Chapter: Business Science : Industrial Relations and Labour Welfare : Industrial Relation

Code of Conduct

A code of conduct is a set of rules outlining the social norms and rules and responsibilities of, or proper practices for, an individual, party or organization. Related concepts include ethical, honor, moral codes and religious laws



A code of conduct is a set of rules outlining the social norms and rules and responsibilities of, or proper practices for, an individual, party or organization. Related concepts include ethical, honor, moral codes and religious laws


Objectives of Code of Conduct


Ø  To ensures that the employers and employees recognize each other‘s rights and obligations.


Ø  To avoid work stoppage.


Ø  To facilitate the free growth of trade unions.


Ø  To maintain discipline in industry.


Principles of code of conduct.


Ø  Every employee in industry or unit shall have the freedom and right to join a union of his choice. No coercion shall be exercised in this matter.


Ø  There shall be no dual membership of unions.


Ø  There shall be regular and democratic elections of executive bodies.


Ø  Casteism, communalism and provincialism shall be eschewed by all unions.


Ø  There shall be no violence, cocercion, intimidation, or personal vilification in inter – union dealings.


Ø  All Central unions shall combat the formation or continuance of company unions.


What a Code Can Help to