from oneState to another;

c. The manner in which, and the qualifications of persons bywhom, the accounts of registered trade unions or of anyclass of such unions shall be audited;

d. The conditions subject to which inspection of documentskept by Registrars shall be allowed and the fees which shallbe chargeable in respect of such inspections, and

e. Any matter which is to be or may be prescribed.3. Every notification made by the Central Government under

sub-section (1) of section 22, and every regulation made byit under sub-section (1), shall be laid, as soon as may beafter it is made, before each House of Parliament, while it isin session, for a total period of thirty days which may becomprised in one session or in two or more successivesessions, and if, before the expiry of the sessionimmediately following the session or the successive sessionsaforesaid, both Houses agree in making any modification inthe notification or regulation, or both Houses agree that thenotification or regulation should not be made, thenotification or regulation shall thereafter have effect only insuch modified form or be of no effect, as the case may be;so, however, that any such modification or annulment shallbe without prejudice to the validity of anything previouslydone under that notification or regulation.

4. Every notification made by the State Government undersub-section (1) of section 22 and every regulation made byit under sub-section (1) shall be laid, as soon as may be afterit is made, before the State Legislature.

Chapter: Regulations

Section 30: Publication of Regulations1. The power to make regulations conferred by section 29 is

subject to the condition of the regulations being made afterprevious publication.

2. The date to be specified in accordance with clause (3) ofsection 23 of the General Clauses Act, 1897 (10 of 1897), asthat after which a draft of regulations proposed to be madewill be taken into consideration shall not be less than threemonths from the date on which the draft of the proposedregulations was published for general information.

3. Regulations as made shall be published in the OfficialGazette, and on such publication shall have effect as ifenacted in this Act.

Chapter: Penalties and ProcedureSection 31: Failure to Submit Returns

1. If default is made on the part of any registered trade unionin giving any notice or sending any statement or otherdocument as required by or under any provisions of thisAct, every office-bearer or other person bound by the rulesof the trade union to give or send the same, or, if there is

no such office-bearers or person, every member of theexecutive of the trade union, shall be punishable with finewhich may extend to five rupees and, in the case of acontinuing default, with an additional fine which mayextend to five rupees for each week after the first duringwhich the default continues :

Provided that the aggregate fine shall not exceed fifty rupees.2. Any person who wilfully makes, or causes to be made, any

false entry in, or any omission from, the general statementrequired by section 28, or in or from any copy of rules or ofalterations of rules sent to the Registrar under that section,shall be punishable with fine which may extend to fivehundred rupees.

Chapter: Penalties and ProcedureSection 32: Supplying False Information RegardingTrade UnionsAny person who, with intent to deceive, gives to any memberof a registered trade union or to any person intending orapplying to become a member of such trade union anydocument purporting to be a copy of the rules of the tradeunion or of any alterations to the same which he knows, or hasreason to believe, is not a correct copy of such rules or alter-ations as are for the time being in force, or any person who,with the intent, gives a copy of any rules of an unregisteredtrade union to any person on the pretence that such rules are therules of a registered trade union, shall be punishable with finewhich may extend to two hundred rupees.

Chapter: Penalties and Procedure

Section 33: Cognizance of Offences1. No court inferior to that of a Presidency Magistrate or a

Magistrate of the first class shall try any offence under thisAct.

2. No court shall take cognizance of any offence under thisAct, unless complaint thereof has been made by, or withthe previous sanction of, the Registrar or, in the case of anoffence under section 32, by the person to whom the copywas given, within six months of the date on which theoffence is alleged to have been committed.

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Learning Objective• The study of this lesson will help you:• Understand the rights and interest of the employee in the

industries.

IntroductionAs we can put and all will agree that industrial relations (IR) isinherently a bipartite relationship. Like in any other relationshipIR too has parties to it. The parties to this relationship includeunion and management, representing workers and employer,respectively. Similar to other relationships, the union manage-ment relationship is highly complex.The complexity can be attributed to:Divergence of interests,Perspectives,Expectations,Value systems andGoals of the two parties.Consequently, there is immense possibility of misunderstand-ing incongruence and conflict at any point of time inorganizational setting over the terms and conditions ofemployment. As the organizations find it difficult to surviveand grow in an environment of conflict and misunderstand-ings, it is desirable that both the parties sit together to resolvetheir differences and conflicts through mutual discussions andnegotiations without the intervention of a third party. Thisprocess of resolving the differences between union andmanagement in the absence of any third party is widelydesignated as collective bargaining.Perhaps, Sydney and Beatrice Webb coined the term ‘CollectiveBargaining’ in 1897. Probably, it means: ‘to bar the gains (ofothers), collectively’.According to Harbinson, collective bargaining is ‘a process ofaccommodation between two institutions which have bothcommon and conflicting interests’. It purports not to attainindustrial peace at any price. Rather, it aims at the attainment ofthe commonly held goals of a free society.Irrespective the causes of industrial disputes the consequencesare harmful to allStakeholdersManagementEmployeesEconomy andSocietyAs the famous saying goes ‘United we stand and Divided wefall’. A dispute therefore needs to be settled as early as possible.Among the various available methods for resolving disputesCollective Bargaining is one. And we can say it is probably the

‘most effective method of resolving industrial disputes. Itoccurs when representatives of two groups (labour union andmanagement) meet and attempt to negotiate an agreement thatspecifies the nature of future relationships between the two. Itcould be to determine employees wages and benefits, to createor revise work rules, and to resolve disputes or violations of thelobour contract.The bargaining is collective in the sense that the chosenrepresentative of the employees (i.e. the union) acts as abargaining agent for all the employees in carrying out negotia-tions and dealing with the management.In the case of the corporation in which the paid professionalmanagers represent the interest of the stockholders and theboard of directors in bargaining with the union leaders.On the employee side too it could be collective in thosecommon situations in which the companies have joinedtogether in an employer association for purposes of bargainingwith union.The ILO (International Labour Organization) Workers Manualdefines collective bargaining as:Negotiations about working conditions and terms of employ-ment between an employer, a group of employers or one ormore employers’ organizations and one or more representativesworkers’ organizations on the other, with a view to reachingagreement wherein the terms of an agreement serve as a codedefining the rights and obligation of each party in theiremployment relations with one another; it fixes a large numberof detailed conditions of employment, and during its validitynone of the matters it deals with can in normal circumstancesgive grounds for dispute concerning an individual worker’.Thus, as opposed to individual bargaining, it relates to groupbargaining about wages and salaries and working conditions.The parties may be trade unions or their federations on the onehand and an employer or his representative or an employers’association or federation, on the other.Flanders identifies the distinctive nature of collective bargainingto be basically a political institution in which the rules are madeby trade unions of workers, employers and corporations/organizations. In fact, despite the divergence in their structuresand functions, trade unions have a common objective ofnegotiation with the employer about a written agreementembracing employment conditions as well as labour manage-ment relationship on mutually accepted terms. Thus, collectivebargaining is nothing but negotiation, administration andinterpretation of written agreement between the union andmanagement, which covers a specific period of time. It is aprocedure adopted by union and management to compromisetheir conflicting interests. Further, it is collective, because, it is agroup action involving two parties having trade unions or theirfederations on the one hand and the employer or his represen-

UNIT 5MANAGEMENT OF INDUSTRIAL

RELATIONSCHAPTER 3 : COLLECTIVE BARGAINING

PROCESS

LESSON 16: UNIT 5CONCEPT OF COLLECTIVE BARGAINING

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tative or an employers’ association or federation on the other. Itis opposed to individual bargaining because it relates to groupbargaining about wages and salaries and working conditions ofthe entire organization. It is a democratic process in the labourmanagement relationship as parties to this process discuss andsolve their problems across the negotiation table.According to Dunlop and Healy, the system of collectivebargaining represents the extension of the democratic idea intowork organizations and it gives workers the feeling of participa-tion in the affairs of their department and organizationthrough various committees.According to Adams, collective bargaining is considered to bethe major function of trade unions.Jones and Morris viewed that collective bargaining in all itscurrent complexities is the bread and butter activity of tradeunions, their life blood what their member regard as the reasonfor their existence normal means of defending their interestsand maintaining and improving their living standard. More-over, collective bargaining is a mutual obligation notcompulsion of parties to sign agreement in good faith onwages and allied conditions of employment.According to Leap and Crino, one primary indication of goodfaith bargaining is willingness to compromise during negotia-tions and the key for negotiation is to maintain a flexibleattitude and willingness to listen to proposals submitted by theother side and to make counter offer on those proposals.Further, it is a continuous and dynamic activity in the employerand employee relationship because once the agreement periodexpires, similar agreement or with different other demandscome up and the nature and duration of agreement may changewith the changing expectations, circumstances and position ofthe parties. As, rigidity and arrogance on any party createsbitterness and gap in any healthy and long lasting relationship,collective bargaining brings flexibility and dynamism betweenthe parties in industrial relationship.

Salient Features of Collective Bargaining are:

1. It is a ‘group’ process, wherein one group representing theemployers and the other representing employees sittogether to negotiate terms of employment.

2. It is a process in the sense that it consists of a number ofsteps. The starting point is the presentation of the charterof demands and the last stage is reaching of an agreement,or a contract, which would serve as the basic law governinglabour management relations over a period of time in anenterprise.

3. Negotiations form an important aspect of the process ofcollective bargaining, Le. there is considerable scope fordiscussion, compromise or mutual give and take in thecollective bargaining deliberations rather than confrontation.

4. It is a bipartite process. The employers and the employeesare the only parties, involved in the bargaining process.There is no third party intervention. The conditions ofemployment are regulated by those directly concerned.

The concept of collective bargaining needs to be understood inits proper perspective. It is not merely a replacement of the

market place haggling by a group of workmen with an em-ployer.As we have already mentioned Flanders identifies the distinctivenature of collective bargaining to be basically a political institu-tion in which the rules are made by the trade unions ofworkers, employers and corporations/organizations.Secondly, since the two aspects of administration and legislationare interlinked, there is a considerable degree of joint regulationby both the parties, governed by the conventions and customsthat prevail at the enterprise level.Thirdly, collective bargaining is not merely an economic process,but more a socio-economic one. The values, aspirations andexpectations also playa significant role.

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Learning ObjectiveThe study of this lesson will help you:• Understand of how and in what levels the collective

bargaining can be done.Collective bargaining is generally structured and con-ducted at three levels:• Plant level• Industry level• National level

Plant LevelThis is the basic or micro level unit, where negotiations areconducted between the management of the plant and union(s)of the plant. Generally the unions are centered around theplant, with little or no involvement in other bodies. There aremany plant, level agreements but the pioneers, in this field, areTata Iron and Steel Co. Ltd.

Industry LevelSeveral units in the same industry band together and form anassociation, which negotiates with a union having a similarstatus. The agreements are somewhat broader in scope anddelineation than the plant level settlements that are very specific.The Rashtriya Mill Mazdoor Sabha negotiates with the mill-owners of Mumbai on behalf of the workers, as it is therecognized industry union.

National LevelHere the terms of reference and scope are much wider thoughsuch agreements are not so common in India. The representa-tives of the trade union and the employer negotiate and arriveat a settlement, but given the industry-cum-region conventionin India, such national level agreements are few. At sometripartite conferences convened by the Government of India,certain specific issues have been negotiated and contracted, e.g.the Agreement to Rationalise Work Practices and manning andrelated issues, concluded in 1951 between labour unions(INTUC) and management.

Stages in Collective BargainingSloane and Witney classify the contract negotiation process inthree stages including the early stages, the later stages and thefinal stages. Union representatives who propose numerouseconomic and non-economic demands initiate the negotiationprocess. The management representatives, who do not have anyprior experience in bargaining, visualize these demands asunjustified. Some of the extreme demands may includeappointment of union officers in the board of directors andfree transportation for all employees. The experienced manage-ment representatives are not at all disturbed by these demandsbecause they consider unions as “political animals” which throwuntenable but “pet” demands of the workers. One of thereasons of these unreasonable demands is that their real

objectives and conceals their real positions ‘until the propertimes have reached. Further, the union representatives attemptto pose of winning the management in the long run ratherthan getting accepted in the current bargaining year.

Early StagesAs Dunlop and Healy point out, neither group can normally beexperienced to permit the new demand the first time it is posed.Indeed, a new issue initially causes merely opposition Item theother group but it may be less novel and seen less outrageousafter the passing of one year. The opposite group may availopportunity to think it over and visualize administrativedifficulties involving mutual diagnosis. Accordingly, proposalsregarding a pension of a health and welfare issue made byunion representative may obtain a cool reception initially.Explicitly, several years may be required before the managementis in a position to consider such issues carefully. There is aperiod of gestation involved in new contract demands.Sometimes, despite the large number of initial demands,several new demands are introduced at any point during the‘long period of negotiations prior to the [mal agreement. Someof the demands by the union may be related to its apparentmadness and used as ploys in a logical bargaining strategy. Theredemands should not to taken literally. Some managementrepresentation representative appreciates the strategic significanceof the large number of demands and makes similar counterproposals.However because of theses exaggerated demands and similarunrealistic counter proposals, the parties remain quite remotefrom each other in the initial stage.Indeed, in the initial meetings, it is not possible to reachagreement because of presence of numerous invited guestsfrom the ranks of each group. Of course, the initial participa-tion of rank and files as well as lawyers and consultants is ofutmost significance from political and human relationsstandpoints. These initial meetings have also utmost educa-tional significance for the bargainers. The presence of numerousfactors does not refrain the bargainers to evaluate each other’sgeneral position and precisely assess the quality of the otherside’s proposals are being taken seriously and which are simplyintroduced to establish bargaining position. It may be notedthat time element is very crucial in negotiation process. Throughexperience and understanding of the tactics of the other group,the bargainers can effectively use the time principle. Indeed, theyshould know when to listen, speak, stand firm and concede,when to make counter proposals, compromise and suggestion,when to sue illustration or a funny story to resolve tension andwhen to become deadly serous and take a final position.

Later StagesAs Sloane and Witney observe, after the termination of thestage, both parties have adequate understanding of the overall

LESSON 17:STAGES AND PREREQUISITES FOR COLLECTIVE BARGAINING

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climate of the negotiation process. The union tends tounderstand the objectives of management while the manage-ment tends to realize what the union is proposing. Both partiesend to determine to what extent t they have to go in thenegotiation, the maximum levels they will accept. At these laterstages, the skilled negotiators don not take extreme., rigidpositions and tend to throw something on the table fordiscussion without taking a defmite stand on a particular issue.A pattern of agreement seems to appear with the minimizeddisagreement and offer of mutual concessions. They tend tounderstand each other’s ultimate goals buy evaluating thearguments and attitudes towards proposals on the bargainingtable. Through the process of counter proposal and compro-mise, they finally reach a “package” of settlement representingthe minimum and maximum levels acceptable to both groups.Frequently, the skied negotiators employ several techniques todetermine the content of the alternative packages. Among,these techniques are included trading points and counterproposals. As regards the trading points, there are severalperquisites of this technique. First, attempt should be made toaccess the demands of the union from the quantities as well asqualitative standpoints. The negotiators should visualize thepoints at which the group is very serious. For example, theunion representatives seem utmost concerned about reductionof work hours. Later on, they realize that the managementcannot accept it and therefore, they withdraw it in return forwage increases and union shop. Thus, reduction of hours isused as a trading point. Counter proposals relate it the compro-mise in bargaining process. For example, if the unionrepresentatives demand four weeks’ vacation with pay foremployees having three years of service with the company andone week for those having less than three years’ service.Sometimes, several counter proposals are made prior to theattainment of a final agreement.

Final StageIn the final stages of the contract negotiation process, severalstrategies may be used to reach the agreement. For example, insome situations, the mere silence may indicate a concessionwhile in others the extent of stress on different points canprovide a significant hint. They may suggest a position by citingstatistics or by discussing a settlement in some other industry.On the basis of these strategies, the parties may reach agreementon even thorny issues on management rights, union security,the role of seniority and financial benefits. Frequently, prepara-tion of an acceptable package involving these may become acomplicated function. This may even lead to a strike deadline,which frequently provides motivation to labour relation’sagreement. Both groups tends to reassesses their ‘final’ positionand balance their rock bottom demands as well as visualize theearlier bargaining position from a different standpoint.Explicitly, in view of threats of strikes both group are willing topromise as they are exposed to reality. Indeed, the stoppage ofwork may cause uncertainties and loss of income to the bothparties and accordingly, they are more keen to bridge differencesthan before. This stage is characterized by new developmentsbecause each side tends to offer new and generous finalproposals. The chief representative from each side may meet

separately in an informal way and reach new agreements. Theextremely insolvable issues may be entrusted to along-rangejoint study committee to solve subsequently.Accordingly, as Stevens observes, the approach of the deadlinesqueezes elements of bluff and deception out of the negotia-tion process as well as exerts pressures to bear with otherschanging the earlier unfavourable situation. Indeed the threat tostrike or lockout tends to bring about conditions necessary foran agreement. The deadline seems to foster positive attitudesand cause positive actions between the two groups. However,sometimes strikes take place, especially in situations where theunion representatives feel that the package of settlement wouldbe refused by the rank and files. They may also happen wherethe negotiators fail to evaluate the significance of concession tothe other group and refuse to grant it. In some cases, in somecases bargainers do not give up initial position because of prideas well as in rare situations they desire a strike to provide anoutlet and accomplish allied objectives.Before the process of collective bargaining is initiated therewould thus appear to be certain preconditions without whichcollective bargaining cannot exist. Here we are going to view anddiscuss the prerequisites for collective bargaining.

Prerequisites for Collective Bargaining1. Careful thought and selection of the negotiation team is

imperative. The team should have a mixed composition,including production, finance and IR experts. A person,preferably personnel, should head it and industrial relationspecialist of seniority who has an adequate brief to committhe enterprise and take decisions, without frequent referralsto top management. For instance, many organizations havea vice –president personnel or director-personnel headingthe team with a brief to commit the organization up to acertain amount which can be spread out depending on thenegotiating situation based on union demands.

2. It is necessary for the management to recognise the unionand to bargain in more good faith, in unionized situations.Unions as representatives of the workers’ interest are agrowing phenomenon. This also puts pressure on theunion to formulae plans and demands in a systematicmanner. Strong union and progressive managements canhelp create an atmosphere of mutual confidence.

3. The necessity of having open minds, to listen andappreciate the others’ concern and point of view and tohave some flexibility in making adjustments to demandsmade.

4. The need to study adequately or do ‘homework’ on thedemands presented, i.e. to gather data on wages and welfarebenefits in similar industries in the geographical area.

5. Both the management and the union should be able toidentify grievances, safety and hygiene problems on aroutine basis and take appropriate remedial steps.

6. Trade unions should encourage internal union democracyand have periodic consultations with the rank and filemembers.

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7. Trade unions should equally be concerned with, bothleading up to a consistent concern for the viability of thefirm and its product/services.

8. Strikes/lockouts should be resorted to, in the ultimateanalysis. Periodic discussion may be necessary between themanagement and the union to interpret the provisions ofthe contract and clarify doubts.

The above mentioned prerequisites are important for both theparties before they start with the process of collective bargaining.In addition to the above we shall also talk and examine theother conditions prior to the process of collective bargaining.To begin with let us first talk about Parity of Power betweenthe two parties-management and unions should be more or lesequal in the matter of power or strength to achieve genuinebargaining status. A weak union, as already seen cannot forcemanagements even to bargain, let alone achieve anything ofsubstance for its members. But it holds equally well for themanagements, and a weak management can surrender so manythings to powerful unions that the agreement cannot berightfully said to represent the results of a bargain.Bargaining In Good Faith is another aspect which the bonafides of the bargaining parties have to be clear right from thestart and the existence of hidden agendas can only hamper theprocess.Bargaining may often result in a stalemate, with neithermanagements nor unions budging from their respective offersor demands. Therefore there should exist Mechanisms ToBreak A Deadlock . The breaking of this deadlock can beachieved in two ways, either through an ultimatum like strikesor lockouts, or through third party mediation, like arbitration orconciliation.Having talked about these conditions let us examine whetherthese conditions exist or not.Parity of power does not exist in many enterprises. In theMNCs, where union legitimacy was accepted from the start,though not always with good grace, unions had a locus standivis-à-vis management. Consequently they had some power. Inthe public sector units, union legitimacy was never in doubt andunions thrived in the PSU ambience, though there were otherconstraints. Collective bargaining therefore , flourished in theseenterprises. But there are sectors where management havestrongly and persistently resisted collective bargaining, justbecause it bestows the unions with legitimacy. There being nostatutory compulsion to bargain, employers have often refusedpoint blank or in some cases tried to pre-empt union demandsby giving workers fairly large wage increases as a preventivemeasure. In other sectors and enterprises, union existence itselfwas in doubt and collective bargaining made either a late start oris still in its infancy. In some sectors, like informal and small-scale export industries, collective bargaining if it exists at all, isrudimentary, dealing only with basic wages. Governmentemployees still have no bargaining.Multiplicity of unions has further reduced union strength andmanagements are only too easily able to play one union offagainst the other. Rival union demands weaken not only theunions but also the workers’ case. Managements can rationally

claim that they are undecided about benefits when the workersthemselves do not know what they want. Sengupta (1993 ) feelsthat ‘the trade union movement, barring a few centres, is stillquite weak in India’ (p.6). Obviously, such disparity in power isnot conducive to collective bargaining.But even in the public sector units, there is a weakness ofanother kind . Excessive political interference and supervisionby the controlling ministries reduces reduces managements’elbowroom and weakens them. Political links make unionsappear larger than they really are and intimidate managers ofthese undertakings. But the main blame may well lie with thegovernment, which did little to give bargaining the legitimacythat it badly needed.Bargaining in good faith is another problem. It has beenobserved in several industries like ‘jute, that bargaining is never;undertaken unless employers can exercise a large degree ofintimidation over the other side: Often; bargaining is takentowards a deadlock, which is used as a pretext to close down theplant. Bargaining is not done, therefore, in good faith. Ifunions are at all able ,to force it on an unwilling management,the employers’ intention may well be to engineer a stalemateand then declare a closure or lockout It is only when both themanagement and unions want to arrive at a settlement, thatthey will behave rationally. .The other conditions necessary for bargaining to culminate in anoutcome is the existence of deadlock-breaking devices. Theseexist, since strikes and lockouts’ are both legitimate industrialactivities. Except for certain restrictions on timing of strikes orlockouts, there is considerable freedom for both unions andmanagements to make their position clear with regard to certainissues and try and break the rigidity of the other party by callinga strike or. a lockout. At the same time, the existence ofconciliation and arbitration also leaves the parties with optionsother than striking or closing. In fact, it is found that in recentyears, many of the negotiations end up in .he conciliationofficers’ chambers and emerge as Section 12(3) settlementsunder the Industrial Disputes Act. But voluntary arbitration is arelatively weak process, since there is’ no standard body ofarbitrators and few, if any, norms exist for dispute arbitration.The large private sector organisations where bipartite bargainingtakes place relatively freely may find that they are unable tocompose their differences and appeal to the government to stepin, either by way of ministerial intervention or by way ofconciliation. Many of the outstanding disputes may get carriedover to the judicial sphere, ‘as has been happening m recentyears. The deadlock-breaking strike or lockout is often notpossible in India because of the low sustaining power ofworkers and the government’s frequent interventions in theprocess, by requesting the two parties to settle up.Another problem’, which keeps recurring in collective bargain-ing, is the bargainability of issues. Even in those sectors wherecollective bargaining has been accepted as a way of industrialrelations” there still seem to be doubts about the issues whichcan or should be bargained. Obviously, unions would like tobargain about as many issues as possible” since bargainingestablishes dual control over those issues. But managementsequally strongly would like to retain their control over as many

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decisions as possible. A good example of this is the Bank ofBaroda strike in Calcutta in late 1987.In this incident, the management of the regional office,transferred some ‘TaI1ch employees on a Friday afternoon.Saturday and Sunday were holidays at that time and employeescould not react. Earlier, there had been several representationsagainst ad hoc transfers in the bank. Except for a tribunal awardin the early 1950s and a 1981 circular of the bank managementlaying down norms for non-executive transfers, there were noproper guidelines for transfers. Banking had undergone majorchanges in structure, clientele, purpose and location of branches,and transfers had become a key issue. Unions wanted athorough discussion while the management continued tomaintain that transfer was a managerial prerogative and was notnegotiable. Several other banks had negotiated bipartitecorporate-level agreements on this thorny issue and achieved ameasure of peace. Bank of Baroda was not one of them. Onthe Monday following the transfer order, a strike decision wastaken. A 50-day strike ensued, which was called off only at theintervention of the Chief Minister. The main union involvedwas the CITU-affiliated BEFI. But the Chief Minister’sintervention actually” put the unions and management face-to-face on the issue. They had to discuss the transfers and arrive atan agreement, and transfer became negotiable, after a 50-daystrike.The primary issue in this strike was the bargainability of transferas an issue. This was not a problem confined to the publicsector. Many private sector companies have also refused tobargain on some specific issues from time to time, though inthe end, many of them have capitulated. In the Mico casementioned earlier, it was the issue of manning of machines.The management refused to bargain on the ground thatmanning and deployment were managerial prerogatives, a factdisputed by the unions.But in spite of the non-existence of some pre-conditions forsuccessful bargaining, or a minimal infrastructure in the form ofdetermination of bargaining agent, or compulsion to negotiate,collective bargaining has been growing. In other words, it isobviously the more preferred form of dispute resolution‘among industrial enterprises. Even though the wage boardsgave decisions favourable to workers, both unions andmanagements showed their preference for collective bargaining,no matter how circumscribed it was.

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Learning ObjectiveThe study of this lesson will help you:• Understand of how collective bargaining concept helps in

the fixation of wages.A significant feature of collective bargaining is the wages thatwill be paid for the work done by the employees. The union’sconcern as well as that of the management is the criteria utilizedin wage negotiations. In actual fact the union is rarely involvedin setting the original job rates; management does this. Theunion is actually involved in enhancing, or, at least, preventing adecrease of wages. This factor is significant in determining theunion’s wage criteria and is to be taken in conjunction with theeconomic factors prevalent in the plant or the industry. Themajor criteria used byunions and management in setting wage levels can be classifiedas: (i) measures of equity; (ii) measures of need; and (iii)measures of contribution. However the most commonly usedcriteria are comparable wages, cost power. Only unions use theliving wages and purchasing power criteria as a justification fortheir demands. To the management, wages are a cost and to theworker (union) income. Some concerns for management wouldbe in terms of saving by reducing workers or transferringresources for technological improvements. The workers(unions) will constantlycompare themselves with others in the same field. These issuesare usually examined in the context of the commonly usedwage criteria referred to earlier.Another area of significance is that of productivity bargaining.The concept of productivity bargaining has gained increasingattention in the Indian industrial relations system. In suchagreements advantages such as higher wages or increased leisureare given to workers for accepting changes on established workpractices and organization of work itself, thus reducing/eliminating waste and leading to more effective working.Randle and Wortman state: “ Productivity usually refers tooutput in physical units per man-hour of work. It is a measureof the relationship between the volume of goods producedand one factor of input-Iobour time.” However, labour is onlyan input and there are several other variables such as “ moreefficient utilization of fuel, more economical materials; technicalimprovements in machines; in organization and in processes;the skill and effort of the work force; the efficiency of manage-ment and the state of Lobour Relations”. Increasedproductivity is usually reflected in increased ability to pay andtherefore industries with high or increasing productivity aregenerally able to pay high wages. Data shows that historicallyproductivity has been going up at the aggregate for the nationallevel. Productivity data is computed both nationally and plant-wise. Man-hour production over time is the basis for calculatingthe productivity, but as argued earlier Lobour’s contribution is

difficult to isolate. This data therefore serves as the base fornegotiations to move on, coupled with otherarguments by unions, particularly in boom and normal periods.The engine plant of Amalgamations group in Madras didresort to a productivity type bargain many years back. In theplantation industry, work norms are established for each type ofactivity. The emphasis here is on achievements of targets. If theworker is fast and does not take the full time for scheduledbreaks and if he [mishes his assigned task early, then he doesnot have to wait; he may leave the work spot. The emphasishere is not on time spent, but on output and quality. TheIndian Railways have also established a productivity base, takinga base year as a norm and comparing subsequent years’ perfor-mance with the base, to identifY variations and establish theproductivity achieved. In fact the Government of India triedhard to propagate the concept of productivity-linked bonus, toboost output and control inflation, especially at the time ofpayment during the festive season.In India, collective bargaining as one of the methods of wagefixation has been adopted in many industries. Most of theagreements are at the plant level, though some significantindustry level agreements have also been concluded. Thenumbers of long-term agreements are also on the increase inthe range of two to five years. Since the Industrial Disputes Act1947, which governs the relations between management andworkers of Industrial establishments, does not provide forrecognition of trade union as a sole bargaining agent, collectivebargaining has been more frequent in industries where there aremajority unions.Apart from dealing with issues relating to wage matters,collective agreements cover a wide range of aspects of employ-ment from recruitment to retirement.The scope of collective bargaining agreements now covers issuessuch as:Wages BonusOvertime Paid holidaysPaid sick leave Safety wearProduction normsHours of work Performance appraisalWorkers’ participation in management HiringFixing of job evaluation norm and Modernization.Although the scope of collective bargaining is expanding, wagesremain their main concern. The ILO in its comparative study ofcollective bargaining methods and practices in industrializedcountries notes that in many of the countries the terms ofemployment settled across the table set a pattern in industries,i.e. the new terms are incorporated informally. In other coun-tries, the terms settled across the bargaining table received a legal

LESSON 18:COLLECTIVE BARGAINING AS A WAGE FIXATION METHOD

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sanction. For instance, in USA and Canada, the law enforces thatthe union certified as the exclusive bargaining agent representthe interests of all employees in the bargaining unit, whether ornot they are union members. Collective bargaining in mostindustrialized countries has gained acceptance to such a greatextent that it is regarded as synonymous with, or as constitut-ing, an essential part of the industrial relation system.

Wage Policy - Assessment and IssueIn all countries, wage policy is a complex and sensitive area ofpublic policy. This is because the relative status of workers inthe society, their commitment to industry and attitude towardsmanagement, their morale and motivation towards productiv-ity, their living standard and in fact their way of life are allconditioned by wages. Hence, a policy dealing with this crucialproblem cannot be simply economic, as it has to reckon withthe realities of multi-dimensional social phenomena, in whichbesides the worker and the management, the consumer and thesociety at large, and in consequence the State, are all vitallyinterested. Wage policy is a determinant of the shares of therival claimants of the product of industry and nationaldividend, but there may often be a conflict between its shortrun and long run objectives as well as between private and socialinterests. There are, of course, theoretical generalisations orprinciples that may provide scientific guidelines for framing awage policy. Equally important in this context are the concretesocial facts that must be taken into account in its formulation atany given time. No principle of wage policy can ever be appliedin vacuum and in disregard of the realities of a situation. Wagepolicy has to be pragmatic, though it does not follow that it hasto be unscientific and remain simply a matter of expediency.In well-organised and developed economies, inter-relationsbetween wages and other factor prices can be worked out on apriori considerations. In others with a large measure ofregimentation, dogmatic solutions can be enforced. But in aneconomy in the process of development and with peoplewedded to democratic institutions, the difficulties in framing awage policy are manifold. It is in this setting that we have toview the various issues connected with wage policy in ourcountry.

Early HistoryFor a long time, laissez faire operated in dealing with wageproblems. But the beginnings of third party intervention arenot all that recent as is popularly believed. Without Govern-ment being brought in, settlement of wage demands throughthird party intervention was accepted in Ahmedabad as far backas 1918 at the instance of Mahatma Gandhi. Ad hoc enquirycommittees, without statutory backing, for settling specific wageissues were not unknown either. Government’s intervention inthe field of industrial relations came with the Indian TradeDisputes Act, 1929; and in early days such intervention wasmainly for regulation of wages. The Whitley Commissionwhich reported later, apart from giving a factual account of wagelevels in different industries, referred to questions connectedwith minimum wages, standardisation, inter-sectoral wages andincentives, and suggested surveys for collection of wage data.It—recommended a minimum-wage fixing machinery of awage board type for industries satisfying certain criteria laid

down by it. These included prima facie establishment of a casefor Governmental intervention, as much as feasibility ofenforcement, including the cost of such enforcement. Legisla-tion was also hinted at if the need was proved. ThatCommission was, however, more concerned with the problemof payment of wages. Unfair deductions seemed to be the rulethen, and special measures were needed to check them. A directresult of the emphasis in the Whitley Commission’s report onunfair deductions and the need to check them was the passingof the Payment of Wages Act, 1936. Among other observa-tions of that Commission we would like to point out onewhich holds good even today. The Commission felt that theproblems of wages of the industrial workers should not beconsidered in isolation; the prosperity of the industrial workersand the community would have to advance simultaneously. Inthis regard it observed:’ “Indian industry is not a world in itself;it is an element, and by no means the most important element,in the economic life of the community. Care must be taken,therefore, to ensure that, in adopting measures for the better-ment of industry or of industrial workers, the interests of thecommunity as a whole are not overlooked.”There were no significant developments in the field of wagepolicy consequent on the Whitley Commission’s report. Buttowards the end of the thirties, ad hoc committees wereappointed for settling the wage structure in some Provinces.Active Government intervention started on an all-India basisonly during the Second World War. Additional payments in theform of dearness allowance to workers for rise in prices and ashare in war-time prosperity through bonuses became morecommonly acceptable than in the past. The Rege Committeewhich surveyed the position prevailing at that time felt that inthe matter of wage fixation the guiding principles, if any,appeared to be in favour of maintaining the status quo ante. Itfelt that the practice of thinking in terms of short term gainswithout adopting a scientific attitude in regard to wage fixationwould be in the long run detrimental no less to labour than toindustry. It also referred to the difference in the levels of wagesin agriculture and in industries and observed that such differ-ences should not be over-emphasised; they could be partlyjustified because of the conditions under which the industrialworkers were made to work and live. The fact that agriculturalwages were low could not be a justification for keeping indus-trial wages low as well1 The 1946 Programme referred to thefollowing three elements of wage policy which are equallyrelevant today:i. “the statutory prescription of minimum wages in sweated

industries and occupations and in agriculture”,ii. “promotion of ‘Fair Wage’ agreements”, andiii. “steps to secure for workers in plantations, a living wage”.2

Policy Statements Since IndependenceThe next significant event of the period was the adoption ofthe Industrial Truce Resolution (1947) which was an aftermathof the industrial unrest immediately prior to and after Indepen-dence. The relevant portion3 of the Resolution states. “...Thesystem of remuneration to capital as well as labour must be sodevised that while in the interests of the consumers and theprimary producers excessive profits should be prevented by

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suitable measures of taxation and otherwise, both will share theproduct of their common effort after making provision forpayment of fair wages to labour, a fair return on capitalemployed in the industry and reasonable reserves for themaintenance and expansion of the undertaking”.The Industrial Policy Resolution (1948) emphasised inter alia itsintension (a) to fix statutory minimum wages in sweatedindustries and (b) to promote fair wage agreements in the moreorganised industries. To facilitate the former, the MinimumWages Act, 1948 had already been passed. For the latter theGovernment appointed the Committee on Fair Wages (CFW)“to determine the principles on which fair wages should bebased and to suggest the lines on which these principles shouldbe applied”.The CFW defined three distinct levels of wages, viz., livingwage, fair wage and minimum wage. The ‘living wage’ accordingto it, represented a standard of living which provided notmerely for a bare physical subsistence but for maintenance ofhealth and decency, a measure of frugal comfort includingeducation for the children, protection against ill-health, require-ments of essential social needs and some insurance against themore important misfortunes. The ‘minimum wage’ was toensure not merely the bare sustenance of life but the preserva-tion of the efficiency of the worker by providing some measureof education, medical requirements and amenities. It envisagedthat while the lower limit for “fair wage” must obviously be theminimum wage, the upper limit was set by the capacity of theindustry to pay. Between these two limits the actual wage woulddepend on (i) the productivity of labour, (ii) the prevailing ratesof wages, (iii) the level of national income and itsdistribution,and (iv) the place of the industry in the economyof the country.* In the actual calculation of the fair wage, theCFW observed that it was not possible to assign any definiteweights to these factors. The wage fixing machinery shouldrelate a fair wage to a fair load of work and the needs of astandard family consisting of three consumption units inclusiveof the earner. The capacity of a particular industry in a specifiedregion should be taken into account to determine ‘the capacityto pay’ and this in turn could be ascertained by taking a faircrosssection of the industry in the region concerned. TheCommittee recognised, “the present level of our nationalincome does not permit of payment of a ‘living wage’ onstandards prevalent in more advanced countries”. But, accordingto it this should not preclude the fixation of fair wages ondifferent and lower standards. “At almost any level of thenational income, there should be a certain level of minimumwages which the society can afford; what it cannot afford areminimum wages fixed at a level which would reduce employ-ment itself and thereby diminish the national income”The CFW recognised that the concepts laid down by it couldnot be viewed in any static sense; they would vary from time totime, depending on the economic and social developments inthe country. The principle that luxuries of today becomenecessities of tomorrow was implicit in this recognition. Theserecommendations have exerted considerable influence on wagefixing authorities in the period under review.

To give effect to the recommendations of the CFW, the FairWages Bill was introduced in the Constituent Assembly ofIndia (Legislative). Though it was not enacted, the then PrimeMinister, the late Shri Jawaharlal Nehru, stated in the Parliamentin April, 1950: “Government are committed to the principles offair wages as recommended by the Tripartite Committee”.2 TheBill lapsed after the dissolution of the Constituent Assembly. Itwas not pursued in the Parliament later. The Constitution ofIndia which was adopted in November, 1949 included thesecuring of a ‘living wage’ to workers as one of the DirectivePrinciples of State Policy. An important development at aboutthis time was the setting up of the First Pay Commission(1946-47) which examined and reshaped the salary structure ofthe Central Government employees. The principles of wagefixation enunciated by that Commission and accepted byGovernment influenced the wage fixing authorities when theydealt with cognate issues. It would also be not incorrect to statethat the Pay Commission was itself influenced by what washappening in the field of wages and salaries in non-Govern-mental employment. It is possible that this aspect offinter-relationship will continue to have an impact on any policyleading to remuneration for work.The First Plan, while cautioning against a general upwardmovement of wages which would set in motion a wage-pricespiral, recommended that wage increases should be grantedmainly to remove anomalies or where the existing rates werevery low. It also recommended restoration of the pre-war levelsof real wages as a first step towards the ‘living wage’ throughincreased productivity. Factors like the need for reduction ofdisparities in income, the distance which wages of differentcategories of workers had to cover before attaining the livingwage standard, the need for standardisation, and maintenanceof wage differentials at a level necessary to provide incentiveswere suggested for being taken into account in making wageadjustments. These features were reasserted in the Second Plan,but a shift in emphasis was introduced; it required thatimprovement in wages should result mainly from increasedproductivity brought about not merely by more efficient workon the part of labour but also by better layout of plants,improvements in management practices and the like. A widerapplication of the system of payment by results, subject tosafeguards like fall-back wages, protection against fatigue andundue speed-up, was envisaged. But the more significantcontribution of the Second Plan was its recommendation thatfor settling industry-wise wage disputes, tripartite wage boardswhich gave the parties themselves a hand in shaping the wagestructure would be more appropriate. Two other developmentsin this period which deserve special mention are: (i) therecommendations of 15th Indian Labour Conference in regardto the need-based minimum wage, and (ii) the report of theSecond Pay Commission in respect of Central Governmentemployees, whose recommendations about the need-basedminimum wage created a public controversy.3 The Third Plangenerally endorsed the recommendations made in the earlierPlans in regard to minimum wage fixation, reduction ofdisparities, wage differentials and the like, but brought intosharper focus the role of productivity in improving the livingstandards of workers. It observed “neither the exercise of their

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organised strength in industrial conflicts, nor laws and theintervention of the State can help the workers much in realisingtheir aspirations. Their gains can arise only out of the strengthand dynamism of the economy, the only enduring basis ofwhich is a rising level of productivity”.1 Thus, while the policyin regard to wages as enumerated in the Plans remained more orless the same in its essential features, a shift in emphasistowards productivity in recent years is discernible.

Indicators of AssessmentEvery aspect of wage policy cannot be evaluated in this sectionnor is such an evaluation called for. Some aspects, however,figure in the detailed analysis in the following chapters. What isattempted here is an assessment of the general wage policy, andin this, the first task is to identify the indicators for suchevaluation. This is not easy since different indicators may notnecessarily lead to the same conclusion, while firm data may notbe available for some. We have, therefore, chosen the indicatorswhich are intended to provide an overall view and tried to makeour assessment as reliable and practicable within the limitationscf the data available to us. The indicators selected by us are: (i)the state of industrial harmony; (ii) the changes in workers’ levelof living; (iii) changes in productivity; (iv) the impact of wageson prices; and (v) the share of wages in the value added bymanufacture.

Industrial HarmonyAn index of industrial harmony is the number of mandays lostowing to industrial disputes. Although the break-up of thetotal time loss is not available according to the causes ofdisputes for the whole period, it would not be unreasonable toassume that the trend in time loss would be considerablyinfluenced by disputes relating to wages and cognate issues asthey constitute nearly 40 per cent of the total number ofdisputes even now. An appraisal of the trend in mandays lostover the period shows that the loss was maximum betweenIndependence and the First Plan which also happened to be theperiod when the real earnings of industrial workers were belowthe 1939 level. On an average, 11.3 million mandays were lostper annum between 1946 and 1950. The improvement in realwages brought about in the years of the First Plan seems tohave had a salutary effect on industrial harmony; the loss wason an average only 3.9 million mandays per annum. More thanthe absolute level cf earnings, it appears that it was the rate ofimprovement in real earnings which was significant. Betweenthe Second Plan and the first four years of the Third Plan, forwhich we have reliable data, real earnings have been falling. Thetime loss was higher than what was witnessed in the First Plan,but much below that in the years prior to 1950. Provisionalfigures on real earnings for the two years thereafter show aconfirmation of this downward trend. The spurt in price levelin 1967 eroded the real wage further. The years 1966 and 1967saw a deterioration in the industrial harmony with the time lossper annum averaging much higher than in the years between1956 and 1965.For a realistic appreciation of the industrial relations situation, itis not enough to study only the trend in time loss over a periodof years. It has to be related to the time worked. On this we donot have reliable information to come to a definite conclusion.

However, a part of the increased time loss could be attributedto the number of new units established in recent years and theconsequent increase in industrial employment and improve-ments in the methods of reporting mandays lost. Taking thesefactors into account, we feel that loss of production throughwage disputes is not that significant. This statement should notbe interpreted to suggest that we are indifferent to the possibleeffects of work stoppages on production, nor do we wish tominimise the serious consequences of a work stoppage in a keysector which results in indirect production loss elsewhere.

Levels of livingThe level of living is a function of real wages. It has been urgedbefore us by theworkers’ representatives that the industrial relations machineryset up by the Government to settle wage disputes worked insuch a manner as to result in a restraint on wages. This has beenso on account of the time taken in the judicial process or by thetribunals in giving wage awards particularly when these wereextended beyond their original period of application. While it isnot possible to say what the precise impact of this aspect onlevels of living has been, taking the period 1947 to 1966 forwhich data have been analysed in the last chapter, it wouldappear that real wages after a rise in the period 1947 to 1955(reaching in the process the 1939 real wage level in 1952, andimproving upon it thereafter) have been declining subsequently.Part of the real wage increase between 1947 and 1955 wasfortuitous because of a tall in living costs. The net effect of theoperations of the industrial disputes machinery on wages offactory workers has been that in 1965 the industrial workers atthe lower levels were earning hardly a real wage corresponding tothat of the year 1952. Evidence from the side of labour hasemphasised this fact. Some independent researches alsocorroborate this fall in real earnings. Wages of coal miners,however, haveconsistently improved since 1956. But this improvement is dueto the initial low level of wages at which the miners workedprior to 1956. In plantations, the situation appeared to besomewhat better than in the case of factory establishments. Inports and docks and in some sections of white collar employ-ments, workers did secure gains. On the whole, between 1952and 1965, while per capita real income has improved, the realwages of workers have, with few exceptions, at best not fallen.But the situation has deteriorated since 1965—66 due to afurther rise in living costs.

Changes in ProductivityLabour productivity and changes therein are difficult to measureand there are no reliable indices available in. this respect. A fewindependent researches in the field in specified industries havegenerally been limited by the assumptions made and lack ofavailability of data and precision in operational concepts. Theirresults have not been generally acceptable. The main difficulty inmeasuring labour productivity arises owing to the output notbeing an exclusive product of labour. Capital, technology andmanagement—all contribute to it along with labour and theseseldom remain constant. In consequence, increases in per capitaoutput cannot be attributed to labour alone, much less the totaloutput. Valuation of the physical product presents another set

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of problems. All that we have is information about changes inoutput per worker at constant prices. These cannot, of course,be taken as indices of labour productivity. With these limita-tions on understanding the changes in productivity, we noticethat for industries for which serial data areavailable, value added by manufacture has increased from Rs.2,113 in the year 1952 to Rs. 4,621 in 1964.1Adjusting the increase in net output for price changes duringthe period 1952 to 1964—and in this case it would be safe touse the index numbers of wholesale prices (for manufac-tures)—we find that production per worker has increased byabout 63 per cent between 1952 and 1964. A part of it musthave been contributed by labour whose real earnings haveremained almost static during the period.

Impact on PricesAn analysis of data in the Census of Indian Manufactures upto1958 and in itssuccessor, the Annual Survey of Industries, for later yearsshows that between 1952 and 1958, money wages as a percent-age of total output dropped from 13.7 to 11.4. Between 1960and 1964, on the basis of the new series of the Annual Surveyof industries, the drop was from 10.9 to 9.7. The decline variesfrom industry to industry but has been registered in all cases,except in case of fair sized units in the match industry wherewage costs as a proportion of the cost of production have goneup. Even after adjusting the gross output in 1964 for prices(1952=100) and working out the share of wages to the output,so adjusted, there is a fall between 1952 and 1964.

Share of WagesFinally, one has to take into account the share of workers in thevalue added bymanufacture. And in this indicator, only two shares count: (i)of employers and those who have provided capital in theexpectation of a dividend and (ii) of workers. The percentageof wages to the value added by manufacture, on the basis ofthe CMI data, shows a decline from about 50 per cent in theperiod 1949-50 to about 40 per cent in 1958. This trend seemsto have continued in the subsequent years as revealed by thedata from the ASI. For instance, wages as a percentage of valueadded declined from about 40 per cent in 1960 to 36.5 per centin 1964, the latest year for which information is available. Evenif the money value of benefits and privileges is taken intoaccount, the conclusion remains the same, though the declinethen becomes less sharp.To sum up, we note that increases in money wages of industrialworkers since Independence have not been associated with a risein real wages nor have real wage increases been commensuratewith improvements in productivity. Simultaneously, wage costsas a proportion of total costs of manufacture have registered adecline and the same is true about workers’ share in value addedby manufactures. Wage disputes under these conditions havecontinued to be the single most important cause of all indus-trial disputes.

Trend of EvidenceIn the evidence before us, every group, Government, employers,trade unions or independent persons, agreed that wage policyshould be geared to policies for economic development. Eachgroup, however, had its own notions of how developmentshould be achieved. Employers emphasised that industrialwages should have relationship with wages in agriculture as alsowith the average per capita national income. Linking wages toproductivity was another argument of theirs though in thecourse of further discussion, they admitted such linkage to bevalid only for levels beyond the basic minimum wage. Theyagreed that a subsistence minimum wage must be a primarycharge on the employer, but the minimum as defined by theCFW should have some relationship with the capacity to pay.Employers also sense some dangers in the present arrangementof neutralising rise in prices by providing dearness allowancelinked with consumer price index numbers. They feel the needfor a flexible wage arrangement, consistent with industry’s needto raise resources out of its own surpluses, to meet at least apart of the cost of its expansion programme as suggested bythe Government.Unions in their evidence emphasised restoration of the recentfall in real earnings as a first step and, eventually, raising ofliving standards of workers through increases in wagescommensurate with increases in productivity. Some of the factswhich have been brought out in the earlier section of thischapter have been mentioned in support of their demand.Workers’ organisations do not recognise that their claim isantithetical to development. Fair wage to labour is an item ofcost. Resource requirements for the development of industrycapital formation and return to entrepreneur in their opinion,should come after provision of fair wages for labour. Accordingto unions, planning in India, in spite of its operations for thelast 18 years, has not improved the per capita availability ofconsumer goods to the common man. On the contrary, thesupply position has been such as to have resulted in a sacrificeby the working class. Income disparities have, likewise, not beenreduced nor is there any evidence in the current policies that theywill be kept under control. Some of the arguments used byemployers for shaping wage policy so as to deny to workerstheir proper share could, with equal justification, be used againstcapital. Established social and economic relationship will haveto change if progressive wage policies are to be pursued; andnational commitment to planning should amount to a changein the established social order. Administrative agencies havelacked vigour in giving relief to labour even where beneficiallegislation has been enacted and suitable policies have beenframed.The State Governments have generally recognised the need for achange in wage policy. The relative emphasis which according tothem is now in favour of labour should be modified and theinterest of consumers should also be taken into account.’ Whilein this respect their evidence seems to go counter to that oflabour representatives, they are at one with labour in acceptingthat such beneficial policy measures as have been enunciated orenacted have suffered for want of adequate implementation.Government’s commitment to improve living conditions in thecountry and to bring about a fair distribution of income and

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wealth have been reiterated in a memorandum which wereceived from the Cabinet Secretary in response to theChairman’s request to the then Deputy Prime Minister andMinister for Finance and to the Home Minister for an authorita-tive statement from Government on some issues relating towages. It was also urged by the Government spokesmen thatthe scope of economic development to raise living standardsand to provide more employment in the immediate future waslimited by resources. The same view was expressed by thePlanning Commission.We analyse at this stage some of the suggestions made in theevidence before us. A point is made that industrial wagesshould not be out of alignment with (a) per capita nationalincome, (b) wages earned in the agriculture/cottage industries,(c) the general level of earnings of the self-employed, and (d)levels of productivity. This needs examination.a. The main contentions of those advocating a linkage of

industrial wages with per capita income are that (i) wages atany given time in any sector should not be out of gear withaverage earnings as reflected by per capita income and (ii)wage changes over time should not be out of tune withchanges in per capita income. The first contention fails torecognise that in any economy sectoral productivities arebound to differ due to differences in skills, technology andcapital and hence wage differentials are not only inevitablebut based on sound grounds. It is of course necessary thatthe extremes which reflect imperfections of the market andinadequacies of measurement should be avoided. Thesecond contention would be valid if wages in each sectorwere related to marginal productivity and the latter changedat the same rate throughout the economy. In so far as this isnot so, wage changes cannot rightly be related to changes inper capita income. Here again, it has to be recognised thatwhile changes in real per capita income reflect changes inproductivity of the economy as a whole, wage variations inany particular sector may not always be based onproductivity changes. A check against unsound wageincreases may be provided by changes in per capita income.But this would ever remain a crude index and its limitationsmust be fully recognised in applying it to any specific case orsituation.

b. The argument that industrial wages should be at par withagricultural wages or wages in small-scale industries isapparently based on the assumption that marginalproductivity of unskilled labour is the same throughout theeconomy. This is nowhere true, far less in our owneconomy, where marginal productivity due to surpluslabour in agriculture may be almost zero. The same appliesto workers in cottage industries and handicrafts. Apart fromdifferential productivity, this argument ignores differences incosts of subsistence of workers in agriculture and cottageindustries on the one hand and in the organised sector onthe other. An industrial worker has to pay for many thingsthe cost of which is simply nominal at the margin in hisvillage home. There are similar differences in the disutilityof work or the effort that a worker has to put in, indifferent sectors. Finally, this argument ignores not only

market imperfections in agriculture and cottage industriesleading to sweated labour, but it also tails to recognise theeconomic necessity of a higher wage in the modernorganised sector to transfer labour from the traditionalsector. It is generally so in all transitional economies wheresuch ‘pull factors’ have to be built up. The disparity betweenindustrial and other wages may not be due to the fact thatthe former are disproportionately high, but because thelatter are disproportionately low. It was for this reason thatthe Minimum Wages Act had to be enacted in 1948 to coverthe scheduled industries. In any case, agricultural wages havebeen increasing in recent years; and in all areas, agriculturallabour is seldom available in the peak season on thestatutory minimum wages. But a certain amount ofdisparity between industrial wages and wages in agricultureor cottage industries is necessary and must continue for thegeneral health of the economy.

c. The earnings of the self-employed persons and wages ofemployees can bear no comparison anywhere. Their effortand sacrifices are altogether different and so are theirworking conditions. Their respective productivities andearnings cannot be related. Very often a self-employedworker may be under-employed. His earnings, therefore,cannot be taken as a criterion to determine the wages of aworker required to put in full-time work.

d. The argument that wages be linked to productivity hasmuch to commend itself on principle. It is actually on thisbasis that wage differentials have a justification; and on thisbasis, industrial wages in general have to be higher thanwages in agriculture or cottage industries. It may further beconceded that wage changes beyond a certain level mustreflect productivity changes. But it is the application of thisprinciple in practice that presents difficulties as contributionto productivity levels and changes therein are not easy tomeasure. It may be hoped that efforts to solve thesepractical difficulties will be intensified and made to succeed.Even then, productivity will be one of the factors affectingwages.

Our ApproachWe sought the assistance of the Study Group on Wage Policywhich we constituted to sort out the issues connected withwage policy and help us in framing our recommendations inthis difficult area. The Group could not reach unanimity. Thereport it presented has two minutes of dissent, and rejoindersby its Chairman to each. We have carefully considered all theseviews in leaching our conclusions. We believe that on an overallplane, issues concerning wage policy are inter-related withbroader economic decisions on the one hand and on the otherwith the goals set for social policy. Wage rates and differentialshave a functional role in sustaining and developing the structureof society and thus merge with other elements of economicand social policy.The functional role of wages is evident, since wages are a pricefor labour as a factor of production. The prices paid for varioustypes of skills and labour inputs, therefore, influence amongother factors the pattern of allocation of labour. At the sametime, these prices are also the incomes of wage earners and

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provide the necessary motivation for organisation of economicactivity. If these factor prices are not in harmony with otherprices in the system, the result is a disequilibria which maymanifest itself in deflationary or inflationary tendencies. Ineither case, the ensuing consequences affect the stability of theeconomy.It is this need for ensuring the stability of the economy whichhas led countries like Netherlands, Norway, Sweden, France andthe United Kingdom to adopt wage policies which are closelylinked with policies relating to incomes and prices. The mainaim has been to ensure that wage increases and increases inother incomes do not outstrip the growth in real nationalproduct. Wage increases inconsistent with the rate of growth ofreal output and productivity have been looked upon as a causeof wage-price spiral’. The emphasis on the practical measuresadopted for achieving this stability by the countries referred toabove has indeed varied according to the social and politicalenvironments in which they operate. Although conditions aredifferent in our country in many respects, the experience doesindicate that the wage policy has to be framed taking intoaccount such factors as the price level which can be sustained, theemployment level to be aimed at, requirements of social justice,and capital formation needed for future growth.In our context while an integrated type of incomes and pricespolicy may hold out promise of fruitfulresults, the limits in pursuing it have to be recognised. Incontrast with advanced countries, which have a predominanceof wage employment, self-employment is dominant in oureconomy. The incomes and wages policy that may be formu-lated has to take into account this structural feature of theeconomy and has to be in accord with the pattern of incomegeneration and distribution as envisaged in our developmentplans. Even so,the social basis of wage policy we have referredto earlier may require consideration of wage policy as a distinctelement of the incomes policy. We have to accept it as a distinctentity in the overall framework of policies for economic growth.Having said this, we recognise that each one of the consider-ations which have guided wage policies in other countries ispresent in varying degrees in ours too. Viewed thus, our wagepolicy will comprise a set of principles capable of beingconsciously adopted to guide, by means of legislation orotherwise, actions of Government as also of parties vitallyconcerned.It is often argued that in all industrially advanced countries likethe U.S.A. the U.K., West Germany, Japan and the USSR, boththe absolute level of per capita wages and the share of labour inthe national product were more or less stable or were decliningduring the initial period of economic development. But in allof them, the political and social factors at the time of develop-ment were different from those obtaining in our country. Thegrowth of the economy certainly depends on the rate ofinvestment which in turn depends on the rate of savings. Tothe extent wage incomes are consumption oriented rather thansavings oriented, rise in wage levels signifies a correspondingdiversion of a portion of the total national product fromsavings and investment to consumption. In certain situationsthis can retard the process of economic growth and can act as a

constraint. On the other hand, in order to maintain the tempoand the pace of growth, consumption increases cannot becontinuously postponed or kept in abeyance in a period ofrising expectations and possible social tensions. In fact increasein consumption may be necessary to sustain and improve themorale of workers and thereby the level of production and paceof economic growth. Wage earners expect to share in the gainsof economic development and growth. Commensurate withchecks and restraints on consumption required for sustainingthe growth process, the standard of living of the workers hasto improve. A democratic society with ideals of social justice willhave to reconcile considerations of equity and fairness witheconomic compulsions.In our country, due to large additions to the working force, theeffect of wage levels on employment has a particular relevance.With an inadequate rate of growth of the economy, the sheernumber of new entrants to the working population exerts adownward pressure on wage rates. Low wages, however, do notgenerate more employment in a less developed economy, sincethe latter is limited by scarcity of means of employment and therate of capital formation. But high wages may result in a shift infavour of capital-intensive techniques and industries aggravat-ing further the employment situation. To the extent this in notdone, high wages may reduce the surplus for capital formationand affect employment potential. There is thus a conflictbetween the employment and wage goals. Its intensity dependson the choice of techniques and industries in the course ofplanned development. We, however, believe that this conflict,even when the techniques are given and cannot be changed incertain sectors of the economy, is not such that it cannot beresolved. Technologically, our economy will have to be for longa dual economy with a large range of capital and labourintensive techniques. Wage policy should foster an appropriatechoice of techniques so as to maximise employment at risinglevels of productivity and wages.Wage policy should aim at a progressive increase in real wages.At the same time, any sustainedimprovement in real wages cannot be brought about withoutincreasing productivity. The real wages of any group of workerscannot be unrelated to their productivity unless inroads into theshare of other groups are made. The urgency of improvingproductivity levels to sustain increases in real wages cannot beoveremphasised. This in turn needs a widening and deepeningof capital to raise technology on the one hand and investmentin human capital on the other.The wage levels will also have to recognise the dualism whichreflects itself in different areas of wage employment. We havefor instance the modern capital intensive large scale sector whererewards will continue to be more attractive, both to capital andlabour. We have also, side by side, small enterprises and othertraditional labour-intensive sectors, including agriculture. Auniformity in wage levels is either likely to affect the growth ofthe latter if the wage level is high or make inequalities evenmore glaring if the level is low and fiscal measures inefficient.Wage differentials consequent on this dualism, i.e., simulta-neous existence of the modern capital-intensive sector and thetraditional labour-intensive sector, are therefore, inevitable and

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desirable. But this does not necessarily mean that all existingdifferentials are scientific or based on differences in productivity.Steps should therefore be taken to standardise job classificationsand reduce differentials, wherever necessary, to suitable limits ona scientific basis.The determination of wages implies evolving and sustaining awage structure which (i) permits a fairremuneration to labour, (ii) permits a fair return to capital and(iii) strengthens incentives to efficiency. Apart from these intra-industry wage-differentials, the inter-industry and inter-regionalwage differentials have a relevance. The latter may be due to thelimitations of the market or on account of inter-regionaldisparities in productivity due to differences in technology,capital per worker or organisation. It is expected that with theindustries competing for skill in the country as a whole thesewill soon be eliminated. Inter-industry differentials likewise arealso unjustified except on grounds of local differences intechnology and capital per worker.Obviously, a crucial issue in regard to the wage-structure is thatof the level at which it should be fostered. Here, the right ofthe workers for a fair standard, the claim of industry forexpansion through its own surplus, the charges on the industryfor public revenues, the need of the economy for resources andthe need of the consumer to get supplies at stable and fairprices, all become relevant factors. But we are clear about onepoint that the first claim is of the worker for a basic minimumwage irrespective of any other consideration. Beyond this,however, in the determination of wage differentials the capacityto pay becomes relevant.These considerations highlight the need for a wage-regulatingmechanism that should deal both with wage structure and itslevel from time to time.An area of wage adjustment which we would like to specificallymention, and which is dealt with in detail in the next chapter, isin regard to adjustments in wage levels due to price changes.Often enough, the growth process may lead to a rise in thegeneral level of prices and a change in the structure of relativeprices. In order to protect the real wages from erosion, the levelof money wages has to be adjusted to price changes. Thepresent practice in this regard has been to pay dearness or dearfood allowance over and above the basic pay to take account ofan increase in prices. It is possible that this practice of adjust-ment of wage levels may conceivably lead to inflation. It is alsopossible that in an inflationary situation the mere maintenanceof the real wage itself may entail monetary outlays on a scalewhich reduces the surpluses available for further investment.Keeping living costs under check should therefore form anintegral part of wage policy. At the same time, social consider-ations do cast an obligation to mitigate through someadjustment mechanism the hardships caused by price increasesat least in respect of the vulnerable sections of labour.We would like to emphasise here that the existing system ofneutralisation of a rise in the cost of living either throughdearness allowance or periodic wage adjustment can not fullysafeguard against a fall in real wages. Firstly there is a time lag;secondly neutralisation can seldom be cent per cent at all levels;and thirdly, the very process of neutralisation may push up the

cost of living further, giving rise to the well-known spiral inwhich wages and living costs push up each other continuously.This last relationship or the feed-back mechanism is, however,often exaggerated. Firstly, the increased purchasing power in thehands of the workers on account of compensatory paymentsfor rise in cost of living forms a small part of the overallincrease in purchasing power. Secondly, the elasticity of compen-satory payments to changes in cost of living is generally lessthan unity so that the feed-back must taper oft. Money wagestability, though important for price stability, is seldom anecessary, much less a sufficient condition for it. On the otherhand, holding of the price line, particularly of the cost of living,is an adequate condition for preventing increases in money wagepayments that are not related to increases in productivity. Thisalone can prevent a fall in real wages. Hence, policies that holddown living costs should form an integral part of wage policy.A successful implementation of such policies would not onlyrestrain increases in dearness allowance and compensatory wagepayments, but it would also lead to the stabilisation of pricesof goods whose costs are sensitive to wages.Any wage policy, to be effective, has to take into account theexisting practices in regard to methods and modes of payingwages as well as the machinery for wage determination. In thecontext of improving production and productivity, it will haveto recognise the role and the feasibility of introduction ofpayment by results in particular lines of activity with necessarysafeguards. The extent of prevalence of the system of paymentin kind and the existing practice of looking at the total wage ascomprising different components like basic wage, dearnessallowance and bonus have practical significance in wage determi-nation and regulation. Benefits and privileges in kind partakethe nature of substitutes for cash compensatory allowances.In the unorganised sector for the most part, adequate govern-mental or quasi-governmental machinery may be necessary toprovide for minimum wage regulation according to conditionsin different areas and industries, but more specifically to protectthe workers in weak position. Thus it may be that differentinstitutional arrangements for wage fixation may be needed fordifferent groups. In one case, it could consist of Commission/Boards for framing wage awards and suitable administrativearrangements for supervising their implementation. In others,both for reaching wage decisions and for enforcing them,bipartite arrangements or collective bargaining between workersand employers may be the most appropriate system. In stillother cases, a tripartite machinery may be appropriate. All thesecan co-exist in the country depending upon the traditions andexperience which are built up for utilising them.The broad objectives of wage policy as outlined by us have tobe looked upon as guidelines for instituting concrete steps asthe economy moves from one phase to another. In each phase,the emphasis on different objectives may change. The main aimof a wage policy as we envisage it is to bring wages intoconformity with the expectations of the working class and, inthe process, seek to maximise wage employment.

Review of Wages and Wage PolicyOur terms of reference make only a tangential and incidentalreference to the question of wages and productivity. They do

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not form part of the central focus of the task that has beenentrusted to us. Even so, it cannot be denied that wages andproductivity are among the central concerns of workers as wellas entrepreneurs. One seeks employment so that one can attaina ‘decent’ or dignified standard of living. The wage or incomethat one obtains from one’s work is therefore, what enables oneto achieve a fair standard of living. One seeks a fair wage both tofulfill one’s basic needs and to feel reassured that one receives afair portion of the wealth that one works to generate for society.Society, in its turn, feels that it has a duty to ensure a fair wage toevery worker, to ward off starvation and poverty, to promotethe growth of human resources, and to ensure social justicewithout which continuous threats to law and order mayundermine economic progress.But the resources to pay wages have also to be created. Theyhave to come from the economicviability and profit of undertakings. So those who run under-takings are concerned with their capacity to pay the wages thatare considered to be fair both in terms of individual needs andthe social responsibility to citizens.Our Constitution accepts the responsibility of the state to createan economic order in which every citizen finds employment andreceives a ‘fair wage’. One of the earliest decisions taken by thegovernment of free India was to set up a Committee to definea fair wage, and indicate the economic and legal means forensuring a fair wage to every employed citizen. An examinationof this question established the integral relation between thequantum of the fair wage and the capacity to pay the wage, andthe need to balance and constantly upgrade both to ensure a fairstandard of life, social security and social justice.Ever since then, we have made many attempts to define theconcept of a fair wage, a minimum wage, a floor wage, and aliving wage. We have also tried to identify how far the capacity topay can be allowed to determine the minimum wage, and atwhat point the capacity to pay should be taken into account andshould be regarded as the main determinant. The meanderingprogress that we have made is reflected in the reports ofCommittees, Conferences, Commissions, and Judgments ofthe Supreme Court. They can also be traced to the FundamentalRights and Directive Principles specified in our Constitutionand the International Conventions we have accepted or ratified.We will therefore, begin our observations with a review of thethinking and legislation on wages in our country, and the ideasand attempts at making wage differentials more equitable.

A Brief History of WagesAs early as in the year 1860, Government of India passed theEmployers’ and Workmen’s (Disputes)Act. This Act was anenabling measureand was designed to secure settlement ofwage disputes by magistrates summarily. Along with this it alsoprovided for penal sanctions for breaches of contract byworkers. In the year 1929, the Royal Commission on Labourfound that the Act had ceased to be used. The Governmenttherefore, repealed the Act in 1932.Legislation for the settlement of industrial disputes includingthe setting up of Wage Boards was the subject of investigationby the Governments of Bengal and Bombay in 1921 and 1922,

and the Government of India prepared a Bill on such disputesin 1924. However, the Indian Trade Disputes Act 1929 pro-vided for setting up Courts of Inquiry and Boards ofConciliation for the settlement of industrial disputes. Someprovincial Governments assumed statutory powers to intervenein labour management disputes and established machinery tobring both labour and management together to settle suchdisputes. These developments made a significant contributiontowards the evolution of a wage policy aimed at protectingwages. The first direct step in this regard was taken in 1936,when the Payment of Wages Act was passed.With the commencement of the Second World War, theGovernment assumed more powers under the Defence ofIndia Rules to ensure uninterrupted industrial production. Rule81A of the Defence of India Rules issued in January 1942 gaveGovernment wide powers to make rules or issue special ordersto restrain strikes and lockouts and to refer any disputeincluding wage disputes to conciliation or adjudication. Thebroad features of these measures were later incorporated in theIndustrial Disputes Act of 1947 and agencies like ConciliationOfficers, Industrial Tribunals, Labour Courts etc. were set up bythe Government to promote the settlement of industrialdisputes.In September 1946, the Interim Government announced a five-year programme of legislative and administrative action in thefield which included: 1. Statutory prescription of minimumwages in sweated industries, 2. Standardisation of wages andoccupational terms in all major industries and the determina-tion of differentials in wage rates as between variousoccupations in an industry, and 3. Promotion of “fair wage”agreements wherever possible with due regard to the capacity ofthe industry to pay.In December 1947, the Government convened a tripartiteconference at which an Industrial Truce Resolution was adoptedunanimously. The object of the Resolution was to devisemeasures to arrest rapidly deteriorating relations between labourand management and to increase industrial production.According to this Resolution, “the system of remuneration tocapital as well as labour must be so devised that while in theinterest of the consumers and primary producers, excessiveprofits should be prevented by suitable measures of taxationand otherwise, both will share the product of their commoneffort after making provision for payment of fair wages tolabour, a fair return on capital employed in the industry andreasonable reserve for the maintenance and expansion of theundertakings”.The Industrial Policy Resolution announced on 6th April 1948emphasised (1) fixation of statutory minimum wages insweated industries and (2) promotion of fair wage agreementsin the more organised industries.This made it necessary to quantify or lay down clear criteria toidentify a fair wage. Therefore, the Central Advisory Council inits first session (November 1948) appointed a TripartiteCommittee on Fair Wages consisting of representatives ofemployers, employees and Government to enquire into andreport on the subject of fair wages to labour.

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the fixation of wages.

Committee on Fair WagesThe Committee on Fair Wages defined three different levels ofwages viz; living wage, fair wage and minimum wage. TheCommittee felt that the living wage should enable the worker toprovide for himself and his family not merely the basicessentials of food, clothing and shelter but a measure of frugalcomfort including education for children, protection against illhealth, requirements of essential social needs and a measure ofinsurance against more important misfortunes including oldage. The Committee was not sure how it could aim at orapproach this standard in the prevailing economic conditions.It, therefore, analysed the basis for fixing a minimum wage, andcame to the conclusion that a living wage should be the target.Even in advanced countries the general level of wages and thecapacity of the industry to pay had been considered relevant. InIndia, the level of the national income was so low that it wasgenerally accepted that the country could not afford to prescribeby law a minimum wage which would correspond to theconcept of the living wage described in the preceding para-graphs. Taking Indian conditions into consideration, theCommittee was of the view that a minimum wage mustprovide not ‘merely for the bare sustenance of life, but for thepreservation of the efficiency of the worker’. For this purposethe minimum wage must also provide for some measure ofeducation, medical requirements and amenities. It furtherobserved that its members were unanimous that the fair wageshould on no account be less than the minimum wage. It alsoobserved that while the lower limits of the fair wage mustobviously be the minimum wage the upper limit should be setby what may broadly be called the capacity of industry to pay.This would depend not only on the present economic positionof the industry but also on its future prospects. The Commit-tee further recalled that between these two limits the actualwages should depend on a consideration of the followingfactors: a. the productivity of labour; b. the prevailing rates ofwages in the same or similar occupations in the same orneighboring localities; c. the level of the national income and itsdistribution; and d. the place of the industry in the economy ofthe country.It then went on to consider the first item, that is, productivityof labour. It observed that in India collective bargaining hadnot so far been a potent factor in the determination of wages.That being so it was more than likely that at least in certainoccupations and industries the workers were getting a wagelower than the value of their marginal net product. It alsoobserved that the awards of industrial tribunals and courts hadmade only a casual reference to the productivity of labour. In

deciding upon a minimum wage, tribunals and courts hadlargely been guided by considerations of the minimum needsof workers and of the capacity of industry to pay. It wastherefore of the view that the wage fixing machinery shouldrelate to a fair wage, a fair rate of work and that in case of doubtwhether the existing work-load was reasonable or not proper,time and motion studies should be instituted on a scientificbasis.As regards the prevailing rates of wages, its observations werethat, while prevailing rates of wages fixed as a result of propercollective bargaining would bear a close approximation to fairwages and should, therefore, be taken into account in fixing fairwages, the same could not be said of prevailing wages resultingfrom unequal bargaining. The wage fixing machinery shouldtherefore make due allowance for any distortion of wagescaused by unequal bargaining.It then referred to the question of the capacity of the industryto pay. It first observed that the capacity would mean one ofthree things, viz. (1) the capacity of a particular unit (marginal,representative or average) to pay; (2) the capacity of a particularindustry as a whole to pay; or (3) the capacity of all industries inthe country to pay.Ideas on this subject have varied fromcountry to country. The Committee was, however, of theopinion that capacity should not be measured in terms of theindividual establishment, but the main criterion should be theprofit-making capacity of the industry in the whole province.The Fair Wages Committee was of the view that in determiningthe capacity of the industry to pay, it would be wrong to go bythe capacity of a particular unit or the capacity of all theindustries in the country. The relevant criterion should be thecapacity of a particular industry in a specified region, and as faras possible the same wages should be prescribed for all units ofthe industry in that region.As regards the measure of the capacity, there were two points ofview in the Committee itself. One view was that the wage fixingmachinery should, in determining the capacity of the industryto pay, have regard to: (1) a fair return on capital and remunera-tion to management; and (2) a fair allocation to reserves anddepreciation so as to keep the industry in a healthy condition.The other view was that the fair wage must be paid at any cost,and that industry must go on paying such a wage as long as itdoes not encroach on the capital to pay that wage. The Commit-tee was of the view that the main objective of the fixation offair wages should not be lost sight of. The objective was notmerely to determine wages which are fair in the abstract, but tosee that employment at the existing levels is not only main-tained but if possible increased. From this point of view, it willbe clear that the level of wages should be such as enables theindustry to maintain production with efficiency. The Commit-tee, therefore, recommended that the capacity of the industry topay should be assessed by the wage board in the light of this

LESSON 19:COLLECTIVE BARGAINING AS A WAGE FIXATION METHOD

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very important consideration. The wage board should also becharged with the duty of seeing that the fair wages fixed for anyparticular industry are not very much out of line with wages inother industries in the region because wide disparities wouldinevitably lead to movement of labour and consequentindustrial unrest not only in the industry concerned but in otherindustries as well.The Committee then considered the classes of workers forwhom, and industries in regard to which, fair wages should bedetermined. It came to the conclusion that in the initial stages,in view of administrative and other difficulties, provisionneeded to be made for the fixation of fair wages of onlycategories up to the supervisory level. The Committee observedthat in the written evidence received by them, there wasunanimity of opinion that fair wages should be determined onan industry-cum-region basis. The Committee supported thatview since it felt that it would not be feasible to fix wages onany other basis.The Committee then identified the criteria that had to beconsidered in fixing wage differentials as: 1. the degree of skill,2. the strain of work, 3. the experience involved, 4. the trainingrequired, 5. the responsibility undertaken, 6. the mental andphysical requirements, 7. the disagreeableness of the task, 8. thehazard attendant on the work, and 9. the fatigue involved.The Committee was of the view that the wage fixing authoritiesshould carefully go into the question of wage differentials afterdeciding on the weight to be attached to each of the abovefactors. It felt that it was not possible to advise the wage fixingmachinery on what weight should be attached to each factor, asit was a matter that would have to be evolved gradually on thebasis of experience. The Committee also suggested that thewage board should try to evolve standard occupational nomen-clature so that the work of classifying and assessing may beundertaken on a uniform basis throughout the country.We have dealt in detail about the report of this Committeebecause it has influenced the principles of wage fixation, theform of wage fixation machinery and other matters for a longtime. The judiciary too has evolved many principles of wagefixation basing themselves on the criteria prescribed by thisCommittee.

Setting up of Wage BoardsThe First and Second Five Year Plans gave importance to (1)laying down principles for bringing wages in conformity withthe aspirations of the working class and (2) setting up anappropriate machinery for the application of these principles.According to them, the existing machinery for the settlement ofdisputes, namely the Industrial Tribunals, had not succeeded ingiving full satisfaction to the parties and, therefore, theyrecommended authorities like Tripartite Wage Boards consistingof equal representatives of employers and workers and anindependent Chairman. Accordingly, Wage Boards were set upfor the following sectors: cotton textile industry, jute, planta-tions, mines, engineering, iron and steel, chemicals, sugar,cement, railways, posts and telegraphs, ports and docks etc.12.152 For quite some time, these Wage Boards determined thewages and other remuneration to be given to the workers inthese industries. Thus wage bargaining mostly took place at the

industry level, and through Government controlled wageboards. Since there were not much regional variations, thissystem worked well for quite some time.In 1973 and 1978, Indian economy suffered two oil shocks.During these years the actual growth rates of industrialproduction fell far below the plan targets; unemployment ratesdoubled, new forms of workers’ protests such as hartal, go-slow and gherao emerged. The number of strikes and thenumber of mandays lost increased considerably. This culmi-nated into an all India Railway Strike in May 1974 that paralysedthe entire economy.This period also saw the growth of independent plant basedmilitant unions without any political affiliations. In order toshare the monopoly gains of an industrial unit and productivityincreases as a result of technological changes, such unions wereorganised on unit basis, and through their militancy, they weresuccessful in obtaining much higher wages and other facilitiesfor the workers. Slowly industry-wise wage boards and wagesettlements took a back seat, and company-wise negotiationsand wage settlements emerged. Though there are manyprinciples that are taken into consideration in wage determina-tion in the unit-based bargaining system, the two mainprinciples are: first, the capacity of the industrial unit to pay, andsecond, the bargaining strength of the trade union to negotiatewith the management.

Sectoral Bargaining at the National LevelAs has been said earlier, prior to the 1970s, Wage Boardsappointed by the Government gave awards on wages andworking conditions. The number of Wage Boards declinedfrom 19 in the late 1960s to two (one for journalists and otherfor non-journalist newspaper employees) in the late 1990s. Sincethe early 1970s sectoral bargaining at the national level has beenoccurring mainly in industries in which the government was thedominant player. These included banks and coal, steel and portsand docks. Fifty eight private, public and multinational banksare members of the Indian Banks’ Association. They negotiatelong-term settlements with the All India Federations of BankEmployees. There is one national agreement for the entire coalindustry. In steel, there is a permanent bipartite committee forintegrated steel mills in the public and private sectors. Since1969, this Committee, called the National Joint ConsultativeCommittee for Steel Industry (NJCS), has signed six long-termsettlements. The 11 major ports in the country have formed theIndian Ports’ Association. They hold negotiations with theindustrial federations of the major national trade union centresin the country.A feature of national-level sectoral bargaining is the presence ofa single employer body and the involvement of the concernedadministrative ministry from the employers’ side. In manysectors, two to five major national centres of trade unions,which have a major presence through their respective industryfederations of workers’ organisations, negotiate. In banks, coaland ports and docks, often agreements have been preceded bystrikes or threats of strike. It is only in the steel industry thatthis has not happened during the past 29 years. Even thoughindustry-wide bargaining is not extended to the oil sector,which was nationalised in the 1970s, the oil coordination

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committees achieve a great deal of standardisation in pay andservice conditions even if collective bargaining occurs at the firmand/or plant level (for instance, Hindustan Petroleum Corpora-tion Limited). Agreements in banking and coal covered 8,00,000workers each while those in steel and ports and docks covered2,50,000 workers each.

Wage Policy – Theory and Various IssuesWage policies have engaged the attention of politicians,administrators, and academic analysts for many years now. Wehave the classical theory of wages, insideroutsider models, andthe efficiency wage theory - that have emerged in the USA, andquite a few other models and theories. Perhaps it is alsopossible to visualise other criteria and models. But we have notgone into the advantages and disadvantages or compulsions ofall these theories because we feel that a self-contained anddetailed discussion of all these are beyond the terms ofreference of our Commission. We have suggested elsewherethat the Government should appoint a high level committeewith technically competent people including economists, tradeunionists, entrepreneurs, consumers, and establishments to gointo all aspects of the inter-related questions and to formulate anational wage policy. It should have been done much earlier inview of the commitments in our Constitution and theConventions we have accepted. The need has become all themore important in the light of the new circumstances andchanged factors that have emerged with globalisation and newtechnology.

Growth in Inequality of Wages andEarningsThere is increasing inequality in the labour market, and wagedifferentials present among various groups and various sectorsof the economy. There are large interindustry and intra-industrywage differentials. In different sectors of the economy, a workerwill be paid differently though he may be doing the same kindof job. Even in the same industry, different units may paydifferent wages for the worker who is having the same measur-able skills. First the differentials are found across a occupations:the firms that pay professionals a premium over the marketaverage also pay less skilled workers a premium over the averagein their occupations. Second, these differentials have a strongtendency to persist over time, industries that pay premia in oneperiod tend to be found paying them in later periods.Different areas of wage employment will have different wagelevels and we have to recognise this fact. We have the moderncapital intensive organised sector of IT industry, petro-chemicals, pharmaceuticals, etc., where wages and otherallowances are likely to be more attractive than in small-scaleindustry and other traditional labour-intensive sectors such asthe unorganised urban and rural sector and agriculture. Thoughour efforts should be to reduce these wage differentials andintroduce some sort of standardisation, as the matter standstoday, it is practically very difficult and these differences inearnings of the workers in different sectors of industry are likelyto continue. Much depends upon the capacity to pay andprofitability of these sectors. Any wage policy will have to takethese factors into consideration.

Rise in Real WagesA wage policy will also have to aim at a progressive rise in realwages. Wage increases can come on account of increase in costof living and improvement in standard of living. As a result ofincrease in prices, there is an erosion in the wage levels in realterms, and in order to prevent such an erosion, dearnessallowance is paid and it is linked to the consumer price index.There are various methods of linking the consumer price indexwith the dearness allowance and determining the extent ofneutralisation of price rise through payment of D. A. Someenterprises pay a fixed dearness allowance and also a variabledearness allowance linked to the consumer price index. Somepay dearness allowance only linked to the consumer price index.The extent of neutralisation also differs from organisation toorganisation.In 1978, Government of India appointed a Committee onConsumer Price Index Numbers under the chairmanship of Dr.N. Rath. After examining the method of constructing con-sumer price index numbers that was being followed at that timeby the Labour Bureau, Shimla, the Committee made a numberof suggestions regarding collection of information forconstructing index numbers, the number of centres to becovered, coverage of workers, sample size design for familyliving surveys, selection of commodities, linking factors, etc. Weare told that based on the recommendations of this Commit-tee, the series were suitably revised.The present series of consumer price index for industrialworkers for 70 centres, all India and 6 additional centres (on thebase year 1982 = 100) is based on the working class familyincome and expenditure surveys conducted during 1981-82.These series were released w.e.f October 1988 index. As per ILORecommendation (Recommendation No. 170 vis-à-visConvention No. 160 ratified by India in 1992) the HouseholdExpenditure Surveys should be conducted at least once in everyten years. But the work was delayed because of the delay insanctioning the scheme. Now in 1999 - 2000, the surveys havebeen conducted at 78 centres by the Labour Bureau, Shimlathrough the NSSO. On the basis of this survey, new series arelikely to be released in 2003. Thus there is a considerable delay inconducting the survey and in constructing the new series ofindex numbers.Therefore, the very purpose of linking dearness allowance to theprice index is lost. This is because the consumption pattern ofthe population undergoes changes, many varieties of items goout of the market and prices for them are not available, someitems become obsolete, and since the index numbers have anupward bias, the employers have to pay higher dearnessallowance than is necessary.Therefore, it is necessary that the consumption surveys areconducted with fixed periodicity and new series of indexnumbers are constructed every ten years. A suggestion has beenmade that there should be a separate legislation to ensure thatnew index series are undertaken on the basis of fixed timeschedules. For this provision has to be made for necessaryresources, staff components, cooperation from NSSO and StateGovernments etc. The Commission endorses this suggestionand would request the Ministry of Labour to move in the

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matter. Apart from the organised sector, dearness allowance isalso paid to workers in the unorganised sector as a part ofminimum wages. Their dearness allowance is revised every sixmonths depending upon the movement of index numbers.This is how erosion in the purchasing power of workers in theunorganised sector is prevented. For them too, it is necessary toassure revision of consumer price index at fixed time intervals.

Wages in the Unorganised SectorIf one is considering the problem of a wage policy from thepoint of view of the national economy, one cannot restrictone’s vision only to the organised sector. A national wage policymust bring within its purview problems of workers in theunorganised sectors who are not unionised and therefore whohave no bargaining strength. In fact the entire emphasis ofGovernment wage policy should be on fixing minimum wagesand implementing them for the workers in the unorganisedsector. Fixing a national minimum wage, fixing minimumwages for different jobs in the unorganised sector, revising thesewages periodically, linking them to dearness allowance in orderto prevent erosion in real wages and the like assume muchsignificance in this context. Government has to set up a propermachinery for fixing these wages and also ensuring that they arepaid.

Objectives of a Rational Wage PolicyWhat can be the objectives of a rational wage policy? There aremany objectives, and we have to isolate and discuss themseparately. a) Do we need a national minimum wage in order toensure that those who are employed in any region or in anysector of the economy are assured of a minimum income thatcan buy minimum necessities of life for them? b) Do we need awage policy under which we have to secure as much employ-ment as possible? Is it necessary to have a poverty level lowwage for this purpose? c) Do we need a wage policy as part of atotal anti-poverty programme in which our goal is to removepoverty of the bottom classes of our society through the useof employment at a level of wages which removes suchpoverty? d) Do we want to remove the differentials of wages ofworkers in the organised sectors, and between the organisedand the unorganised sectors? Is it possible to do so? e) Is itpossible to standardise wages in the same type of industry?Should we attempt to do so? f ) Should we give more empha-sis on prescribing wages for the unorganised sector, and leavethe wages in the organised sector to be decided by collectivebargaining? g) What can we do to ensure at least a minimumincome to the workers in the unorganised sector? h) Can thewage rise be linked to increase in productivity? i) Can we have awages, incomes and prices policy? What is the practical shape itcan take, and what will be the machinery to enforce it?

National Minimum WageVarious Committees and Commissions have discussed thenecessity of introducing the concept of a national minimumwage below which no employer should be allowed to engageany worker in the country. The advocates of a national mini-mum wage claim that such a minimum would have moreextensive coverage, and would make implementation easier andeffective because of its simplicity and applicability to all types ofemployments in all parts of the country.

Recommendations of the First NationalCommission on LabourThe First National Commission on Labour discussed this issueand came to the conclusion that “a national minimum wage inthe sense of a uniform minimum monetary remuneration forthe country as a whole is neither feasible nor desirable. If one isfixed, the dangers are that there will be areas which will notafford the minimum if the minimum is worked out somewhatoptimistically. And if calculations are allowed to be influencedby what a poorer region or industry can pay, the nationalminimum will not be worthy enforcing”.The Commission also pointed out the difficulties in construct-ing a national minimum wage because of the large variations inconsumption patterns of persons in different regions, the widevariety of items used by them, regional price variations and soon. In view of these, the Commission suggested that indifferent homogeneous regions in each state regional minimacould be notified. The Commission recommended fixation ofsuch regional minima in view of the wide variation in rates ofminimum wages fixed under the Act even within a smallgeographical region.

Recommendations of the BhoothlingamCommitteeGovernment of India set up a Study Group on Wages,Incomes and Prices, popularly known as the BhoothlingamCommittee in 1977. The Committee gave its report to theGovernment in 1978. This Committee did not agree with therecommendations of First National Labour Commission, andsaid that “in our view, the real minimum wage can only be theabsolute national minimum, irrespective of sectors, regions orStates below which no employment would be permitted”. ThisGroup also observed that in determining such a nationalminimum wage, several considerations had to be kept in viewand it had to be consistent with factors like (a) the per capitanational income adjusted after applying the participation rate (b)average national income per consumption unit and (c) per capitarural consumption expenditure. It could not also deviate toomuch from prevalent earnings in the small-scale sector and itsimpact must not be such as to inhibit the generation ofemployment. It recommended that the national minimumwage should be Rs.150 per month at 1978 prices, to be achievedwithin a period of seven years, starting with not less than Rs.4per day for eight hours of unskilled work or not less than Rs.100 per month and being revised every two years to achieve thegoal. Thereafter the revision in the minimum wage should bedone every three years (as was also recommended by theNational Commission on Labour, 1969) in relation to the trendincrease in per capita national income. This minimum wage wasto be applicable throughout the country for unskilled work forevery adult of 18 years or above, irrespective of sex, bringing upthe statutory minimum wages wherever they were lower. StateGovernments were to continue to have the freedom to fixhigher minimum wages wherever they were lower. For theagricultural sector the Group felt that a desirable minimum ruralhousehold income would be a more meaningful conceptbecause of the irregular and seasonal nature of employmentand unstable and varied sources of income. The minimum

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income to be aimed at should be such as to enable the bottom30% to come up roughly to the level of the next higher decile.It was placed at Rs.1800 per annum (1977-78 prices) forplanning purposes. Policy measures should be directed towardscreating conditions in which the households of those whowork part time or sporadically, as well as landless labourers andmarginal farmers are enabled to earn the minimum within aperiod of seven years. The measures were to include improve-ment of the productivity of marginal farmers through highervalue crops and increasing opportunities for work with betterreturns.

Recommendations of the NationalCommission on Rural LabourIn 1991, the National Commission on Rural Labour consti-tuted under the chairmanship of Dr. C. H. Hanumanth Raomade a strong recommendation for a national minimum wagefor rural labour. They deplored the wide variations in theminimum wages prescribed for unskilled workers in agricultureby various State Governments, and laid down the followingprinciples for fixation of minimum wages: a) the cost of livingrelating to the minimum subsistence level for the worker andhis family of three adult consumption units, and b) theminimum wage will be the same for all employmentsThe National Commission on Rural Labour thought that theapplication of these principles would naturally bring aboutuniformity in the minimum wages throughout the countryirrespective of the authorities notifying the wage. The Commis-sion called this the basic minimum wage applicable for thecountry as a whole, and no wage should be fixed or permittedbelow this level. This is to be distinguished from the minimumwage which may be notified above this level under the Mini-mum Wages Act by different State Governments. Differences inthe wages arrived at on the basis of cost of living would beaccounted for only by the differences in the comparative cost ofliving between various regions in the country. The Commissionfelt that this approach will admit of minor variations.

Recommendation by the NationalCommission on Self Employed WomenIn 1987, the National Commission on Self Employed Womenand Women in the Informal Sector was appointed with Mrs.Ela Bhatt as the Chairperson. In its report, the Commissionrecommended a reasonable wage of Rs. 500 for womenworkers. The Commission did not call it a national minimumwage, but it amounts to the same.The National Minimum Wage has been discussed on manyother occasions in different fora. Because fixation of wagesdepends on a number of criteria like local conditions, cost ofliving and paying capacity which vary from State to State andfrom industry to industry, many difficulties have been pointedout. The Indian Labour Conference held in November, 1985expressed the following view: “Till such time a national wage isfeasible, it would be desirable to have regional minimum wagesin regard to which the Central Government may lay down theguidelines. The Minimum Wages should be revised at regularperiodicity and should be linked with rise in the cost of living”.

Accordingly, the Government issued guidelines in July, 1987 forsetting up Regional Minimum Wages Advisory Committees.These committees renamed subsequently as Regional LabourMinisters’ Conference, made a number of recommendationswhich included reduction in disparities in minimum wages indifferent States of a region, setting up of Inter-State Coordina-tion Council, consultation with neighbouring States whilefixing/ revising minimum wages etc.

Floor Level Minimum WageIn the absence of a National Minimum Wage Policy, the CentralGovernment introduced the concept of a National Floor LevelMinimum Wage of Rs. 35/- per day in 1996 based on therecommendations of the National Commission on RuralLabour. The floor level of minimum wage was furtherenhanced to Rs. 40 per day in August 1998. We were told thatthis had been revised to Rs. 45 this year, and accordingly thePrime Minister had written letters to all State Governments. Forthe time being this has become a sort of national minimumwage. It can, therefore, be that till such time as a NationalMinimum Wage Policy is evolved, this floor level minimumwage may be treated as the current national minimum wage.In view of the importance of the subject, our Commissionfeels that the Government of India should appoint an expertCommittee to study the pros and cons of this subject andmake suitable recommendations for the construction of such anational minimum wage.Our Constitution gives us a mandate to assure ‘fair wages’ tothe workers. We have endorsed this commitment in theInternational Conventions and Declarations that we haveaccepted. A Fair Wage Committee was appointed in 1948. Inspite of all this, we have not been able to determine a nationalminimum wage. The diversities in the different parts of thecountry and different regions in the same State, includingunequal capacities to pay, have delayed the fulfilment of thepromise in the Constitution. Some Committees have held theview that a uniform national minimum wage is difficult todetermine, and will be even more difficult to enforce every-where. Some members of our Commission hold the sameview, and feel that it may be impractical to suggest a nationalminimum wage. The general opinion in the Commission isthat the concept or commitment of a national minimum wagecan not abandoned on the plea that there are difficulties. It hasto remain an ideal or goal to be reached. We have recommendedthat an Expert Committee must be appointed to study allaspects, and make a recommendation that is practical and leadsto the goal even if it is in progressive phases. Till we reach thetarget, our immediate attempt should be to progress towardsthe next phase, leading from a floor level minimum wage to aregional minimum and finally to a national minimum. Indetermining such a wage, the recommendations of differentCommittees, the 15th session of the ILC, and the judgmentsof the Supreme Court should be used as guidelines

Low Wage PolicyAs is said earlier, now no one advocates a low wage policy, andpayment of the minimum wage as prescribed is legally bindingon the employers. But such a low wage policy was advocated bya few economists and politicians in order to encourage employ-

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ment in the country, and in order to keep industrial costs down.The first Five Year Plan had also warned against any upwardmovement of wages. Their theory was that if wages are low,more employment can be generated in the country, and costs ofproduction of products can also be held under check.

Differentials in WagesWhat should be the maximum-minimum differential in wagesof employees of an organisation?It is difficult to lay down a clear cut criterion for fixing anappropriate ratio between salaries of the top management andwages paid to the worker at the lowest rung of the ladder. Ingeneral, the ratio seems to be high in a developing countrywhere the level of higher education in many fields is notcommensurate with the needs of economic development andwhere the general level of education of workers is not very high.Therefore, the unskilled worker is paid the minimum, andmanagerial experts whose skills are rare are paid much more.Sometimes, foreign experts are also hired, from countries wherethe general levels of pay are high compared to our country, andthey have to be paid much higher salaries than would bewarranted by the paying capacity of our country. Higher salariesare thus fixed externally at the international level. Thus they getcompletely out of line with the wages of purely local labourwhich is unskilled and which is abundant in supply.It would be worthwhile to quote the example of China. InChina as well as in the erstwhile communist East Europeaneconomies bringing down maximum and minimum differen-tial had been one of the important objectives of a wage policy.Government of India had tried to fix a ceiling on managerialremuneration, and thus an effort was made to bring down thedifferential in wages in private enterprises. But as a result ofpersistent demand and severe criticism, after the new economicpolicy of liberalisation, the ceiling on managerial remunerationwas raised substantially in July 1993 and relaxed completely forprofit making companies in February 1994. Companies wererequired to make disclosures for employees earning more thanRs. 12 lakh annually. But their number has increased consider-ably over the years. Now under Schedule XIII of theCompanies Act 1956, companies can pay 100% increase in themaximum level of remuneration. Therefore, the clause has beenamended, and Companies need to give details of only suchemployees as are paid over Rs. 24 lakh per annum. The trend istowards increased remuneration to top management andwidening differentials. Apart from the removal of such ceilings,most of the top managerial personnel receive a share of 1 or 2percent in the profits of the company. In addition to this theyalso receive perquisites like free housing, chauffeur driven cars,free club memberships, free international travel etc. In theabsence of full data, it is very difficult to comment generally onthe wage-differentials. But the general observation is that afterthe policy of economic liberalisation, these differentials havebeen further widened.The Fifth Pay Commission appointed by Government of Indiahas discussed this issue while fixing maximum pay for Govern-ment servants. The Commission had analysed the maximumand minimum disparity ratios of Government servants. Theirconclusions were: a) During the period 1948-1996, the mini-

mum salary of the lowest Government employee rose fromRs.55 to Rs.2,060. b) During the same period, the pretaxmaximum salary rose from Rs. 3,000 to Rs. 16,580, while thepost-tax salary rose from Rs. 2,263 to Rs. 12,615. c) Thedisparity ratio between the maximum pre-tax remuneration andthe minimum went down progressively from 54.5 (1948) to46.2 (1949), 37.5 (1959), 34.0 (1965), 24.8 (1970), 10.7 (1986)and 8.0 (1996). d) The post-tax disparity ratio came down evenmore drastically from 41.0 (1948) to 6.1 (1996). The post-taxratios were naturally lower than the pre-tax ratios because ofprogressive rates of taxation.The falling disparity ratio was the result of a deliberate policyfollowed by successive Commissions. This was probably intune with the prevalent socialist ideas of the time. The ratiosdid not remain constant even in the intervening period betweentwo consecutive Pay Commissions. Thus the pre-tax ratioslipped from 10.7 (1986) to 8.0 (1996). This phenomenon isexplained by the prevailing practice of offering only partialneutralisation for increased cost of living at the higher levels,while there is complete neutralisation at the lower level.

International ComparisonsThe Fifth Pay Commission had also collected data from variouscountries in order to know these differentials in wages. Theinformation received on maximum-minimum Government payscales in different countries was as follows:

International Disparity ratios, 1995Country Ratio Country Ratio Malaysia 3.0 Sweden 4.0 France 6.6Indonesia 6.9 Australia 7.7 China 8.0 Thailand 9.0 Hongkong40.0 Perhaps the disparity ratios are likely to be different for theprivate sector enterprises in these countries.The Fifth Pay Commission had also carried out studies onremuneration paid to top management personnel in the privatesector. Their observations were as follows: a) The CEO inprivate sector gets a pay packet which is nearly 50% higher thanhis counterparts in public sector undertakings and Government.b) In addition to the salary, the CEO in private sector draws anaverage performance related incentive which works out to 65%of the basic salary. c) The CEO in private sector draws sundryallowances for club membership, credit cards, services, ameni-ties, domestic servants, use of car, housing, free travel etc.Thus there was, and even now there is a difference in thecompensation paid to employees in the private sector and toGovernment employees. It can be observed that the disparityratio ranges between 3 in Malaysia and 40 in Hongkong.An OECD study on the salaries of senior functionaries hasreported that Japan, UK and Canada reward their senior civilservants better than Germany, USA, the Netherlands, Ireland,Australia, France, Finland and Sweden. While the real incomesof senior civil servants rose in the range of 20 to 40% between1980 and 1990 in the case of Japan, UK, Canada, Ireland,Finland, Sweden and US, it fell in the case of Germany, theNetherlands, Australia and France. Differentials between thesenior and lower grades are clearly compressed in the case ofCanada, Australia, France, Germany, the Netherlands, UK andUS. Also substantial remuneration discounts for public servicevis a vis private service exist in countries like France, Germany

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and the United Kingdom. This information is for the year 1995and for Government servants in the respective countries.The increase in the salaries of the Government employees as aresult of the Pay Commission recommendations, resulted inpre-tax disparity ratio between maximum and minimumremuneration reach the level of 10.7

Logic of Wage DifferentialsWhat is the logic of this differential in wages? The chief factordetermining the excess earning of trained personnel overminimum wage is the cost of investment in education,including time spent on education, the excess earning beingmeant to compensate for the investments and time spent ineducation. Secondly, in the case of top managerial personnel,they have adequate technical experience of management, theyhave to carry risks of business and are responsible to produceresults. Their job is more than full-time. Therefore, they are tobe paid higher salaries to compensate for the risks and forsacrificing all their time for business. Such managerial talents arerare to be found and therefore, they have to be adequatelycompensated and retained. 12.196 How does it happen that afilm star receives a remuneration which is so much higher thanthat of a street cleaner? Why does a foreman receive more thanan unskilled worker, or an accountant more than a sweeper?These are stock questions to be found in economic text books.The answers given also are stock answers. Foremen andaccountants are few have to spend long years in training andunskilled workers and sweepers are available in plenty and theyneed no training. This is the way the differentials in employ-ments are sought to be justified. The actual higher or lowerwages depend upon the scarcity of labour in that category.The country needs to reward persons who have put in moreefforts to acquire specialised skills, as long as better quality ortalent is sought to be recruited or trained. Moreover thedifferentials will continue to exist when the intellectual capital ofa person, skills and experience acquired differ from person toperson. This also differs from industry to industry. In a labourintensive industry say cotton textile industry, where wagesconstitute 25% of the total costs, we see that wages per workerare lower than in a capital intensive industry like petro-chemicalsor fine chemicals. Again a small industry or an industry in ruralarea is not expected to pay the same wages and fringe benefits toworkers as in large-scale industry. The capacity and profitabilityof such industries is much less, and the skills required fromworkers in such small units are also less. We can hope that overa period of time these differentials will narrow.Thus the differentials in wages are bound to persist and it isdifficult to eliminate them. Their differential ratio perhaps canbe brought down by judicious wage policies to be pursued atthe enterprise level. It is up to the management of the enter-prise to initiate action.As long as we follow a laissez-faire policy in respect of wagesand both employers and employees are free to fix their wages,the Government will find it difficult to exercise strict control.As has been mentioned earlier, there have been differences inthe wages paid in different sectors. These differences prevailedfor the same skills within an industry itself and that too at the

same place. This problem has been discussed in India sincelong. As far back as in 1922, the Bombay Industrial DisputesCommittee discussed this problem and again the Textile TariffBoard did so in 1927. The Whitley Commission pointed outthe need for adopting a common standard of payments forsimilar classes of work in some of the leading industries. In1934, a wage census was conducted by the Government ofBombay and it compiled data for standardisation. The TextileLabour Enquiry Committee (1940) and Committee on FairWage (1948) showed strong preference in favour ofstandardisation. The First National Commission advocatedstandardisation of occupational nomenclature and arrange-ments for a wage census on a regular basis because it felt that,that would assist in standardising wage ratesIn the changed circumstances, with a variety of wage rates indifferent industries and in enterprises of the same industry,standardisation has become pretty difficult. This is because ofthe large variation in the capacity of each industry to pay anddifferent market conditions in which they operate.

West Bengal ExperimentBut because of the peculiar circumstances in the seventies, thisstandardisation was brought about in the engineering industryin West Bengal. This was a unique experiment that is worthmentioning.In the sixties, wages in major industries in West Bengal such asjute, cotton textiles, plantation and engineering, wage fixationand revision in salary scales was done through awards ofindustrial adjudication. Thus in the case of the engineeringindustry, there were three omnibus engineering tribunal awardsnamely that of 1948, of 1950 and of 1958. These were followedby Wage Board recommendations for the engineering industryin 1966. There was also a Special Engineering Tribunal Awardwhich was known as the 7th Industrial Tribunal Award whichrelated to engineering establishments employing less than 250employees.Around 1969, when the leftist government came to power inWest Bengal, the image of West Bengal industry suffered a setback. Those were the days of gheraos, strikes, sudden stoppageof work, frequent intimidation by workers etc. As a result, theState received a big set back in its industrial development.Investors were not prepared to go to West Bengal and no newindustrial projects were coming up in West Bengal. TheGovernment wanted to improve this tarnished image of thestate. It took considrable interest in settling labour problemsand in ensuring investors that there would be no labourproblems in the state. Most of the trade unions were controlledby the leftist parties and, therefore, it was easy to convince thetrade unions and force them to be more accommodative andless militant. As a part of this effort, the parties in poweralmost forced trade unions in the State to come together andcarry on negotiations with industry to have industry-wise wagesettlements. As a result, the first wage settlement in theengineering industry in West Bengal was signed in 1969. TheGovernment played a major role in bringing the two partiestogether and forcing them to sign such a settlement. Followingthis settlement, four successive industry wise agreementsthrough collective bargaining and intervention of the Govern-

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ment were reached in 1973, 1979, 1983 and 1988. Most of theFederations of Trade Unions, and the Confederation of IndianEngineering Industries (CIEI) would sit and negotiate wagesof all types of workers in engineering industries in West Bengal.A good deal of preparatory work was also done by both unionsand employers.

Role played by the State GovernmentThe State Government played a positive role in bringing aboutthe settlements. All the meetings of negotiations were presidedover by the Labour Commissioner and he acted as a conciliationofficer. If there was an impasse in negotiations, there waspolitical intervention and the Labour Minister as well as theChief Minister intervened to see that the negotiations weresuccessful. The State Government tried to bring both partiestogether. It used its influence and saw that there was a reason-able settlement. The State Government was also a party to thesettlement and, therefore, this was a tripartite settlement. Thiswas a unique experiment and, therefore, it has been narrated indetail. At no other place, according to our information, weresuch experiments carried out. Now we are told that this systemof industry-wise negotiations do not take place, and unit-wisebargaining is resorted to.

Wage Determination through CollectiveBargainingWe have earlier refered to the elimination of Industry level WageBoards and the increasing trend of resorting to collectivebargaining at the individual plant level. Let us understand thelegal position of such agreements. There is no law at thenational level for recognition of trade unions. But some stateslike Maharashtra and Madhya Pradesh have legal provisions forrecognition. In some states like Orissa, West Bengal andAndhra Pradesh, unions are recognised as bargaining agentsthrough secret ballots. Under section 2(p) of the IndustrialDisputes Act, 1947 collective agreements can be reached with orwithout the involvement of the conciliation machineryestablished by legislation. While settelments reached in concilia-tion are binding on all parties, settelments arrived at, otherwisethan in the course of conciliation proceedings are binding onlyon parties to the agreement. It is not binding on workmen whodid not sign the agreement or did not authorise any otherworkman to sign on his behalf. A collective agreement presup-poses the participation and consent of all the interested parties.When workmen are members of different unions, every union,without regard to whether or not it represents a majority,cannot, but be considered an interested party. Also, someworkmen may not choose to be members of any union andone or more unions may, for reasons of their own, not like toreach a settlement. Section 2(p), and 18(3) of the IndustrialDisputes Act, 1947 deal with such practical difficulties bymaking collective agreements binding even on indifferent orunwilling workmen as the conciliation officer’s presence issupposed to ensure that the agreement is bonafide

Unorganised SectorCollective bargaining is not common in the unorganised sector.In several cases bipartite collective agreements in theunorganised sector have provided for wages lower than theapplicable minimum wages. Where such agreements are entered

into through conciliation and/or registered with the appropriategovernment, the labour commissioners concerned are expectedto ensure that the wages, benefits and other conditions are notlower than the applicable minimum wages and other standardslaid down in labour laws

Special Features of such CollectiveAgreementsIn any industry, some units are doing well and some are notdoing so well. While signing wage agreements on industry-wisebasis, one has to take care of what is affordable to the leastprofitable unit in the industry. Many times workers in moreprofitable units feel that they are not given adequate remunera-tion and facilities. This was one important reason why tradeunions in such profitable units opted out, and signed indi-vidual agreements with managements of such companies. As aresult, they got better remuneration and better facilities. As hasbeen started earlier, workers in such prosperous enterprises wereable to wages that were described as disproportionate. Theywere also able to share the monoply gains of such companiesbecause of the militant methods they followed.Following are the some of the special features of such agree-ments: (a) A steep rise in wages not comparable to any othersector of the economy. Unions were able to achieve better termsbecause of their bargaining power. (b) As a result of the steepincrease in wages, incomes of many workers became taxable.Unions then preferred a variety of allowances apart from rise inwages. Some of these allowances were not taxable. One willthus find a variety of allowances being added to emoluments.Thus, as in the case of managerial personnel, workers too havehad the benefit of augmenting incomes through specialallowances and perquisitesWages are generally defined as only basic wage, fixed and variabledearness allowance and not any other allowance and benefits.Thus all the other allowances paid and monetary value of thefacilities provided by employers in the organised sector are notincluded in “wages”. But the value of all these allowances andperquisites is substantial if one is to compute the total remu-neration paid to the workers.

Court DecisionsThe principles of wage determination have been greatlyinfluenced by Court decisions from time to time. In many casesof wage disputes, the Supreme Court has given decisions whichlay down some principles of wage fixation and these principleslater have become important factors in wage determination.Here are a few important decisions.In the case of Crown Aluminium Works vs. their workmen(1958 I LLJ 1), on the specific issue of capacity to pay, theSupreme Court has said “There is, however, one principle whichadmits of no exceptions. No industry has a right to exist unlessit is able to pay its workmen at least a bare minimum wage. It isquite likely that in the under-developed countries whereunemployment prevails on a very large scale, unorganisedlabour may be available on starvation wages.....If an employer can not maintain his enterprise without cuttingdown the wages of his employees below even a bare subsis-

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tence or minimum wage, he would have no right to conduct hisenterprise on such terms”.In M/s Unichem Laboratories Ltd. vs. Their Workmen, [1972 –I LLJ 576, 590, 591], the Supreme Court observed as follows:“In the fixation of wages and dearness allowance the legalposition is well established that it has to be done on anindustry-cum-region basis having due regard to the financialcapacity of the unit under consideration.... Industrial adjudica-tion should always take into account, when revising the wagestructure and granting dearness allowance, the problem of theadditional burden to be imposed on the employer and ascertainwhether the employer can reasonably be called upon to bearsuch burden.... As pointed out in Greaves Cotton and Co. andothers vs. Their Workmen, [1964 – I LLJ 342], (1964) 5 S.C.R.362, one of the principles to be adopted in fixing wages anddearness allowance is that the Tribunal should take into accountthe wage scale and dearness allowance prevailing in comparableconcerns carrying on the same industry in the region....” From an examination of the decisions of the Court, it is clearthat the floor level is the bare minimum subsistence wage. Infixing this wage, Industrial Tribunals will have to consider theposition from the point of view of the worker, the capacity ofthe employer to pay such a wage being irrelevant. The fair wagemust take note of the economic reality of the situation and theminimum needs of the worker having a fair-sized family withan eye to the preservation of his efficiency as a workerMinimum Wage - a Statutory ObligationA minimum wage was considered a necessary catalyst to advancethe social status of the worker even according to our ancient law,and treated as an obligation of the StateIn the Secunderabad Club vs. State of Andhra Pradesh case(1997- I LLJ 434), Mr. Justice Y. Bhaskara Rao adverting to theconcept of minimum wages as laid down in the SUKRANEETI, observed: “It would be relevant to look at theconditions governing wage, life and other social aspects ofworkers, which are delineated in SUKRA NEETI, an ancienttreatise. The English translation of which is: ‘Wages to beconsidered as fair must be sufficient to procure the necessitiesof life from out of the wages. The wage of an employeeshould therefore be a fair wage, so as to enable him to procureall the necessary requirements of life.’ (SUKRA NEETI II, 805-806) ‘By payment of very low wages, employees (of the king)are likely to become his enemies and they are also likely tobecome plunderers of treasuries and cause harassment to thegeneral public.’ (SUKRA NEETI II, 807-808)Thus the concept of payment of minimum wages is inbuilt inour society even before the introduction of the MinimumWages Act of 1948. The principle that it is the duty of the Stateto ensure the payment of minimum wages has been recognisedby the framers of the Constitution by incorporating Article 43in the Constitution of India. Though this Article is included inthe Chapter on Directive Principles, and in its sweep contem-plates payment of ‘living wages’ to a worker, nevertheless, it isthe duty of the State to ensure that workers are paid minimumwages. The exercise to fix minimum wages thus is the responsi-bility of the State. It enacted the Minimum Wages Act in 1948,

whereby it has directly imposed statutory minimum standardson the scheduled employments.

Components of Minimum WagesIn Unichoyi vs. State of Kerala, (1961 – I LLJ-631), theSupreme Court explained what the components are that wouldmake up the minimum wages and stated: “It is, therefore,necessary to consider what are the components of a minimumwage in the context of the Act. The evidence led before thecommittee on fair wages showed that some witnesses wereinclined to take the view that the minimum wage is that wagewhich is essential to cover the bare physical needs of a workerand his family, whereas the overwhelming majority of witnessesagreed that a minimum wage should also provide for someother essential requirements such as a minimum of education,medical facilities and other amenities. The committee came tothe conclusion that a minimum wage must provide not merelyfor the bare subsistence of life but for the preservation of theefficiency of the worker, and so it must also provide for somemeasure of education, medical requirements and amenities. Theconcept about the components of the minimum wage thusenunciated by the committee have been generally accepted byindustrial adjudication in this country. Sometimes, the mini-mum wage is described as a bare minimum wage in order todistinguish it from the wage-structure which is “subsistenceplus” or fair wage, but too much emphasis on the adjective“bare” in relation to the minimum wage is apt to lead to theerroneous assumption that the minimum wage is a wage whichenables the worker to cover his bare physical needs and keephimself just above starvation. That clearly is not intended bythe concept of minimum wage. On the other hand, since thecapacity of the employer to pay is treated as irrelevant it is butright that no addition should be made to the components ofthe minimum wage which would take the minimum wage nearthe lower level of the fair wage, but the contents of this conceptmust ensure for the employee not only his sustenance and thatof his family but must also preserve his efficiency as a worker.The Act contemplates that minimum wage rates should befixed in the schedule industries with the dual object of provid-ing sustenance and maintenance of the worker and his familyand preserving his efficiency as a worker.”

Industry-cum-RegionThe principles which govern the field have been laid down inseveral judgments of the Supreme Court. One of the earlydecision was a decision of the Supreme Court in French MotorCar Company Ltd vs Their Workmen, reported in 1962 II LLJ744, in which it was held that: “It is now well settled that theprinciple of industry-cum-region has to be applied by industrialcourt, when it proceeds to consider questions like wagestructure,dearness allowance and similar conditions of service. Inapplying that principle industrial court have to compare wage-scales prevailing in similar concerns in the region with which it isdealing, and generally speaking, similar concerns would be thosein the same line of business as the concern with respect towhich the dispute is under consideration.” It was alsoobsevered that amongst the factors which must be consideredfor the purpose of wage fixation were (i) the extent of businesscarried on by the concern, (ii) the capital invested therein, (iii) the

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profits made, (iv) the nature of the business carried on, (v) thestanding of the business, (vi) the strength of the labour force,(vii) the presence or absence and the extent of the reserves, (viii)the dividend declared and (ix) the prospects of the future of thebusiness and other relevant circumstances. Comparability wouldalso postulate that there must be comparability of size.The Supreme Court in Greaves Cotton & Co Ltd vs TheirWorkmen, (1964 I LLJ 342) held that where there are largenumber of industrial concerns of the same kind in the sameregion, it would be proper to put greater emphasis on theindustry part of the industry-cum-region principle as thiswould place all concerns on an equal footing in the matter ofproduction cost and in the matter of competition in themarket. On the other hand, where the number of comparableconcerns were small in a particular region and the aspect ofcompetition is not the same importance, the region part of theindustry-cum-region formula assumes greater importance. TheSupreme Court in the Greaves Cotton case also observed thatthe Industrial Tribunal while making a comparison must takeinto account the total wage packet for each category of factoryworkmen

Financial Capacity of the EmployerThe judgment of the Supreme Court in AhmedabadMillowners, Association vs. Textile Labour Association, [1966 ILLJ 1], enunciates the considerations which must inter aliaguide the Industrial Tribunal in dealing with the financialcapacity of the employer to meet an additional burden occa-sioned by a revision of the wage structure. In this regard theSupreme Court held as follows: “On the other hand, in tryingto recognise and give effect to the demand for a fair wage,including the payment of dearness allowance to provide foradequate neutralisation against the ever-increasing rise in thecost of living, industrial adjudication must always take intoaccount the problem of the additional burden which suchwage-structure would impose upon the employer and ask itselfwhether the employer can reasonably be called upon to bearsuch burden.... What has been the progress of the industry inquestion; what are the prospects of the industry in future; hasthe industry been making profits; and if yes, what is the extentof profits; what is the nature of demand which the industryexpects to secure; what would be the extent of the burden andits gradual increase which the employer may have to face? Theseand similar other considerations have to be carefully weighedbefore a proper wagestructure can be reasonably constructed byindustrial adjudication vide Express Newspapers (Private) Ltd.,& Anr. Vs. Union of India & Ors. [1961-I LLJ 339]. Unusualprofit made by the industry for a single year as a result ofadventitious circumstances, or unusual loss incurred by it forsimilar reasons, should not be allowed to play a major role inthe calculations which industrial adjudication would make inregard to the construction of a wage-structure. A broad andoverall view of the financial position of the employer must betaken into account and attempt should always be made toreconcile the natural and just claims of the employees for a fairand higher wage with the capacity of the employer to pay it; andin determining such capacity, allowance must be made for alegitimate desire of the employer to make a reasonable profit”.

Pretax profits of the CompanyIn Unichem Laboratories Ltd. vs. Their Workmen, reported in1972 I LLJ 576, a Bench of three Learned Judges of theSupreme Court referred to the earlier Judgment inGramophone Company Ltd. vs. Its Workmen, (1964 II LLJ.131), where the Court had held that: “When an IndustrialTribunal is considering the question of wage structure andgratuity which in our opinion stands more or less on the samefooting as wage structure, it has to look at the profits madewithout considering provision for taxation in the shape ofincome-tax and for reserve. The provision for income-tax andfor reserve must in our opinion take second place as comparedto provision for wage structure and gratuity, which stands onthe same footing as provident fund which is also a retirementbenefit.” This principle was quoted with approval by theSupreme Court in Unichem Laboratories case.

Principles of Wage FixationIn Kamani Metals & Alloys ltd. vs their workmen, [1967 – IILLJ 55]; (1967) 2 S.C.R. 463, the Court observed as follows:“Fixation of a wage-structure is always a delicate task because abalance has to be struck between the demands of social justicewhich requires that the workmen should receive their propershare of the national income which they help to produce with aview to improving their standard of living, and the depletionwhich every increase in wages makes in the profits as this tendsto divert capital from industry into other channels thought tobe more profitable. The task is not rendered any the easierbecause conditions vary from region to region, industry toindustry and establishment to establishment. To cope withthese differences certain principles on which wages are fixed havebeen stated form time to time by this Court. Broadly speakingthe first principle is that there is a minimum wage which, in anyevent, must be paid, irrespective of the extent of profits, thefinancial condition of the establishment or the availability ofworkmen on lower wages. This minimum wage is independentof the kind of industry and applies to all alike big or small. Itsets the lowest limit below which wages cannot be allowed tosink in all humanity. The second principle is that wages must befair that is to say, sufficiently high to provide a standard familywith food, shelter, clothing, medical care and education ofchildren appropriate to the workmen but not at a rate exceedinghis wage, earning capacity in the class of establishment to whichhe belongs. A fair wage is thus, related to the earning capacityand the workload. It must, however be realized that ‘fair wage’is not ‘living wage’ by which is meant a wage which is sufficientto provide not only the essentials above mentioned but a fairmeasure of frugal comfort with an ability to provide for old ageand evil days. Fair wage lies between the minimum wage, whichmust be paid in any event, and the living wage, which is thegoal”.In Hydro (Engineers) (Private) Ltd. vs. their workmen, 1969 – ILLJ 713-716], the Supreme Court further observed as follows:“It is thus clear that the concept of minimum wages does takein the factor of the prevailing cost of essential commoditieswhenever such minimum wage is to be fixed. The idea of fixingsuch wage in the light of cost of living at a particular junctureof time and of neutralizing the rising prices of essential

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commodities by linking up scales of minimum wages with thecost of living index cannot, therefore, be said to be alien to theconcept of a minimum wage”.In the case of Killick Nixon Ltd. Vs Union (1975- II LLJ 53SC),the Supreme Court has laid down certain considerations offixing wages. They are as follows: 1) Condition of the wagescales prevalent in the Company. 2) Condition of the wage levelprevalent in the industry and the region. 3) The wage packet as awhole of each earner in the company with all amenities andbenefits and its ability and potency to cope with the economicrequirements of daily existence consistent with his status insociety, responsibilities, efficiency at work and industrial peace. 4)The position of the company concerns in relation to othercomparable concerns in the industry and the region. 5) Pre-emptive necessity for full neutralisation of the cost of living atthe rock-bottom of the wage scale if at all just above thesubsistence level. 6) The rate of neutralisation which is beinggiven to the employees in each salary slab. 7) Avoidance of hugedistortion of wage differentials taking into reckoning allpersons employed in the concern. 8) Degree of sacrificenecessary even on the part of workers in general interest. 9) Thecompulsive necessity of securing social and distributive justiceto the workmen. 10) Capacity of the company to bear theadditional burden. 11) Interest of the national economy. 12)Repercussions in other industries and society as a whole. 13)The state of the consumer price index at the time of decision.14) Forebodings and possibilities in the foreseeable future as faras can be envisaged.We should also point out that the revision of DA is not thesame as the revision of wages.

Price, Income and Wage PolicyIn the context of wage fixation, very often questions regardingprice policy and income policy are raised. In fact it is advocatedthat there should be an integrated price, income and wage policyin a country. It is necessary to consider a number of questionsin this context. a) What could be the minimum wage and whatare the norms on which a minimum wage should be based? b)Will the minimum wage be different or same for (i) agriculture,industry and the service sectors (ii) organised and unorganisedsectors (iii) urban and rural sectors (iv) different states andregions (v) between different employers in the organised sectorc) What would be the criteria for determining differentialsbetween minimum and maximum wages, could the ratio bedifferent for different industries? d) What can be the criteria fordetermining the maximum income? Should there be anyrelationship between maximum income and maximum wages?e) Can there be any common policy for fixation of wages,income and prices in the economy?All these issues go into the making of a price, income and wagepolicy. The Government has to take a position on all theseissues and attempt implementation and coordination of thesepolicies.Take for instance differentials of wages and incomes. Differen-tials between different sectors of the economy are bound toexist in a dynamic society. As we have seen earlier, they areindicative of differences in skills formation, capital endow-ments, risk taking abilities, forecasting skills etc., only difference

is that the incomes policy asks the rationale of these differences.But the effect of market forces cannot be ignored. An incomepolicy based on rigid differentials may break down. This hasbeen the experience even in the communist countries. SovietRussia was not able to control such differences in remunerationof different persons working in various sectors of its economy.Income policy in the sense of controlling incomes of differentsectors of the economy and freezing the existing incomes mayrun into problems. The case for an incomes policy is strong ifwe use it in India as one important policy element in supplyinga sense of proportion to the various competing groups, as animportant weapon of “high growth, higher distribution”,strategy of development, as a supplier of valuable guidelines toanomalies not only in wages but also in investments, prices andprofits, and as an instrument not only of rationalising wages,bonus and dearness allowance, but of the system of pricecontrols, investment and taxation.As we said earlier, in 1977, a Study Group was appointed onwages, incomes and prices under the chairmanship of Dr. S.Bhoothlingam and their recommendations for a price, wageincome policy were as follows: a) Wage policy has to strike abalance between ensuring minimum incomes for unorganisedlabour and increasing opportunities for employment. Thispolicy must pay adequate attention to rationalisation of wagestructure and ironing out anomalies. It should encouragesystems of incentives for higher productivity and betterperformance. b) Incomes policy should cover all non-wageincomes. The level of incomes of those below poverty levelshould be enhanced. Apart from progressive taxation, theemphasis should be on encouraging savings and investments,discouraging ostentations and luxury and reducing disparities inconsumption. c) The main objectives of prices policy should beto maintain reasonable stability of prices while reasonable pricescan be assured to producers like farmers. Consumers shouldalso be taken care of. Wherever subsidised prices are imple-mented, efforts should be to see that the benefits actually go tothose for whom they are intended. Price system should servethe economic objective of growth and development.What is the scene like today? Economic conditions havechanged in the last few decades. We are no longer in a regi-mented economy or a semi-regimented economy, economicforces are now allowed to play freely. Government is not in aposition to fix the incomes of workers or the management inthe organised sector; it cannot put any ceilings over the incomesof self-employed persons; price controls operate on a very fewcommodities.In fact prices of some commodities like fertilisers, cooking gas,kerosene etc. are controlled through subsidies on their prices.For foodgrains, higher prices are offered as a part of Govern-ment monopoly procurement policies. The result is anoverflowing stock of foodgrains in Government godowns.Both these policies have put considerable strain on Govern-ment resources and Government is reconsidering these policies.But because of anti-poverty considrations, it has to continuethese policies. Will it be possible to control prices of allcommodities and services? For instance, it is not possible to cutback the incomes of some categories of highly paid doctors or

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lawyers or the selfemployed. Quite often their high incomes areearned only during certain phases of their working lives. It isalso not possible to control the income of a private business-man. It can be done only through steep taxation. But theexperience is that if we have such steep taxation, businessmendo not disclose their incomes and large business operations takeplace outside the books. We thus come across the difficultiesthat the government is experiencing in controlling prices, wagesand incomes. The moot question seems to be whether we canhave a free economy or an economy in which the state does notwant to exercise the functions of control, and at the same timeformulate and implement a policy of wages, prices andincomes.

Minimum WagesThe 15th Session of the Indian Labour Conference held on11th and 12th of July 1957 at New Delhi adopted a resolutionon the fixation of minimum wages. It was agreed by theConference that the minimum wage had to be need based, andhad to ensure the minimum human needs of the industrialworker, irrespective of other considerations. To calculate theminimum wage, the Committee accepted the following normsand recommended that they should guide all wage fixingauthorities, including minimum wage committees, wageboards, adjudicators, etc.: (i) In calculating the minimum wage,the standard working class family should be taken to consist of3 consumption units for one earner; the earnings of women,children and adolescents should be disregarded; (ii) Minimumfood requirements should be calculated on the basis of a netintake of 2,700 calories, as recommended by Dr. Akroyd for anaverage Indian adult of moderate activity; (iii) Clothingrequirements should be estimated at a per capita consumptionof 18 yards per annum which would give for the averageworker’s family of four, a total of 72 yards; (iv) In respect ofhousing the norm should be the minimum rent charged byGovernment in any area for houses provided under theSubsidised Industrial Housing Scheme for low-income groups;and (v) Fuel, lighting and other ‘miscellaneous’ items ofexpenditure should constitute 20 percent of the total minimumwage.The Committee took note of the steps taken by Governmentfor conducting (a) a wage census, and (b)family budget enquiriesin various industrial centres.As for fair wages, it was agreed that the Wage Boards should gointo the details in respect of each industry on the basis of therecommendations contained in the report of the Committee onFair Wages. These recommendations of the Fair WagesCommittee should also be made applicable to employees in thePublic Sector.Thus in 1957, the Minimum wage was evolved as a need basedconcept.In 1968, some more criteria for the determination of minimumwages came to be recognised when the International LabourOrganisation listed three criteria for fixing minimum wages.These were (i) the needs of the worker; (ii) the capacity to pay ofthe employer; and (iii) wages paid for comparable work. In1969, the capacity to pay was explicitly admitted as a relevantfactor by the National Commission on Labour when it held

that in fixing the need-based minimum wage the capacity to payshould be taken into accountIn 1991, the Supreme Court, in its judgment in the case ofReptakos Brett and Co. versus others, expressed the view thatthe criteria recommended by the Indian Labour Conference1957 may not suffice. It held that an additional component forchildren’s education, medical requirements, recreation includingfestivals/ceremonies and provisions for old age and marriageshould constitute 25% of minimum wagesThe Minimum Wages Advisory Board (Central) in its 24thMeeting in 1991 recommended that minimum wages should belinked to productivity, and the appropriate Government underthe Minimum Wages Act may fix piece-rate wages whereverfeasible.The Indian Labour Conference in its Thirtieth Session inSeptember, 1992 expressed the view that while the tendency tofix minimum wages at unrealistically high levels must bechecked, implementation of wages once fixed must be ensured.It felt that the implementation machinery, consisting of labouradministration in the States had been far from effective. It wasdesirable that workers’ organisations and non-governmentalvoluntary organisations etc., played a greater role instead ofengaging an army of inspectors for this purpose.

Approach of the Pay CommissionsThe Pay Commissions of the Central Government tookdifferent approaches for the determination of the MinimumWages for government employees. They were as follows: (i) Theneed based approach; (ii) Capacity to pay approach; (iii) RelativeParities approach; (iv) Job evaluation approach; (v) Productivityapproach; (vi) Living wage approachWe are not suggesting that each of these was an exclusivisitapproach. These various aspects have found mention and beengiven varying emphasis in the report of different Pay Commis-sions. The decision of the Pay Commissions on minimumwages was often determined by some kind of harmonisationbetween the first two i.e., the need-based approach and thecapacity to pay approach. This was essential because a minimumwage which was found to be socially desirable was not necessar-ily economically feasible. Job evaluation and measurement ofproductivity was not found to be feasible by the earlier PayCommissions, and fair comparisons with the public and privatesector were also not conceded by them. On living wages theyobserved that a living wage was a desirable level towards whichthe State must endeavour to go.The Fifth Pay Commission after comparing public sector andprivate sector employees, comparisons with State Governmentsand considering the expectation of the employees tried to workout a minimum wage for Central Government Employees ofthe lowest cadre. The Commission used a modified version ofthe constant relative income criterion and fixed Rs : 2440/- asthe salary of lowest paid employee of the Central Government.This meant more than a three-fold jump in the basic pay fromRs. 750/- to Rs. 2400. The Commission had estimated that thiswould mean an additional outgo to the tune of Rs. 294.1 croresevery year for this category of employees.

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It is not necessary to describe the pressure that such a steep risein pay scales of Government Employees causes on theGovernment’s Budget.

Minimum Wage vis-a-vis Government PayOur Study Group on Unorganised Labour recommended thatthe minimum wage prescribed by the Fifth Pay Commissionfor the lowest category of Government employees (Rs. 2400 +Rs. 2100 DA = Rs. 4500/-) should be the minimum wage for aworker in the unorganised sector. We could not agree with thisrecommendation. It may be adviseable to repeat our argumentson this question from earlier paragraphs in our chapter on the‘Unorganised Sector’.We fully appreciate the considerations that have prompted theStudy Group to make this recommendation. But we regret thatwe do not find it possible to accept and endorse this sugges-tion. Firstly, in monetary terms, the minimum wage that theStudy Group has recommended will approximate to Rs. 4500/-. Secondly, there are lakhs of people with very low incomes bothin the rural areas, and in the urban areas, – perhaps just aroundthe amount that the Study Team has recommended as theminimum wage, who engage or employ others as domesticservants or in sundry services like those provided by dhabas(eating places) in the rural areas. They may not be able to pay aminimum wage almost as high as their own incomes. In such asituation, if the law on minimum wages is observed orenforced in letter and spirit, many lakhs of workers will cease tobe employed. They will lose their jobs. An alternative scenariowill be that to protect their jobs or employment, domesticworkers and others of the kind we have referred to earlier, willagree to work for a sum of remuneration that is lower than theprescribed minimum wages. The worst development will bewhen the custodians of law and order who are mandated toenforce the law on minimum wages and trade unions who arecommitted to struggle for and protect the rights and real wagesof workers come to an agreement, outside the law, on aremuneration or wage far below or appreciably below the legallyprescribed minimum. Such a possibility is not a creation of ourimagination. In the course of the evidence tendered before us inWest Bengal, we were informed that the actual wage paid to bidiworkers in West Bengal is much less (Rs. 35 per 1000) thannotified minimum wage (Rs. 70 per 1000 bidis).Disparity in minimum wages, lapses in the implementation ofthe law and enforcement, periodic nonrevision of minimumwages are among the factors that make a mockery of such anAct. The State government of Bihar fixed Rs. 27.30 as theminimum wage for agricultural workers in 1996, while anagricultural worker near Dhanbad received Rs. 20. A femaleagricultural labourer in the same area received a daily wage of Rs.15 and 200 to 250 grams of muri (puffed rice). In Fatehpur,Ahrawa and Fulepur villages of Barh in Bihar, the agriculturalworkers got as wages one kilogram of rice or flour and half akilogram of sattu for breakfast. In the Baruhi village ofBhojpur, in 1996, women got Rs. 15 and a breakfast comprisingof 2 rotis, while men got Rs. 25, lunch and breakfast. Bihar,which has the highest number of inspectors exclusively for theagricultural sector could not enforce the minimum wages, set bythe State government during this period.

In West Bengal, when we enquired why the minimum wage lawwas not being enforced, we were told that both the TradeUnions and the Government Department had agreed to thebelow-minimum wage payments as both were agreed onprotecting the jobs of bidi workers. We have enough reasons tobelieve that similar arrangements are entered into elsewhere tooby the enforcing authorities and the representatives of workers.We believe that any law that creates such a situation becomes amockery, if not a self-inflicted fraud. We, therefore, feel that weshould legislate only what is capable of being put into practiceat the ground level. Anything higher that is desirable will haveto remain an aspiration or an eventual goal, not a clause in thelaw. Any other course will breed disrespect, unconcern andcontempt for the law and law enforcing authorities. We feel thatthe purpose of the law and highly desirable social goals can bebetter served by prescribing an adequate minimum wage, andproviding for compulsory review of the adequacy of theminimum to keep pace with aspirations, needs and the cost ofliving (and increasing levels of expectancy about higher stan-dards of living to which the worker is entitled).Almost all the Committees and Commissions are against asubsistence level minimum. In principle, every committeeconstituted in this regard has agreed with the standard con-sumption units and calorie contents. However, the WageBoards after the Second Pay Commission (1957-59) have notfound it possible to fix the need-based minimum wagesrecommended by the Indian Labour Conference (1957). TheReport of the Committee, set up by the first National Com-mission on Labour, on the Functioning of the System of WageBoards (cited in the Report of NCL, 1969) found it infeasiblebecause the need-based minimum would be beyond thecapacity of the industry to pay and might result in the transfer-ence of the burden to the consumer.Sub-committee ‘D’ of the Standing Committee of LabourMinisters (1981) recommended that the level of minimumwage should not be below the poverty line. The Report of theCommittee of Secretaries of States (1981) has also recom-mended that the minimum wages should be at such a level asto take a family of 3 adult units of consumption above thepoverty line, and the consumption basket should consist of percapita per day requirements of 2400 calories in rural areas and2100 calories in urban areas as well as clothing, shelter, fuel,light, education, etc. The Report of the National Commissionon Rural Labour (1991) endorsed a similar concept of threeconsumption units.

Variable DA and Price AdjustmentsThough there is no definition for the term minimum wage inthe Act, its section 4(1) states that the minimum rates of wagesfixed or revised by the appropriate authority for the scheduledemployments shall take into account the following: (i) a basicrate of wages and a special allowance at a rate to be adjusted atintervals with the variation in the cost of living index numberapplicable to such workers; or (ii) a basic rate of wages with orwithout the cost of living allowance, and the cash value of theconcessions in respect of supplies of essential commodities atconcessional rates, where so authorised; or (iii) an all inclusive

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rate allowing for the basic rate, the cost of living allowance andthe cash value of the concessions, if any.That means that the minimum wage consists of (1) a basic rateof wage (2) cost of living allowance, and/or (3) cash value ofconcessions or (4) a combination of all the three components.It also means that the cost of living allowance varies withchanges in prices. 12.255 The Minimum Wages Advisory Board(1981) observed that it would be desirable to attach a variableDA formula to the minimum wages so that it may be adjustedas and when necessary to protect the real wages of the workers.The Subcommittee ‘D’ of the Standing Committee of LabourMinisters (1981) also recommended that the variable DAshould be an element of minimum wage wherever possible.The Report of the Committee of Secretaries of States (1981)said that the DA might be revised once in six months based onthe average All India Consumer Price Index numbers of theseries 1960=100. The Gurudas Dasgupta Committee (1988)recommended that the minimum wages should be linked tothe movement of consumer price index (CPI) to account forthe cost of living. To protect the minimum wage from fallingbelow subsistence level, the National Commission on RuralLabour (1991) suggested that the cost of living element (DA)should be linked to the minimum wage and adjusted every sixmonths.

Revision of Minimum WagesThe Minimum Wages Act stipulates that review/revision ofminimum wages in the scheduled employments should beundertaken at intervals not exceeding 5 years. However, the firstNational Commission on Labour (1969) recommended that theperiod should be reduced to three years. At the 31st session ofthe Labour Ministers Conference held in July 1980, it wasdecided that the minimum rates of wages may be reviewed andrevised if necessary, within a period not exceeding two years, oron a rise of 50 points in the CPI numbers, whichever is earlier.The 36th Labour Ministers Conference held in May 1987 alsoreiterated these recommendations. The Gurudas DasguptaCommittee (1988) recommended a revision every two years oron a rise of 50 points in the CPI. The Umbrella legislationshould provide a separate facility within the body to beinstituted for the unorganised sector workers, to undertake aconstant review of wages as and when needed, as for examplewith changes in prices. We feel that the wages may be revisedafter an interval of 2 to 3 years. It will be difficult to administerif too frequent revisions take place.The 31st Labour Ministers’ Conference had recommended inJuly 1980 that both the Central and State Governments shouldbring down the periodicity of fixation of wages from 5 years to2 years and should link the variable dearness allowance. Despitethese recommendations, we are told that many State Govern-ments have not been able to bring down the periodicity offixation of minimum wages from 5 years to 2 years while only19 out of 32 states and union territories have been able to linkminimum wages to dearness allowance.The Shramshakti report (pg. 100) proposes the panchayat orblock level administrative set-up for the execution of provisionsof different labour laws, especially on payments and claims, asfar as possible . The Report says that it would be necessary to

have authorities like the claims authority under section 15 of thePayment of Wages Act 1936 or section 20 of the MinimumWages Act 1948, or the authority under section 39 (2) of theBidi and Cigar Workers (Conditions of Employment) Act1966, at levels not higher than that of the Block or PanchayatSamiti. It also says that already some State Governments haveamended the central laws to provide for appointment of claimsauthorities under the Payment of Wages Act and the MinimumWages Act at these levels, for example, Minimum Wages(Maharashtra Amendment) Act 1975, and the Wage Laws(Rajasthan Amendment) Act, 1976. We agree that it is necessaryand important to take an effective settlement machinery downto the local level.The involvement and mediation of local bodies includingvillage panchayats in the enforcement of the rates and paymentof wages is important. The prevailing government enforcementmachinery cannot redress their grievances. The fixation ofminimum rates of wages and the widespread awareness ofthese rates would become a great basis of protection to theworkers. The moment the rates fixed are known to the workingpeople, voluntary organisations and workers’ organisations andthe public at large, they will mount vigil, and the implementa-tion of the minimum rates will become easy. In cases ofdispute, the local bodies and panchayats can provide reliefthrough persuasion, mediation and Lok Adalats etc. to whichwe have referred in our earlier.

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the fixation of wages.

Non-Implementation of Minimum WagesA number of States that have reviewed and revised minimumwages in scheduled employments for which they are theappropriate governments show disturbing results. In Sikkim,the Minimum Wages Act is yet to be extended and enforced.Only 19 states/union territories have made provision forVariable Dearness Allowance as a part of the minimum wagefor a few or all of the scheduled employments. The wages varyfrom state to state; the disparity is so wide that one has toconclude that different appropriate Governments are followingdifferent criteria for the fixation of minimum wages. Theadjustment of Variable Dearness Allowance is also veryirregular. The lowest among the minimum wages, meant mostprobably for unskilled workers, was below Rs.30 in some statesand union territories, as on October 1, 2000: Rs.19.25 inPondicherry, Rs.20.63 in Tripura, Rs.21 in Goa, Rs.26 inHimachal Pradesh and Karnataka, and Rs.27 in Andhra Pradesh(see Table12.16). The daily minimum wages for differentoccupations vary widely within the States. The Table carries boththe minimum and maximum payment from among the varietyof occupation-specific wages fixed as Minimum Wages withineach State.

Table: Daily Minimum Wages (in Rs.) as on 01/10/2000Centre/ States/Union Territories Min. Max.Central Sphere 80.74 90.19Andhra Pradesh 27.00 63.19Arunachal Pradesh 35.60 37.60Assam 32.80 55.70Bihar 49.19 61.59Goa 21.00 125.00Gujarat 34.00 92.40Haryana 70.30 74.30Himachal Pradesh 26.00 51.00Jammu & Kashmir 30.00 –Karnataka 26.00 74.03Kerala 30.00 164.77Madhya Pradesh 50.46 56.46Maharashtra 42.46 108.95Manipur 44.65 55.00Meghalaya 50.00 –Mizoram 70.00 –Nagaland 40.00 –

Orissa 42.50 -Punjab 69.25 151.32Rajasthan 47.05 60.00Sikkim (Minimum Wages Act, 1948 not yet extended and enforced)Tamil Nadu 35.00 115.80Tripura 20.63 45.00Uttar Pradesh 42.02 70.62West Bengal 48.21 87.28Andaman & Nicobar Islands 50.00 86.76Chandigarh 81.65 -Dadar & Nagar Haveli 60.00 71.00Daman & Diu 50.00 60.00Delhi 93.00 -Lakshadweep 46.80 -Pondicherry 19.25 65.00Source: Ministry of Labour, Annual Report 2000-2001, p. 50.

An evaluation study conducted by the Labour Bureau, Ministryof Labour, on the implementation of Minimum wages in theagricultural sector in selected States shows that agriculturalworkers are not receiving full minimum wages in the surveyedStates. The surveyed States were Karnataka, Rajasthan, AndhraPradesh, Uttar Pradesh, Bihar and Gujarat. The situation issimilar in the low technology labour intensive sectors likeforestry, fisheries, cottage industries and artisanry, and in urbanemployments like vending and slum based and home basedproductions.

Need for Minimum Wages in theUnorganised SectorThe character and nature of the informal or unorganised sectorare undergoing fundamental changes. The movement is frompermanent to casual, contractual, temporary employment; fromestablishment based to home-based production; from time-rateto piece-rate work; male dominated to female intensive worksituation; regulated to unregulated forms of labour. Mean-while, the labour market, in particular, the rural labour market,is experiencing the influx of casual labour from the traditionalsubsistence occupations like forestry, fisheries, agriculture,handlooms, etc. as a result of dispossession of assets, and theintegration of these sectors into the market economy. At thesame time, researchers point out that the labour force is highlysegmented due to factors like sectoral disparities, variations inskills, education, caste, religion, and regional and linguisticdifferences. In such a situation, workers cannot be givenminimum protection unless minimum wages are prescribedand enforced in the unorganised sector. 12.263 India signed theILO Convention 26 of 1928 (Concerning the Creation of

LESSON 20: UNIT 6COLLECTIVE BARGAINING AS A WAGE FIXATION METHOD

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Minimum Wage-Fixing Machinery) as early as in 1955. Indiaaccepted the commitment to offer minimum wages to itsworkers.The minimum wages are different for different industries. Thefollowing table shows the number of schedules of employ-ment each state government has notified. We feel that the stategovernment should specify a minimum wage for all unskilledcategory workers and these wages should be the same for allindustries. This is a need-based minimum wage and it has to bethe same for all workers irrespective of where they are em-ployed. This has to be paid irrespective of the capacity to pay.Hence it is not necessary to fix different types of wages fordifferent industries or professions. In other words, we recom-mend that the distinction between scheduled and unscheduledemployment should be given up, and whatever the employ-ment, the notification should prescribe the same minimumwage to all. Perhaps the Minimum Wage Committee may fixthe minimum wage for a region and then the Governments cannotify these, and the minimum wage for the region can bemade applicable to all employments in that region.Table: No. of Scheduled Employments in Different States:Sl.No. Centre/States/UTs No. of Scheduled

Employments1. Central Sphere 442. Andhra Pradesh 72*3. Arunachal Pradesh 254. Assam 72*5. Bihar 746. Goa 237. Gujarat 498. Haryana 509. Himachal Pradesh 2410. Jammu & Kashmir 1811. Karnataka 5912. Kerala 46*13. Madhya Pradesh 3614. Maharashtra 6215. Manipur 516. Meghalaya 2117. Mizoram 318. Nagaland 3619. Orissa 8320. Punjab 6021. Rajasthan 3822. Sikkim Minimum Wages Act, 1948 have

not yet been extended and enforced.

23. Tamil Nadu 62*24. Tripura 925. Uttar Pradesh 6526. West Bengal 55*

Union Territories27. Andaman & Nicobar Islands 428. Chandigarh 4429. Dadra & Nagar Haveli 4330. Daman & Diu 7231. Delhi 2932. Lakshadweep 933. Pondicherry 6*

TOTAL 1254*** Also includes scheduled employments for which minimumwages have not been fixed yet.**Includes 44 scheduled employments under State Sphere forwhich minimum wages have not been fixed yet.The irregularities committed under the Minimum Wages Act areon the increase. In 1997, 1,05,639 irregularities were brought tonotice. This number went up to 1,41,913 in 1998. A studycould be undertaken of such irregularities to find out why suchlarge numbers of irregularities take place. On the basis of thestudy, either the law or practices, can be modified.

Procedure for Fixation/RevisionIn Section 5 of the Minimum Wages Act, 1948, two methodshave been provided for fixation/revision of minimum wages.These are the Committee method and the Notification method.(a) Committee Method Under this method, committees andsub-committees are set up by the appropriate Governments tohold enquiries and make recommendations with regard to thefixation and revision of minimum wages, as the case may be.(b) Notification method In this method, the Governmentpublishes its proposals in the Official Gazette for informationof the persons likely to be affected thereby, and specifies a datenot less than two months from the date of the notification fortaking the proposals into consideration.After considering the advice of the Committee/Sub-commit-tees and all the representations received by the specified date, theappropriate Government will, by notification in the OfficialGazette, fix/revise the minimum wage in respect of theconcerned scheduled employment, and that will come into forceon the expiry of three months from the date of issue of thenotification. 12.268 We feel that the second alternative is betterbecause it gives an opportunity to all concerned to have a say inthe matter. Mutual consultations and understanding thedifficulties and problems of both are possible in this method.

Productivity – Wage RelationThough we have been talking of the relation between produc-tivity and wage, the country has not yet evolved or adopted apolicy of linking wages to productivity. We have not been ableto find an acceptable method of linking the two. As a resultthere has been a mismatch between wages and productivity inthe Indian Economy. According to a study made by Dr.Pramod Verma, of the Indian Institute of Management,Ahmedabad, the wage index overtook the productivity index in1977-78 and wages have increased thereafter at a higher rate thanproductivity. Wage is an important component of the cost ofproduct/services, hence the increase in wages without increase inproductivity does make products uncompetitive.

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Productivity in IndiaTable compares India’s performance in recent years with that ofthe USA, the world economic leader with the highest levels oflabour productivity. For this purpose the national output hasbeen measured in terms of market values as well as afteradjusting for variations in Purchasing Power Parity (PPP).India’s Labour productivity is distressingly low, the GDP perperson employed being as low as 1.39% of that in USA. GDPper person hour employed is even lower at 1.18 % obviouslyimplying that the hours of work per person in India is higherthan in the USA.

TableLabour Productivity Levels In India And Usa In 2000 (Us $)

Country 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

USA 51148 51259 53222 54948 58276 61519 63161 65775 68168 72228 3.5

France 39798 40777 42309 42518 45924 48185 48461 51915 52657 53833 3.1

Canada 41360 40975 43118 45525 48348 48594 48191 50178 49709 51347 2.2

Germany 36791 37623 37238 36434 38457 40278 41686 42722 ———- ——- 2.2

Australia 29655 30286 30932 32135 32140 32899 33187 33551 33596 38227 2.6

Taiwan 16766 18277 19114 20377 21569 23175 24548 24686 25102 26857 4.8

Netherlands 38370 38407 38693 38854 42845 44890 45824 46289 47422 48439 2.4

Sweden 35746 36169 39393 42326 48970 50471 51647 55227 56325 58120 5.0

Japan 44695 45592 44462 43624 44220 47838 51071 53223 51662 53126 1.7

U.K. 31764 32814 35282 36622 38136 37763 37256 37562 37423 38648 2.0

Korea 12659 13548 14751 16152 27756 19413 21194 23644 25164 29824 8.9

(Rep. Of) 12659 13548 14751 16152 27756 19413 21194 23644 25164 29824 8.9

Indonesia 3651 3908 4145 4339 3950 4688 4918 4972 4947 4361 1.8

China 3644 2797 3148 3608 4167 5357 5070 5530 -------- -------- 6.1

India 2719 2481 2538 2702 2972 3328 3529 3526 3590 ------- 3.5

India as 5.32 4.84 4.77 4.92 5.10 5.41 5.59 5.36 5.27 ---- ---

% to US

Source: Based on ILO2002

A c t u a l P P P A d j u s t e d I n d i a s L a b o u r P r o d u c t i v i t y a s p e r c e n t a g e t o U S A ’ s

I n d i a U S A I n d ia U S A A c t u a l P P P A d j u s t e d G D P p e r p e r s o n

1 0 3 3 7 3 8 8 8 5 4 5 2 6 9 1 9 3 1 . 3 9 7 . 9 0

e m p l o y e d G D P p e r p e r s o n

0 . 4 5 8 3 8 . 5 2 2 . 4 2 3 6 . 0 8 1 .1 8 6 . 7 0

e m p l o y e d p e r h o u r G D P p e r p e r s o n

5 0 1 5 1 6 9 5 2 6 9 6 4 8 4 1 0 0 . 9 6 5 . 5 7

e m p l o y e d i n A g r i c u l t u r e G D P p e r p e r s o n

2 1 1 0 8 5 9 1 1 1 1 2 6 7 8 4 5 1 2 . 4 6 1 4 . 0 0

e m p l o y e d i n I n d u s t r y G D P p e r p e r s o n

2 1 1 6 7 0 9 3 0 1 1 8 3 3 6 6 4 2 2 2 . 9 8 1 7 . 8 1

e m p l o y e d i n S e r v i c e s

S o u r c e : B a s e d o n I M D ( 2 0 0 1 )

In Table, we have figures of labour productivity growth inIndia in the nineties in the manufacturing sector vis-à-vis inother countries from both the developing and the developedworld. We have relied on the ILO’s latest key Indicators of theLabour Markets 2001-02. It is found that though labourproductivity in India has grown at a rate higher than that ofmany in the developed west (Germany 2.2, UK:2.0, againstIndia’s 3.5, all percent per annum compound, during thenineties), we have been lagging significantly behind our Asiancompetitors. For instance, China recorded a high productivitygrowth rate, as high as 6.1% per annum (on the basis of officialfigures). Taiwan and Korea also made rapid progress inproductivity, at 4.8% and 8.9% per annum respectively.

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Annual Compoundrate of Growth (%)Tables give the comparison of labour productivity amongstAsian countries. A comparison of labour productivity indicesof Asian Countries for the period 1988 to 1995 reveals that therate of growth in labour productivity has been highest inMalaysia, followed by China, Singapore, Korea, Nepal, HongKong, India, Pakistan, Japan, Phillipines and Iran. India’sposition is 7th among the 11 Asian countries. Average produc-tivity of the Chinese worker seems to be about 20 % higherthan that of the Indian worker.

Table: Labour Productivity In Asian Countries:

SL.No: Country 1987 1988 1989 1990 1991 1992 1993 1994 1995

1. Malaysia 100 105.55 111.24 116.66 122.91 128.67 133.75 141.85 151.25

2. Republic 100 106.71 113.38 119.14 125.77 131.28 137.76 143.58 150.50

of China

3. Singapore 100 106.10 111.24 113.34 118.61 121.85 133.21 141.66 149.53

4. Republic 100 107.88 110.24 116.91 124.33 128.20 133.05 140.64 149.24

of Korea

5. Nepal 100 106.24 111.18 115.79 122.34 127.05 130.25 139.50 142.47

6. Hong Kong 100 105.99 109.10 113.23 117.23 125.03. 128.92 131.24 134.93

7. India 100 100.73 111.78 115.73 117.12 114.42 119.05 120.42 125.61

8. Pakistan 100 105.39 106.92 108.66 118.54 122.65 121.29 123.02. 125.29

9. Japan 100 104.40 110.13 114.06 116.18 116.24 115.25 116.20 117.97

10. Phillipines 100 103.27 107.90 107.82 105.10 101.32 101.25 102.66 105.53

11. Iran 100 89.28 89.02 96.51 103.37 105.28 106.32 104.04 104.58

Comparison of Labour Productivity and Overall Productivity in49 countries:Table:Labour Productivity (PPP) Overall Productivity (PPP)Estimate: GDP(PPP) per person Estimate: GDP(PPP) perperson employed per hour. US$ employed US$ RankingCountry US$ Ranking Country US$1. Luxembourg 41.90 1. Luxembourg 73,9992. Belgium 39.95 2. USA 69,1933. France 73.72 3. Belgium 68,4024. Italy 36.64 4. Italy 63,4605. USA 36.08 5. Ireland 62,4866. Ireland 34.75 6. France 59,8567. Denmark 34.72 7. Denmark 58,5708. Norway 33.75 8. Norway 58,3899. Austria 33.19 9. Austria 56,38910. Germany 32.76 10. Canada 56,26211. Finland 31.63 11. Germany 55,29712. Australia 30.97 12. Finland 54,49713. Netherlands 30.45 13. Australia 54,17414. Spain 30.01 14. Taiwan 52,07215. Canada 29.75 15. Spain 51,731

16. Switzerland 27.73 16. Switzerland 51,44617. Sweden 27.02 17. Netherlands 51,34218. Japan 26.69 18. Iceland 51,11719. U.K. 26.63 19. Hong Kong 50,97120. Iceland 26.34 20. Sweden 50,26221. Israel 24.89 21. Japan 49,74122. Greece 24.11 22. Israel 49,55823. Taiwan 23.93 23. U.K. 48,81124. Hong Kong 23.37 24. Singapore 43,05625. New Zealand 22.73 25. Greece 42,91426. Singapore 21.66 26. New Zealand 42,57127. Portugal 20.55 27. South Africa 42,04028. South Africa 19.65 28. Korea 38,03429. Argentina 18.49 29. Argentina 37,067Ranking Country US$ Ranking Country US$30. Korea 18.35 30. Portugal 35,71031. Slovenia 17.36 31. Slovenia 35,56432. Hungary 15.69 32. Hungary 31,18233. Czech Republic 14.38 33. Czech Republic 29,31234. Slovak Republic 13.11 34. Slovak Republic 27,62635. Poland 12.63 35. Chile 25,76736. Chile 11.48 36. Poland 23,61837. Estonia 10.83 37. Malaysia 21,15938. Turkey 9.96 38. Estonia 21,06539. Russia 9.93 39. Turkey 20,66340. Malaysia 9.64 40. Mexico 20,51141. Brazil 9.33 41. Russia 18,10442. Mexico 8.66 42. Brazil 16,49343. Venezuela 7.29 43. Columbia 15,21244. Columbia 6.97 44. Venezuela 14,25845. Thailand 5.59 45. Thailand 11,69646. Philippines 4.94 46. Philippines 10,69447. China 3.47 47. China 6,88448. Indonesia 3.14 48. Indonesia 6,66049. India 2.42 49. India 5,452

Tables are from the World Competitive Year Book 2001. Theyindicate the comparison of Labour Productivity (PPP) andOverall Productivity (PPP) in 49 countries. The comparisonreveals that in India Labour Productivity as well as OverallProductivity (PPP) are the lowest, i.e. we are in the 49thposition.If we continue to be at the lower end of labour productivityand overall productivity, we will not be able to hold our own inglobal competition. Our companies will continue to incur lossesand there will be growing industrial sickness leading to theclosure of a large number of unviable units causing loss ofjobs to millions of workers. 4

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We have therefore to make our industries competitive byadopting suitable changes in the existing policies.

Wages and ProductivityThe wages in the organised sector are decided mostly bycollective bargaining. Wherever necessary, the governmentintervenes in the wage determination process. The governmenthas been fixing minimum wages for different occupations andalso linking these wages to dearness allowance.An ideal wage policy should aim at a minimum wage andprogressive rise in real wages. But any sustained improvementin real wages cannot be brought about unless it is accompaniedby corresponding improvements in productivity. Hence linkingof wages to productivity is of the utmost importance. There arevarious misconceptions about productivity and therefore it isnecessary to have a clear idea about productivity.The Seventh Plan (1987-92) summarised the objectives of awage policy as “a rise in the level of real income in consonancewith an increase in productivity, promotion of productiveemployment, improvement in skills, sectoral shift in desireddirections and reduction in wage disparities”.

Single and Total FactorProductivityProductivity is the ratio of output to inputs and is a measureof efficiency of production. Productivity can be total factorproductivity or single factor productivity. Single factor produc-tivity refers to output per unit of an individual input such aslabour or capital. A commonly used measure is labour produc-tivity which can be defined as – Output Labour Productivity=____________ Labour units.Similarly we can define the productivity of capital or any otherinput. It may be possible that labour productivity may beincreasing, as a result of infusion of more capital inputs,therefore it is useful to look at the productivity of the entirebundle of inputs. This is called Total Factor Productivity (TFP)and is defined as Output TFP = ___________________Entire bundle of inputsFor technical reasons, we generally look at the Total FactorProductivity Growth or TFPG. This is defined as the differencebetween the growth of output and the growth of inputs(suitably weighted).Thus TFPG is that part of output growth which is notexplained by an increase in input use. In this sense, positiveTFPG reflects technical change and any other improvements inthe management of resources. At the level of the firm,improvements in productivity lead to lower costs and possiblyhigher profits. The workers will also get a share in productivitygains in the form of higher wages or higher profit sharingbonus or both. If we take the economy as a whole, increasedproductivity means lesser costs and proper utilisation ofresources. There will be more goods available in the market at areasonable price, with enhanced income, workers will haveopportunities to consume more and of course a greater varietyof products to choose from. In the long run, this will ensurehigher standards of living to all. Thus, TFPG = (Growth ofoutput) – (Growth of weighted inputs) In the short run,increased efficiency results from improvements in managerialefficiency and organisational competence, innovation, fuller

utilisation of capacity, economies of scale, and improvement inlabour management and skills. This is not an exhaustive listand anything leading to more efficient resource management isidentified as productivity gain. Much depends upon theinnovative skills of the management and the willing coopera-tion of workers.

Relations between Liberalisation andProductivityDuring the last two decades, several developing and socialisteconomies that had followed highly interventionist and importsubstituting policy regimes implemented a radical policy shift interms of reducing government intervention and opening up oftheir economies to international trade and investment. Some ofthese economies have achieved rapid economic progress duringthe post-reform period. Therefore, it is generally believed thatdeveloping economies benefit from free international trade andflow of investment from developed economies, free flow oftechnology, access to international markets and internal andexternal competition.An increase in competition puts a downward pressure on pricesand profits thereby providing a challenge to which firms have torespond. They have to increase their technical efficiency, reducetheir costs, improve managerial efficiency, have higher productiv-ity of labour, better capacity utilisation and more innovations.The resultant increase in the efficiency of use of resources can beinterpreted as increase in productivity.Liberalisation enables cheaper and easier access to foreigntechnologies, global capital, imported inputs, and makespossible greater international exchange of information.However, it is not an automatic process. A developing economyneeds to have a certain level of human capital, and technologicaland industrial endowments in order to reap the benefits of freetrade and liberalisation. The ability to put new ideas andtechnology into productive activities requires resources and skillsand right kind of incentives.

Post-Liberalisation Effects in IndiaWhat is the effect of the policy of liberalisation on productivityimprovement in Indian industries? Have we gained as a result?Researchers and academicians appear to be divided on this issue.The National Council of Applied Economic Research under-took a special study on “The impact of India’s economicreforms on industrial productivity, efficiency and competitive-ness”. This study was sponsored by the IDBI, and the NCAERhad taken 3000 firms as the sample size. According to thisstudy, there is some evidence that suggests that even the limitedreforms of the mid- seventies and the mid to late eightiesengendered higher Total Factor Productivity Growth (TFPG),and that this was conducive for higher economic growth.Further, the available evidence also suggests that the positiveimpact of liberalisation on firm level productivity and efficiencydepend on factors such as the availability of long term finance,access to imported inputs and the ability to export.At the same time, the NCAER Study has drawn the conclusionthat productivity and efficiency of Indian industry during thenineties has been worse than in the eighties. The total factorproductivity growth rate during the 1990s is lower than during

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the 1980s. NCAER has also drawn the conclusion that there arecertain exogeneous factors that are relevant in this context. Thestudy mentions the poor quality and slow growth of infrastruc-ture facilities such as power, roads, ports, transport andcommunications acting as a serious drag on industrial produc-tivity and growth. In spite of these factors some sectors ofindustry have recorded increased TFPG than others.Mrs. I.J. Ahluwalia4 , in her study observes that the improvedproductivity performance of the 1980s was a consequence ofpolicy changes of liberalisation, initiated in the mid 1970s. Hercross country analysis indicates that both import substitutionand capital intensity have had a negative effect on productivitywhile output growth and scale have had a positive effect Mr. P.Balkrishna and K. Pushpangadan5 have taken objection tothese conclusions. According to them establishing acceleratedproductivity growth in the 1980s is contingent on the use ofsingle deflation, a procedure which is flawed in principle.According to them there is no credible option to doubledeflation when working with value added as the outputmeasure in physical terms. Mr. B. Golder found that bothcompetition and greater availability of imported inputs had apositive impact on productivity.6All these analyses relate to the organised manufacturing sectorof Indian industry. There are very few studies that have analysedproductivity trends in the small-scale or unorganised sector ofmanufacturing industry in India. This is obviously because ofthe inadequacy of data.J. Unni, N. Lalitha and Uma Rani have attempted an analysis oftrends in total factor productivity in both organised andunorganised sectors of Indian industry.7 Following is theirsummary table.4 Ahluwalia I.J (1991) Productivity and Growth in IndianManufacturing, Oxford University Press, New Delhi5 P. Balkrishnan & K. Pushpangadan: TFPG inManufacturing. The 80s visited EP Weekly Jan. 26,20026 Golder B (2000): Productivity Measurement in IndianManufacturing: A Brief review A paper presented at theworkshop on Productivity measurement in India – Instituteof Eco. Growth, New Delhi Dec.20-22, 20007 Economic Reforms and Productivity Trends in IndianManufacturing: J. Unni, N. Lalitha, Uma Rani, E.P WeeklyOctober 13, 2001 P3914Growth of Total Factor Productivity Labour Productivity inOrganised and Unorganised Manufacturing Sector in IndiaTable:Years Organised TFPG Labour Unorganised

TFPG Labour ur1978-85 0.26 4.2 14.57 7.61985-90 4 7.9 11.37 6.81990-95 1.28 11.9 3.13 7.51978-90 1.13 5.9 2.66 1.11978-95 0.1 7.8 2.47 3.1

According to the table cited above, during the period 1978-85,India has experienced a decline in TFP in both organised andunorganised sectors at the All India level. The TFPG was highin the pre-reforms period, but appeared to decline in thereforms period. During the entire period the growth ofemployment was higher in the unorganised sector, and this hasresulted in lower labour productivity growth compared to theorganised sector.The growth of value added, employment and capital in theorganised manufacturing sector in the country as a wholemoved forward after the introduction of economic reforms.However, this growth was achieved with an inefficient use ofresources as reflected in the declining and negative total factorproductivity. This is the conclusion that the Study has drawn.There is another angle to this. Murli Patibandla and B. V. Phanihave addressed the issue of explaining industrial productivityby micro level factors.8 They do not discuss whether theproductivity has increased or decreased after the reforms.According to them, the studies that show increase in productiv-ity at the aggregate level, are theoretically flawed. In any givenindustry, some firms could adjust more efficiently to thechanged market conditions; and others who could not adjust,remain inefficient and slowly die out. In the short run, theinefficient remain or exist in the industry. In such a case, theaverage productivity of the industries may not show anyincrease owing to the existence of both efficient and inefficientfirms. The opening up of the economy has certainly helpedsome firms who have more exposure to international trade.They are open to the free flow of new ideas and technologies,and as a result the idea gap is reduced. They have also the abilityto adjust to the changed market conditions.Thus one can say that the policy of economic liberalisation hascertainly helped some Indian firms who have the ability to faceinternational competition. They would always, try to reduce thecost, use the inputs more efficiently, try to innovate and suchfirms are likely to have more total factor productivity growth.Indian industry can be efficient only if we have more firms ofthis type in any industry.We have already seen that wages in the organised sector aredecided mostly by collective bargaining, and much dependsupon the bargaining strength of the management and tradeunions. Generally, the practice has been to revise wages,allowances of all types and other facilities given to workers everythree years. Now some enterprises are signing agreements forfive years. But this has been the recent trend. So far wage riseshave not been linked to productivity and profitability condi-tions. This had worked well because we were not facingcompetitive conditions. Now after the introduction of policiesof economic liberalisation, these conditions have changed.Indian industry has suddenly become cost conscious and anyeffort to reduce cost and increase the efficiency of anorganisation are now welcome. As a result a large number ofindustrial undertakings are resorting to cost cutting exercisesand are resorting to reducing the number of workers byresorting to VRS and outsourcing. This raises the question ofthe links between productivity or cost reduction and wages orwage increases.

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One extreme way of linking wages to productivity is tointroduce a “share contract” system for giving compensation toworkers. The share contract wage moves down with poorearnings so that labour costs adjust quickly without resort to layoffs.But this system will introduce a lot of uncertainty about theincomes of workers. Moreover, workers and their unions maynot believe the employers and the truthfulness and transparencyof their book-keeping practices. This will lead to disputes aboutthe profitability or otherwise of the company. Therefore, thispractice of share contract does not seem practicable in a countrylike India today.We are still left with the question, how can wages and produc-tivity be linked?An ILO-National Tripartite Workshop (1996) observed thatthere was no operationally effective mechanism for linking wagechanges to changes in productivity or profitability. It wassuggested by the Tripartite Workshop that income stability foremployees in the organised sector should be ensured throughfull indexation of the basic wage while bonus and wagerevisions should be related to productivity and profitability.Productivity of labour (net value added per worker) in theorganised sector was generally found to vary with changes incapital intensity and the ratio of salaried staff to total employ-ees. In addition to productivity, wages were influenced by capitalintensity, the ratio of salaried staff to total employees, the ratioof wages to value added, and the consumer price index.

Productivity Linked WagesIf a productivity linked wage system is to succeed, it wouldneed the involvement and commitment of all the parties,particularly the employers and the unions in coming up with aproductivity linked wage system acceptable to all. As we havepointed out, productivity emerges from an integrated approachand hence all, from the top management to the bottom rungof workers, should a share the gains from increased productiv-ity. Wages for various jobs reflect differences in skills andprovide necessary incentives for skill upgradation. The variablewage element can be determined with the participation ofemployees at the individual, group, company, or national level.In a productivity linked wage system, the wage structure willconsist of a basic wage and a variable component. The formerreflects the value of the job within the market, while the variablecomponent provides the flexible linkage with a measure ofperformance based on either the performance of the economy,the company or the individual. The wage structure will then be:Total wage = Basic Wage + Variable component (Dependingupon productivity)The key elements of fixed and variable components include:• Basic Wage• Annual Increment (wherever mentioned in the agreement)• Contractual Bonus (where applicable) Variable component• Wage increases based on the productivity/profit sharing

formula.Basic Principles of productivity wage reform should include thefollowing:

• Wages should aim at providing an adequate standard ofliving to workers.

• Wage increase must take into account the company’s abilityto pay and the performance of the employees.

• Wage must reflect the value of the job.• There must be variable components to accommodate

business cycles.• Wage increase must be commensurate with productivity

growth.The methodology to be applied for deciding the variable parthas to be negotiated and decided by mutual agreement byunions and management, and will involve technical time andmotion studies. There are various methods available and thereare also expert industrial engineers to undertake such studiesand evolve a commonly acceptable solution. The local Produc-tivity Councils do provide training to trade union leaders ongreater details about these techniques.The methodology to link wages with productivity will dependon the nature of the enterprise, and the formulae used can bedetermined by consensus between employers and the employ-ees. The following are important for successful implementation:i. Wage reform at the macro level must be a tripartite effort

among the Government, the Unions and Employers.ii. There must be allowances for a phasing period, during

which adjustments and changes could be made.iii. Real built-in wage increases should be tuned to productivity

growth.iv. At the micro level, there must be satisfactory labour

management relations and mutual trust and understanding.v. There should be sharing of relevant information.The productivity wage system may be applied companywise.The typical characteristics of the system are:• Employee involvement• Linkage of a portion of wages with performance at

individual, group and company level• Improvement of work culture• Recognition of job differentials and skill development.Indian experience reveals that linkages between wages andproductivity can at best be partial. If the objective of the linkageis to limit inflationary pressures then wage increases should berestricted to improvements in labour productivity, making theunit cost constant. The linkages can be used for making wagesmore flexible in tandem with the market conditions. Wageproductivity linkage can also improve the economic performancethrough paying higher wages or bonus for making extra effortsto achieve the performance goals.Wage productivity linkages vary depending on the objective viz.,labour cost containment, wage flexibility, or worker motivationetc. When wage cost containment is the paramount concern, aconventional measure of labour productivity is generally used,i.e., output divided by a measure of labour input. When wageflexibility is the objective, and when the objective is workermotivation, wages linked with productivity can take a numberof forms.

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The most common method used involves worker incentiveschemes, the traditional payment-byresults schemes (piece-worketc.) rating or performance appraisal systems. Motivation mayalso be enhanced through a variety of bonus schemes based onmeasures of collective performance. Other performancemeasures used for calculating collective bonus incentives arebased on quality, machine utilisation, or savings in raw materi-als, energy, or other costs. Increases may also be granted inanticipation of productivity improvements linked with changesagreed upon in work methods, as specified in so-called produc-tivity bargaining. The feasibility of identifying suitableperformance measures will obviously vary with the circum-stances of individual enterprises and groups of workers.In the foregoing paragraphs, we have tried briefly to state someof the considerations that have been urged on the question oflinking productivity and wages. We have not put forward anyformula because the time and resources at our disposal did notpermit an exhaustive and satisfactory study, and because therewas no specific mandate to us to propose such a formula.

Productivity AgreementsOur attention has been drawn to the fact that, in a goodnumber of industries now productivity agreements have beensigned.We have already seen that productivity is not merely labourproductivity. Labour productivity can be improved withouteconomising on the use of labour as an input. By seeking theco-operation and commitment of workers and by sharpeningtheir skills and attitudes, employers can raise productivitythrough better use of other resources. This is what some ofthese agreements have proposed to do. We shall cite a few ofthem.The common interpretations of productivity in recent yearsinclude the following:1. Waste reduction in all forms.2. Working intelligently, not merely putting in hard work3. People will take action for productivity improvement only

when they are convinced about the rationale and usefulnessof the action.

4. Positive involvement and commitment of workers andunions.

5. Change as a continuous process in terms of technology,materials, products, processes, etc.,

6. Productivity is a multidimensional concept. It depends onquantity, quality and features of products and the efficiencyand effectiveness with which they are produced.

The productivity linked wages settlement by Southern IndiaTextile Association is a unique example of joint agreement ofsystematic assessment of work loads and the principle ofsharing by workers of 50% of the savings by the total categoryof basic workers. 30 Mills were party to the agreement.The TI Cycles entered into an agreement, during the period itwas faring badly, providing for DA linked to productivityinstead of inflation. After three years, however, the DA’s linkagewith inflation was restored. INDAL’s Belur Unit links bonusnot to profit, but to overall plant efficiency and output.

In juxtaposition, Madura Coats agreed for higher bonusprospectively for the next three years, and ONGC started thepractice of giving ad hoc fixed performance and productivityallowances.Incentive schemes are increasingly being calculated on the basisof pre-determined plant efficiency parameters. EicherGoodearth scrapped its incentive scheme and introduced, in itsplace, Total Quality Allowance (TQA) based on 13 parameters.Kirloskar Oil Engines Ltd. entered into an agreement wherebythe management would demonstrate actual working of a joband time taken to complete a job in case there is a differenceover the attainability of the standards prescribed.Bombay Mills have agreed to pay 4% allowance for 7 daysworking, 3% allowance for working during recess period and 1.5times the wages for working on holidays.Many agreements begin with opening paragraphs aboutproductivity, work culture and the role to be played by theunion and the management. The agreement that Bajaj Autoentered into is an example:“Productivity, Quality, Work Culture, Time Study And Ex-pected Production Output.“The Union and the Company agree that in view of theincreased competitive environment in the domestic and globalmarkets, the company can survive, let alone prosper, only bygaining competitiveness and improving levels of production,productivity and ensuring better quality in all its operations andactivities by means of maximum utilisation of plant, machin-ery, equipment, human and other resources at its disposal.Therefore, both the parties agree to achieve higher output andman/ machine utilisation by continuously reducing cycle time,work simplification, up-to-date maintenance, upkeep ofmachines and tools, toolings, gauges, fixtures, reduction inconsumption of consumables and energy and by use ofimproved and latest technology. The Union and the Companyalso agree to ensure continuous improvement in productivityand quality in all the operations of the Company. Further, theCompany and the Union acknowledge that the conditions intwo and three-wheeler industry are fast changing due toimprovements in technology and the emergence of competitivemarkets where the buyer dictates the terms and therefore it isabsolutely imperative that higher quality products are to beconsistently produced at lower costs. “The Union agrees thatthe company will continue to conduct time studies to decide therate of production (output rates) and all workmen shall give theproduction as per the output rates fixed by the Company. TheUnion also agrees that these output rates may change from timeto time by retime study, depending on changes in workmethods, raw material, jigs, fixtures etc10.”Similar provisions can be found in many agreements signedrecently.“In view of the globalisation of the economy leading to acompetitive environment the union and the company recognisethe need to improve production and productivity”.“Survival in the demanding business environment calls for agreater degree of working together and sharing together tobring about higher and higher degree of qualitative perfor-mance”.

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“Workers shall extend wholehearted cooperation for optimisingperformance of the company at all levels”.“Purpose of the agreement is to increase the level of productiv-ity and to improve it further”.“Purpose is to become more versatile, more flexible and moreinnovative so that the company can be more competitive”.All these indicate that both managements and workers are awareof the changed economic environment and the need forworking together to enhance productivity.

Special Provisions in CollectiveBargainingCollective bargaining provisions in wage agreements have cometo provide for an element on contingency based on individual/group/organisational performance. They are manifested in oneor more of the following ways:a. managerial discretion in setting new norms of production/

productivity;b. Proportionate deductions if standard output is not

achieved;c. two – tier wage agreements;d. linking dearness allowance to cost of production rather than

to cost of living;e. wage cuts/freezes in sick enterprises andf. arbitration.a. Managerial discretion in setting new norms: Severalcollective agreements provide for incentive schemes, but fewattempt to link wages with productivity and/or bonus. Veryfew companies – Eicher Goodearth, in New Delhi, a pioneeredit in 1990 – withdrew incentive schemes altogether, clubbedaverage incentives for the past three years with salary, andannounced that workers must do what management asks themto do.The agreement in Bajaj Tempo Ltd., Akurdi, Pune (19th April1993) provides that:a. Union will be provided information regarding the issuance

of new norms;b. workers who fail to achieve the norms are liable for

disciplinary action and denial of all allowances; andc. management decision with regard to work norms and

work-load will be final and binding on all concerned dailyand monthly-rated workmen.

b. Proportionate deductions if standard output is notachieved: The agreement in Asian Paints Ltd., Cochin (Kerala)provides that, “——wages agreed upon in this settlement arefor standard output………. and any persistent shortfall in theoutput will attract proportionate deduction in the wages payablefor the period.”c. Two – tier wage agreements: When existing collectiveagreements are revised, some companies have created newgrades which start at a lower basic wage than is provided tosimilar jobs/grades as per earlier statements. This does notseem to conflict with the Equal Remuneration Act in Indiawhich is concerned solely with gender based discrimination.However, recognising the impact of such discrimination on

team work, many agreements provide for tapering off thedifferences over a three year period. There are exceptions as theagreement in Mahindra and Mahindra and Larsen and Toubroreveal. In Mahindra and Mahindra Limited, Igatpur Plant, Nasikthe agreement dated 24th April 1995 provides for increase ineffective working time by 10 minutes per shift/person: “TheUnion and the workmen have agreed to work for 420 manminutes as Effective Working Time” per shift. In addition tothe above, the union and the workmen have agreed to carry outwork related activities such as filing of production/precontrolcharts, minor setting, minor maintenance including oiling,greasing and cleaning of respective machines, equipments andjigs-fixtures etc., in each shift and for this purpose they willwork for an additional 10 minutes on average per shift. Thus inthe first and second shifts of 480 minutes duration there will beeffective utilisation of 430 (420+10) minutes. It was agreed inthe agreement in Larsen & Toubro Limited, Powai Works,Mumbai (30 December 1993) covering daily rated workmen andmonthly rated technical staff that “effective working hours forthe Day shift (General/First shift) shall be reduced to 45 hoursper week (from 48 hours). Flexi-time is yet to be introducedthrough collective agreements. The problem that manyemployers face concern utilisation of the agreed working hours.In the past guaranteed overtime agreements were not uncom-mon. In recent years, agreements provide that such overtimewill be paid only if people are physically present. Interestingly,the thrust is on presence, not work. It confirms that in the past,it was possible, due to norms established through collectivebargaining, to claim predetermined overtime without beingphysically present, let alone working, for the extra hours.Themain thrust of the agreements on working hours concernspunctuality and regularity in attendance. With the result, manycompanies have begun to link payment of a variety of benefitslike canteen allowance, conveyance allowance, etc., to attendanceon top of the attendance bonus. In rare cases even house rentallowance and children’s education allowance are linked toemployee’s attendance. A few firms have also given attendancebonus if any employee does not avail any leave for the firstthree years; (a) from the company’s point of view a fresh workertakes at least three years before he or she rises to peak perfor-mance on the learning curve; (b) from the union’s point ofview, loyal, long serving members should have better rewardthan fresh employees who may or may not have joined theunion yet.d. Linking dearness allowance (cost of living allowance)to cost of production:This is done on an exceptional basis in chronically sick compa-nies. For example, T.I. Cycles in Madras attempted this in 1984for a couple of years. Once the company began to earn profitsthe union requested the management to link dearness allowanceback to cost of living index which the management accepted. Inquite a few sick companies dearness allowance was frozen for alimited period.e. Wage Cuts/freezes: Wage cuts and temporary freezes onemployee benefits and allowances are common in sick compa-nies deep in debt or facing funds crisis. Wage cuts upto 30% areusually regarded as a trade off against job cuts. Freezes areconsidered as a temporary contribution to tide over a financial

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crisis. In the Fifth round of wage negotiations in the publicsector during 1993-95, nearly one-fourth of the 240 centralpublic sector undertakings (CPSUs) did not have wage revisionagreements even though most of the existing agreementsexpired on 31 December 1991. Such companies lost one roundof wage revision covering the period 1992-96. The Sixth roundof wage revisions covering the period 1997-2006 will also beskipped in these ‘sick’ companies because of the increases inwage cost. Wage cuts and freezes take place in the sick privatesector units too.f. Arbitration: Wherever there is any dispute between tradeunions and management on time study and work measure-ment, disputes are not settled through courts, but throughtechnical experts. In many agreements in the Pune region, thesedisputes are referred to industrial engineers of the PoonaDivision Productivity Council whose decision is binding onboth the parties. This willingness to abide by the verdicts oftechnical experts is something new.In linking wages with productivity and in effectively implement-ing such a scheme, the primary responsibility lies on themanagement. Technology, processes and people are the majorsources of productivity. The scope of technology has extendedfar beyond production, to cover materials, processes, packaging,energy, maintenance, transportation, logistics, dispensing,recycling etc. Secondly, various processes can also contribute toproductivity. Industrial Engineering, Operation ResearchTechnique, SQC, TQM, ERP, CRM, SCM and simple techniqueslike Quality Circles all add up to improve productivity. The thirdfactor is people. If they are handled properly people can unlockthe productivity latent in themselves.Such a change cannot be brought about without co-operationbetween unions and management. The co-operation ofworkers is crucial in all efforts to increase productivity. It is theresponsibility of the management as well as the union tobring about the culture of co-operation on which productivitydepends. The Government too has its share of responsibilityto ensure the infrastructure that is needed to assure andimprove productivity – roads, power supply, communications,quick administrative responses, elimination of corruption,transparency and so on.

Wage DeterminationThus, the factors that are relevant to wage determination can bebriefly recounted:a. Recommendations of various Committees appointed by

the Government for the purpose.b. Various judicial pronouncements and the principles

enunciated therein from time to time.c. Capacity of an industry to pay.d. Bargaining strength of the negotiating union of workers.e. Regional wages prevailing in that region.f. Prices, profits and productivity.Recommandation:We therefore, strongly recommend that, in view of thea. Constitutional commitments to a fair wage;

b. The international agreements or Declarations that we haveaccepted on the social need and responsibility for a fair wage;

c. The reports of Committees and Commissions and thejudgments of the Supreme Court on minimum wages, fairwages and related matters,

d. The economic link between a fair wage and the capacity topay;

e. The relation between the capacity to pay, prices, profit andproductivity;

f. The new methods that have emerged to promote as well asto assess productivity;

g. The gradual withdrawal or weakening of the control of thestate in economic matters (including wage fixation) that hasfollowed globalisation;

h. The crucial and continuing importance of the quantum andregular payment of minimum wages in the vast anddispersed areas of the unorganised sector where more than90% of the working opulation are engaged, and where weakorganization and poor public awareness further weaken thebargaining power of workers; i) The experience that allsocial partners have gathered in this field in the last halfcentury;

j. The view that the diversity in conditions within States andbetween States makes it necessary for us to approach anational uniform minimum wage through effectiveenforcement of regional minima within regions in theStates, and States in proximate regions;

k. The view that with globalisation, market forces willincreasingly influence wages; and

l. The countervailing (opposite) view that globalisation andthe consequent job uncertainty have made it all the morenecessary to ensure fair and just wages and social securitythrough the intervention of legislation and the machineryof the State and public bodies; The Government shouldappoint a high power committee consisting ofrepresentative of Trade Unions, entrepreneurs, State andCentral Governments, academicians, social activists, andother concerned and competent groups to study thequestion of fair wages and minimum wages and makerecommendations on methods of determination andrevision, quanta, methods of enforcement, relation tocapacity to pay, the socially desirable linkages withproductivity, and other relevant matters.

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Learning ObjectiveThe study of this lesson will help you:• Understand the types of collective bargaining• Collective bargaining in India.

Types of Collective BargainingAt the outset it should be stated that there is a great deal ofvariation in the collective bargaining practices ranging from aninformal oral agreement to a very formal and detailed agree-ment.Collective Bargaining takes the following forms:I. It may be a single plant bargaining, that is, bargaining may

be between a single trade union . This type of collectivebargaining prevails in the United States and India.

II. It may be a multiple plant bargaining, that is, bargainingmay be between a single factory or establishment havingseveral plants and the workers employed in all these plants.

III. It may be a multiple employer bargaining, that is,bargaining between all trade unions of workers in the sameindustry through their federal organizations, and theemployer’s federation. This is possible both at the local andregional levels and is generally resorted to in the textileindustry.

In India, collective bargaining has been classified under fourcategories. These are:I. Agreements which are negotiated by officers during the

course of conciliation proceedings and are called settlementsunder the Industrial Disputes Act.

II. Agreements which are concluded by the parties themselveswithout reference agreements, however, are sent toappropriate sent to appropriate governments and toconciliation officers.

III.Agreements which are negotiated by the parties on avoluntary basis when disputes are sub- judice and which arelater submitted to industrial tribunals, labour courts orlabour arbitrators for incorporation into the documents asparts of awards. These are known as consent awards.

IV. Agreements which are drawn up after direct negotiationbetween labour and management and are purely voluntaryin character. These depend for their enforcement on moralforce and on goodwill and co-operation of the parties.

Collective Bargaining in IndiaCollective bargaining in India grew at par with the growth ofTrade Unionism. Collective bargaining arrangements for thefirst time were made at Ahmedabad cotton textile industry. Themain purpose of the arrangements was regulation of labourand management relation ships. But there was no considerable

growth until the second world war. Even this growth duringthe second world war was not the result of management andunions’ influence but due to government efforts. There was notmuch awareness of collective bargaining and its importance atthat period.Only after independence , there was considerable growth incollective bargaining. Trade unions gained importance afterindependence. From management’s side, there emerged a newclass of managers, who saw the labour with sympathy andunderstanding. But Collective Bargaining process took placemainly at plant level and organization level unlike westerncountries where the agreements are reached at industry level.Another flow of collective bargaining process in India is that itis mostly used for basic monetary benefits. In recent yearsCollective bargaining is gaining momentum.

Causes for the Limited Success of CollectiveBargaining in IndiaThough, it is argued that collective bargaining has grown inIndia due to the statutory provisions, voluntary measures,Industrial Truce Resolution of 1962 and the amendments tothe Industrial Disputes Act , 1947, its success is limited. Thecauses for its limited success are:1) Problems with the unions: Collective bargaining processmainly depends on the strength of Unions. But still there arenot many strong unions in India. Indian unions are markedwith multiplicity, inter and intra –union rivalry, weak financialposition and non-recognition. Weak trade unions cannotinitiate strong arguments during negotiations. There is usuallyno unanimous decision among workers to be presented at thenegotiable table.2) Problems with the Government:The government has notbeen making any strong effects for the development ofCollective bargaining. The government has imposed manyrestrictions regarding strikes and lockouts, which is an obstaclefor the development of collective bargaining process.3) Legal problems: Now adjudication is easily accessable. Assuch now collective bargaining process is losing its importance.4) Political Interference: Interference of political leaders in allaspects of union matters, has increased over the years. Almostall the unions are associating themselves with some politicalparty or the other. And there are many such unions. To protecttheir own unions, all political parties interfere into the matters,creating inter union rivalries.5) Attitude of management: In India management havenegative attitude towards unions. They do not appreciate thereworkers joining unions. As strong unions are must for thecollective bargaining process this attitude of managementhampers the process.

LESSON 21:TYPES OF COLLECTIVE BARGAINING

AND STUDIES IN COLLECTIVE BARGAINING

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Recommendations of the National Commission ofLabour for Successful Functioning of CollectiveBargaining.

National Commission of Labour in 1969 made the followingrecommendations after considering the problem.(a) Government intervention in industrial relations particularlyin the settlement of the industrial disputes, should be reducedgradually to the minimum possible extent. Compulsoryadjudication of disputes should be used only as a last resort.(b) Trade unions should be strengthened both organizationallyand financially by amending the Trade Union Act of 1926 tomake registration of unions compulsory, enhance the unionmembership fee, reduce the presence of outsiders in the unionexecutive and among the office-bearers and increase theminimum number of the members in the respect of unionapplying for registration.(c) Legal provision may be made either by a separate legislationor by amending an existing enactment for :1. Compulsory recognition of the trade unions and

certification of unions as bargaining agents.2. Prohibition and penalisation of unfair labour practices.3. Bargaining in good faith by both employers and unions.4. Conferring legal validity and legitimacy on collective

agreements.

Suggestions for the Effective Functioning ofCollective Bargaining

i. There must be a change, in the attitude of employers andemployees. They should realize that Collective Bargainingapproach does not imply litigation as it does underadjudication. It is an approach which indicates that the twoparties are determined to resolve their differences on theirrespective claims in a peaceful manner relying only on theirown strength and resources; they do not look to a thirdparty for the solution of their problems.

ii. Collective bargaining is best conducted at plant level. Thebargaining agents of both the parties should be determinedto arrive at an agreed solution of their respective problems.The employers should be represented by the employers andthe workers by their trade unions. Both should know whichis the recognized union, incase there is more than one in aplant; and this union, recognized in the proper manner,should be the sole bargaining agent of all the workers in anorganization.

iii. Employers and employees should enter upon negotiationson points of difference or on demands with a view toreaching an agreement . The trade unions should not makeor put forward unreasonable demands. Any refusal tonegotiate on the part of either side should be looked uponas an unfair practice. Rigid attitudes are out of place in acollective bargaining system.

iv. Negotiations can be successful only when the parties rely onfacts and figures to support their point of view. The tradeunion should be assisted by such specialists or economists,productivity experts and professionals, so that their case isproperly presented to the representative of the

management. In order to bring this to pass, theorganizational set-up of a trade union will have to bechanged; and the later should adopt a constructive approachat the bargaining table rather than the present agitational orlitigation oriented approach.

v. To ensure that collective bargaining functions properly,unfair labour practices should be avoided and abandoned byboth the sides. The negotiations between the managementand the recognized trade union will then be conducted inthe atmosphere of goodwill, which will not be vitiated bymalpractices, and neither side would take advantage of theother by resorting to unfair practices.

vi. When negotiations result in an agreement, the terms of thecontract should be put down in writing and the embodiedin a document. When no agreement is reached, the partiesshould agree to concilation, mediation or arbitration. If nosettlement is is arrived at even then, the workers should befree to go on strike, and the employees should be at libertyto declare a lockout. To restrict this right is to inhibit andthe very process of Collective Bargaining.

vii. Once an agreement is reached , it must be honoured andfairly implemented.No strike or lockout should be permitted in respect ofissues which have already been covered in the contract; andthe trade union should not be allowed to raise freshdemands.

viii.A provision for arbitration should be incorporated in theagreement, which should become operative when there isany disagreement on the interpretation of its terms andconditions. The disputes arising out of the agreementshould be referred to an agreed third party with a view toarriving at a final and binding decision.

Indian Institute of Personal Management offeredthe following suggestions

i. A truly representive, enlightened and strong trade unionshould come into being and should function on strictlyconstitutional lines;

ii. There should be a progressinve and strong managementwhich is conscious of its obligations and responsibilities tothe owners of the business, to the employers, theconsumers and the country.

iii. There should be unanimity between labour andmanagement on the basic objectives of the organizationand of the workers and a mutual recognition of their rightsand obligations.

iv. When there are several units of the company, there shouldbe a delegation of authority to the local management ;and

v. A fact finding approach , and a willing ness to use new tools– for example, industrial engineering- should be adoptedfor the solution of industrial problems.

The National Commission on Labour offered thefollowing recommendations

i. In the absence of arrangements for statutory recognitionsof unions except in some states and provisions whichrequire employers and workers to bargain in good faith’, it

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is no surprise that reaching of collective agreements has notmade much hgeadway in our country. Nonethe less therecord of collective agreements has not been asunsatisfactorily as it is popularly believed. Its extention to awider area is certainly desirable.

ii. There is a case for shift in emphasis and increasingly greaterscope for and reliance on collective bargaining. Any suddenchange replacing adjudication by a system of collectivebargaining is neither called for nor is practicable. The processhas to be gradual. A beginning has to be made in the movetowards collective bargaining by declaring that it will acquireprimacy in the procedure of setting industrial disputes.

iii. Conditions have to be created to promote collectivebargaining. The most important among them is statutoryrecognition of a representative union as the sole bargainingagent. The place strikes/lock-out should have in the overallscheme of industrial relations needs to be defined; collectivebargaining cannot exist without the right to strike/lock-out.

Notes -

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Learning ObjectiveThe study of this lesson will help you understand:• Nature,causes and procedure of grievance.• Grievance redress mechanism.

GrievanceEfficient grievance management is an important and integralpart of the human recource management. There are severalaspects of HRM, human relations and industrial relationspractices which generate feelings of discontent on the part ofindividual workers. In fact, it is the starting point of the processsince further arguments and agreements emanate on the basisof the agreement arrived at earlier. In this implementation of acollective agreement a number of problems-— grievances –arise frequently and on account of this reason both manage-ment and workers show utmost concern to the collectiveagreement. If an individual’s grievances are unattended andunresolved they will become collective disputes. Hence, there is anecessity of providing a procedure for redressal of individualgrievances.A grievance is a sign of employee’s discontent with job and itsnature. The employee has got certain aspirations and expecta-tions which he thinks must be fulfilled by the organizationwhere he is working. When the organization fails to satisfy theemployee need, he develops a feeling of discontent or dissatis-faction. For instance, the employee expects properimplementation of the Central and State Government’s laws,collective agreements, company policies and managementresponsibilities. A violation of any one among these causedissatisfaction on his part. Thus, grievance is caused due to thedifference between the employee expectation and managementpractice.The concept ‘grievance’ has been defined in several ways bydifferent authorties.Some of the definitions are as follows:Beach defines a grievance as ‘any dissatisfaction or feeling ofinjustice in connection with one’s employment situation that isbrought to the notice of the management’, whereas Flippoindicates the grievance as a ‘type of discontent which mustalways be expressed. A grievance is usually more formal incharacter than a complaint. It can be valid or ridiculous, andmust grow out of something connected with companyoperations or policy. It must involve an interpretation orapplication of the provisions of the labour contract.Jucius defines a grievance as “… any discontent or dissatisfac-tion, whether exposed or not, whether valid or not, arising outof anything connected with the company which an employeethinks, believes or even feels to be unfair, unjust or inequitable.The above definitions indicate that a grievance may be factual orimaginary or disguised and it is problem whether it is expressedor not, valid or not. When an employee presents a problem, the

grievance redressing authority, has to analyze the problem, findout the route cause of the problem rather than viewing it fromlegal aspects and solve it based on humanitarian approach. Thisapproach of grievance redressal is known as clinical approach togrievance handling. Hence, a grievance may be viewed ascomplex psychological phenomenon calling for human ratherthan any procedural or legal action in its analysis and solution.

Characteristics of GrievancesA grievance may have the fallowing characteristics:a. Factual: The employer-employee relation ship depends

upon the job contract in any organization. This contractindicates the norms defining the limits with in which theemployee expects the organization to fulfill his aspirations.When these legitimate needs of expectations or aspirationsare not fulfilled, the employee will be dissatisfied with thejob. Such dissatisfaction is called Factual Grievance. Forinstance, when an employee is not given promotion, whichis due to him, or when work conditions are unsafe,grievances of employees relating to these issues are basedon facts. In other words, these grievances reflect thedrawbacks in the implementation of the organizationalpolicies.

b. Imaginary: when the job contract is not clear-cut and doesnot indicate the norms defining the limits with in which theemployee expects the organization fulfill his needs andaspirations, the employee develops such needs which theorganization is not obliged to meet. Here grievances are notbased on facts. Even then the employee feels aggrieved.Normally, the organization does not feel any kind ofresponsibility for such grievances and their redressal, becausethey are not only based on the wrong perceptions of theemployee but also on wrong information. However, suchgrievances can have far-reaching consequences on theorganization because the employees are likely to develop analtogether negative attitude towards the organization, whichdecreases their effectiveness and involvement in work.

c. Disguised: In general organizations consider the basicrequirements of their employees. Psychological needs oftheir employees such as need for recognition, affection,power, achievement etc., normally unattended and ignored.For instance, an employee complaining very strongly aboutthe working conditions in the office may in turn be seekingsome recognition and appreciation from his or hercolleagues. Hence, disguised grievances should also beconsidered since they do have far-reaching consequences incase they are unattended and ignored.

Need for a Grievance ProcedureGrievance procedure is necessary for any organization due to thefollowing reasons:

LESSON 22:

APPROACHES AND NATURE OF GRIEVANCES,

CAUSES, PROCEDURE AND GRIEVANCE

REDRESS MECHANISM

UNIT IIIMANAGEMENT OF INDUSTRIAL

RELATIONSCHAPTER 4 : GRIEVANCE REDRESS

MECHANISM

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1. Most grievances seriously disturb the employees. This mayaffect their morale, productivity and their willingness to co-operate with the organization. If an explosive situationdevelops, this can be promptly attended to if a grievancehandling procedure is already in existence.

2. It is not possible that all the complaints of the employeeswould be settled by first time supervisors, for thesesupervisors may not have had a proper training for thepurpose, and they may lack authority. Moreover, there maybe personality conflicts and other causes as well.

3. It serves as a check on the arbitrary actions of themanagement because supervisors know that employees arelikely to see to it that their protest does reach the highermanagement.

4. It serves as an outlet for employee gripes, discontent andfrustrations. It acts like a pressure valve on a steam boiler.The employees are entitled to legislative, executive andjudicial protection and they get this protection from thegrievance redreessal procedure, which also acts as a means ofupward communication. The top management becomesincreasingly aware of employee problems, expectations andfrustrations. It becomes sensitive to their needs, and caresfor then well-being. This is why the management, whileformulating plans that might affect the employees – forexample, plant expansion or modification, the installationof labour-saving devices.

5. The management has complete authority to operate thebusiness as it sees fit-subject, of course, to its legal andmoral obligations and the contracts it has entered into withits workers or their representative trade union. But if thetrade union or the employees do not like the way themanagement functions, they can submit their grievance inaccordance with the procedure laid down for that purpose.

A well-designed and a proper grievance procedureprovides

I. A channel or avenue by which any aggrieved employee maypresent his grievance,

II. A procedure, which ensures that there will be a systematichandling of every grievance,

III.A method by which an aggrieved employee can relieve hisfeelings of dissatisfaction with his job, Working conditionsor with the management and

IV. A means of ensuring that there is some measure ofpromptness in the handling of the grievance.

Nature and Causes of GrievancesA grievance is a problem and submitted by an employee orseveral employees of different types. It may be concerning asituation or likely to effect the terms and conditions of theemployment of one worker or several workers. If a problem isrelated to and endorsed by all or majority of the employees orif trade union submits a problem as a general claim it fallsoutside the scope of grievance procedure and generally comesunder the purview of the collective bargaining. Thus, if an issueis wider in scope or general in nature it will be outside thegrievance machinery. For example, if the majority of the

employees or the trade unions in an organization demand wagerevision, such issue does not come under the scope of grievancemachinery and falls with in the scope of collective bargaining. Incontrast if the workers of different departments submit to themanagement that there wage is not in accordance to with theaward given by the Wage boards and if they ask the manage-ment to correct the wage inequity such issues falls with in thescope of grievance machinery. Thus, a grievance – (a) Has anarrower perspective; (b) Is concerned to an individual or a fewemployees of different types. As such policy issues do not fallwith in the scope of grievance machinery.Causes of grievances related to interpretation of all personnelpolicies: National Commission on Labour states that “complaints affecting one or more individual workers in respectof their wage payments, overtime, leave, transfer, promotion,seniority, work assignment and discharge would constitutegrievances. The causes of grievances include the interpretationof areas like placement, transfer, working conditions, promo-tion, payment of wages, allowances, overtime pay,victimization, medical benefits, housing facilities, increments,granting loans, conditions of work, leave, seniority, safetymeasures, fines, conditions of work, suspension, break in theservice and the like.

The Causes of GrievancesThe causes of employee grievances include:1. Demands for individual wage adjustments,2. Complaints about the incentive system,3. Complaints about the job classifications,4. Complaints against a particular foreman,5. Complaints concerning disciplinary measures and

procedures,6. Objections to the general methods of supervision,7. Loose calculation and interpretation of seniority rules, and

unsatisfactory interpretation of agreements,8. Promotions,9. Disciplinary discharge or lay-off,10. Transfer for another department or another shift,11. Inadequacy of safety and health services/devices,12. Non-availability of materials in time,13. Violation of contracts relating to collective bargaining,14. Improper job assignment, and15. Undesirable or unsatisfactory conditions of work.

Pre-requisites of a Grievance ProcedureThe efficiency of a grievance procedure depends upon thefulfillment of certain per-requisites. These are as follows:a. Conformity with Prevailing Legislation: While designing the

grievance procedure due consideration must be given to theexisting statutory provisions. In other words, the existinggrievance machinery as provided by law may be made use of.

b. Clarity: There should be clarity regarding each and everyaspect of the grievance procedure. An aggrieved employeemust be informed about the person to whom arepresentation can be made, the form of submission

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(written /oral), the time limit for the redressal of grievanceetc. Similarly, the redressing authority should be very clearabout what is expected from him, what measures he cantake, the limits with in which he should resort to an actionetc.

c Simplicity: The grievance procedure should be simple. Everyemployee must understand different stages of theprocedure, the forms to be filled up, and the witnessesrequired etc. if there are too many stages in the procedure,too many forms to be filled up, too much going aroundetc., the very purpose of the procedure is defeated. Insteadof resorting to the formal procedure an employee mayignore it.

d. Promptness: The promptness with which a grievance isprocessed adds further to the success of the grievanceprocedure. Since justice delayed is justice denied theprocedure should aim at rapid disposal of the grievances.

e. Training: The success of the procedure also depends uponimparting training to the supervisors and the unionrepresentatives in handling grievances.

f. Follow-up: The successful working of a grievance proceduredepends upon a proper follow up by the personneldepartment. The department should periodically review theprocedure and introduce the essential structural changesmaking it more effective.

Basic elements of a Grievance ProcedureThe basic elements of a grievance redressal procedure are:A. The existence of a sound channel through which a grievance

may pass for redressal if the previous stage or channel hasbeen found to be inadequate, unsatisfactorily orunacceptable. This stage may comprise three, four or fivesub-stages.

B. The procedure should be simple, definite and prompt, forany complexity or vagueness or delay may lead to anaggravation of the dissatisfaction of the aggrievedemployee.

C. 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. Analyzing the facts, after taking into consideration the

economic, social, psychological and legal issues involved inthem;

d. Taking an appropriate decision after a careful considerationof all the facts; and

e. Communicating the decisions, to the aggrieved employee.D. Whatever the decision, it should be followed up in order

that the reaction to the decision may be know and in orderto determine whether the issue has been closed or not.

Errors in the Grievance ProcedureI. Stopping too soon the search for facts;II. Expressing the opinion of the management before all the

pertinent facts have been uncovered and evaluated;

III.Failing to maintain proper records;IV. Resorting to an executive fiat instead of dispassionately

discussing the facts of the grievance of the employee;V. Communicating the decision to the grievance in an

improper way; andVI. Taking a wrong or hasty decision, which the facts or

circumstances of the case do not justify.

Measures to Avoid the ErrorsManagements should try to avoid the errors in the grievanceprocedure by following the measures indicated here under:1. Helpful attitude and support of the management.2. Belief on the part of all concerned in the practice of the

procedure.3. Introduction of the procedure with the concurrence of

employees and trade unions.4. Following the simple, fair and easily comprehensible

procedures.5. Formulating the clear policies and procedures of the

company.6. Delegation of appropriate authority to the parties

concerned.7. Functioning of the personnel department in the advisory

capacity.8. A fact-oriented and issue-oriented rather than employee-

oriented procedure.9. Respect the decisions taken at all the levels.10. Adequate publicity to the procedure.11. Periodic evaluation and review of the procedure.

Grievance InterviewDespite the fulfillment of the above pre-requisites, there issome inherent impersonality in the procedure, which makes itinsensitive to imaginary and disguised grievances. Hence theyshould be supplemented or sometimes replaced by a goodpersonal approach, i.e., the grievance interview. This alsofacilitates the identification of the basis –whether factual or not.Even when the basis is factual the grievance interview reducesthe magnitude of the problem and develops an understandingbetween the aggrieved and the organization.The effectiveness of the interview depends on the skills on thepart of the interviewer. He must give a patient listening to theemployee and the employee should feel free to ventilate hisgrievance. If the interviewer is competent in professionalhandling of the situation and well conversant with the tech-niques of interview he can draw the aggrieved to him and in theprocess of interview he can bring about an integration of theemployee’s objectives of the organizational objectives.

The open Door PolicyHow to minimize/eliminate the source of an employee’sgrievances?This question is normally ignored and prevention of grievancesis a neglected part of grievance management in a number oforganizations. What is required is the development of sensitivefeelers with in an organization for tapping the source of

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dissatisfaction. In other words, the upwardchannels of communication should be free fromblocks and hindrances. Unfortunately, in manyorganizations there is a notion among superiorsthat a negative content generates dissatisfaction onthe part of higher-ups and gives a negative feelingabout the concerned department. Hence anendeavor is made for suppressing the grievancesand individuals are prevented from speaking out.To overcome the barriers of upward communica-tions some experts have suggested an ‘open doorpolicy’, which requires efforts and willing ness fromthe individual’s superior. In other words thereshould be a general invitation to all employees towalk in at any time and speak over their grievances.However this policy is workable only in smallorganizations. Since the principle of managementby exception is practiced in large organizations, thetop level managements have time neither to lookafter the innumerable grievances of their employeesnor familiarity with their work situation.

Grievance ProcedureThe model grievance procedure suggested by theNational Commission on Labour has provided for thesuccessive time bound steps each leading to the next in case oflack of satisfaction.At the outset an aggrieved worker shall approach the foremanand informs his grievance orally and seeks the redressal of hisgrievance. If it is not redressed to his satisfaction he approachesthe supervisor who has to give to the complaint of the workerwith in 48hrs. if the decision(answer)is not acceptable by theworker or if the superior does not give any answer, the workercan go to the next step. At the third stage the worker can, eitherin person or accompanied by his departmental representative,approach the head of the department who has to give theanswer before the expiry of three days. If the department headfails to do so or if the answer is not acceptable by the workergiven by him, then the worker can resort to the GrievanceCommittee, which comprises of the representatives ofemployers and employees. This committee shall communicateits recommendations to the manager with in seven days of thegrievance reaching it. If there are unanimous decisions, thoseshall be implemented by the management. In case unanimousdecisions have been not arrived at, the views of the committeemembers shall be recorded and all the relevant record shall beplaced before the manager for decision. The manager shallcommunicate his decision with in three days. The worker has aright to appeal against the managers decision. These appealsshall be decided with in a weak. If the aggrieved desires he cantake along with him a union official for discussion with theauthority. In case a decision has not been arrived at, at this stage,the union and management may refer the grievance to voluntaryarbitration with in a week of receipt of the management’sdecision by the worker.

N.S Not SatisfiedAll the above-mentioned steps may not be resorted to by aworker. In case the grievance arises on account of dismissal ordischarge of the worker, he can resort to the second step. In thelater stage he can make an appeal to the dismissing authoritydesignated by the management with in a week from the date ofdismissal or discharge.Thus, there is voluntariness in so far as the implementation ofthe model grievance procedure is concerned. But there is a greatneed for providing a statutory backing to the grievance machin-ery since voluntariness failed to get the desired resulting in anumber of cases. Further, there is a need to introduce sugges-tion schemes which are helpful in overcoming the barriers inupward channels of communication. In the western countriessuggestion schemes have helped a lot in harmonizing therelations between labour and management. In India also,suggestion schemes have been success in some organizationsdue to monetary rewards, establishment of suggestioncommittees and dissemination of full information about thesuggestions received. Hence, the importance of suggestionschemes should be recognized and measures should be initiatedfor the introduction of such schemes.Certain Do’s and Don’ts in handling grievances:

Do’s-

1. Investigate the handle each and every case as though it mayeventually result in an arbitration hearing.

2. Talk with the employee about his grievance; give him agood and full hearing.

3. Get the union to identify specific contractual provisionsallegedly violated.

4. Enforce the contractual time limits.5. Comply with the contractual time limits for the company to

handle a grievance.

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6. Determine whether all the procedural requirements, asdictated by the agreement have been complied with.

7. Visit the work areas where the grievance arose.8. Determine if there were any witnesses.9. Examine the relevant contract provisions, and understand

the contract thoroughly.10. Determine if there has been equal treatment of employees.11. Examine the grievant’s personal record.12. Fully examine prior grievance records.13. Evaluate any political connotations of the grievance.14. Permit a full hearing on the issues.15. Identify the relief the union is seeking.16. Treat the union representatives as your equal.17. Command the respect of the union representatives.18. Hold your grievance discussions privately.19. Provide the grievance process to non-union members as

well.20. Satisfy the unions right to relevant information.21. Demand that proper productivity levels be maintained

during the processing of incentive grievances.22. Fully inform your own superior of grievances matters.

Don’ts1. Discuss the case with the union steward alone; the grievance

should definitely be there.2. Make agreements with the individuals that are inconsistent

with the labour agreement.3. Apply the grievance remedy to an improper grievance.4. Hold back the remedy if the company is wrong.5. Admit the binding effect of a past practice.6. Relinquish your authority to the union.7. Settle grievances on the basis of what is fair. Instead, stick

to the labour agreement, which, after all, should be yourstandard.

8. Make mutual consent agreements regarding future action.9. Bargain over items not covered by the contract.10. Concede implied limitations on your management’s rights.11. Argue grievance issues off the work premises.12. Treat as “arbitrable” claims demanding the disciplining or

discharge of management members.13. Commit the company in areas beyond your limits of

responsibility or familiarity.14. Give away your copy of the written grievance.15. Discuss the grievances of striking employees during an

illegal work stoppage.16. Settle a grievance when you are in doubt.17. Support another supervisor in a hopeless case.18. Refer a grievance to a different form of adjudication.19. Overlook the precedent value of prior grievance settlement.

20. Trade a grievance settlement for a grievance withdrawal(ortry “to make” up for a bad decision in one grievance by”bending over backs wards” in another).

21. Give long written grievance answers.22. Negate the management’s right to promulgate plant rules.23. Deny grievances on the premise that “your hands have been

by the management”.24. Agree to informal amendments in the contract.

Grievance Management in IndianIndustryAt present, there are three legislations dealing with grievances ofemployees working in industries. The industrial employment(standing orders) Act, 1946, requires that every establishmentemploying 100 or more workers should frame standing orders.These should contain, among other things, a provision forredressal of grievances of workers against unfair treatment andwrong full exactions by the employer or his agents. TheFactories Act, 1948 provides for the appointment of a welfareofficer in every factory ordinarily employing 500 or moreworkers. These Welfare Officers will also look after complaintsand grievances of the workers. They will look after properimplementation of the existing labour legislation. Besides,individual disputes relating to discharge, dismissal or retrench-ment can be taken up for relief under the Industrial DisputesAct, 1947 amended in 1956.However, the existing labour legislation is not being imple-mented properly by employers. There is a lack of fairness ontheir part. Welfare Officers have also not been taken forprotecting the interests of the workers in the organized sector.In certain cases, they are playing a dual role. It is unfortunatethat the public sector, which should set up an example for thesector, has not been implementing the labour laws properly.In India, there is a Model Grievance Procedure, which hasadopted by the Indian Labour Conference in its 16th sessionheld in 1958. At, present Indian Industries are adopting eitherThe Model Grievance Procedure or procedures formulated bythemselves with modifications in the Model Grievance Proce-dure. In other words, at present the grievance procedures arevoluntary in the Indian Industry.

Guiding Principles of GrievanceProcedureThe guiding principles under the model procedure:1. Conformity with existing legislation: A procedure should

form part of an integrated scheme which should promotesatisfactory relations between employees and management.

2. Need for simple and Expeditious Machinery: It was laiddown that, as far as possible,

a. A grievance should be settled at the lowest level;b. No matter should ordinarily be taken up at more than two

levels;c. Different types of grievance should be referred to

appropriate bodies or authorities;3. Workman Should Know Whom to Approach: For this

purpose, it should be essential for the management to

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designate the authority or body to be contacted at variouslevels.

Other Guiding Principlesi. When a grievance arrives out of an order issued by the

management, the order itself must be complied with beforethe procedure is activated;

ii. The right of the worker’s representative on the GrievanceCommittee to see a document and the right of themanagement’ representative to refuse to show a documentof a confidential nature; in the later case, confidentialdocuments shall not be used against him.

iii. There is a time limit of 72 hrs with in which an appeal canbe taken from one step to another .

iv. Payment for the time that has been spent on the redressalof the grievance.

v. In the event of the grievance arising out of discharge ordismissal, the worker has the right to appeal either to thedismissing authority or to a senior body, specified for thepurpose by the management, with in a week from the dateof dismissal or discharge.

Checklist to Evaluate, the GrievanceProcedureManagement should evaluate the grievance procedure to knowits functioning through the following checklist.i. Was the case handled in such a way that the parties involved

in it were able to identify, and agree upon, what was atstake?

ii. Was the incident closed with a sense of satisfaction on thepart of everyone immediately involved in the originalcomplaint?

iii. Was the case handled in a way which strengthened the lineauthority, specially at the level immediately above that atwhich dissatisfaction was first expressed?

iv. Did the solution result in a better understanding and abetter adjustment between the supervisor and hissubordinate?

v. As a result of this case, did this understanding spreadamong others in the management and in the trade unionwho were not directly involved in the original complaint?

vi. Did the solution contribute to the operational efficiency ofthe organization?

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Case: Organisational Discipline – A GoalOr a MeansA nationalized road transport corporation introduced anincentive scheme for the bus crew (staff) so as to provide bettertransport facilities to the maximum number of passengers asthere was no other transport agency operating on the sameroute. Moreover, this would increase the revenue of thecorporation. In accordance with this scheme, the corporate fixeda certain amount of the level of revenue to each route as baserevenue. If the revenue earned by a particular trip was equal tothe base revenue, the conductor and driver of that bus wouldbe eligible to receive the incentive amount of one per cent ofthe base revenue. If the revenue exceeded the base amount theconductor and driver could get higher per cent on incrementalrevenue as incentive bonus.In a bid to take advantage of this incentive scheme, the busconductors of almost all the routes started to overload thebuses exceeding double the seating capacity (i.e., 49 seatingcapacity plus 49 standing passengers). This scheme had beenfunctioning successfully, benefiting the passengers, the bus crewand particularly the corporation, as the cost of operation of thebus did not increase in proportion to the increase in revenue.Mr. ‘A’ had been working as a conductor in ‘Z’ depot of theroad transport corporation. He was on duty on 19th September’83 on a route (R to K passenger bus). He had overloaded thebus almost to double of the seating capacity. Mr. X – apassenger of that bus did not purchase a ticket despite repeatedenquiries of the conductor, because the heavy overloadedcondition of bus and his illness. The conductor was unable tocount the passengers because of the overload. In this state, theticket checking officers stopped the bus, verified the tickets of allthe passengers and found that Mr. X had not purchased a ticket.They blamed the conductor for not issuing the ticket and thepassengers for not buying the ticket. Then Mr. X in a writtenappeal to the checking staff stated that he had not purchasedthe ticket despite repeated enquiries by the conductor because hewas ill and the bus was heavily overloaded. He requested,therefore, not to take any action against the conductor. Theticket checking staff collected the ticket fare and penalty fromMr.X and suspended the conductor ignoring the written requestmade by Mr.X .Moreover, the repeated requests made by theco-passengers of that bus was not paid any heed to.The suspension of the conductor created an uproar among allthe bus crew of the depot (Z). The operating staff (conductorsand drivers) held a meeting on 19th September itself andresolved to limit the intake of passengers to the seating capacity.This decision was implemented with immediate effect. Conse-quently, most of the commuters were unable to leave for theirdestination. Passengers of almost all the routes experiencedmany difficulties while travelling. Average revenue per day of ‘Z’bus depot declined to Rs. 75,000 from Rs. 1,00,000 between

20th and 27th September. The suspension of Mr. A at ‘Z’ busdepot served as the potential ‘fuel’ for the staff, the officials ofthe corporation re-examined the whole case and withdrew thesuspension order served on Mr. A on 27th September 1983.

QuestionsQ1.Was the conductor guilty of negligence of duty?Q2. Should the corporation officials ignore the pleas and

evidences of the passengers traveling in that bus whileimposing a penalty?

Q3. Should a genuine mistake call for the drastic punishmentof suspension?

Q4. Should the disciplinary rules, be applied for the sake ofmere discipline or should they contribute to the goals andobjectives of a corporation?

LESSON 23:CASE STUDY

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Case: Grievance Procedure VS. CollectiveBargainingThe Andhra Pradesh State Road Transport Corporation hasbeen providing passenger transportation facilities since 1956. Ithas been extending its operation from one region to another bynationalizing the private passenger transport companies on aphased manner. Presently it is operating its services in 80% ofthe routes in the State. It nationalized two routes in EastGodavari district in the State in October, 1988. Normally itabsorbs all the employees working in passenger transportcompanies before nationalization and fix their wages at par withthe scales of similar categories of jobs.The pay scales in the corporation are determined on the basis ofmutual agreement between the management and the recognizedtrade union. The scales are revised once in three years. The recentagreement came into force with effect from September, 1988.there are two classes in the drivers’ category, i.e., Class I (driversworking on long distance buses) and Class II (drivers workingin short distance routes). The pay scale of Class II drivers isenhanced from Rs. 600-1200 to Rs. 900-1600 (with effect fromSeptember,1988) in cocequence to the latest agreement . Theagreement further says that the pay scales of the drivers drawingthe scale ofRs. 600-1200 will be fixed in the scale of Rs. 900-1600.The corporation absorbed 10 drivers who were with the privatepassenger transport companies upon the recent nationalizationof two routes. The personal department fixed the scale of these10 drivers in the scale of Rs. 600-1200 and it rejected their pleaof fixing their pay in the scale of Rs.900-1600 saying that onlythe drivers drawing the scale of Rs. 600-1200 are now eligible todraw the new scale of collective bargaining machinery to resolveemployee problems. Then these drivers submitted this issue tothe foreman who is their immediate superior. The foreman toldthem to raise this issue in collective bargaining with the help oftrade union leaders as it is a policy issue. These drivers ap-proached the trade union leaders and persuaded them to solvethis issue. The trade union leaders included this item in thedraft agenda to the collective bargaining committee to be held inJanuary, 1989. but the collective bargaining committee deletedthis item from the draft agenda saying that this issue can besettled through grievance machinery as only 10 drivers out of3,000 drivers of the corporation are concerned with this issue.

QuestionsQ1. Who is correct? The personnel department or the foreman

or the collective bargaining committee.Q2. Where do you place this issue for redressal?Q3. How do you redress this grievance?

LESSON 24: UNIT 7CASE STUDY

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Learning ObjectiveThe study of this lesson will help you understand:• Aspects,causes and approaches to disciplineMaintenance of harmonious human relations in an organiza-tion depends upon the promotion and maintenance ofdiscipline. No organization depends upon the promotion andmaintenance of discipline. No organization can prosperwithout discipline. Discipline has been a matter of utmostconcern for all organizations. There are some people whobelieve and state that maintenance of discipline is concernedwith only higher echelons of an organization. But discipline isconcerned with employees at all levels.Maintenance of effective discipline in an organization ensuresthe most economical and optimum utilization of variousresources including human resources. Thus, the objective ofdiscipline in an organization is to increase and maintainbusiness efficiency. Effective discipline is a sign of soundhuman and industrial relations and organizational health.

Need for Disciplinary MeasuresRules and regulations are essential to maintain peace, preventanarchy, regulate behavior of people and to hold the piecestogether. Moreover, most of the employees prefer to workunder disciplined environment as fair rules protect the indi-vidual and the organization and enable the teamwork. Further,disciplinary measures ensures just and equal treatment to allemployees, efficient two-way communication, encouragescooperation and builds team pride. Disciplinary rules regulatethe behavior of the employees in an organization as the lawregulates the behavior of the people in the society.

Meaning and DefinitionsDiscipline refers to a condition or attitude, prevailing among theemployees, with respect to rules and regulations of an organi-zation. Discipline in the broadest sense means”... orderliness,the opposite of confusion. It does mean a strict and technicalobservance of rigid rules and regulations. It simply meansworking, cooperating and behaving in a normal and orderly way,as any responsible person would expect an employee to do.”Discipline is defined as “... a force that prompts individuals orgroups to observe the rules, regulations and procedures whichare deemed to be necessary for the effective functioning of anorganization.”According to Ordway Tead, discipline is “... the orderly conductof affairs by the members of an organization, who adhere todo necessary regulations because they desire to cooperateharmoniously in forwarding the end which the group has in aview, and willingly recognize that. To do this their wishes mustbe brought into a reasonable unions with the requirements ofgroups in action.” Discipline is said to be good employeeswillingly follow company’s rules and it is said to be bad when

employees follow rules unwillingly or actually disobey regula-tions.Webster’s dictionary gives three meanings of the word ‘Disci-pline’, viz.,i. It is training that corrects, moulds, and strengthens for

perfects.ii. It is control gained by enforcing obedience, andiii. It is punishment or chastisement.This definition indicates the aspects of discipline, viz., Positiveapproach and Negative approach.

Aspects of DisciplineThere are two aspects of discipline, viz., Positive and Negativeaspects.1. Positive Aspect: Employees believe in and support disciplineand adhere to the rules and regulations and desired standardsof behavior. Discipline takes the form of positive support andreinforcement for approved actions and its aim is to help theindividual in moulding his behavior and developing him in acorrective and supportive manner. This type of approach iscalled positive approach or constructive discipline or self-discipline. Posluve discipline takes place whenever theorganizational climate is marked by aspects such as payment ofadequate remuneration and incentives appropriate avenues forcareer advancement, appreciation of proper performance andreinforcement of approved personnel behavior or actions etc.,which all motivate employees to adhere to certain rules andregulations or exercise self control and work to the maximumpossible extent.2. Negative Aspect: Employees sometimes do not believe inand support discipline. As such, they do not adhere to rules,regulations and desired standard of behavior. As such disciplin-ary programme forces and constraints the employees to obeyorders and function in accordance with set rules and regulationsthrough warnings, penalties and other forms of punishment.This approach to discipline is called negative approach orcorrective approach or punitive approach. This approach is alsocalled autocratic approach as the subordinates are given no rolein formulating the rules and they are not told why they arepunished. Negative or enforced discipline connotes thatpersonnel are forced to observe rules and regulations onaccount of fear or reprimand, fine, demotion, or transfer. Butthese are helpful in extracting just minimum standard of workfrom the employees since they work on account of fear theyhave got. In fact, punishment, penalties, demotions andtransfers provide or establish a climate which demotivate anddelead employees. Hence, such climate is not helpful for theaccomplishment of group goals and for enhancing the moraleon the part of employees. Therefore, “where the end is notaccepted as necessary or desirable, where there is no common


RELATIONSCHAPTER 5 : DISCIPLINE MECHANISMS

LESSON 25:JUDICIAL APPROACHES TO DISCIPLINE

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aim between the discipliners and disciplined, discipline becomesa mere frustration of human purpose, stunts development ofhuman personality, embitters human relation, for it is then adenial of freedom to the individuals. But it has been felt that, “if employment relationship is goodin other respects, most employees can be counted on theexercise of a considerable degree of self--discipline. They willrespond to positive leadership and need not be threatened orpunished. In contrast, if the authority is exercised arbitrarily, orif rules of conduct are unreasonable or if employees do nothave sense of adhering to the rules and regulations, discipline isthreatened and if it is prolonged, it affects the organizationalhealth. Any programme of discipline will be effective andsuccessful only when it is used to supplement and strengthenself-discipline.

Objectives of DisciplineThe objectives of discipline are:i. To obtain a willing acceptance of the rules, regulations and

procedures of an organization so that organizationalgoals may be attained;

ii. To impart an element of certainty despite several differencesin informal behaviors patterns and other related changes inan organization;

iii. To develop among the employees a spirit of tolerance and adesire to make adjustments;

iv. To give and seek direction and responsibility;v. To create an atmosphere of respect for the human

personality and human relations; andi. To increase the working efficiency and morale of the

employees so that their productivity is stepped up the costof production improved.

Constructive Programme of DisciplineSome of the employees, for various reasons, deviate from theexpected standards of behaviour. Hence, it becomes essential tohave constructive programme of discipline to deal with theseviolations.According to Walkins, Dodd, McNaughton and Prasow, aconstructive programme of discipline to promote harmoniousindustrial relations should be developed around the followingessential elements:• Formulation of a set of clear and reasonable rules carefully

publicized and administered.• Impartial enforcement of these rules by means of

announced warnings and penalties, corrective in purpose,proportionate and uniform in their application.

• Supervisory leadership that is uniformed on disciplinaryrules and procedures, but firm in the handling ofdisciplinary matters, and itself a good example for employeebehavior.

• An impartial and uniform procedure for investigation ofapparent infractions, whose procedure is subject to reviewby higher levels of management and includes a system ofappeal against disciplinary decisions that are consideredunjust.

The Red Hot Stove RuleWithout the continual support and regard of the subordinates,no managers can get the things done. But disciplinary actionagainst a delinquent employee is painful and generates resent-ment on his part. Hence, a question arises as to how to imposediscipline without generating resentment? This is possiblethrough what Douglas Mc Grover called the “Red Hot StoveRules”, which draws an analogy between touching a hot stoveand undergoing’ discipline, when one touches a hot stoveUndergoing discipline, when one touches a hot stove -a. The burn is immediate.b. He had warning. When the stove was red hot, he knew what

would happen if he touched it.c. The effect is consistent. Everyone who touches a red-hot

stove gets burned.d. The effect is impersonal. A person is burned not because of

who he is but because he touched the hot stove.The same thing is true with discipline. The disciplinary proce-dure should start immediately after an omission is noticed. Itshould give a clear-cut warning regarding the extent or punish-ment for an offence. The same punishment should beconsistently given for the same type of offence. Irrespective ofstatus, different punishment should be imposed, i.e., it shouldbe impersonal.

IndisciplineIndiscipline means disorderliness, insubordination and notfollowing the rules and regulations of an organization. Thesymptoms of indiscipline are change in the normal behavior,absenteeism, apathy, go-slow at work, Increase in number andseverity of grievances, persistent and continuous demand forovertime allowance, lack of concern for performance etc. Theparties responsible for indiscipline in Indian industries are TradeUnions and management: Politicized Trade Union leadership inIndia encouraged and instigated indiscipline. Intra-union rivalryand inter-union rivalry are also major causes of indiscipline.‘Similarly, management tactics like deliberate delay in disciplineprocedure, concealed penalties such as transfer to an inconve-nient place at a short notice, maintenance of confidentialreports, withholding of pay and the level of sincerity, honestyand commitment of superiors are also responsible for indisci-pline in India.

Causes of IndisciplineThe main causes of indiscipline are as follows:i. Non-placement of the right person on the right job which

is suitable for his Qualifications, experience and training;ii. Undesirable behavior of senior officials, who may have set a

pattern of behavior which they expect their subordinates tofollow; but ‘their expectations are often belied, and aninfringement of rules follows;

iii. Faulty evaluations of persons and situations by executive’sleads to favoritism, which generates undisciplinedbehaviour;

iv. Lack of upward communication, as a result of which thethoughts, feelings and reactions of employees cannot be

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conveyed to the top management. This may lead toaggressive or rebellious behaviour;

v. Leadership which is weak, flexible, incompetent anddistrustful of subordinates is often an instrument whichmakes for the creation of indiscipline among theemployees, particularly when a decision is taken in haste andwithdrawn under pressure;

vi. Defective supervision and an absence of good supervisorswho know good techniques, who are in a position toappreciate critically the efforts or their subordinates, who canlisten patiently to them who are capable of giving definiteand specific instructions, and who believe in correcting theirmen rather than in uprooting them:

vii. Lack of properly drawn rules and regulations, or theexistence of rules and regulations which are so impracticablethat they cannot be observed and the absence of servicemanuals and a code Of behaviour;

viii.The “divide and rule” policy of the management, as a resultof which friction,’ and misunderstanding are created amongthe employees which destroy, their team spirit;

ix. Illiteracy and the low intellectual level of workers as well astheir social background; for example, there may beindebtedness, drinking habits casteism and other social evilsfrom which an employee may suffer,

x. Workers’ reactions to the rigidity and multiplicity of rulesand their improper interpretation;

xi. Workers’ personal problems; their fears, apprehensions,hopes and aspirations; and their lack of confidence in, andtheir inability to adjust with their superiors and equals;

xii. Intolerably bad working conditions;xiii.Inborn tendencies to flout rules;xiv. Absence of enlightened, sympathetic and scientific

management;xv. Errors of judgment on the part of the supervisor or the

top management’xvi. Discrimination based on caste, colour, creed, sex, language,

and place in matters of selection, promotion, transfer,placement and discrimination’ in imposing penalties andhandling out rewards;

xvii.Undesirable management practices, policies and activitiesaiming at the control of workers; e.g., employment ofspies, undue harassment of workers with a view to creatinga fear complex among them, and the autocratic attitude ofsupervisors towards their subordinates.

xviii.Improper co-ordination, delegation of authority andfixing of responsibility and ‘

xix Psychological and sociological reasons, includingmisunderstanding, rivalry and distrust among workers andsupervisors, an absence of fellow-feeling, a widespreadsense of injustice, or apathy on the part of themanagement.

Approaches to Discipline

The different approaches to discipline include,i. Human relations approach,ii. Human resources approach,iii. Group discipline approach,iv. The leadership approach, andv. The judicial approach.The employee is treated as human being and his acts ofindiscipline will be dealt from the viewpoint of values, aspira-tions, problems, needs, goals behaviour etc. Under humanrelations approach the employee is helped to correct hisdeviations. The employee is treated as a resource and the acts ofindiscipline are dealt by considering the failure in the areas ofdevelopment, maintenance and utilization of human resourcesunder the human resources approach. The group as a wholesets the standards of discipline, and punishments for thedeviations. The individual employees are awarded punishmentsfor their violation under the group discipline approach.Every superior administers the rules of discipline and guides,trains and controls the subordinates regarding disciplinary rulesunder- the leadership approach.In Judicial approach, in disciplinary cases are dealt on the basisof legislation and ‘cote decisions. The industrial Employment(Standing Orders) Act, 1946, to a certain prescribed the correctprocedure that should be followed before awarding punish-ment to an employee in India. No other enactment prescribedany procedure for dealing with disciplinary problems. But over aperiod of time, a number of principles regarding the basicformalities to be observed in disciplinary procedures emerged,gradually resulting from the awards of several IndustrialTribunals, High Courts and supreme Court. Principles ofNatural Justice:The principles indicated by the Supreme Court for proceedingagainst a delinquent employee are known as the “Principles of aNatural Justice.” These include:a. The delinquent employee must be indicated in

unambiguous terms about the charge leveled against him.b. The delinquent employee must be given an opportunity for

conducting his defence, i.e., by cross examination of thewitnesses.

c. The enquiry should be fair and the enquiry office should beimpartial.

d. the evidence should be put forward in the presence of theemployee charged.

e. Punishment should be proportionate to the misconductcommitted.

Industrial Employment (StandingOrders) Act, (1946)The Industrial Employment (Standing Orders) Act, 1946requires the employees the employees in “Industrial Establish-ments” employing one hundred or more employees to definein precise terms, the conditions of employment under them.The States can extent the application of the enactment to the‘establishments’ employing less then one, hundred employees.

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The ‘establishment’ covered by the Act can have their ownstanding orders certify by the State Labour Commissioner or anofficer under hims called’ certifying these standing orders, interalia, define acts and omissions which amount to mis conduct,are required to be in conformity with the Model StandingOrders framed by the respected State Governments. Until anemployer gets his own standing orders certified the establish-ment stands governed by the Model Standing Orders.

Omission and MisconductFor instance, the Model Standing Orders under the BombayIndustrial Employment (Standing Orders} Rules, 1959, specifythe acts and omissions as mis-conduct for which the chargedemployee can be punished. These omissions and misconductinclude: Willful insubordination or disobedience of any lawfuland reasonable order of the superior, going on an illegal strikeor inciting the workers for that willful slowing down of work,theft, fraud or dishonesty in connection with the employersbusiness or property or the theft of the property of anotherworker within the factory premises, or taking or giving bribes,habitual absence without leave for more than ten consecutivedays or overstaying the sanctioned leave without adequategrounds or satisfactory explanation, late attendance, on not lessthan four occasions with in a month, habitual breach of anyStanding Order or any law applicable to the establishment,collection with the consent of the manager any money with inpremises of the establishment except as sanctioned by law forthe time being enforced, engaging in trade within the premisesof the establishment habitual neglect of work or gross orhabitual negligence, canvassing for union membership except inaccordance with any law or with the permission of the manager,willful damage to work in process or to any property of theestablishment, holding meetings inside the premises of theestablishment except in accordance with any law or with thepermission of the manager, disclosing about the process of theestablishment to any unauthorized person which may comeinto the possession of the workmen in the course of his work,gambling within the establishment where it is prohibited,smoking or spitting on the premises of the establishmentwhere it is prohibited, failure to observe safety instructionsnotified by the employer, refusal to accept a charge-sheet,ordered to other communication served in accordance withthese Standing Orders, and unauthorized possession of anylethal weapon in the establishment. No act of misconductcommitted on less than three occasions within a period of oneyear shall be treated as habitual. (Exhibit). Omissions andcommissions constitute misconduct according to clause 14 ofthe model standing orders.

Omissions and Commissionsi. Willful insubordination or, disobedience (whether alone or

in combination with others) of any lawful and reasonableorders, rule or regulation;

ii. Refusal to work on a job or a machine which has beenassigned to him;

iii. Refusal to accept or reply to a charge sheet within theprescribed period of time;

iv. Theft, fraud, or dishonesty in connection with the propertyof the company;

v. Theft of another employee’s property inside the industrialarea or company premises;

vi. Causing willful damage to, or loss of, the employer’s goodsor property;

vii. Causing damage to a product in process or to any property;viii.Sabotage of, or interference with, safety devices;ix. Disregard of any operational or maintenance instructions or

carelessness in the performance of operational andmaintenance jobs.

x. Non-observance of safety precautions and rules;xi. Taking or giving a bribe or any illegal-gratification;xii. Acceptance of gifts from subordinates;xiii.Habitual late coming;xiv. Absence from duty without leave;xv. Overstay when on leave without prior authorized

permission;xvi.Absence from work without permission for more than ten

consecutive days;xvii. Leaving the work premises without authorized leave;xviii. Entering or leaving, or attempting to enter or leave, the

work premises except through authorized entrances andexits;

xix.Assaulting or abusing or in any way insulting an officer ofthe company inside or outside the premises of theorganization;

xx. Insubordination and indiscipline;xxi.Drunkenness, or coming to work under the influence of

drink;xxii. Gambling on company property and company premises;xxiii Fighting, or indulging in a riotous, disorderly or indecent

behaviour in the company premises, or indulging in any actwhich is subversive of discipline;

xxiv. Smoking in prohibited areas;xxv. Sleeping while on dutyxxvi. Threatening or intimidating any employee inside or

outside the company premises.xxvii. Unlawful interference in the work of other employees;xxviii. Gross negligence of duty;xxix. Tradiness, malingering, or slowing down on work, or

neglecting to perform it properly;xxx. Striking work or inciting others to strike work;xxxi. Collecting any money or canvassing the collection of it for

any purpose in the company premises and during the hoursof work without the written permission of themanagement;

xxxii. Holding meetings in the company premises without thewritten permission of the management;

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xxxiii. Distribution or exhibitions within the boundaries of theestablishment, of any newspaper, notice, pamphlet or posterwithout the prior permission of the management in writing;xxxiv. Unauthorized use of the company’s quarters or land forany purpose other than the lawful purpose of his ownresidence;xxxv. Subletting of the accommodation given to’ him by thecompany;xxxvi. Conduct in private life which is prejudicial to thereputation of the company;xxxvii. Conviction in any court of law of any criminal offence oran offence involving moral turpitude;xxxviii. Approaching the higher authorities, either directly or

through any outside person for promotion or any otherpersonal favour or gain except through proper and lawfulchannels;

xxxix. Giving false information about his name, father’s name,age, qualifications, previous experience, etc., at the time ofhis employment;

xl. Unauthorized communication of official documents’ orinformation or the disclosure to any unauthorized persons,including fellow-workers, of any information bearing onthe operations and business of the organization to whichhe belongs:

xli. Writing of anonymous letters, or letters written under apseudonym, criticizing the management, or collectingsignatures or collective representations during workinghours;

xlii.Spreading false rumours or giving false information ormaking defamatory statements (written or oral) which tendto bring the management or its officers into disrepute;

xliii. Failure on the part of an employee to inform the medicalofficer of the company of any case in his home of aninfectious or epidemic disease, such as cholera, small-pox,diphtheria, cerebrospinal meningitis, plague, yellow fever ortyphoid, or any other dangerous or contagious disease;

xliv. Carrying on a money lending or any other private business;xlv. Speculation in any commodity;xlvi. Insolvency;xlvii. Abetment of, or an attempt to commit, any of the acts of

misconduct;xlviii. Breach of any of the rules applicable to the

establishment;xlix. Preaching or inciting people to violence;a. Going on an illegal strike, either singly or with other

workers, without giving a notice of 14 days; andb. Failure or refusal to wear or use any protective equipment

given by the employer.Source: C.B. Mamoria, op. cit, p. 854-857.Thus, the above list briefly indicates acts and omission on thepart of an employee which can be termed as misconduct.Besides, the above list of acts and omissions, an employer mayconsider certain other acts and omissions and get them certified.

No disciplinary action can be taken for any act or omissionwhich is not misconduct.

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Learning ObjectiveThe study of this lesson will help you understand:• Disciplinary procedureDisciplinary ProcedureDisciplinary procedures in Indian industries comprise of thefollowing stages1. Issuing a Letter of Charge to the Employee Calling uponhim for Explanation: When the management of the establish-ment comes to conclusion that an act of misconductcommitted by an employee warrants disciplinary action, theconcerned employee should be issued a charge-sheet. The chargesheet should indicate the charges of indiscipline or misconductclearly and precisely, Explanation should also be called from thedelinquent employee and for that sufficient time should begiven to the employee. Saving of the charge sheet may be eitherpersonally or by post.2. Consideration of the Explanation: When the delinquentemployee admits, in an unqualified manner, about his miscon-duct, there is no need for conducting any enquiry further.Besides, when the employer is satisfied with the explanationgiven by the delinquent action. On contrary, when the manage-ment is not satisfied with the employee’s explanation, there isneed for serving a show-cause notice.3. Show-cause Notice: In the show-cause notice, the employerprovides another chance to the employee to explain his conductand rebut the charges made against him. Show-cause notice isissued by the manager, who decides to punish the employee.Besides, a notice of enquiry should be sent to the employee andthis should indicate clearly the name of the enquiring officer,time, date and place of enquiry in the misconduct of theemployee.4. Holding of a Full-fledged Enquiry: The enquiry should be inconformity with the principles of natural justice, that is, thedelinquent employee must be given a reasonable opportunityof being heard. The enquiry officer should record his findingsin the process of an enquiry. He may also suggest the nature ofdisciplinary action to be taken.The important steps in domestic enquiry are: preparing andserving the charge sheet supervision in grave cases. Obtain replyto charge-sheet, selecting enquiry officer, conducting enquiryproceedings, holding of enquiry in the free environment,recording findings, submitting enquiry officer’s report to thedisciplinary authority, decision of the disciplinary authority,communication of the order of punishment.5. Considering the Enquiry Proceedings and findings andMaking final Order of Punishment: When the misconduct ofan employee is proved, the manager may take disciplinary actionagainst him. While doing so, he may give consideration to theemployees previous record, precedents, effects of this action on

other employees, consulting others before awarding punish-ment rate. No inherent right to appeal has been provided unlessthe law provides it. In case the employee feels the enquiry is notland action unjustified, he must be given a chance to make anappeal.6. Follow-up: After taking disciplinary action, there should beproper follow-up. The disciplinary action should not make theemployee repeat his mistake.Section ll-A of the Industrial Disputes Act, 1947, which wasintroduced by an amendment in 1971 reads as follows:“Where an industrial dispute relating to the discharge ordismissal of a workman has been referred to a labour court,tribunal or national tribunal, as the case may be, is satisfied thatthe order of discharge or dismissal was not justified, it may, byits award, set aside the order of discharge or dismissal as thecircumstances of the case may require, provided that in anyproceedings under the section the labour court, tribunal orNational tribunal as the case may be, shall rely only on thematerials on record and shall not take any fresh ordinance inrelation to the matter.”

Intervention by a TribunalOnly under the following circumstances can the tribunal exercisethe right to consider the case• When there is a want of good faith;• When there is victimization or unfair labour practices are

used;• When management has been guilty of a basic error or

violation of a principle of natural justice; and• When the findings are baseless and perverse.

Types of punishmentWhen a delinquent employee is going to be punished, the typeof punishment should be commensurate with the severity ofthe omission or misconduct. Different types of punishmentsresulting from various types of omissions or misconduct are asfollows:1. Oral Wamings: Whenever an employee commits minoromissions he may be given an oral reprimand by the superiorconcerned. In such cases, the superior should enlighten theemployee as to how to prevent their recurrence. Since repeatedwarnings may bring down drastically the level of morale of theemployee, oral warnings should be used sparingly.2. Written Warnings: Whenever oral warnings fail to achieve thedesired behaviour on the part of an employee, written warn-ings, which are the first formal state of progressive discipline,may be resorted to. Written warnings are also referred to as“pink slips” which indicate that certain rights would bewithdrawn in case the employee continues his omission ormisconduct.

LESSON 26:DISCIPLINARY PROCEEDINGS

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3. Loss of Privileges and Fines: If an employee leaves the work,without taking the permission of the superior, he may not beallowed to select good tools and machine for himself and tomove freely in the company. All these might have been theprivileges enjoyed hitherto by the employee. Further, if thecontract of employment provides for imposition of fines bythe employer on the delinquent employee, the employer mayresort to them.4. Punitive Suspension: Under punitive suspension theemployer prohibits the employee from performing the tasksassigned to him and the wages are withheld or withdrawnduring the period of such prohibition.5. Withholding of Increments: This is a major punishment.Under this method, the employer withholds the annualincrements of the delinquent employee in a graded scale.6. Demotion: Under this kind of punishment, an employee isreduced to a lower grade from the grade enjoyed by him earlier.Normally this method is resorted to when an employee ispromoted by mistake and he is not able to perform the job.7. Termination: The employee’s service can be terminated in thefollowing forms:i. Discharge simpliciter;ii. Discharge;iii. Dismissal.Exhibit shows disciplinary actions for various offences

EXHIBIT

Disciplinary Actions for Various Offences

First Second Third Fourth Type of Offence Offence Offence Offence Offence

Unexcused absence Warning Warning Suspension Discharge Unauthorized soliciting Warning Suspension Discharge Theft Discharge - - Carelessness Warning Warning Suspension Discharge Sleeping on the job Warning Discharge Insubordination Warning Discharge Leaving work without permission Warning Suspension Discharge

Slowdown on production Warning Suspension Discharge

Willful damage to property Discharge - -

Unexcused excessive lateness Warning Warning Suspension Discharge

Discharge and DismissalWhen the conduct of an employee is deemed to be incompress-ible with the faithful discharge of his duties and undesirable oragainst the interest of the employer to continue him inemployment, dismissal will be justified. This is an extreme kindof punishment. But in case of discharge, an employer termi-nates the employment of delinquent employee either by givingagreed advance notice or by paying money in lieu of such notice.In other words, in discharge, the reciprocal promises andobligations are stated to be discharged. Termination of theservice of an employee IY not be on account of his misconductbut may be for certain other reasons which do not cast a slur onhim. This is referred to as ‘discharge simpliciter.’ In such a case,if the employee challenges the employer’s bona fides, the

employer must prove them. But discharge has acquired ameaning analogous to dismissal and an employee may bepunished by way of discharge also. In such case, dischargeshould not be regarded as discharge simpliciter’ but discharge inlieu of dismissal.Thus, though both discharge and dismissal culminate intermination of employment, discharge is regarded as some kindof punishment less severe than that dismissal. Dischargerequires either an advance notice or payment of money in lieuthere of, whereas there is no such requirement in case ofdismissal. However, dismissal attaches some kind of stigma tothe employee concerned or casts a slur on him.

The Role of Personnel Manager/SupervisorIn so far as maintenance of effective employee discipline isconcerned, personnel manager has got a crucial role to play. Hehas got numerous responsibilities such as advising andassisting top and, line management in determining anddeveloping an appropriate disciplinary procedure, assisting incommunication the same to all employees of the organization,seeing that the disciplinary policy conforms to the legal decisionsof the State, looking after the procedures laid down, lookingafter the disciplinary action as fair, and conforms with appropri-ate principles of personnel management, training thesupervisors and executives in dealing with disciplinary casesproblems, involving the trade union and the employees indetermining and implementing disciplinary procedures,development of self-discipline and self-control on the part ofthe employees and winning over the confidence of employeesin disciplinary policies and procedures.Analyzing the role of personnel manager in regard to employeediscipline, the Indian Institute of Personnel managementindicates: “In advising management whether to proceed with adisciplinary case, the personnel officer must give careful thoughtto the likely repercussions on discipline and general relationshipin the organization, Even when there is a prima facie caseagainst an employee, it is to be ‘considered whether an enquiry,with all publicity and excitement that it causes, is advisable, orwhether some other line of action might prove more effectivein improving discipline for the future, such’ as consultationwith the trade union or the works committee in the hope thatsocial pressure may be brought on the delinquent to apologizeand not to repeat the offence.” Besides, it adds: “Because he hasto be familiar with the correct procedure and with tribunalrulings in disciplinary cases, the personnel officer is often felt bytop management to be the most suitable person toconduct an enquiry. He has the advantage of being removedfrom the direct line of production, and he is also well known toboth employees and union, It is generally he who makes thepreliminary investigation, and he may be asked to give his viewson the enquiry report, even if he does not himself conduct theenquiry.”Whenever employers go against the predetermined rules andregulations and commit serious mistakes or create seriousproblems to the organization and its interests, the employees’misconduct should not be condoned since it amounts to theencouragement of misconduct which ultimately leads to serious

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repercussions on the morale of the organization and itsdiscipline. Hence, where employees fell out seriously in adheringto disciplinary rules and regulations, they must be givenpunishment. Otherwise, they will not have any respect for themanagement. At the same time, the personnel manager shouldalso make an endeavor to develop self-discipline on part of theemployee.;Emphasizing self-discipline, the American ManagementAssociation states “Until human nature attain greater perfection,the fullest measure of individual freedom of action can berealized only within the framework of an expressed discipline.In the social situation, this takes the form of laws; in industry,it manifests in standard firmness in securing conformity, inboth instances it is wholly consistent with our democraticapproach. But the requirements must be fair, the reasonsbehind them must be clear, and so far as possible, they must bearrived at cooperatively, This is the road to self-discipline, this isthe aim of a wise leadership.”Guidelines for Creating a Climate for DisciplineThe personnel manager/supervisor has to handle the problemsor indiscipline based on management’s policies, trade unionsand industrial relations policies and practices. He should alsocreate conducive climate for discipline by following the guide-lines such as: clearly laid down rules, regulations and procedures,impartial decisions and consistent enforcement of rules, selectand award right punishment, verify the past records of theoffender, consider the precedents, make sure that action correctsbut not punishes, be sure that reprimand is necessary, be surethe principle of just cause are observed.

Principles of Effective DisciplinePersonnel manager/supervisor should,a. have interest in the welfare of each employee,b. View discipline as a corrective measure,c. Not take disciplinary action unless it is a must,d. Not administer discipline on routine basis,e. Have all the facts and circumstances,f. Give a fair chance to the worker to defend himself,g. Discover the employee’s mind,h. Maintain consistency in disciplinary actions,i. Admit his mistake willingly,j. Resume normal attitude and behaviour towards the

employee, andk. Have the audit over the entire action and situation to correct

the employee.

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Learning ObjectiveThe study of this lesson will help you understand:• Domestic enquries in industry.• Issue of charge sheets.• Conduct of enquiry and award of punishment.

Domestic Enquiries in IndustryThe first and primary step is to carry out a preliminary investiga-tion before the employer holds a disciplinary enquiry in order tofind out whether a prima facie case of misconduct is evident.Thus the enquiry should be the result of a preliminary investi-gation and should not be adopted merely as a matter of course.After the preliminary investigation is carried out and a primafacie case of misconduct is established, the following stages ofdisciplinary enquiry should be followed:1. issue and service of a charge sheet calling upon the

employee to sub-mit an explanation,2. consideration of the explanation,3. giving notice of an enquiry into the charges in case of

unsatisfactory explanation,4. suspension with or without pay, pending enquiry (if

needed),5. enquiry into the charge;• deciding as to who should conduct• deciding as how to proceed• deciding about the order of examining witnesses6 recording of findings by the enquiry officer,7. punishment-decision,8. communication of punishment.Let us examine each step in detail.

Issue of a Charge-SheetAs soon as misconduct is observed and confirmed throughpreliminary investigation a manager should frame a charge-sheetwhich contains charges or a description of misconduct, and anexplanation should be asked for. A manager has to be verycareful in framing the charge-sheet because if the punishmentawarded is not in consonance with the charges it would beinvalidated.The following points should be considered while framing thecharge-sheet:I. The charge-sheet should be properly worded and loose

language should not be used so as to create apprehensionand confusion in the mind of the concerned workman.

2. While stating the offence, the date, time and place of itscommission and all other relevant details should be given.

3. If, in a firm, standing orders are in force, then the wordingof the charges should be in consonance with the wording inthe standing orders.

4. The proposed punishment may be mentioned.5. It should call upon the worker to submit an explanation in

writing within a specified time or date.6. The charge-sheet should be issued under the signature of

the disciplinary authority and not of the enquiry officer.7. The charge-sheet should be properly served and there

should be strict proof of issue and delivery so that later theworker may not deny it. The following alternatives exist: (i)when the workman is present, hand over and obtainsignature on duplicate copy; (ii) if he refuses to sign, thenduplicate may be signed by the manager and two witnesses;(iii) deliver it to him by registered post; (iv) if the registeredcharge sheet is returned unserved, then it should bedisplayed on the notice board, with a noting on it, as towhen displayed, when removed, etc; and (v) in appropriatecases, the charge-sheet should be published in a localnewspaper having sufficient circulation or coverage.

Consideration of the ExplanationThe workman receiving the charge-sheet may:1. Submit his explanation admitting the charge and ask for

leniency -even if such an admission is unqualified andunambiguous, the enquiry should be held before awardingthe punishment. In such an enquiry, the enquiry officer neednot record evidence but should record findings on the basisof the admission of charges in the worker’s presence andhis signature may be obtained.

2. Submit his explanation refusing the charge-sheet. Then it isto be care-fully examined, to find out whether theexplanation is satisfactory or not. A further decision aboutproceeding in the matter and a detailed enquiry is to betaken on that basis.

3. Apply for an extension of time for submitting anexplanation. If such an extension is reasonable then itshould be given, so as to avoid future controversy.

4. Fail to submit his explanation, the employer may followfurther pro-ceedings of enquiry.

Notice of EnquiryThe enquiry should be normally held within a reasonable timeof receiving the explanation.. Proper and sufficient advancenotice should be given indicat-ing the date, time and venue ofthe enquiry and name of the enquiry officer, so that theworkman can prepare his case. It should also be notified that heshould be ready with oral and documentary evidence on thedate of enquiry and bring witnesses to prove his case.

LESSON 27:DOMESTIC ENQUIRES, CHARGE SHEETS, CONDUCT

OF ENQUIRY AND AWARD OF PUNISHMENT

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In certain cases, the following steps may be observed instead ofthose previously mentioned:• issue of show cause notice;• consideration of explanation; and• issue of charge-sheet and notice of enquiry.While framing the notice, care should be taken not to make astatement which would indicate that the workman’s case hasbeen prejudged, e.g. statement that the explanation submittedwas false etc. should not be made.

Suspension with or without Pay

Pending Enquiry if NeededWhere the nature of misconduct is grave and serious, and if itis in the interest of security and safety and maintenance of goodorder and discipline in the establishment,-the worker may besuspended with or without pay till disciplinary proceedings arecompleted. A manager may suspend a worker even before thecharge-sheet is issued or an order of suspension may be givenalong with the charge-sheet. In a case where standing orderslimit the period of suspension, the enquiry must either becompleted within the period or wages should be paid for thetime exceeded.

Conduct of the EnquiryWho should hold the enquiry?

Enquiry OfficerStanding Orders may provide as to who should hold theenquiry. Other-wise, an assistant manager, or administrativeofficer, or labour welfare Officer may be nominated. Thus, hemay be either a member of the management, or an outsider, oran employer’s lawyer or the manager of another business, butnot a person who is a witness or ~ho is himself involved in theincident. He has to collect information and arrive at a conclu-sion. He should not act as a prosecutor or an inquisitor. Thereshould be no personal bias, otherwise the principle of naturaljustice is violated. The enquiry officer has authority to give anadjournment to the charge-sheeted workman.Request for Adjournment: If the workman concernedrequests for further time on reasonable grounds then anotherenquiry date should be fixed and conveyed.Nominee of the Accused Workman: If the charge-sheetedemployee would like another employee to represent and assisthim in the conduct of his defence, the enquiry officer shouldallow this. However, it is left to the discre-tion of the manage-ment to allow a non-employee union official to act as anominee of the workman at the enquiry.Interpreter: He may be needed when the workman is notfamiliar with the language of the enquiry officer.The enquiry officer should record preliminary statementspertaining to the date of holding the enquiry, persons present,statement of charges, state-ment that the enquiry procedure wasexplained to the workman.In the presence of the accused workman, witnesses should beexamined one by one so that prospective witnesses do notknow what the previous witness has said. Each witness should

be first examined by the party which has called him (examina-tion in chief) and then by opposite party (cross--examination).The evidence may preferably be recorded by the enquiry officer ina narrative form. .Order of Examination of Witnesses. In the presence of theworkman, first the management witnesses should be examined.Then fair opportunity should be given to the workman tocross-examine the management witnesses. Documentaryevidence should also be produced through witnesses and bemade a part of the enquiry proceedings.At the end of the recording of evidence given by a witness, heshould be asked to sign and then the enquiry’ officer shouldalso sign the evidence.After that the worker’s witnesses including the worker shouldbe examined.They can be cross-examined, and the records should be signed.Expartite Enquiry. When the workman does not turn up forthe enquiry without notice or reasonable cause or refuses toparticipate or walks out then the enquiry officer may proceed tohold the enquiry ex parte.

Findings of the Enquiry OfficerAt the conclusion of the enquiry proceedings, by applying hismind to all the facts that emerged at the enquiry, the enquiryofficer should decide as to whether the charges made are valid ornot along with reasons for his findings. He may or may notrecommend punishment. As far as possible heshould refrain from awarding punishment and leave it to thedecision of the appropriate authority.

Awarding of PunishmentThis is a management task and punishment awarded should bebased on the findings of the enquiry and past record of theemployee. The gravity of misconduct should be taken intoaccount.

Communication of PunishmentAfter a decision is taken regarding punishment, it should becommunicated to the concerned workman as expeditiously aspossible. The letter com-municating the punishment shouldcontain:• reference to the letter of charge issued to the employee; -

reference to the enquiry;• reference to the findings of the enquiry;• decisions whether to punish or not; and• date from which the punishment is to be effective.When it is necessary to have the approval or prior permissionof the conciliation officer, court or tribunal for effecting theorder of punishment as provided under Section 33 of theIndustrial Disputes Act, a slightly diffe-rent procedure is to befollowed. In such a case, the letter communicating punishmentshould mention permission obtained or being obtained. Thisis so in case of prior permission. If the punishment is dis-missal or discharge and permission is yet to be obtained, thenthe letter should mention this and the concerned workmanshould be placed under suspension. In cases where priorapproval is necessary the order of punishment is effective at

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once be-cause only an application to the concerned authority for‘approval’ is to be sent by the management along with thepayment of one month’s wages to the concerned workman.

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Learning ObjectiveThe study of this lesson will help you understand:• Nature of conflict and its manifestations

Industrial ConflictThough several measures are taken to manage human resources,satisfy the demands of employees and employer, disputesbetween employees and employer take place due to conflict ofinterest between capital and labour. Profit maximization orwealth maximization goal of management and profit sharingor wage maximization goal of workers contradict each other.These diversified goals of management and labour result indispute of interest and consequently industrial conflicts. Thesedisputes are also called ‘conflicts of interests’ or ‘conflicts ofrights.’Industrial peace broadly implies the absence of industrial unrestor the existence of a harmonious relationship or cooperationbetween labour and capital. Industrial peace is a condition wherelabour and management work together harmonic towards theirsocially desirable goals. Industrial peace is not merely a negativeconcept to industrial unrest. Industrial unrest is the result ofthe discontent of workers and management.Industrial conflicts can be classified into four groups, viz.:i. Interest Disputes : These are the disputes that arise out of

deadlocks in negotiations.ii. Grievance Disputes: These are the disputes that arise from

day-to-day grievances.iii. Unfair Labour Practices: These are the disputes that arise

from acts of interference with the exercise of right toorganise acts etc.

iv. Recognition Disputes: These are the disputes that arise dueto the recognition of trade union as a bargaining agent.

Definition of a DisputeAccording to the Industrial Disputes Act, 1947, Section 2 (k),“Industrial disputes means any dispute or difference betweenemployers and employers, or between employers and workmenor between workmen and workmen, which is connected withthe employment or non-employment or terms of employmentor with the conditions of labour of any person.”For a dispute to become an industrial dispute, it should satisfythe following essentials:i. There must be a dispute or a difference - (a) between

employers and employers (such as wage-warfare wherelabour is scarce); (b) between employers and workmen (suchas demarcation disputes); and (c) between workmen andworkmen;

ii. It is connected with the employment or non-employmentor the terms of employment or with the condition oflabour of any person (but not with the managers or

supervisors), or it must be pertaining to any industrialmatter

iii. A workman does not wages exceeding Rs. 1,000 per month;and

iv. The relationship between the employer and the workmanshould be in existence and should be the result of thecontract and the workman actually employed.

Industrial disputes, means disputes relating to existingindustry. It must be a real dispute and the person regardingwhom the dispute is raised and the parties to a dispute musthave a direct or substantial interest.The term ‘Industrial Dispute’ has been interpreted and analyzeddifferently in different case situations by the Court. Some of theprinciples to judge the nature of a dispute were evolved by thecourts as follows:1. The dispute must affect large group of workmen who have

community of interest and the rights of these workmenmust be affected as a class in the interest of common good.In other words, considerable section of employees shouldnecessarily common cause within the general lot.

2. The dispute should invariably be taken up by the industryunion or by an appreciable number of workmen.

3. There must be a concerted demand by the workers forredress and the grievance becomes such that it turns fromindividual complaint into the general complaint.

4. The parties to the dispute must have direct and substantialinterest in the dispute, i.e there must be same nexusbetween the union which exposes the cause of theworkmen and the dispute. Moreover, the union must fairlyclaim a representative character.

5. If the dispute was in its inception an individual dispute andcontinued to be such till the date of its reference by theGovernment for adjudication, it could not be convertedinto an industrial dispute by support subsequent to thereference even of workmen interested in the dispute.

By incorporating Section 2A in the Industrial Disputes Act,1947, a right has been given to the individual workman himselfto raise an industrial dispute with regard to termination,discharge, dismissal, or retrenchment of his service even thoughno other workman nor any trade unions of workmen raised itor is a party to dispute.Industrial unrest, thus, takes an organized form when the workpeople make common causes for their grievances againstemployers through manifestations of strikes, demonstrations,picketing, morchas, gate meetings, gheraos, etc.

Features of Industrial ConflictsFeatures of industrial conflicts are as follows:1. Many of the present-day conflicts are totally devoid of cost

benefit consciousness on the part of labour. Many of them

LESSON 28:NATURE OF CONFLICT AND

ITS MANIFESTATIONS


RELATIONSCHAPTER 6 : INDUSTRIAL CONFLICT

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were long-drawn-out. e issue raised by the strikes and thequantitative benefits even in the cases total success, show alack of proportion to the disadvantage of labour. It isthough damage and loss to the employer rather thanbenefits for labour have been the objectives of the struggle.

2. Another significant trend seen in those conflicts is thefrequency with which management met, “labour pressure bythe management pressure of lockou-t.”

3. Most of the strikes are “political strikes”, i.e., they are notcaused by any industrial dispute as such. Among these areincluded physical restraint bandh, gherao, dharna etc.) go-slows and work-to-rule. All these practices) show that thedimensions of conflict in industrial relations are growing.These are a cause of significant loss of mandays. A singleday’s bandh cause a loss of nearly one million mandays. Asingle day’s bandh may cause a loss of nearly one millionmandays in industrialized States like kerala, Maharashtra,West Bengal, Gujarat and Tamil Nadu.

4. Another significant fact is that lock-ours account for a sizablenumber mandays lost. Such lock-outs are more frequent inthe eastern region and may be due to: (i) employers’ reactionto a turbulent industrial situation erupting in ‘gheraos,violence characterized by destruction of prop burning ofvehicles, snapping of telephone wires or even stabbing

Murdering; (ii) a habitual reaction of the traditional or authori-tarian style\ management of labour intransigence (i.e., with aview to teaching labour lesson by withholding employment).The average duration of lockout is much larger than that of astrike, as a lock-out represents an employer resistance and inIndia the employer has more resources to ride out a period ofstoppage.”

Causes of Industrial ConflictsIt is not easy to identify a single factor as a cause of industrialconflicts multifarious causes blended together result in indus-trial disputes. Deep seated and more basic causes of disputescan be identified through in-depth probe, though sumManifestations appear to be responsible for conflicts. Therelative importance of the causes, when more than one present;is often very difficult to gauge.According to Mukerjee, “the development of capitalisticenterprise, which means the control of the tools of productionby small entrepreneur class has brought to the fore the acuteproblem of friction between management and labour throughthe world.”Causes of industrial conflicts may be grouped into fourcategories, viz.:A. Industrial factors;B. Management’s attitude towards workers;C. Government machinery; andD. Other causes.

A. Industrial Factors

“Under this category, some of the causes of a dispute may be:i. An industrial matter relating to employment, work, wages,

hours of work Privileges, the rights and obligations of

employees and employers, terms and Conditions ofemployment including matters pertaining to:

a. Dismissal or non-employment of any person;b. Registered agreement, settlement or award; andc. Demarcation of the functions of an employee. Iii. An industrial dispute which connotes any difference which

has been fairly defined as is of real substances; i.e., a matterin which both parties are directly and substantiallyinterested; or which is a grievance on the part of a workerwhich the employer is in a position to redress; or which issuch as the parties are capable of settling betweenthemselves or referring to a adjudication.

iii. Disputes often arise because of:a. The rapidly increasing population which has no

opportunities for gainful employment; there is, therefore,no improvement in the standard of living of employeeswho put forward demand for higher wages, which, if notconceded, often lead to strained industrial relations andstrikes.

b. Rising unemployment.iv. The galloping prices of essential commodities, their

shortages and/or non--availability, all these erode the valueof money, as a result of which the real wages of theworkers go down. Existing inadequate and unjustified wagestructure which has been chaotic, confusing and full ofanomalies; and failure to pay the “need-based wage”; andfixation of D.A. as per the price--index based on 1961- havecreated dissatisfaction among the workers, compelling themto demand higher wages.

v. The attitude and temperament of industrial workers havechanged because of their education, their adoption ofurban culture and the consequent change in social values,the growth of public opinion and progressive legislationenacted for their benefit. They are, therefore, very consciousoftheir rights and will not put up with any injustice or wrongdone to them.

vi. The trade unions often failed to safeguard the interests ofworkers. The, reasons affairs are:

a. Rivalry among, and multiplicity of, trade unions havedestroyed the solidarity of the working class;

b. Non-recognition of some trade unions as “bargainingagents” of their members;

c. Compulsory adjudication has made trade unions seemredundant for the wages and working conditions ofindustrial employees can now be determined by courts,tribunals, and wage boards;

d. Trade Unions generally do not bother about any aspect ofthe lives of industrial labour except their wages;

e. Trade unions leaders who are them selves’ industrialworkers have become an eyesore

f. Trade unions generally function on the basis of caste,language, or communal considerations, which ‘divide’ ratherthan ‘unify’ industrial labour.

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g. Trade unions are unstable and ephemeral;a. Trade unions leadership aim at fulfilling ulterior motive

leading to thwarting the attempts of trade union unity.

B. Management attitude Towards Labouri. Management is not willing to talk over any dispute with

their employees or their representatives or refer it to‘arbitration’ even when trade unions want them to do so.This enrages the workers.

ii. A management’s unwillingness to recognize a particulartrade union and the dilatory tactics to which it resorts whileverifying the representative character of any trade union havebeen a very fruitfu1l source of industrial strikes.

iii. Even when representative trade unions have beenrecognized by employers they do not, in a number ofcastes, delegate enough authority to their officials tonegotiate with their workers, even though therepresentatives of labour are willing to commit themselvesto a particular settlement.

iv. When, during negotiations for the settlement of a dispute,the representatives. Of employers unnecessarily andunjustifiably take the side of the management tensions arecreated, which often lead to strikes, go-slow or lock-outs.

v. The management’s insistence that they alone are responsiblefor recruitment promotion, transfer, merit awards, etc., andthat they need not consult their employees in regard to anyof these matters, generally annoys the workers, who becomeun-cooperative and unhelpful and often resort to strikes.

vi. The services and benefits offered by a management to itsemployees do promote harmonious employer-workerrelations. But a large number of managements have nottaken any steps to provide these benefits and services fortheir workers.

C. Government Machinery

i. Though there is a plethora of enactments for promotion ofharmonious relations, yet it is ineffective and unsatisfactoryin most cases due to:

a. Their irrelevancy in the context of the challenges of presentindustries climate/culture, as many have not been convincedof their utility satisfactorily;

b. Incapability of understanding and answering imperatives ofdevelopment;

c. Improper and inadequate implementation by manyemployers.

ii. The Government’s conciliation machinery has settled a verynegligible number of disputes because:

a Both employers and employees have very little confidence init;

b. Both have become litigation-minded;c. It is inadequate, for the number of disputes referred to it is

very large and the personnel dealing with them is hopelesslywhen thesis hopelessly inadequate, particularly because, inaddition to labour disputes, it is called upon to see to it thatlabour laws are properly implemented; and

c. The officers associated with conciliation proceedings havevery little training in handling the problems or disputeswhich are referred to them.

D. Other Causes

Among these the following may be included:i. Affiliation of the trade unions with the political party. Each

political party, therefore, somehow, “engineers” strikes,gheraos and bandhs to demonstrate its political strength.Invariably, the political party which is in power favors thattrade union organization which is affiliated to it. Result:Labour Conflicts and Disputes.

ii. Political instability, Centre-State relations, generalresponsibility or all fronts are reflected in industry resultingin industrial conflict.

i. Other potential factors, such rampant corruption inindustry and public life, easy money, conspicuousconsumption, permissive society, character crisis and generalbreak-down in the national morale have brought in theirtrain debasement of social values and social norms - allthese can and have perpetuated all kinds of unrest,including industrial unrest. “

Exhibit

Causative Factors of Industrial Conflicts

i. Industrial FactorsCauses of industrial disputes under this category are:a. Industrial matters relating to employment, work, wages,

hours of work, privileges, rights and obligations ofemployees, terms and conditions of employment.

b. Disputes often arise because of the population explosionand rising unemployment.

c. The increasing prices of essential commodities.d. The attitude and temperament of industrial workers.ii. Management’s Attitude Towards Workersa. Disinterest of management to discuss with the workers and

their representa-tives.b. Management’s unwillingness to recognize a particular trade

union.c. Unwillingness of management to delegate required

authority to its officials for the purpose of discussing withtrade unions. .

d. Taking management side by the management officials whilediscussing the issues in collective bargaining.

e. Disinterest of the management in involving the workers indecision-making.

iii. Govemment MachineryThough the Government enacted a number of legislations,Government machinery is not successful in implementingthe machinery due to:

a. Their irrelevancy in the context of the challenges of presentindustrial climate.

b. Inability to understand and answer imperatives ofdevelopment.

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c. Inability to check employers in implementing labour laws.d. A little confidence of employees and employers in

government’s conciliation machinery.e. Inability of government’s conciliation machinery in doing

its job effectively.iv. Other Causesa. Affiliation of trade unions with political party and political

leadership of trade union.b. Political instability, poor center-state relations etc.c. Other political reasons like character crisis, values etc.

Manifestation of industrial conflicts is below: Manifestations of Conflict

Manifestation of organized group Manifestation of individual and Conflict (union Management conflict) unorganized conflict Manifestations Manifestation of Workers Management Of unions management Non-co-operation Unwillingness Unorganized Autocratic With holding supervision Of efforts Arguments Termination International Over strict Waste and discipline Inefficiency Hospitality Demotion Labour Penalties Turnover Stresses and Lay offs absenteeism Tensions complaints Demotion Unwillingness To negotiate Resentment instances of Absenteeism breaking of rules Lay offs Work to rule Strikes Lockouts Demonstration Morcha, Gherao Loss of production strike

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Learning ObjectiveThe study of this lesson will help you understand:• The labour administration machinery.

Labour Administration MachineryIn India both Central and State Governments enact andadminister labour laws. The division of jurisdiction betweenCentre and States is provided by the Constitution which makesa distinction between matters within the exclusive jurisdictionof the Centre and the State and within the concurrent jurisdic-tion of the State and Centre. It is the Centre which plays themain role in laying down laws, making provisions and the StateGovernments with the assistance of their labour departmentsare in charge of law enforce-ment. The Centre in addition hasthe functions of coordination through a variety of offices.The Ministry of Labour and Employment of the CentralGovernment is the main agency for policy formation andadministration in. all labour matters. Together with the State-Governments, the local bodies and the Statutory Corporations/ Boards, it sees to the implementation of these policies andthe decisions of the Tripartite Committees. These four agenciesare also responsible for the enforcement of the labour laws. TheMinistry of Labour and Employment at the Centre dischargesthe functions entrusted to it through a number of Directorateswhich are described briefly below.1. Directorate General of Employment and Training (DGET):DGET lays down policy for running of the employmentexchanges and the industrial training institutes. It also runsseven Central Training Institutes for craft instructors and tworesearch institutions.2. Office of the Chief Labour Commissioner (CLC) (Central):This is also called the Central Industrial Relations Machinery(CIRM). He has the following functions: administration oflabour laws; verification of membership of registered unionsfor granting recognition under the Code to industries whichcome under the purview of the Central Government; determi-nation of membership of the central federations forrepresentation at national and international forums; supervi-sion of implementation of the Code. But his main duties relateto resolving disputes.3. The Director General of Mines Safety (DGMS): It looks intothe working conditions and implementation of the Mines Act,1952, and the Maternity Benefit Act, 1961, in, mines other thancoal mines.4. The Directorate General of Factory Advice Service and LabourInsti-tutes: Provides advisory service to the factory inspectoratesof different states. Conducts research in problems relating tosafety, health, welfare and productivity. It runs a Central LabourInstitute and the Regional Labour Institutes.

Other offices connected with the Central Labour Ministryare:The Industrial Tribunals set up in different centres for indus-tries for which the Central Government is the appropriategovernment. There are eight such tribunals dealing withdisputes in the central sphere in India (Ministry of Labour,1981).Wage Boards, Commissions, Committees of Enquiry, ESICorporations, the Central Board of Workers’ Education, SafetyCouncils which are ad-hoc bodies. (note: Most of these havebeen dealt with elsewhere.)While the labour secretary is overall in charge of both policy andadministration, the commissioner of labour in the states is theoperative arm for the implementation of labour laws. He is theRegistrar of Trade Unions. In some states, he has the functionsof the State Director of the National Employment Service orof the Chief Inspector of Factories. In the states where there isno separate authority for labour welfare, the Commissioner(State) looks after this function.

Statutory MeasuresSince Labour falls in the Concurrent List, the State Govern-ments are free to legislate their own labour laws. For example,Uttar Pradesh, Madhya Pradesh, Gujarat, Rajasthan andMaharashtra have their own laws to resolve industrial conflicts.For the states which have their own acts, the Industrial Dis-putes Act, 1947 is applicable to industries no\ covered by theState Legislations. In addition, the Defence of India rules114,118 and 119 govern industrial relations but they can be usedonly during an emergency by the government. Though theIndustrial Disputes Act, 1947 is a central Legislation, it isadministrated by the Central and State Governments in theirrespective spheres.

LESSON 29:LABOUR ADMINISTRATION MACHINERY

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Learning ObjectiveThe study of this lesson will help you understand:• Inter industry propensity for strikes.• Strike patterns.

Inter-Industry Propensity to StrikeWe review below the four major studies that have been carriedout in this field in various industries and countries.Pandey and Pathak in their paper “Inter-Industry Conflict-Proneness in India” have tried to analyze:i. trends in conflict-proneness in different industries in India;ii. the extent and direction of variation in industries with

regard to four measures of conflict-proneness which are:• Frequency of conflicts,• Duration of conflicts,• Participation in conflicts, and• Loss due to conflicts.iii. the relationship, if any, between the abovementioned

measures of con-flict-proneness with a view to finding outwhether they move in the same or different directions.

Methodology and FindingsThe authors have made a study of the nine-year period, i.e.1959-1967, Which is divided il1tO three periods, viz. 1959-61,1962-64, and 1965-67. It covers 14 major industry groups in themanufacturing sector as classified under the InternationalStandard classification of industries, and two impor-tant non-manufacturing industries, namely, mining and quarrying. Latelyplantations have also been considered.The authors, by calculating the coefficient of variations for 16industry groups during three periods as well as the average forthe nine-year period covering all these four measures, foundthat there is no systematic pattern in inter-industry conflict-proneness. By finding the mean values for each period, for eachmeasure and seeing whether a particular industry falls above orbelow the mean values, it was concluded that industries like tex-tiles, paper and paper products, leather find leather productswere compara-tively more conflict-prone. To find the interrela-tionship between the four measures of conflict the coefficientof correlation was tabulated over the nine-year period and it wasfound that these measures ‘are positively rela-ted, which let usconclude that in actual practice structural and organiza-tionalweaknesses of union have very little adverse influence on theduration of conflicts and workers’ participation therein. Thedata also reveals that the possibility of a quick settlement ofconflicts tends to decline with the increase in frequency ofconflicts.Kerr and Siegel in their study on “The inter-industry propensityto strike-an international comparison”, which is based ongeneralized groupings of industries of eleven countries-

Australia, Czechoslovakia, Germany, Italy, Netherlands, NewZealand, Norway, Sweden, Switzerland, the United Kingdomand to United States. The propensity to strike of the industriesis measured in terms of high, medium-high, medium, medium-low and low categories as compared to the average value of theincidence of conflict in specific industries. Several hypotheseshave been tested by the authors.1. The location of the worker in the society: The location hererefers to the nature of his work environment, his relations withthe society of which he is a part, economic conditions andstandard of living, etc. This variable influences the propensity tostrike and is, in turn, heavily influenced by the industrialenvironment. The nature of the industry creates a distinctcommunity in an isolated environment. This coupled with thenature of work breeds a very distinct and identifiable culture.Such communities which are removed from the mainstream ofactivity are classified as a distinct “isolated mass”. The conceptof ‘isolated mass’ is tested by miners, long shore men peoplewho work in the dock s and to a lesser extent, by textileworkers, who are away from their own communities, socialstandards etc. and have peculiar grievances. Industrial hazards,severe depression, Un-employment, bad living conditions, lowwages, etc. are causes for disputes and therefore their propensityto strike is also comparatively higher.‘The integrated individual and the integrated group’ concept isin con-trast to that of ‘isolated mass’. It is used in a sociologicalsense and hence the propensity to strike is low or medium-low(particularly in industries like railroads, trade, agriculture, etc.).The workers in such industries play a role which integrates thembetter with the general community and hence the individualgrievances are less likely to be turned into a mass grievance.2. The character of the job and the worker: The nature of thejob deter-mines the kinds of workers employed and theirattitudes, which again determines whether there will be anatmosphere of conflict or peace. Thus it is found that if the jobis physically difficult and unpleasant, the propen-sity to strikewill be higher, of course, this hypothesis is not universally trueand may be wrong in certain periods and in different countries.Verma in his paper “Industries and Conflict in India: AStatistical Analysis” has tried to study inter-industry differencesin conflict-prone-ness by taking 22 major industries. The studyrelates to three periods, i.e. from 1961-65, 1966-70 and 1971-73.The measure used is the number of man-days lost during theseperiods in 22 industries. It was found that 12 out of 22industries are not very conflict-prone as their values fall belowmean-values of man-days lost. The textile industry was themost conflict prone industry in the combined period of 1961-73, folio wed by metal products, plantations, tobacco, miningand quarrying, machinery, food (except beverages) and transportand communication, in that order.

LESSON 30: UNIT 8LNTER INDUSTRY PROPENSITY FOR STRIKES, STRIKE PATTERNS

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Ross and Hartman’s study on “Changing Patterns of IndustrialConflict” reveals interesting findings on patterns of strikes over4 major parts of the world-the North European Patterncovering Denmark, the Netherlands and the UK; the NorthernEuropean Pattern covering Sweden and Norway; the Mediterra-nean-Asian pattern covering France, Japan, Italy and India andthe North American sphere covering Canada and the US. Theauthors concluded that white-collar workers are less strike-prone. As regards Mediterranean-Asian patterns, it wasobserved that strikes are widespread in this group, involvingsubstantial proportions of union members and non-agricul-tural employees in most years. However, the average durationof the strike is short. This particularly holds true for France,Italy and Japan. In India, strikes have continued for a longerperiod than in other countries in this group. The pattern ofstrike activity in India prior to independence resembles thepattern in France, Italy and Japan but after that period theresemblance is much less. With widespread participation andmoderately long strikes, the ratios of lost time in India havebeen very high, in fact the highest in the world.These research studies give us an idea of the various patterns ofconflicts among industries in different countries over theperiods of time. Various factors lead to these variations inpattern of conflict propensity which can be generalized thus:1. The organization of unions: The nature of organization ofunions may be responsible for a high or low frequency inconflicts in a particular industry. The variables that determine therelative frequency of conflict in an industry are the presence ofmultiple unions, inter-union rivalry or even no unions at all;also, whether the union is militant or weak.2. Technology: Sometimes technology may be a primary or oneamong many causes contributing to the frequency of conflicts.Complex technology may evolve fear of change amongemployees leading to resistance and conflict.3. Maturity of parties: This is an inherent factor leading to ahigh or low propensity to strike. When parties are mature andobjective, there are relatively fewer chances of conflict and even ifthey occur they are of short duration and most often resolvedquickly. Their maturity also facili-tates recourse to institutionalmeans to resolve their conflict.4. Equality of partners: This refers not only to equality in termsof representation of both parties but also to the strength ofeach party to bargain and negotiate. A strong trade union mayforce a weak management either to accept the demands or forcea strike situation. It could also be the other way round in caseof a strong management and weak unions. So, strength andability on both sides would bring about a concrete and speedyresolution of problems.5. Wage rates: This could also be the sole cause of conflicts,when they are set too low or arc not consistent with the rate ofinflation, or in parity with other industries.

All these factors together, or some of them, or perhaps evenone factor could prompt a conflict situation.An attempt has also been made here to study conflict in 19major indus-tries over the period 1961 to 1976. This period isbroken up into 3 sub-periods-1961-65, 1966-70, and 1971-76.The number of man days lost has been selected as a measure tostudy conflict-proneness. Tables 9.8 a and b give the data onthese industries. After finding out the average man days lost foreach of the three periods, and for the entire 16 year period, theindustries have been divided into high, medium and lowcategories by com” paring actual man days lost in that industryto the average number of man days lost.The above analysis brings us to the conclusion that the textileindustry is the most conflict-prone industry. This is concludedfrom the fact that in all the three periods as well as for the entire(16 years) period the number

T A BL E 9 . 8 ( a )

I n d u s t r y - w i s e T r e n d s i n M a y d a y s L o s t ( ' 0 0 0 )

S I . N o . I n d u s t r y 1 9 6 1- 65 1 9 6 6 -7 0 1 9 7 1- 7 6 1 9 7 7- 8 1 *

1 . P l a n t a t i o n 1 2 0 6 1 5 6 5 5 6 0 1 0 2 4 2 . M i n i n g a n d q u a r r y i n g 1 8 9 6 5 1 4 7 6 7 0 4 5 2 5 3 3 . F o o d ( e x c e p t b e v e r a g e s ) 2 6 4 0 3 7 2 5 3 5 0 3 1 5 7 6 4 . B e v e r a g e s a n d t o b a c c o 6 9 3 7 3 3 4 1 4 0 8 5 1 8 8 4 5 . T e x t i l e s 7 9 9 6 2 5 7 9 3 3 1 5 7 6 1 3 9 5 0

6 . P a p e r , p a p e r p r o d u c t s a n d a l l i e d

I n d u s t r i e s , p r i n t i n g a n d p u b l i s h i n g 4 2 7 1 6 2 1 1 9 0 2 2 1 4 6

7 . L e a t h e r a n d l e a t h e r p r o d u c t s 1 7 3 1 5 3 8 3 0 2 0 5

8 . R u b b e r a n d r u b b e r p r o d u c t s 4 4 8 1 1 7 0 2 7 5 7 1 3 9 9

9 . C h e m i c a l s a n d c h e m i c a l p r o d u c t s

E x c e p t p e t r o l e u m a n d c o a l 9 3 9 2 2 7 7 2 9 7 8 2 4 0 0

1 0 . N o n - m e t a l l i c m i n e r a l p r o d u c t s 1 8 0 0 3 9 0 9 6 1 5 6 2 4 2 4

l l . B a s i c m e t a l i n d u s t r i e s a n d t r a n s p o r t

E q u i p m e n t s 7 6 9 1 6 1 8 5 3 7 7 5 6 9 4 1 2 .

M e t a l p r o d u c t s ( e x c e p t m a c h i n e r y ) 2 6 1 5 7 5 9 1 4 0 5 2 1 1 4 1

1 3 .

M a c h i n e s ( e x c e p t e l e c t r i c a l a p p l i a n c e s ) 3 8 4 5 2 6 5 59 49 5 4 9 8

1 4 .

E l e c t r i c a l m a c h i n e a p p a r a t u s 6 0 1 2 2 9 1 4 2 7 4 2 4 4 4

1 5 . T r a n s p o r t e q u i p m e n t 6 1 4 1 8 1 4 2 1 3 4 3 5 1 1

1 6 . C o n s t r u c t i o n 4 1 8 1 0 2 5 1 3 1 2 1 1 2 6

1 7 .

E l e c t r i c i t y , g a s , w a t e r a n d s a n i t a t i o n

S e r v i c e s 9 6 4 2 0 7 7 2 7 1 1 5 8 1 1 8 . C o m m e r c e 92 4 7 3 8 4 6 1 0 2 8

1 9 .

T r a n s p o r t a n d c o m m u n i c a t i o n 7 3 1 4 9 9 6 1 3 3 2

2 1 2 8 2

T o t a l 3 1 5 5 0 8 2 4 4 2 1 0 6 02 8 5 4 5 1 6

A v e r a g e 1 6 6 0 . 5 4 3 3 9 . 1 5 5 8 0 . 4 2 8 6 9 3

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Table:Type of industry –conflict proneness Patterns

of man-days lost have been very high in this industry ascompared to the average values as a whole. The transport andcommunication industry (excluding workshops and metalproducts) are highly conflict-prone com-pared to others in thehigher category.The industries with low conflict propensity as revealed by thedata are commerce, leather and leather products, paper andpaper products, print-ing, publishing and allied industries.This data, relating to conflict-proneness in industry providesmaterial for further research and analysis. Why is the textileindustry highly conflict- prone-it could be the working condi-tions, the low wage rates or even the militant unions anddepressed market conditions. Many more factors could also beinvolved and each category offers scope for separate analysis.

1. Formation stage Hesitation / Hostility Guilds and craft unions

2. Fighting stage Acceptance / Conflict Classical unions

3. Friendly stage Acceptance / Understanding Collective bargaining

4. Fraternal stage Friendship / Mutuality Consultation, participation

5. Fusion stage Joint effort / Inter-dependence Union-management cooperation

ConclusionThe historical data on conflict patterns (refer earlier graphs andcharts) points clearly to the fact that the industrial relations scenein India over the years has not been very encouraging. There isno definite pattern towards the stabilization of peacefulrelations and this is particularly so after the Emergency, whenindustrial conflict has become widespread.Agarwala in his article has provided a model for the stages in thegrowth of industrial relations. It consists of five stages anddescribes the form of relations and the type of unions existingin each stage. The model is des-cribed below:

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This compartmentalization of stages may not be water-tightand some overlapping might obviously occur. It, however, doesgive an idea as to how from the stage of hesitation andhostility, the two parties (the union and the management) canreach the stage of joint effort and interdependence.The National Commission on Labour after studying theconflict patterns and the legal machinery to cope with it has feltthat the present settlement machinery is inadequate andineffective. This is attributable to the delay involved, theexpensive ad hoc nature of the process, and the fact that dis-cretion is vested in the government in matters relating toreferring disputes for adjudication.Keeping in mind the shortcomings of the present disputesettlement machinery, the recommendations of NCL and astudy of foreign experience, the Government of India in itsIndustrial Relations Bill, 1978 provided powers and formulatedthe procedures and duties of various authorities like conciliationofficers, arbitrators, tribunals, etc. under the proposed system.In addition the Bill proposed many far-reaching structuralchanges such as election of bargaining agent or representativeunion. However, the bill has yet to see the light of day. Thegovernment has, in the meantime, enacted the ID AmendmentBill 1982, in order to bring about speedier resolution ofdisputes. How far this will be effective is yet to be seen. In anindustrial society a state of harmony and goodwill between themanagement and its workers is usually an objective. This is notalways possible where two groups exist, each with differentideologies, goals and interests which may be in conflict. Conflictis therefore inevitable and could also prove healthy in the sensethat it brings inherent problems to the fore. The cause ofconflict, the mechanisms to resolve conflict, and the outcome ofconflict, are all governed by each situation. On the one hand,there are macro-level vari-ables-economic, social, political andlegal factors which contribute in their specific ways to a particularsituation. Yet on the other hand there are unit level or micro-variables such as company policies, corporate attitudes topersonnel issues that could also contribute to a conflictsituation. We have seen in the Indian environment, thestructural limitations and the causes of conflict over a broadtime span. To what extent has conflict been resolved byinstitutional mechanisms, which stand the test of acceptanceand credi-bility to be utilized and wanted, remains a question.If institutional mecha-nisms do evolve to meet the changingsituation, then the manifestations of conflict are likely to findother outlets.Increasing population and unemployment, an unstable politicalsituation, growing alertness among the unorganized sectorswho are beginning to be aware of their rights, etc. are thechallenges faced by industries, which make the achievement ofthe objective of industrial harmony all the more difficult. In aless developed economy the tradeoff is between growth anddevelop-ment, which is dependent on non-stoppage of workand at the same time acceptance of democratic rights to expressone’s dissatisfaction either through strikes or lockouts in theultimate analysis. Industrial harmony, an elusive ideal, tries tobalance these opposites.

Notes -

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Learning ObjectiveThe study of this lesson will help you understand:• The settlement of conflicts.

Settlement of ConflictsThe methods of the settlement of conflicts generally include

i. Investigation.ii. Mediation.iii. Conciliation.iv. Voluntary Arbitration.v. Compulsory Arbitration/Adjudication.

1. InvestigationThis is conducted by a board or court appointed by thegovernment. It may voluntary or compulsory. If the investiga-tion is conducted on an application by either or both the partiesto the dispute, it is voluntary. If the Government appoints acourt of Inquiry to investigate into a dispute without theconsent of the parties, it is compulsory. Investigations do notaim at bringing about the settlement of disputes directly, but byanalyzing the facts they aim at bringing about an amicablesolution. When the investigation is compulsory, the strikes andlockouts are required to be stopped and employers should notmake any change in the conditions of employment. The resultof investigation has no serious effect on the disputes becausethe general public is least bothered to make note of disputes.

2 MediationAnother attempt to settle disputes is Mediation. In thismethod an outsider assists the parties in their negotiations. Ittakes place with the consent of both the parties. The mediatorperforms the messenger’s job for both the parties and heneither imposes his will nor his judgment upon them. Themain aim of mediation is the settlement disputes by bringingabout a voluntary agreement. There may be three kindsmediation:1. The Eminent Outsider;2. Non-Government Board; and3. Semi-Governmental Board.If mediation is conducted skillfully and sympathetically alongproper lines, it can bring about the adjustment of differencesthat might otherwise contribute to stoppage of work.

3. ConciliationThe main objective of a conciliation and arbitration is to reunitethe two conflicting groups in industry in order to avoidinterruption of production, distrust etc.Conciliation is a process by which representatives of bothworkers and employees are brought together before a thirdparty with a view to persuading them arrive at some sort ofsettlement. Conciliation is an extension of collective bargainingwith third party assistance. It is practice by which the services ofa neutral third party are used in a dispute as a means of helpingthe disputing parties to reduce the extent of their differencesand to arrive at an amicable settlement or agreed solution. It is aprocess of rational and orderly discussions of differencesbetween the parties to a dispute under the guidance of aconciliator.Conciliation machinery consists of a conciliation officer andboard of conciliations. The conciliator induces the parties to acourse of action. He plays the roles of an innovator, protector,discussion leader, stimulator, advisor, face-saver. He acts as asafety value and a communication link.The task of conciliation is to offer advice and make suggestionsto the parties to the dispute on controversial issues.

Qualities of a ConciliatorThe essential qualities of a conciliator include:1. Independence and impartiality are the two attributes which

every conciliator should possess. It is essential that heshould not only possess these qualities but be also ‘seen topossess them. He must be above suspicion; and bothparties must have confidence in his integrity and neutrality.He should be independent enough not to be or influencedby others. He should be able to resist undue pressures orpersuasion from powerful employers or unions.

2. Since conciliation, in certain case, means arduous work, aconciliator should be physically and psychologically fit forthe rigors of his task. He must have a strong heldconviction of the importance and usefulness ofconciliation, and he must like or learn to like the work. Ithas been noted that “conciliation is an expression of one ofthe highest virtues which can be practiced - the desire tounderstand and be just to one another. Each time that oneattempts to resolve a conflict without force one renders tomen and enormous service in leading them in the path ofwisdom and of respect themselves and for each other.”

3. A conciliator should never allow conciliation proceedingsbefore him to constitute a mere formality or a step on roadto arbitration. He must be able to offer to the partiesinducements that will persuade them to prefer a settlementwith his assistance and to make serious efforts to reachagreement.

LESSON 31:ENVIONMENTAL INFLUNCES: ARBITRATION, CONCILIATION,

ADJUDICATION,UNFAIR LABOUR PRACTICES

Methods of settlement of Industrial conflicts

Meditation

Investigation Conciliationcompulsory

Voluntary

ArbitrationArbitration/Adjudication

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4. Because of the nature of his work a conciliator must havethe ability to get along well with the people. He must be, toa certain extent, a specialist in human relations in therelations between the parties when they come face-to-face,and in his own relations with them. He must be honest,polite, tactful, self-confident, even- tempered and patient intrying to accomplish results. He should have powers ofpersuasion, including a good command of language andfacility of expression, and should be able communicate withthe parties in language they understand.

5. Since a conciliator has to deal with different persons and hasto preside over their joint meetings in conciliationproceedings, he not only needs tact and ability to guide andcontrol their joint discussions, but must also give animpression of expression, responsibility, dear-headednessand mature judgement. He must be to show others that hepossesses enough common sense and practical-mindedness.

6. A conciliator should have a friendly personality, a sense ofhumour, specially for releaving tensions of jointdiscussions. A special alacrity of mind will enable him tograsp quickly and analyse rapidly the main elements ofcontroversy.

7. A conciliator should be fully familiar with the law andregulations concerning industrial re/alions and thesettlement of industrial disputes. He should be familiarwith the industrial relations system, e.g., the developmentand structure of trade union and employers’ associations;the prevailing methods of collective bargaining; negotiatingprocedures and practices; the operation of agreednegotiating bodies set up by the parties; the main causesand patterns of disputes; knowledge of personnelmanagement, functioning of trade union withinundertakings, grievance and disciplinary procedures andjoint consultancy machinery.

8. He should be well-trained in different aspects ofmanagement process. He should have some knowledge ofproducts and services, the production methods, practices,etc., knowledge about wage rates and other financialmatters, incentive schemes; and the understanding of thosefactors, traditional outlooks and cultural, peculiarities, andof the way in which they affect labour relations.

9. He must have ability and versatility to form judgments. Heshould, therefore, acquire knowledge from personalexperience and observation; besides getting knowledge insocial sciences, psychology, social institutions, groupbehavior and cultural change.

Role of the ConciliatorThe conciliator is a multi-facted individual. His contribution hasbeen discussed by the I.L.O publication thus:“The conciliator induces the parties to a course of action. “ Hisintervention in the dispute creates for the parties a situationdifferent from the direct confrontation they had before.The conciliator establishes for the parties a need to re-examine”the positions in this new situation and to consider possiblealternatives or options, The’ need to make a choice of possible

option continues after his initial intervention; and, dependingon the shifting pressures on the parties he can sharpen or bluntthe need to make a choice.“The conciliator opens to the parties a variety of availableoptions besides those they can think of themselves. Bypromoting their attitudes and discovering in what fields theymay be prepared to show some flexibility, he gains perspectiveof the issues in dispute and of alternatives possibilities ofsettlement. These options may vary in number according to thenature of the issues involved; and they may be available inrespect of a single issue or on combination of issues.“The conciliator controls the timing for the selection of option,the acceptability of which to the parties may vary from time totime. On the basis of his evaluation of the parties attitudes andthe progress of the discussions, he can decide whether it isnecessary to increase or shorten the time available for theselection of option; his contribution is to offer the options atthe particular moment, when they are most likely to win apositive response from the parties.”The subsidiary role of a conciliator may be discussed underfollowing heads:

As a Discussion LeaderAs a discussion leader the conciliator reduces irrationality andantagonism between the parties. He guides them towards aproblem-solving approach to their dispute; he ensures that theydiscuss their differences in as friendly a manner as possible; hehelps them to analyse their problem, always striving to keep theanalysis on rational ground; he identifies the elements of theproblem, both for the parties benefit and for his own.

As a Safety ValveThe conciliator places himself in the position of alternativetarget when he feels that the parties are in an aggressive mood.By setting a substitute target, the parties can achieve an emo-tional release without direct and immediate damage to thenegotiations.

As a Communication LinkThe conciliator fulfils an important function as a communica-tion link between the parties; serving as a communication linkmay either constitute his main conciliatory effort or be acontribution to it. He not only works as a conduit throughwhich messages relayed from one side to the other, are passed,but he also provides a thorough explanation and interprets theintention of the party.

As an InnovatorThe conciliator acts as an invaluable source of new information,and new information the new thoughts, particularly in provid-ing the parties with different views of the issues, withalternative solution and possibly an entirely new approach.

As a Sounding BoardHe is often described as a “flying ambulance squad” appearingwhenever or wherever a collision or conflict, which threatens todisturb harmonious relationship occurs or his apprehended tooccur between the interests of the parties. He may indicate theparties which of their own arguments, defenses and supportscannot stand under a rational searching enquiry.

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As a Protector The conciliator plays a protecting role for making the partiesready for collective bargaining positions by exploring alternativesolutions during separate meetings.

As a Fail-Safe DeviceThe conciliator often assists a party which has overstated itsposition to the extent or bluff or exaggeration of its reaction tosome move on the part of the other; or taken a clearly unten-able stance to withdraw gracefully under the banner of reason.

As a StimulatorSensing the need for positive action, the conciliator can providenecessary impulse; he makes a concise statement, supplies somedate, gives a hint or suggestion. He crystallizes changes ofopinion, in course of discussions, by intervening at theappropriate moment and giving such ideas a concrete form.

As an AdviserThe conciliator tries to remove misunderstandings regarding theother’s position, intentions and capabilities. He tries to see thatsuch misinterpretations do not occur and that each sidethoroughly understands the others’ point of view, obtains apicture opponent’s strength and realizes its own limitations andweaknesses.

As a Face SaverWhen a party knows from the outset or realizes during thecourse of proceedings that it has a weak case and can hope forlittle success in pursuing the dispute. The people concerned areoften reluctant to admit defeat, because they feel that this willinvolve them in a loss of face, or prestige, with their membersor with the public, In such situations, conciliator may device aform of announcing settlement, which’ apparently make somesmall concession to the party concerned but which in realitygives it little or nothing.As a Promoter of Collective Bargaining:While intervening in a dispute he is not only concerned withobtaining settlement, but often he assists and promotescollective bargaining and helps and guides the parties in thedevelopment of their relationship.Thus, a conciliator has to playa wide variety of roles. When astrike or lockout is threatened it is his duty to advise the partyconcerned on the legality of the proposed action and to use allhis powers of pursuing so that at least the action can bepostponed while conciliation is going on. He makes all effortsto persuade the parties against violent or disorderly behavior incarrying out the proposed action which might lead to bitterness.He also tries to bring the parties together to negotiate before thefactory is shut down or any damage, to equipment or propertyis done. He also ensures that work is immediately resumedwhen the strike or lock-out is terminated.

Criticisms Against Conciliationi. The work of conciliation is often delegated by the State

Governments to the officers of the Labour Department,who are already over-burdened and, therefore, cannot dofull justice in the matter. In actual practice these officers actonly “as post offices” and do little to conciliate disputes.They carry no conviction with the, labour and in many cases

take recourse to the path of least resistance and make areport to the Government for reference of the dispute foradjudication.

ii. Most of the conciliation officers are young, inexperiencedand untrained who have no thorough training in the act ofmediation. They get both the parties together in the sameroom and ask each to state its position which just makesthe situation worse. They are just rubberstamps and oftenrefer cases directly to adjudication. .

iii. Conciliation proceedings are abused and misused by theparties. They often use the conciliators to find the positionand strength of each other and to feed wrong informationto each other. This often happens when the conciliator andthe adjudicator are the same person.

iv. It has been said that even when labour and employers reachan agreement without the help of the conciliators “thewritten document is frequently initiated and approved bythe State Labour Commissioner and this can then may bereported as settled through conciliation.”

v. Conciliation is looked upon very often by the parties asmerely a hurdle to be crossed for reaching the next stage.There is, therefore, casualness about it in the parties and ahabitual display of such casualness conditions conciliatoralso into that attitude.

vi. Outside interference has been common in the working ofthis machinery, Manager grudge that political pressure isbrought on them and conciliation machinery to settle theissues in favour of workers. Unionists, on the other hand,quip ‘that political pressure is exercised to safeguard theemployers’ interest.

vii. The machinery is often partial and puts only half-heartedefforts to reach any settlement. Such things procreate afailure orientation towards conciliation machinery both inthe workers and the management. Often the Governmentofficials and management as well as trade unionists havepredicted that conciliation is ineffective in India. This worksas an important tool in the hands of those who areopposed to conciliation intervention at the plant level.

viii.The trade unionists are of the view that the machineryfavours management while taking decisions whereasmanagers feel that it is pro-union. They also say that, “someof the Conciliation officers lack the requisite qualities of aconciliator and obvious of the necessary knowledge ofindustry, labour problems, labour laws and industrialrelations and often look towards labour leaders andmanagement representatives for guidance. They are inept inthe art of mediation. The indiscriminate reference ofdisputes to adjudication is also a contributory factortowards inefficient working of the machinery.

ix. Finally, there are other impediments and problems facingthe machinery which have made it bootless, viz., sincerity ofefforts; interest in the working community, capacity to resistexternal pressure; authority to enforce proceedings and getthe decisions implemented, initiative, drive and tactfulness;and the physical distances involved in contacting themachinery and attending proceedings, etc.

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Suggestions for Effective Functioning ofConciliation“To make conciliation more effective the National Commissionon Labour has recommended that, “Conciliation machineryshould be part of the Industrial Relations commission, whichwill make it free from other influences... The independentcharacter of the machinery will alone develop greater confidenceand will be able to evoke more cooperation from the parties ...Apart from this basic change which will introduce importantstructural, functional and procedural changes in the working ofthe machinery; other measures are: (i}proper selection ofpersonnel, (ii) adequate pre-job training, and (iii) periodic in-service training through refresher courses, seminars andconferences.”Following suggestions may be offered for improving theworking of the conciliation machinery:1. The first basic need for making the conciliation machinery a

success is to free it from the clutches of any political oradministrative interference. This can be achieved byassigning the control, of machinery to some autonomousbody:

2. The conciliation machinery should be invested withadequate and more powers so that the parties could beforced to arrive at a conclusion which is binding and notonly recommendatory in nature.

3. The mutual images of the parties towards each other needbe improved so that their negative conceptions may notwork like a self-fulfilling prophecy for the failure ofconciliation.

4. The parties should not treat conciliation machinery as amore joy and ride and a sense of commitment towards theresolution of dispute should be inculcated among them byconciliator.

5. Conciliation should be introduced in all the industries inspite of their being public utilities or otherwise.

6. The workload of the machinery should be periodicallyassessed, if need be, the necessary staff should beappointed so that it may not break down under theunbearable workload which it is at present carrying.

7. The conciliation officers can be made more effective by: (i)prescribing proper qualifications for a conciliation officer andimproving his qualities by proper selection and training, (ii)enhancing their status for dealing with persons who appearbefore them, (iii) delegating appropriate authority to theseofficers, and (iv) minimizing political interference.”

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Learning ObjectiveThe study of this lesson will help you understand:• The settlement of conflicts.

Voluntary ArbitrationIf the two parties to the dispute fail to come to an agreement,either by themselves or with the help of a mediator or concilia-tor agrees to submit the dispute to an impartial authority,whose decision, they are ready to accept. The essential elementsin voluntary arbitration are:• The voluntary submission of dispute to an arbitrator;• The subsequent attendance of witness and investigations;• The enforcement of an award may not be necessary.

Essential Elements of VoluntaryArbitrationEssentials of voluntary arbitration are:• The voluntary submission of dispute to an arbitrator;• The subsequent attendance of witness and. investigations;• The enforcement of an award may not be necessary and

binding because there is no compulsion. But generally, theacceptance of an arbitration implies the acceptance of itsaward - be it favorable or unfavorable; and

• Voluntary arbitration may be specially needed for disputesarising under agreements.

Advantages of ArbitrationAdvantages of Arbitration include:1. Since it is established by the parties themselves, arbitration

has the particular advantage of bringing the disputesettlement procedure down to the level of the parties todispute. Workers and management tend to have greaterfaith and full confidence in settlement machinery which is ineffect their own.

2. Since arbitration is established by agreement, it is moreflexible than other procedures and can be adjusted to theviews, desires and experience of parties and to thecircumstances of the undertaking or industry.

3. This procedure, operating on the level closest to the partiesto disputes, has the advantage of enabling the arbitrators toacquire a much greater familiarity with the characteristics ofthe particular industry or undertaking concerned than mostcourts or tribunals.

4. The procedure is relatively expeditious when compared toordinary courts or labour tribunals. It cuts down delays andresults in prompt settlement of differences.

5. It is informal in character and on that account as well asbecause the disputes are handled by the parties themselvesoften without recourse to lawyers, it tends to be lessexpensive than other procedures.

6. Awards are capable of implementation without any grudgeon the part of both the parties at dispute and do not leadto further chances of litigation.

7. Since it is based on the consent of both the parties it helpsbuilding up a sound base for healthy industrial relations,mutual understanding and cooperation.

“It is popular because it is suitable and compelling. It is farbetter than a costly work-stoppage, even though not whollysatisfactory from either parties’ point of views.

Disadvantages of ArbitrationDisadvantages of Arbitration include:1. It deprives the labour of its right to go on strike - as there is

often a provision in the agreement that the trade unionsand workers will refrain from strike action during the courseof the continuance of the agreements.

2. Judgement is often arbitrary all ill-advised as the arbitratorsare not well- versed in the economic and technical aspects ofindustry.

3. Arbitrators are often biased against labour and their awardis, therefore, usually not in favour of the labour.

4. Delay often occurs in arriving at the award and settlementof disputes. This leads to break down in the morale ofmembers.

5. Though arbitration is an essential element in the creation ofbetter labour- management relations, its availability maylead to less dependence of negotiation and conditionsimposed by a third party may be resented.

6. Too much arbitration is not a sign of healthy relationship.Parties who find it necessary to leave the disposition ofdisputes to third parties do so often because they they havenot learnt how to solve their own problems, how to livewith one another. Therefore, too frequent arbitration is notonly costly and time-consuming but it also promotes ahostile and rigid relationship between the parties.

Reference of Dispute to ArbitrationUnder Industrial Disputes Act, 194;Under the Industrial Disputes Act, 1947, a dispute may bereferred to arbitration under following conditions:a. An industrial Dispute exists or is apprehended in an

establishment;b. The employer and the workmen of that establishment

agree, in writing, to refer the dispute to arbitration;c. Arbitration agreement is in the prescribed form and signed

by the parties to it in the prescribed manner;d. The agreement must be accompanied by the consent, in

writing, of the arbitration or arbitrators;

LESSON 32:ENVIONMENTAL INFLUNCES: ARBITRATION, CONCILIATION,

ADJUDICATION,UNFAIR LABOUR PRACTICES

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e. The dispute must be referred to arbitration at any timebefore it has been referred to a Labour Court or Tribunal ora National Tribunal;

f. The reference must be to certain person or persons specifiedin the arbitration agreement to act as a arbitrator/arbitrators;

g. The arbitration agreement must set forth the issue/issuesto be decided by the arbitration procedure and a copy of theagreements is forwarded to the Government and theConciliation Officer.

National Arbitration Promotion Board“To make voluntary arbitration more acceptable to the partiesand to coordinate efforts for its promotion the governmentappointed in July 1967, a National Arbitration PromotionBoard with a tripartite composition. The functions of theBoard are:i. To review the position periodically;ii. To examine the factors inhibiting wider acceptance of this

procedure and suggest measures to make it more popular;iii. To compile and maintain up-to-date panels of suitable

arbitrators for different areas and industries and to lay downtheir fees;

iv. To evolve principles, norms and procedure for guidance ofarbitrator and the parties;

v. To advise parties, in important cases, to accept arbitrationfor resolving disputes so that litigation in courts is avoided;

vi. To look into the cause of delay and expedite arbitrationproceedings wherever necessary.

vii. To specify, from time to time, the types of disputes whichwould normally be settled by arbitration in the light oftripartite decisions.”

Compulsory Arbitration / AdjudicationWhere trade unions are weak the method of CompulsoryArbitration is used. Compulsory Arbitration is utilized generallywhen the parties fail to arrive at a settlement through thevoluntary methods.In India, Compulsory Arbitration is enforced because collectivebargaining was not used for regulating wages and otherconditions of employment.It may be said that compulsory arbitration may be at times andunder certain circumstances, necessary and desirable. The nature,scale and timing of state intervention should be suited to theneeds of different occasions. The objective of state interventionin the field of industrial relations should be to do social justiceand make the weaker party equally strong to enable it ultimatelyto stand on its own legs and settle its differences throughnegotiations and collective bargaining.Compulsory arbitration is one where the parties are required toarbitrate without any willingness on their part. Anyone of theparties may apply to the appropriate governments to refer thedispute to adjudication machinery.“Under compulsory arbitration, the parties are forced toarbitration by the State wheni. The parties fail to arrive at a settlement by voluntary

method; or

ii. When there is a national emergency which requires thatwheels of production should not be obstructed by frequentwork-stoppages; or

iii. The country is passing through grave economic crisis; oriv. There is a grave public dissatisfaction with the existing

industrial relations orv. When industries of strategic importance are involved; orvi. Parties are ill balanced, Le., where the unions are weak, ill-

organized, and powerless and the means of production arein the hands of the capitalists who are well-organized andmore powerful; or

vii. Where public interest and the working conditions aredesired to be safeguarded that regulated by the State.Compulsory arbitration leaves no scope for strikes and lock-outs and thus deprives both the parties of their veryimportant and fundamental rights.”

Model Principles for Reference ofDisputes to AdjudicationThe Indian Labour Conference (held in Chennai in July 1959)evolved a set of model principles for reference of disputes toadjudication. These principles were:1. All disputes may ordinarily be referred to adjudication on

request.2. Disputes may not, however, be ordinarily referred to

adjudication:(a) Unless efforts at conciliation have failed and there is no

further scope for conciliation and the parties are notagreeable to arbitration;

(b) If there is a strike or lock-out declared illegal by a Court, or astrike or lock-out resorted to without seeking settlement bymeans provided by law and without proper notice or inbreach of the Code of Discipline, as determined by themachinery set up for the purpose unless such a strike orlock-out, as the case may be, is called off;

(c) If the issues involved are such as have been the subject-matter of recent judicial decision or in respect of which anunduly long time has elapsed since the origin of the causeof action; and

(d) If in respect of demands other legal remedies are available,that is, matters covered by the Factories Act, Workmen’sCompensation Act, Minimum Wages Act, Payment ofWages Act, etc.

3. Industrial disputes raised in regard to individual cases, thatis, cases of dismissal, discharge or any other action ofmanagement on disciplinary grounds, may be referred to foradjudication when the legality or property of such action isquestioned, and in particular:

(a) If there is a case of victimization or unfair labour practice;(b) If the Standing Orders in force or the principles of natural

justice have not been followed; and(c) If the conciliation machinery reports that injustice has been

done to the workman.

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The following principles are derived form the judicial judg-ments:i. The Government must be of the opinion that an industrial

dispute actually exists or is apprehended;ii. Making a reference is an executive and administrative act and

not a judicial or quasi-judicial act; Government’s ordermaking a reference, therefore, cannot be challenged on theground that the Government has no material before it tocome to the conclusion that the dispute exists;

iii. Expediency of making a reference is a matter entirely for theGovernment to decide. Even if a dispute factually exists theGovernment may not make a reference; the Governmentcannot be compelled by a Court to make a reference; makingof reference, thus, is not a duty or an obligation on the partof the Government but a matter of discretion;

iv. The Government may refer the dispute or any matterappearing to be connected with or relevant to the dispute,whether it relates to any matter specified in the SecondSchedule or the Third Schedule to a Tribunal foradjudication;

v. Where the Government is of the opinion that anyindustrial dispute exists or is apprehended and the disputeinvolves any question of national importance or it is ofsuch a nature that industrial establishments situated inmore than one State are likely to be interested in or affectedby such dispute, it may refer the dispute for adjudication tothe National Tribunal - whether it relates to any matterspecified in the Second or the Third Schedule;

vi. Where the dispute relates to any matter specified in theThird Schedule is not likely to affect more than 100 workers,the Government may make a reference to Labour Court;

vii. It is mandatory upon the Government to make a referenceof disputes to Courts or Tribunals where:

a. The dispute relatives to public utility service; (b) A notice ofStrike or lockout has been given; (c) Where the parties to thedispute apply in the prescribed manner for a reference andthe Government is satisfied that the persons applyingrepresent the majority of each party.

viii.The reference shall be made even if any other proceedinghas commenced but this mandatory power is subject to twoexceptions:

a. the notice has been frivolously or vexatiously given; orb. that it would be expedient to make a reference.

An order of reference passed by the Government can bechallenged on the grounds:

1. That the order is void ab initio or without jurisdiction;2. Where the order of reference is made in both faith or is

mala fide; or3. The appropriate Government had no material before it; or

1. It did not apply its mind to a material; or2. Has not taken into consideration certain vital facts andmaterials which it ought to have taken into account.

Three Tier System of AdjudicationThe Industrial Disputes Act, 1947, provides three-tier systemof adjudication:1. Labour Courts,2. Industrial Tribunals, and3. National Tribunals.These are adjudicating bodies who decide the disputes referredto by the appropriate Government and pass their awards.The Labour Courts adjudicate upon disputes listed in ScheduleII of the Act.The Industrial Courts adjusticate upon disputes listed inSchedule II or III of the Act.The National Tribunals adjudicate upon the disputes which areof national importance, or the dispute is of such a nature whichaffects industrial establishments situated in more than oneState.

Labour CourtsOne or more Labour Courts may be constituted by theappropriate Government for adjudicating on industrial disputesrelating to any matter specified in the Second schedule to theAct, and for performing such other function as may be assignedto them.

ConstitutionA Labour Court shall consist of one person only. Such aperson: (a) is or has been a judge of a High Court; or (b) hasbeen for a period of not less than 3 years a District judge; or (c)has held any judicial office in India for not less than 7 years. Noperson shall be appointed or continue in the office of theLabour Court if he is not an independent person; or he hasattained the age of 65 years.The duties of the Labour Court are: (i) to hold adjudicationproceedings expeditiously, and (ii) submit its award to theappropriate Government as soon as practicable on the conclu-sion of the proceedings. The Labour Court usually deals withmatters which arise in day-to-day working.

JurisdictionThe jurisdiction of the Labour Courts extends to adjudicationof following disputes relating to matters specified in the SecondSchedule (given under):1. The property or legality of an order passed by an employer

under the Standing Orders;2. The application and interpretation of Standing Orders:3. Discharge or dismissal of workmen, including

reinstatement of, or grant of relief to workmen wrongfullydismissed;

4. Withdrawal of any customary concession or privilege;5. Illegality or otherwise of a strike or lock-out; and6. All matters other than those specified in the Third Schedule

to the Act.

Industrial TribunalsThe appropriate Government may appoint one or moreIndustrial Tribunals for adjudication of industrial disputesrelating to any matter whether specified in the Second Schedule

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or the Third Schedule. The matters which are in the form ofnew demands and give rise to industrial disputes which affectthe working of a company or industry are usually referred to anIndustrial Tribunal. Industrial Tribunal may be: appointed for alimited period on an ad hoc basis or permanently.

ConstitutionA Tribunal shall consist of one or more persons. Such a person(a) is or has been judge of a High Court, (b}has been a DistrictJudge for a period of not less than 3 years, (c) has held theoffice of the Chairman or any other member of the LabourAppellate Tribunal for a period of not less than 2 years.The Government may, if it thinks fit, also appoint two personsas assessors to advise the Tribunal in the proceedings before it.The functions and duties of the Industrial Tribunal are verymuch like those of a body discharging judicial functionsalthough it is not a court. It has all the necessary attributes of acourt of justice. It may create new obligations or modifycontracts in the interest of industrial peace, to protect legitimatetrade union activities and to prevent unfair practice and victim-ization. The Tribunals are required to give award based oncircumstances peculiar to each dispute and they are, to a largeextent, free from restrictions of technical considerationsimposed on Courts. .

JurisdictionIndustrial Tribunals have a wider jurisdiction than a LabourCourt. It has jurisdiction over any matter specified in the SecondSchedule or Third Schedule.The matters specified in the Third Schedule are:1. Wages, including the period and mode of payment;2. Compensatory and other allowances;3. Hours of work and rest intervals;4. Leave with wages and holidays;5. Bonus, profit sharing, provident fund and gratuity;6. Shift working otherwise than in accordance with Standing

Orders:7. Classification of grades;8. Rules of discipline;9. Rationalisation;10. Retrenchment of workmen and closure of an

establishment;, and I, Any other matter than may beprescribed.

Eight Industrial Tribunals-cum-Labour Courts have been setup to adjudicate disputes in the Central sphere. Of these, threeare located at Dhanbad (Bihar), two at Mumbai ‘and one each atCalcutta, Jabalpur and New Delhi. The services of Tribunalsand labour Courts set up by the State Governments are alsoutilized by the Central 1ent as and when necessary.

National TribunalsThe Central Government may be notification in the OfficialGazette, constitute one or more National Tribunals for theadjudication of industrial disputes which in the option of theCentral Government involve questions of national importanceor are of such nature that industrial establishments situated in

more than one State are likely to be interested in, or affected by,such disputes.

ConstitutionNational Tribunal shall consist of one person only to beappointed by the Central Government such a person: (a) is orhas been a judge of a High Court, or has the office of theChairman or any other member of Labour Appellate Tribunal,for a period of not less than 2 years.If the Central Government so thinks fit may appoint twopersons as assessors to advise the National Tribunal in theproceedings before it.

Criticisms Against AdjudicationAdjudication or compulsory arbitration is criticized on thefollowing grounds:i. Resort to compulsory arbitration promotes and prolongs

industrial disputes;ii. Compulsory arbitration undermines self-government in

industry, i.e. it hampers the development of industrialdemocracy;

iii. It takes away from the employers and union theresponsibility of working out their mutual problems andtransfer it to government created tribunals;

iv. It kills collective bargaining and replaces it with litigation; itallows the parties to avoid unpleasant confrontation oftheir difficulties, creating a dependency upon publicauthority;

v. By requiring even an air of compulsory labour it subjectsthe workers to involuntary servitude;

vi. It exposes. workers to arbitrary restraints and penaltiesbefore trial and corrections;

vii. It denies the working people the right to protect and resist awrong and to strive peacefully for improvement in theirconditions;

viii.Decisions handed down through arbitration could becoloured by political expediency. Thus, both employers andthe unions would become deeply involved in politicalpressures and efforts to win favours;

ix. It means loss of personal freedom, loss of mobility, lossof power of initiative, loss of hope and aspiration for self-betterment;

x. The prohibition of strikes is not readily enforceable; fineslevied on the workers depreciate workers’ morale, causeshowdown, lower productive efficiency, and imprisonmentshuts off all productive possibilities.

Alexander Frey has criticized compulsory arbitration on thefollowing four main grounds:i. The minimizing effect which it exercise upon genuine

bargaining by disputants;ii. The absence of standards without which the adjudicator

cannot avoid being either arbitrary or reactionary;iii. Its tendency to increase rather than to diminish disputes

because of the probable reluctance of at least one of theparties to live with the adjudicator’s order;

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iv. The impracticability of enforcing judgements.

Suggestions to Make AdjudicationEffectiveThe National Commission on Labour has stated, “During thelast 20 years, the adjudication machinery has exercised consider-able influence of several aspects of conditions of work andlabour management relations. Adjudication has been one ofthe instruments of wages and working conditions and forsecuring allowances for maintaining real wages, for standardiza-tion of wages, bonus and introducing uniformity in benefitsand amenities. It has also helped to avert many work stoppagesby providing an acceptable alternative to direct action and toprotect and promote the interests of the weaker sections of theworking class, who were not well organized or were unable tobargain on an equal footing with the employers.”i. The recognition of trade unions, by methods to be decided

by an independent authority like the Industrial RelationsCommission;

ii. To bring about changes in the existing machinery,permanent machinery, entirely independent ofadministration, should replace the existing ad hocmachinery;

iii. This machinery - National Industrial Relations Commission- should be appointed by the Central Government forindustries for which the Government is the appropriateauthority ... to deal with such disputes which involvequestions of national importance or which are likely toaffect the interest of establishments situated in more thanone state, that is, disputes which are at present dealt with byNational Tribunals;

iv. There should be an Industrial Relations Commission ineach State for settlement of disputes for which the StateGovernment is the appropriate authority, The IRCs at theCentral and State levels should perform three functions:adjudication, conciliation, and certification of unions asrepresentative unions;

v. If negotiations fail and the parties approach the IRC, it willhelp them in choosing an arbitrator, or after service ofstrike/lock-out notice either party may approach it fornaming a conciliator. On the failure of collective bargainingand when parties do not agree to arbitration, either party‘shall’, in case of essential services/industries, notify theIRC of the failure of such negotiation where upon the IRCshall adjudicate and its award shall be final and bindingupon the parties. In other case, the IRC may offer to theparties its good offices for settlement;

vi. If after the expiry of notice period, no settlement is reached,the parties will be free to resort to direct action; if suchaction continues for 30 days, it will be incumbent on theIRC to intervene and arrange for settlement of industrialdispute;

vii. Labour Courts should be set up to deal with “disputesrelating to rights and obligations, interpretation andimplementation of awards of either the National or StateIRC and claims arising cost of rights and obligations, as

well as disputes in regard to unfair labour practice and thelike;”

viii.For settlement of disputes in smaller units or whereunorganized workers are involved, the LabourCommissioner should intervene.”

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Case: All India Railway Strike, May 1974Indian Railways - the core of the nations’ system - constitutesAsia’s largest and World’s third largest rail system in terms of kilin terms of employment, and second largest, in terms ofinvestment, public sector, undertaking in the country and isspread geographically through the length and breadth of India.With its wide network, the Indian Railways serve as a crucialinstrument in the socio-economic transformation in India.With a total capital of around Rs. 248,084 million as on 31stMarch 1992, the gross revenue earnings of Rs. 141,137 millionin 1991-92, route length of 61,836 km. and employment ofover 1. 76 million persons (including about 200,000 casualworkers), it is the largest enterprise owned and managed by theGovernment of India, as a departmental undertaking.Railways in India are owned and managed by the UnionGovernment, except a few branch lines on the narrow gaugethat are owned and managed by private companies andmunicipal bodies.The Minister for Railways represents the railways’ interest in theParliament. The administrative and management responsibili-ties of the railways vest with the Railway Board under theoverall supervision of the Union Minister of Railways, who isgenerally assisted by Minister of State and one or more deputyministers.Since the Government of India is the “employer” in thisdepartmentally run public sector undertaking, the wage policyof Indian Railways is linked to the wage policy of UnionGovernment. Further, the Government-instituted JointConsultative Machinery at national level is the body to discussand resolve the issues of union Government employees andemployees of departmentally run public sector undertakings.Trade Union Movement in the Indian Railways had its origin in1897. Even then, it is as old as the labour movement in India.The All India Railway men’s Federation (AIRF) was formed in1924 with affiliation to the All India Trade Union Congress(AITUC) and was granted recognition in 1930. A rival federa-tion - affiliated to Indian National Trade Union Congress(INTUC) - was formed in 1948. Serious efforts were made tobring unity between the two federations. Consequently, thesetwo federations merged into the National Federation of IndianRailway men (NFIR) in 1953.But this unity could not survive long and the organization wassegregated into AIRF and National Federation of IndianRailway men (NFIR). Attempts made from time to time failedto achieve unity of the two Federations.Indian Railway administration solves the employee problemthrough collective bargaining, which is represented by perma-nent negotiating machinery and Joint Consultative Machinery.It was decided in the 49th Annual Convention of AIRF held atSecunderabad during October 1973, to solve the long pending

problems relating to bonus, need based minimum-wage, parityin wages with other public sector employees etc., through theJCM. The convention also decided to solve them through strikeaction, if they were not solved through JCM. But later it wasfelt by the AIRF that Government utilized this opportunity forspending time, delaying its decisions and to put forth totallyunacceptable proposals. The NFIR working committee totallydisaUnilateral decision taken by AIRF. In consequence, AIRF held aGeneral Council meeting on 6th and 7th February 1974, atNagpur and decided to hold a convention of all employees’organizations (excluding NFIR) and other Central Governmentemployees and Central Trade Unions. Accordingly, a NationalConvention of railway men was held on 27th and 28thFebruary 1974, at New Delhi which gave birth to the “NationalCo-ordination Committee for Railway men’s Struggle”(NCCRS) and an action committee of NCCRS was alsoappointed. The leaders of AIRF, All India Trade UnionCongress, All India Railway Employees’ Confederation,Bharatiya Mazdoor Sangh, Centre of Indian Trade Unions, andall category-wise associations in Railways participated in thisconvention. The convention formulated a six-point charter ofdemands and urged the then Minister for Railways to redressthem through negotiations by April 10, 1974.However, the then Railway Minister convened a meeting withthe members of action Committee of NCCRS headed byGeorge Fernandez, the then President of AIRF and therepresentatives of NFIR on April 12, 1974, with the initiativetaken by the then Labour Minister. As a result of the discus-sions in this meeting, it was decided that the Member Staff ofthe Railway Board should commence negotiations with thedelegations from April 15, 1974. Accordingly, the ActionCommittee of NCCRS and NFIR held talks on April 15, 1974,with the Member Staff. This meeting was closed, with theMember Staff declaring on behalf of the Railway Ministry thatno demand could be conceded and that he did not have theauthority to negotiate.” Thus, “the negotiations reached theirdead end on the very day they commenced within a matter ofhours.” In consequence to this crucial and turning situation,“the National Co-ordination Committee of Railway men’sStruggle called upon the railway men to go on indefinite generalstrike from 6.00 hours on 8th May 1974,” whilst the “NFIR”expressed its regret rover the casual manner in which thesenegotiations were held.” In reply to its protest the NFIR wasassured by the Railway Minister that “what had happened onthe 15th April, 1974, meeting was not the last word and that hewould himself meet the Federation in the afternoon of 18thApril, 1974.” Thus, the railway, management played onefederation against the other. NFIR felt that the strike decisiontaken by NCCRS was a hasty step.


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Meetings between the railway administration and ActionCommittee of NCCRSAnd NFIR were, however, held on 20th and 27th April 1974,which did not bear fruit. Even then, NFIR decided to settle theissues through negotiations. As a result the general strike brokeout at 6.00 hours on 8th May 1974, and went on up to 27thMay 1974. But NFIR did not associate itself with this strike,due to rivalry between AIRF and ‘NFIR. However, it was feltthat there would have been possibilities to settle the problemsof rail men through negotiations, if the incident of 15th April1974, had not occurred. This strike was organized to achieve thefollowing “demands:(i)a. all railwaymen be treated as industrial workers with full

trade union rights including the right to negotiate;b. The working hours of railwaymen shall not exceed eight

hours per day;c. There shall be job evaluation of all railwaymen through a

scientific system to be followed by their classification anddegradation with the need-based minimum wage as thewage for the lowest paid worker.

d. Pending the completion of job evaluation andreclassification, immediate parity in wages with those ofworkers in the Central Government undertakings begranted;

(ii)Dearness allowance linked to the cost of living index withfull neutralization for every rise of four points in a six-month period be sanctioned;

(iii)Bonus at the rate of one month’s wages for the years 1971-72 and 1972.73;

(iv)Decasualisation of all casual railway men and theirconfirmation in service with all benefits given to them withretrospective effect;

(v)Adequate and subsidized food grains and other essentialcommodities through departmentally run shops; and

(vi)All victimization cases should be withdrawn.This strike was mostly responsible for the maximumnumber of mandays lost (14.84 million) and maximumnumber of man-days lost per thousand workers employed910,560.89) during the history of Indian Railways. Themandays were lost in all the nine zonal railways. It has beencommented that “the All India Railwaymen’s strike in May1974 upset the industrial relations developed over theyears…”

During the strike period, though the Railways kept the wheelsmoving according to plan, the performance of railways declinedseverely, Traveling public, basic industries, power houses, tradeand the like suffered a lot. Productivity in railways declined inthe year 1974-75 compared to that in 1973-74. This strike,

within the living memory, has brought about significantchanges in the employee-management relationship besidesdecline in efficiency of railways. Though the Government didnot concede to the demands of the employees, they had takenaction against the employees who participated in the strike asshown in the table. Dismissal of employees in connection withMay 1974 strike is found in all the nine zones, but the numbervaries between 521 and 3,507. Number of employees who weredismissed was highest in Western Railway (3,507) followed byNortheast Frontier Railway (3,336) and was lowest in SouthernRailway (521). However, 15,840 employees (or 94.18 percent tonumber of employees dismissed) were taken back by all thenine zonal railways by the end of 1975. The percentage ofemployees taken back to total number of employees dismissedwas highest in North-Eastern Railway (98.91) followed bySouth Central Railway (98.62). Number of employees not takenback, by the find of 1975 was 979 or 5.82 per cent to the totalnumber of employees dismissed, However, these remainingemployees were taken into service in 1978 during Janata Partyregime. The Government met some of the demands later andthe important issue of bonus was solved in November 1979.

TablePosition of Employees Dismissed in Connection with the

Strike of May 1974

Railway Total Number Total Number Percentage Total Number

of Employees of Employees of Employees of Employees Dismissed in Taken Back Taken Back not May 1974 by the End to the Number Taken Back of 1975 of Employees by the End Dismissed of 1975

Central 1,704 1,619 95.01 85 Eastern 2,848 2,490 84.43 358

Northern 1,389 1,354 97.48 35 North

Eastern 826 817 98.91 9

Northeast frontier 3,336 3,172 95.08 164

Southern 521 492 94.43 29 South central 580 572 98.62 8

South eastern 2,108 1,881 89.23 227

Western 3,507 3,443 98.18 64 16,819 15,840 94.18 979

It is evident from this analysis that, the category-wise unions,particularly the Loco running Staff Association had organizedstrikes frequently during 1961-62 to 1964-65, 1970-71 to 1973-74,1978-79,1979-80 and 1980-81. Strikes of this nature disturbthe industrial harmony, besides affecting the productivity andefficiency. In addition the policy of railway administration hasbeen to discourage the category-wise unions. Hence, it may besuggested that the category-wise associations and unrecognizedfederations unions and should be made ineligible to use theweapon of strike action and or any other suitable steps shouldbe taken to avoid these frequent strikes.

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The comparative study of number of mandays lost perthousand employees due to industrial disputes in IndianRailways and in different sectors of India gives the usefulconclusions which are presented in Table . It can be observedfrom this table that, despite the all India strike in July 1960, themandays lost per thousand employees in Indian Railways(719.49) were less than that of manufacturing sector (1,382) inthe year 1960. During 1966, no single man-day was lost inIndian Railways, while the mandays 10stlper thousand workerswas 2,258 in plantations, 2,041 in manufacturing sector, 645 incoal mining and 625 in mining. During 1970, the number ofmandays lost per thousand employees in Indian Railways(245.28) was less than that of manufacturing (3,329), mining(1,375), coal mining (1,191) and plantations (317). During 1971to 1973 also, this figure in Indian Railways (varied between34.66 and 233.72) was less than that of manufacturing (variedbetween 2,328 and 3,231), mining (varied between 1,675 and2,293), coal mining (varied between 1,639 and 2,502) andplantations (varied between 476 and 2,116).

TableMandays Lost Per Thousand Workers Employed in Indian

Railways and In Different Sectors due to IndustrialDisputes

Year Manufacturing Mining Coal Mining Plantation Indian Railways

1957 1,181 1,562 1,522 403 NA 1960 1,382 360 325 174 719.49 1966 2,041 625 645 2,258 - 1970 3,329 1,375 1,191 317 245.28 1973 2,971 2,079 1,897 476 233.72 1974 4,505 1,029 1,465 3,380 10,560.89 1977 3,761 2,406 N.A. NA 0.92 1979 N.A. N.A. N.A. NA 10.63 1980 N.A. N.A. N.A. NA 1,469.27

1983.84 N.A. N.A. N.A. NA 0.24

But during 1974, this figure was highest in Indian Railways (l0,560.89) compared to that of manufacturing (4,505), plantations(3,380), coal mining (1,465) and mining (1,029), which was dueto organization of all India strike in May 1974 in the Railways.However, this figure was too less in Indian Railways (variedbetween only 0.02 and 32.31) compared to that of manufactur-ing (varied between 2,261 and 4,072) and mining (variedbetween 272 and 2,406) during 1975 to 1978. Thus, this analysisreveals that the incidence of strikes was very low in IndianRailways (except in the year 1974) compared to the other sector,viz., manufacturing, mining, coalmining and plantations.

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Learning ObjectiveThe study of this lesson will help you understand:• Objects of Industrial Disputes Act, 1947.

The Industrial Disputes Act, 1947IntroductionTrade had been an important incident of society. It catered theneed of people of the society in various ways. Even prior to1947, trade had been enormously developed in the country.There were disputes between the agencies devoted to trade assuch. The British people at the helm of administration andlegislation both gave an enactment named as the Trade Dis-putes Act 1929. This Act remained in force till year 1947.Certain short -comings were witnessed in the Act of 1929 indue course of time. The provision to institute a proceedingunder that Act for settlement of dispute either by making areference to Board of Conciliation or to Court of inquiry, so asto bind the parties to dispute and thereby giving a finality ofthe matter between them. This defect was although removed byincorporating Rule 81-A of Defense of India Rules wherebysuch disputes were to be referred to an Adjudicator. It was notsufficient as it short lived for six months more after 1stOctober. 1946, where after a permanent arrangement wassought. Consequently Industrial Disputes Act. 1947 wasenacted.The Act of 1947 contains most of the essential principles ofRule 81-A of Defense of India Rules. There were two newinstitutions imported in the Act, one was the Works Commit-tee consisting of representatives of em-ployers and workmenexceeding a strength of 100. The other were Tribu-nals.Reference of disputes to Industrial Tribunal on the applicationof both parties or by appropriate governments, the award ofTribunals was to be enforced within a period not exceeding oneyear. This Act of 1947 has also undergone several amendments.Several amendments were made in the Act from time to time.At present there are seven chapters devoted to various mattersregarding industrial Disputes. There are various authoritiesunder the Act including Board and Tribunal Labour Courts tolook after such disputes. Procedures, powers and duties ofauthorities have been defined so as to implement the provi-sions of the Act. Certain prohibitions have been imposed onthe strikes and lockouts and even financial assistance given tosuch strikes and lockouts were prohibited. The provisionsrelating to above matters are mentioned I to V.Constitution of authorities, Labour Courts and Tribunalsalong with duties and pavers of such authority have beenmentioned in Chapters I to V. Prohibitions imposed on strikes,lock outs, their financiers are dealt in the aforesaid chapters.Procedure to implement the provisions of Act are included inthe Act.

Chapters V-A to V-C deal with lay-off and retrenchment ofemployees. There are also special provisions regarding closure incertain establish-ments, bar on unfair labour practice. Contra-vention of these provisions was made penal. Chapter VI dealswith specific penalties for various kinds of breaches andcontravention of provisions of the Act.Chapter VII being the last one deals with miscellaneous mattersspecial feature of which are rule making powers and its delega-tion.There are five schedules attached to the Act. The First Scheduledeals with industries to be declared as public utility service, thesecond schedule specifies matters within jurisdiction of labourinterests, the third one with matters within jurisdiction ofIndustrial Tribunals. The fourth one is regarding conditions ofservices for purposes of Sec. 9-A and fifth schedule is meant formatters connected with Sec. 2.In this way it is a self-contained Act and caters the need ofindustries, its employees, employers and the workmen. It is aprogressive legislation for welfare of public.

Object of Industrial Disputes Act, 1947The object of the Industrial Disputes Act is to improve theservice conditions of industrial labour so as to provide forthem the ordinary amenities of life and by the process, to bringabout industrial peace which would in its turn accelerateproductive activity of the country resulting in its prosperity. Theprosperity of the country in its turn, helps to improve theconditions of labour. The Act is not intended only to makeprovision for investigation and settlement of industrialdisputes but also to serve industrial peace so that it may resultin more production and improve the national economy. In thepresent socio-political economic system it is intended to achieveco-operation between the capitals and labour which has beendeemed to be essential for maintenance of increased productionand industrial peace. The Act provides to ensure fair terms toworkman and to prevent disputes between the employer andthe employees so that the large interest of the public may notsuffer. The provisions of the act have to be interpreted in amanner which advances the object of the legislature contem-plated in the statement of object and reasons. Whileinterpreting different provisions of the Act, attempt should bemade to avoid industrial unrest to ensure, industrial peace andto provide machinery to secure that end. Conciliation is mostimportant and desirable way to secure that end. In dealing withindustrial disputes the Courts have always, emphasized doctrineof social justice, which is founded -on basic ideal of socio-economic equality as enshrined in the preamble of ourConstitution. While construing the provisions of the Act, theCourts have to give them a construction which should help inachieving the object of the act.

LESSON 34:INDUSTRIAL DISPUTES ACT 1947

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The priciple objects of this Act are as follows:1. The promotion of measures to secure cordial relations

between labour and management.2. Investigation and settlement of industrial diputes(for

which machinery is provided).1. Prevention of illegal strikes and lockouts.2. Provision of relief in matters of lay-off and retrenchment.Several authorities are named for purpose of investigation andsettlement of diputes. They are:1. Works committees2. Conciliation officers3. Board of conciliation4. Court of enquiry5. Arbitration (voluntary)6. Labour courts7. Industrial tribunals8. National tribunals

The Second Schedule (of the Industrial Disputes Act,1947)

Matters within the Jurisdiction of the Labour Courts1. The propriety or legality of an order passed by an employer

under the standing orders.2. The application and interpretation of standing orders.3. Discharge or dismissal of workmen including reinstatement

of, or grant of relief to, workmen wrongfully dimissed.4. Withdrawal of any customary concession or privilege.5. Illegality or otherwise of a strike or lockout and6. All matters other than those specified in the third schedule.

The Third Schedule

Matters within the Jurisdiction of Industrial Tribunals1. Wages, including the period and the mode of payment2. Compensatory and other allowances3. Hours of work and rest intervals4. Leave with wages and holidays5. Bonus, profit-sharing, provident fund and gratuity6. Shift working otherwise than in accordance with Standing

Orders7. Classification by grades8. Rules of discipline9. Rationalisation10. Retrenchment of workmen and cloure of establishment11. Any other matter that may be prescribed.Some of the Unfair Labour Practices Listed by the IndustrialAmendment Bill, 1982By Employer1. Threatening workmen with discharge or dismissal if they

join a trade union (TU) or threatening a closure or lockoutif a trade union is organized.

2. Granting a wage increase to workmen at crucial periods oftrade union organization with a view to undermine theefforts of the trade union.

3. To establish an employer’s sponsored trade union.4. To encourage or discourage membership in any TU by

discriminating against any workman.5. To discourge or dimiss workmen by way of victimization

due to the exercise of the employer’s rights, by falselyimplicating a workman in a criminal case for misconduct ofa minor or a technical nature etc.

By Workmen or Trade Union

1. To force workmen to become members of a trade union2. For a recognized union to bargain collectively in good faith

with the employer.3. To stage, encourage, coerce actions such as wilful go-slow,

and to stage demonstration at the residence of theemployers or management staff members.

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Learning ObjectiveThe study of this lesson will help you understand:• Nature of workers’ Participation in Management.• Conditions for successful working of WPM.

Workers’ Participation In ManagementThe concept of workers’ participation in management isconsidered as a mechanism where workers have a say in thedecision-making process of an enterprise.

DefinitionThe concept of workers’ participation in management crystal-lizes the concept of Industrial Democracy, and indicates anattempt on the part of an employer to build employees into ateam which work towards the realization of a commonobjective.According to Davis, “It is a mental and emotional involvementof a person in a group situation which encourages him tocontribute to goals and share responsibilities in them.”Within the orbit of this definition, a continuum, of menmanagement relationship tan be conceived:Workers’ Control à Joint Management à Joint ConsultationWork Place Consultation à Management SupremacyIn this continuum, workers’ control represents one extremewhich suggests concentration of all powers in workers, andmanagement supremacy represents the other extreme, whichimplies a zealous defense of managerial prerogatives.“Workers’ participation in management is a resounding phrase,bringing the past and the future. It echoes the millennial visionof nineteenth century thinkers while heralding the evolution ofnew forms of industrial organization under twentieth centurypressures. The word ‘workers’ participation’ is plentifullysupplied with ideas, institutions and opinions.” “There are twobasic ideas in the concept of workers’ participation in manage-ment: there are two groups of people in an undertaking(managers and workers) and that there are two separate sets offunctions to be performed (managerial and operative). Manage-rial functions are essentially those concerned with planning,organizing, motivating, and controlling, in contrast with“doing” or “operative” work.Mamoria defines it as a system of communication and consul-tation either formal or informal by which employees of anorganization are kept informed about the affairs of theundertaking and through which they express their opinion andcontribute to management decisions..

Summary of the Definitionsa. The participation results from practices, which increase the

scope for employee’s share of influence in decision—making at different tiers of the orgiansational hierarchy withconcomitant assumption of responsibility.

b. The participation has to be at different levels ofmanagement: (i) at the shop level, (ii) at the departmentlevel, and (iii) at the top level. The decision--making at thesedifferent levels would assume different patterns in regard topolicy formulation and execution.

c. The participation incorporates the willing acceptance ofresponsibilities by body of workers. As they become partyto the decision-making, the workers have to committhemselves to ensuring their implementation.

d. The participation is conducted through the mechanism offorums and practices which provide for association ofworkers’ representatives.

e. The broad goal of participation is to change basically theorganizational aspect of production and transfer themanagement function entirely to the workers so thatmanagement becomes “Auto management.”

Formal Vs. InformalThe forms of Workers’ Participation in Management dependon the differences in the levels of management, the subject-matter of participation, the strength of the union and thepattern of industrial relations. The important forms in whichworkers could participate in management are collective bargain-ing, joint decision-making, consultation and informationsharing. They may take the form of formal organizations likeWorks Committees, Joint Management Councils or an informalsystem, for instance, a supervisor consulting a worker beforetaking any decision in which the latter is interested.

Different ViewsThe scope, extent and the successful working of the participa-tive management depends to a great extent on the objectivesand the three important factors of the system of industrialrelations, viz., the employee, the employer and the government.The objectives as viewed by these three parties contradict witheach other in India. The workers expect that Workers’ Participa-tion in Management schemes will lead to the achievementsecurity of employment, better wages, bonus etc. Theemployer’s interest is in the maximization of profit throughincreased production and minimization of expenditure. Thegovernment expects the scheme to bring about closer associa-tion between labour and management and industrial peace.Viramani viewed that it is this variance in the objective ofparticipation as perceived by the three sectors that is responsiblefor the unsuccessful functioning of schemes of participativemanagement.

Objectives of Workers’ Participation inManagementThe main objectives of Workers’ Participation in Managementinclude:i. To promote increased productivity for the advantage of the

organisation, workers and society at large;

LESSON 35:EVOLUTION AND NATURE OF

PARTICIPATION, PREREQUISITESFOR SUCCESSFUL PARTICIPATION


RELATIONSCHAPTER 7 : WORKERS PARTICIPATION

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ii. To provide a better understanding to employees about theirrole and place in the process of attainment oforganisational goals;

iii. To satisfy the workers’ social and esteem needs; andiv. To strengthen labour management co-operation and thus

maintaining industrial peace and harmony.v. To develop social education for effective solidarity among

the working community and for tapping latent humanresources.

vi. An ideological point of view to develop self-managementin industry.

vii. An instrument for improving efficiency of the company andestablishing harmonious industrial relations.

viii.To build the most dynamic human resource.ix. To build the nation through entrepreneurship and

economic development.

Participation and MotivationParticipation provides greater autonomy for subordinates andoften leads to increasing motivation for:a. Participation permits a more balanced interaction pattern

and, therefore, results in less resistance to innovation.b. It permits members of the group to unfreeze their

attitudes and engage in catharsis.c. It permits leaders to reinforce their position. They enhance

their status both by taking a leading part in making thedecision and through inducing group members to abide byit.

d. It enables the subordinate to feel that an exchangerelationship has been set up since the boss listens to hisproblems and permits them to be corrected.

e. It may permit the subordinate to feel that doing the jobwell provides him an opportunity to demonstrate skillswhich he values high, i.e., it provides him an opportunityfor achievement from work..

f. It subjects the individual to certain group pressures toImplement the decision which the group participated inmaking it.

Essential Conditions for successfulWorking of WPMThe success of workers portion in management depends uponthe following conditions:1. The attitude and outlook of the parties should be

enlightened and impartial so that a free and frank exchangeof thoughts and opinions could be possible. Where a rightkind of attitude exists and proper atmosphere prevails theprocess of participation is greatly stimulated.

2. Both parties should have a genuine faith in the system andin each other and be willing to work together. Themanagement must give the participating institution itsrightful place in the managerial organization of theundertaking and implementing the policies of theundertaking. The labour, on the other hand, must alsowhole-heartedly co-operate with the management throughits trade unions. The foremen and supervisory cadre must

also lend their full support so that the accepted policiescould be implemented without any also lend their fullsupport so that the accepted policies could be implementedwithout any resentment on either side.

3. The experiment of labour participation in managementmust be given a wide db; in order that the idea ofparticipation is ingrained in the minds of those who are toimplement the scheme. Lectures, discussions, film shows,conferences, seminars and other methods of propagandamay be fruitfully employed to create enthusiasm about thescheme among the management as well as the workers.

4. Participation should be real. The issues related to increase inproduction and productivity, evaluation of costs,development of personnel, expansion of markets also bebrought under the jurisdiction of the participating bodies.These bodies should meet frequently and their decisionsshould be timely implemented and strictly adhered to.

5. Objectives to be achieved should not be unrealistically high,vague or ambitious but practicable of achievement and clearto all.

6. Form, coverage, extent and level of participation shouldgrow in response to specific environment, capacity andinterest of the parties concerned.

7. Participation must work as complementary body to helpcollective bargaining, which creates conditions of work andalso creates legal relations.

8. Institutional participation should be discouraged but suchparticipation should be encourage through changes inleadership styles, communication process, and inter-personal and inter-group relations.

9. There should be a strong trade union, which has learnt thevirtues of unit and self-reliance so that they may effectivelytake part in collective bargaining or participation.

10. Multiple unions in one enterprise should be restricted bylegislative measures. Similarly, there should be nomultiplicity and duplicacy of bipartite consultativemachinery at the plant level.

11. A peaceful atmosphere should be there wherein there are nostrikes and lockouts, for their presence ruins the employees,harms the interest of the society, and puts the employees tofinancial losses.

12. Authority should be centralized through democraticmanagement process. The participation should be at thetwo or at the most three levels.

13. Programmes for training and education should bedeveloped comprehensively. For this purpose, “labour is tobe given education not to the head alone, not to the heartalone, not to the hands alone, but it is dedicated to thethree; to make the workers think, feel and act.” Labour is tobe educated to enable him to think clearly, rationally andlogically; to enable him to feel deeply and emotionally; andto enable him to act in a responsible way. The managementat different levels also needs to be trained and oriented togive it a fresh thinking on the issues concerned.

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14. Progressive personnel policies should ensure growth ofindividual workers within industry and proper policiesshould exist for selection, promotion, compensation,rewards and discipline.

15. Management should be prepared to give all informationconnected with the working of the industry and labourshould handle that information with full confidence andresponsibility.

16. The workers should become aware of their responsibilities.The leaders should initiate this in them. Similarly, the topmanagement should make the lower enhelons to show anew attitude in the light of the new relationship.

17. The follow-up action on the decisions of the participatingforums should be ensured. The government may also setup machinery to act as a watchdog for implementing thescheme.

18. Effective two-way communication is a must for the successof the programme. The shorter is the time forcommunication, the greater is the probability of correctinterpretation.

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Learning ObjectiveThe study of this lesson will help you understand:• The forms of WPM and their influnce and impact.

Forms of WPMThe forms of Workers’ participation in management vary fromindustry to industry and from country to country. The impor-tant forms are: Labour-Management Consultation andCo-operation, Joint consultation and Model of Participation(U.K). Union-Management Co-operation (USA),Codetermination Scheme (West Germany), joint ManagementPlan, Joint Decision-Making Model, Workers’ Control Model,Self- management or Auto Management Scheme.Forms of Workers’ Participation in Management are:i. Works Committee;ii. Joint Management Councils;iii. Joint Councils;iv. Shop Councils; andv. Unit Councils.

Work CommitteesThe Industrial Disputes Act, 1949 provides for the setting upof works committees as a scheme of workers participation inmanagement which consist of representatives employers andemployees. The Act provides for these bodies in every undertak-ing employing 100 or more workmen. The aim of setting upof these bodies is to promote measures for maintainingharmonious relations in the work place and to sort outdifferences of opinion in respect of matters of commoninterest to employers and employees. The Bombay IndustrialRelations Act, 1946 also provides for these bodies, but underthe provisions of this Act they can be set up only in units whichhave a recognized union and they are called joint committees.The workers directly elect their representatives where there is nounion.Functions: These works committees/joint committees areconsultative bodies. Their functions include discussion ofconditions of work like lighting, ventilation, temperature,sanitation etc., amenities like water supply for drinking pur-poses, provision of canteens, medical services, safe workingconditions, administration of welfare funds, educational andrecreational activities, and encouragement of thrift and savings.It shall be the duty of the works committee to promotemeasures for securing and preserving amity and good relationsbetween the employers and workmen and to comment uponmatters of their common interest or concern and endeavor toreconcile any material difference of opinion in respect of suchmatters.Structure: The works committees have, as office bearers, aPresident, a Vice Presiident, a Secretary and a Joint Secretary. The

President is a nominee of the employer and the Vice-Presidentis the Workers’ representative. The tenure of these bodies intwo years. The total strength of these bodies should not exceed20. The employees’ representatives have to be chosen by theemployees.These committees functioned actively in some organisations likeTata Iron and steel Company, Indian Aluminium Works atBelur, and Hindustan Lever. In all these, the managements haveevolved joint committees independently of the statutoryrequirements.

Joint Management Councils (JMCs)The Second Five Year Plan recommended the setting up ofjoint councils of management consisting of representatives ofworkers and management. The government of India deputed astudy group (1957) to study the schemes of worker’s participa-tion in management in countries like U.K., France, Belgium andYugoslavia. The report of the study group was considered bythe Indian Labour Conference (ILC) in its 15th session in 1957and it made certain recommendations:1. That workers’ participation in management schemes should

be set up in selected undertakings on a voluntary basis.2. A sub-committee consisting of representatives of

employers, workers and government should be set up forconsidering the details of workers’ participation inmanagement schemes. This committee should select theundertakings where workers’ participation in managementschemes would be introduced in the first stage on anexperimental basis.

Objectives: The objectives of Joint Management Councils areas follows:i. To increase the association of employers and employee

thereby promoting cordial industrial relations;ii. To improve the operational efficiency of the workers;iii. To provide welfare facilities to them;iv. To educate workers so that they are well equipped to

participate in these schemes; andv. To satisfy the psychological needs of workers.A tripartite sub-committee was set up as per the recommenda-tions of Indian Labour conference, which laid down certaincriteria for selection of enterprises where the JMCs could beintroduced. They are:i. The unit must have 500 or more employees;ii. It should have a fair record of industrial relations;iii. It should have a well-organized trade union;iv. The management and the workers should agree to establish

JMCs.

LESSON 36: UNIT 9DEGREE OF INFLUNCE AND INVOLVENT, FORMS

OF PARTICIPATION, AND IMPACT OF PARTICIPATION

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v. Employers (in case of private sector) should be membersof the leading Employers’ organization; and

vi. Trade unions should be affiliated to one of the Centralfederations,

It was observed by the sub-committee that if the workers andemployers mutually agree they can set up JMCs even if theseconditions are not met.The sub-committee also made recommendations regardingtheir composition, procedure for nominating workers’ represen-tatives, the membership of JMCs etc. The details of theseaspects have to be worked out by the parties themselves. A draftmodel was drawn up regarding the establishment of JMCs.The sub-committee was later reconstituted as the “Committeeon Labour-Management Co-operation” to advise on all matterspertaining to the Scheme.

Criteria for Selecting of Units for Settingup of JMCsThe sub-committee of the Fifteenth Indian Labour Conferencewhich selected 48 units for introduction of the scheme of jointmanagement council’ had laid down the following criteria forselecting the units:In private sector, the industries selected were cotton and jutetextiles, engineering, chemica1s, tobacco, paper, cement, minesand plantations.In public sector, industries included railway workshops andyards, posts and telegraphs, ports, shipyards, transportworkshops, mines, printing and electrical undertaking;i. The undertaking should have a well-established, strong

trade union functioning.ii. There should be a readiness in the parties between

employers’ and workers’ union to try out experiment in aspirit of willing cooperation.

iii. The size of the undertaking should be at least 500 workers.iv. The employer in a private undertaking should be member

of one of the leading employers organization; and similarlythe trade union be related to one of the central federations.

v. The company should have a fair record of industrialrelations.

Functions: The following are the important functions ofJMCs:i. To be consulted on matters like standing orders,

retrenchment, rationalization, closure, reduction ofoperations etc.

ii. To receive information, to discuss and offer suggestions.iii. To shoulder administrative responsibilities like maintaining

welfare measures, safety measure, training schemes, workinghours, payment of rewards. .

The tripartite committee originally prepared a list of 50enterprises and later the target was raised to 150 to introduceJMCs. It was found by 1966 that 124 JMCs were inexistence.This number dropped to 80 in 1978 and a good number ofthese were working. Some of the organizations, which weresuccessful with experiments of workers’ Participation are BharatHeavy Electricals Ltd. (BHEL), Tata Iron and Steel company

(TISCO), Indian Aluminum Company and AluminumIndustries of Kundara, TISCO agreed to establish a compre-hensive scheme of joint consultation by an agreement with itsunits. Under this Scheme a three-tier system of consultationwas setup.

Workers Participation in ManagementScheme of 1975Government of India on 30th October 1975 announced ascheme of workers’ participation in management, whichconsisted of establishment of Joint Councils and Council aspart of its 20-point economic programme. The schemeenvisages for establishment of joint -councils and shop councilsin manufacturing and mining industries employing 500 ormore employees in public, private and co-operative sectors. IThe scheme contemplated participation of workers in thedecision-making process in the matters relating to production,productivity, absenteeism, safety measures, general discipline,working conditions and welfare, and over-all efficiency of theshop/department.Important features of this new scheme are:1. All decisions of a Shop Council as well as of the Joint

Council shall be on the edifice of the “Consensus and notby process of voting.”

2. It is non-statutory like JMCs and there is a clear-cut functionof these councils.

3. “Consensus and time-bound implementation” are thetools for arriving at decisions. Thus, the scheme tries toeliminate the chances of direct interference by outsideelements. The decisions are required to be implementedwithin one month.

4. The scheme provides for participation of workers at theshop floor level; otherwise the framework is not materiallydifferent from that of WCs. and JMCs.

5. It provides for a two-way communication and an exchangeof information between the management and theworkmen.

6. The very change in the nomenclature of the scheme from‘participation of workers in management’ to that of‘participation of workers in industry’ makes it moreacceptable to employees as the latter are likely to offset someof their misgivings and apprehensions caused by theformer.

7. The scheme hits at three principal objectives to which thereform of industrial democracy is directed, viz., recovery ofindividual human rights at the, work place; consolidationof social and political freedom (to join a particular union ofhis own choice without any coercion); and the framing ofnew industrial system functionally suitable to the country’seconomy.

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Learning ObjectiveThe study of this lesson will help you understand:• The forms of WPM and their influnce and impact.

(iii) Joint CouncilsThe joint councils are for the whole unit and its membershipremains confined to those who are actually engaged in theorganization. The tenure of the joint councils is for two years.The Chief Executive of the unit becomes its Chairman.Workers’ members of the council nominate the Vice Chairman.The joint council appoints the Secretary. The Secretary isresponsible for discharging the functions of the council.The joint councils will meet once in four months, but theperiodicity of the meeting varies from unit to unit, it may beonce in a month, quarter etc. The decisions taken at the jointcouncil meetings are by the process of consensus and themanagement shall implement the decisions within one month.The scheme was implemented by the major units of the centraland State governments. The government enlarged the functionsof the councils in 1976.

(iv) Shop CouncilsThe shop council represents each department or a shop in anunit. Each shop council will consist of an equal number ofrepresentatives of employers and workers. The employers’representatives will be nominated by the management andmust consist of persons from within the unit concerned. Theworkers representative will be from among the workers of thedepartment or shop concerned. The number of members ofeach council may be determined by the employers in consulta-tion with the recognized union. The total number of members,however, may not generally exceed twelve.The decisions of the shop council are to be taken .on the basisof consensus but not by voting. Management has to imple-ment the decisions within one month. The tenure of the shopcouncil is for a period of two years. Members of the shopcouncils meet at least once in a month. Management nominatesthe Chairman at least once in a month. Management nominatesthe Chairman of the shop council whereas workers’ membersof the council elect the Vice-chairman of the council.The number of shop councils to be established in an organiza-tion are determined by the employer in consultation with therecognized trade unions/workers of the organization. Thedecisions of a shop council, which have a bearing on anothershop, will be referred to joint council for consideration andapproval.

Shop Councils

Main FeaturesThe main features of the scheme of Participative Managementthrough Shop councils are as follows:

i. In every industrial unit employing 500 or more workmen,the employer shall constitute a Shop Council for eachdepartment or shop or one council for more than onedepartment or shop, considering the number of workmenemployed in different departments or shops.

ii.(a) Each council shall consist of an equal number of

representatives of employers and workers.(b) The employers’ representatives shall be nominated by the

management and must consist of persons from the unitconcerned.

(c) All the representatives of workmen shall be from amongstthe workers actually engaged in the department of the shopconcerned.

(iii) The employer shall decide in consultation with therecognized union or the various registered trade unions orwith workers, as the case may be, in the manner bets suitedto local conditions, the number of shop councils anddepartments to be attached to each council of theundertaking or establishment.

(iv) The number of members of each council may bedetermined by the employer in consultation with therecognized union, registered unions or workers in themanner best suited to local conditions obtaining in theunit; the total number of members may not generallyexceed 12.

(v) All decisions of a shop council shall be on the basis ofconsensus and not by process of voting, provided thateither party may refer the unsettled matters to the jointcouncil for consideration.

(vi) Every decision of a shop council shall be implemented bythe parties concerned within a period of one month unlessotherwise stated in the decision itself and compliance reportshall be submitted to the council.

(vii) Such decision of a shop council which have bearing onanother shop, or the undertaking of establishment as awhole will be referred to the joint council for considerationand decision.

(viii) A shop council once formed shall function for a period oftwo years. Any member nominated or elected to the councilin the mid-term to fill a casual vacancy shall continue to be amember of the council for the un expired portion of theterm of the council.

(ix) The council shall meet as frequently as in necessary and thatat least once in a month.

(x) The chairman of the shop council shall be a nominee of themanagement the worker members of the council shall electa Vice-Chairman from amongst themselves.

LESSON 37:DEGREE OF INFLUNCE AND INVOLVENT,

FORMS OF PARTICIPATION, AND IMPACT OF PARTICIPATION

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Functions of the Shop Councils: The shop councils shouldin the interest I increasing production, productivity andoverall efficiency of the shop department attend to thefollowing matters:

i. Assist management in achieving monthly/yearly productiontargets.

ii. Improvement of production, productivity and efficiencyincluding elimination of wastage and optimum utilizationof machine capacity and manpower.

iii. Specially identify areas of low productivity and takenecessary corrective steps at shop level to eliminate relevantcontributing factors.

iv. To study absenteeism in the shop/departments andrecommend steps to reduce them.

v. Safety measures.vi. Assist in maintaining general discipline in the shop/

department.vii. Physical conditions of working, such as lighting,

ventilation, noise, dust, etc., and reduction on fatigue.viii.Welfare measures to be adopted for efficient running of the

shop/department.ix. Ensure proper flow of adequate two-way communication

between the management and the workers, particularly onmatters relating to production schedules and progress inachieving the targets.

Joiny CouncilsIn every industrial unit employing 500 or more workers, thereshall be a Joint Council for the whole unit. The main featuresof the scheme of Joint Council may be as follows:i. Only such persons who are actually engaged in the unit shall

be members of the joint council.ii. The council shall function for a period of two years.iii. The Chief Executive of the unit shall be the Chairman of

the joint council and there shall be a Vice-Chairman whowill be nominated by worker- members of the council.

iv. The joint council shall appoint one of the members of thecouncil as its . Secretary. Necessary facilities for the efficientdischarge of function by the Secretary shall be provided withthe premises of the undertaking/establishment.

v. The term of council once formed shall be for a period oftwo years; if, however, a member is nominated in the mid-term of the council to fill a casual vacancy, the membernominated to such a vacancy shall continue in Office for theremaining period of the term of the council.

vi. The joint council shall meet, at least, once in a quarter.vii. Every decision of the joint council shall be on the basis of

consensus and not by a process of voting and shall bebinding on employers and workmen and shall beimplemented within one month unless otherwise stated inthe decision itself. -

Functions of Joint Council: The joint council should deal withmatters relating to:

i. Optimum production, efficiency and fixation ofproductivity norms of man and machine for the unit as awhole.

ii. Functions of a shop council, which have a bearing onanother shop or the unit as a whole.

iii. Matters emanating from shop councils, which remainunresolved.

iv. Matters concerning the unit or the plant as a whole, therespect of production targets; more specifically, taskassigned to a shop council at the shop/ department levelsbut relevant to the unit as a whole will be taken up by thejoint council.

v. The development of skills of workmen and adequatefacilities for training.

vi. Awarding of rewards for valuable and creative suggestionsreceived from the workers.-

vii. The preparation of schedules of working laws and ofholidays.

viii.Optimum use of raw materials and quality of finishedproducts.

(ix) General health, welfare and safety measures for the unit ofthe plant.

(v) Unit CouncilsEncouraged by the success of the scheme in manufacturing andmining units, a new scheme of workers’ participation inmanagement in commercial and service organization in thepublic sector, having large-scale public dealings, was announcedon 5th January, 1977. The Scheme envisaged setting of UnitCouncils in units employing at least 100 persons. The organiza-tions include hotels, restaurants, hospitals, air, sea, railway androad transport services, ports and docks, ration shops, schoolresearch institutions, provident fund and pension organiza-tions, municipal and milk distribution services, trustorganizations, all financial institutions, banks, insurancecompanies, post and telegraph offices, Food Corporation, StateElectricity boards, Central Warehousing, State WarehousingCorporations, State Trading corporation, Mines and Minerals.Trading Corporation; irrigation systems, tourist organizations,establishment for public amusement and training organizationsof the Central and State Governments. .The scheme provides for unit level councils. These councils areto eliminate, factors, which hamper operations and improvemethods of operation.The main functions of the councils include creation of condi-tions for achieving optimum efficiency, better customer servicein areas where there is direct and immediate contact between theworkers at the operational level and the consumer, higherproductivity, the elimination of pilferage and all forms ofcorruption, and the institutions of rewards to be given to thosewith proven ability in these areas.Main Features 0/ the New Scheme: The main features of thescheme of workers’ participation through unit level councilswould be as follows:i. A unit level council consisting of the workers and

management of the organization/service may be formed

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generally in each unit, employing 100 or more workers todiscuss day-to-day problems and find solutions; butwherever necessary a composite council may be formed toserve more than one unit or a council may be formeddepartment wise to suit the particular needs of anorganization/service.

ii. Every unit council shall consist of an equal number ofrepresentatives of the management and workers. The actualnumber of members should be determined by themanagement in consultation with the recognized union,registered unions or the workers in the manner best suitedto the local conditions obtaining in a unit or anorganization, but their total number may riot exceed 12. Itwould be necessary to nominate suitable and experiencedworkers from various departments irrespective of theircadre, affiliation or status, and not trade union functionarieswho may not be actually working in the unit.

iii. The management’s representatives should be nominated bythe management and should consist of persons from theunit concerned.

iv. The management shall decide in consultation with therecognized union or the registered unions or the workers asthe case may be in the manner best suited to localconditions. The number of unit councils and thedepartments to be attached to each council of theorganization/service.

v. All decision of a unit council shall be on the basis ofconsensus and not by a process of voting, provided thateither party may refer the unsettled matters to the jointcouncil for consideration.

vi. Every decision of a unit council shall be implemented bythe parties concerned within a month, unless otherwisestated in the decision itself.

vii. The management shall make suitable arrangement for therecording and maintenance of minutes of the meetings anddesignate one of its representives as - a secretary for thispurpose who shall also report the action taken on thedecisions at subsequent meetings of the council.

viii.Such decisions of a unit council, which have a bearing onanother unit of the organization/service as a whole shall bereferred to the joint council for consideration and decisions.

ix. A unit council once formed shall function for a period oftwo years. Any member nominated or elected tot he councilin the mid-term to fill a casual vacancy shall continue to be amember of the council for the unexpired portion of theterm of the council.

x. The council shall meet as frequently as is necessary but atleast once in a month.

xi. The Chairman of the council shall be a nominee of themanagement. The worker members of the council shall electa Vice-Chairman from amongst themselves.

Main Functions: The main functions of the United Councilsmay be:i. To create conditions for achieving optimum efficiency, better

customer service in areas where there is direct andimmediate contact between workers at the operational leveland the consumer, higher productivity and output includingelimination of wastage and idle time and optimumutilization of manpower by joint involvement inimproving the work system.

ii. To identify areas of chronically bad, inadequate or inferiorservice and to take necessary corrective steps to eliminate thecontributing factors to evolve improved methods ofoperation.

iii. To study absenteeism and recommend steps to reduce it.iv. To eliminate pilferage and all forms of corruption and to

institute a system of rewards for this purpose.v. The suggest improvements in physical conditions of

working such as lighting, ventilation, dust, noise,cleanliness, internal layout, setting up of customers’ servicepoints, etc.

vi. To ensure proper flow of adequate two-waycommunication between the management and workers,particularly about matters relating to the service to berendered, fixation by targets of output and progress inachieving these targets.

vii. To recommend and improve safety, health and welfaremeasures for an efficient running of the unit.

viii.To discuss any other matters which may have a bearing onthe improvement of performance of the unit for ensuringbetter customer service.

Performance Evaluation of the Scheme of Workers’ Participa-tion in managementNumber of public sector units implemented or initiated actionof implementing the joint Councils increased from 472 in 1976to 545 in 1978. A Committee on workers’ participation inmanagement and equity was appointed by the Government inSeptember 1977 to study all the issues relating to participativemanagement. The committee after its in-depth study suggestedthe outline of a comprehensive scheme and came to conclu-sions on matters like the nature, structure, levels ofparticipation and their function, which may form part of ascheme of participative management. Though this theme was lauded with great fanfare, it has notbeen effective in its working owing to the same malady fromwhich the Joint Management Councils have been suffering, i.e.,absence of commitment of both employer and employees.Further, employees feel that this scheme is mostly oriented tomaximization on production/productivity, optimum utiliza-tion of capacity, better utilization of raw materials etc., withoutconcerning much about the mean of the unit/plant.

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Learning ObjectiveThe study of this lesson will help you understand:• The reasons for limited success of WPM.

Reasons for the Limited Success ofWorkers’ Participation in ManagementThus, it is felt that the ineffective functioning of variousschemes of participative management has been mostly due toabsence of commitment and lack of interest in the schemes ofparticipative management on the part of both the parties. But astudy conducted by Prof.Laxminarain reveals that both the tradeunionists and managements covered in the study have muchfaith in the potentiality and promise of employers’ participationin management and a majority of them believe that it would besuccessful if proper mechanisms are introduced. Further, boththe employees and manager fully I appreciate the benefits ofparticipative management such as increase in production/productivity, better understanding among managers, supervi-sors and workers and help in strengthening industrial relations.Further, the trade unionists believe that employees are capableof being an effective party to participative management as theyare:a. Generally interested in participation at various level;b. Desirous of sharing the responsibility; andc. Competent to effectively participate indecision-making at

various levels.Despite the positive attitudes of both the parties about theconceptual framework of participative management, thearrangements of the participative management in public sectorunits are so far failed to deliver the goods. It is felt the existingsystem is not conductive due to inherent constraints due to —i. The inherent conflicts between employees and management;ii. The general beliefthat the workers are inferior to

management;iii. The fact that the system is management dominated and due

to; aridiv. The view that managers are averse to share responsibility.Further, it is also viewed that the ineffective functioning mightbe partly due to certain defects in contextual setting and themechanisms of participative management at micro level.Workers feel that there is no seriousness on the part ofmanagement in making the schemes of participative manage-ment a success. In view of these defects, the author of thestudy suggested that, it is necessary to sell the concept to thetop management more vigorously and to change it with theresponsibility to implement the participative managementschemes in all enterprises. Further, managers’ participation inmanagement at top level is an important link in the participativeapproach down to the line. Additional managers should also

share powers with employees to make the participative manage-ment a success. In this connection, managers in the public sectorwould have to be bold enough to take some risks inherent inthe sharing of power. Further, it is felt by the parties concernedthat voluntary nature of participative management schemes isanother reason for their ineffective functioning. In this connec-tion it is suggested that the Government should take effectivesteps in providing necessary infrastructure, in addition toproviding necessary legislative framework for the success of theparticipative management.Public enterprises should provide a lead in making the schemeof participative management a success to the private sectorindustries in the country, with their distinct advantage byproviding training to the employees in production, planning,techniques, management, decision-making, behavioral skills,financial area, organizational knowledge etc. This naturally callsfor re-orientation of workers’ education and trainingprogrammes. The managers in public sector should not as theowners act in private sector industry in sharing authority, views,information etc., and they have to take employees into confi-dence since all of them are the partners in the industrialendeavor of public sector. Thus, the roles to be played bymanagers and workers are challenging but not beyond achieve-ment in making workers participation a successful one.Various reasons have been assigned for the slow progress andunsatisfactory working of the scheme. These include:i. The apathy and even hostility of the employers and the

workers; the former looked upon the bipartite bodies(Works Committees and JMCs) as substitute of tradeunions, while the latter considered them to be their rivals;

ii. Lack of a proper understanding between employers andemployees of the concept, purposes and benefits of thescheme;

iii. Progressive employers, who have a long tradition of havinga healthy system of communication and consultation withtheir employees, find the bodies to be superfluous;

iv. Workers indirectly participate in management through theirrepresentatives. Their latent abilities and qualities have,therefore, been largely unutilized;

v. The existence of a number of joint bodies - workscommittees, joint management councils, productioncommittees, suggestion committees, canteen committees,safety committees, etc., - has caused confusion and aduplication of effort as well as a waste of time and energy;

vi. The absence of a strong trade union or the existence ofmore than one trade union and inter-union rivalry has madethe working of the scheme somewhat difficult;

vii. The absence of a proper education and training in theprinciples of human relations, cooperation and

LESSON 38:LIMITATION OF PARTICIPATION

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participation on the part of the workers’ representatives onthese bodies;

viii.Although the representatives of the central organizationssupported the scheme of national conference andcommittee meetings, they have shown inadequate interest inmaking their affiliates enthusiastic about it. In undertakingin which employee-employer relations are not cordial and inwhich arrangements for works committees, grievanceredressal procedure, and a procedure for the recognition of atrade union are absent, the joint management councilscannot be expected to function satisfactorily;

iv. Delay in implementating the suggestions andrecommendations of these bodies often leads to thewarning of the workers’ interest in such bodies;

x. The joint management councils were created without thecreation of a congenial and constructive climate for them,which would ensure that each party would trust the otherand would respect its rights. As a result, they were used as aplatform form which, because of mutual distrust andsuspicion, charges and counter-charges were made aboutdelays in the setting up of the joint management councils,about apathy and indifference, about the shirking ofresponsibility and uncalled for or unnecessary interference inlabour matters by the State, towards workers, which meansthe establishment of machinery for setting of grievances ofthe workers; which means advance notice and often advanceconsultation with workers or their representatives prior toimportant management action which may affect them, itmeans that workers through their representative can have aneffective voice in their working lives.

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Learning ObjectiveThe study of this lesson will help you understand:• The working of WPM in India.

Working of Workers’ Participation inManagement in IndiaThe highlights of the Indian experience, with regard to workers’participation in management is that, the schemes have althoughbeen initiated by the Government. Taking into account theeconomic, political and wotker/trade union situation in India,the Government’s initiative for participative management isjustified. The global experience also stands testimony to suchinitiative. The trade unions in India who have demanded fornationalisation of industry that culminate in people’s participa-tion in the economic activity have been conspicuous by theirsilence with regard to workers’ participation in the industrialactivity.‘There has been a phenomenal growth in number of unitsadopted by JMCs in public sector (augmented from eight in1958 to 140 in 1976). JMCs in some of the public sectorundertakings, for example, Bharat Heavy Electricals Limitedhave provided an appropriate forum for effective communica-tion, and managements unreservedly furnished all facts andinformation sought for, the unions have responded bymoderating their enthusiasm and exercising reasonable restraintin demanding information, disclosure of which could bedetrimental to the interest of the organisation. Deliberations inthe JMCs are characterised by mutual understanding and a highlevel of objectivity in the appreciation of problems withoutacrimony or emotionalism.But the working of the JMCs indicates that they have not beensuccessful both in private and public sectors. JMC was firstintroduced in Hindustan Machine Tools in 1958 among thepublic sector units but survived less than one year. The schemewas also failed in other public sector units like Posts andTelegraphs, Railways, Hindustan Insecticides, Indian AirlinesCorporation, Air India International and in Fertilizer andChemical Corporations.It is often criticized by different quarters that the scheme ofemployee participation in management did not make a headwaythough it was initiated With much enthusiasm. The NationalCommission on Labour observed that, “mental reservationswhich operated against it are same both in the ranks ofmanagement and among the workers”

Suggestions for the Success of Workers’Participation in ManagementThe following are the prerequisites for the successful function-ing of the schemes of workers’ participation in management.Managements, trade unions and the workers should beconcerned with these prerequisites:

1. There should be mutual trust, faith among all the partiesconcerned.

2. There should be progressive management in the enterpriseand should recognize its obligations and responsibilitiestowards workers and trade unions.

3. There should be strong, democratic and representativeunion which should represent the cause of workers withoutneglecting the management’s interest.

4. There should be closely and mutually formulated, objectivesfor participa-tion by trade unions and management.

5. All parties concerned to participative management shouldfeel that they should participate at all levels.

6. There should be effective communication between workersand manage-ment and effective consultation of the workersby the management.

7. Both the parties should develop a favorable attitudetowards the schemes of participative management.

8. Management and Government should provide training toall the parties concerned to prepare them for participativemanagement.

9. Both the parties of anticipative management should beconscious of the benefits of the schemes.

LESSON 39:CURRENT TRENDS IN PARTICIPATION IN INDIAN INDUSTRIES

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Case: South Indian BankSouth Indian bank was instituted in 1950. Most of theemployees joined as clerks with matriculation qualification in1950s and in 1960s became the branch managers and regionalmanagers by 1988. Thus, most of the managers of the bankeither matriculates or graduates. These managers have beenperforming various functions including marketing functions ofthe bank like purchasing of deposits and selling of advances.Top management of the bank had decided to employ candi-dates with MBA (marketing) qualification as marketingexecutives in 1986. The managers of the bank protested againstthe managements decisions saying they could perform, withtheir long experience, the marketing functions more efficientlythan MBAs. But the top management ignored the oppositionof the managers and employed MBA (marketing) candidates asMarketing Executives. MBAs joined the bank in 1987 andassured the responsibilities of purchasing deposits, sellingadvances and recovery of advances.The performance of the bank was poor during 1987 and 1988especially in areas like deposit mobilization (by 30%) sanction-ing advances(by 20%) and recovery of advances (by 40%). Thepersonal department, besides other departments of the bank,was asked to find out the reasons for the declining performance.The newly employed Marketing Exexcutives felt that the oldmanagers would not accept the new ideas proposed by them,whereas the old managers opened that the Marketing Execu-tives, thought very high of themselves and did not allowthemselves to share others’ experience and ideas. Both felt thatthere were no special interactions between the two groups.

Questions1. Do you think that the performance of the Marketing

Executives has fallen?2. What is the problem in this case?3. What do you recommend to solve the problem?


Management of Industrial Relations

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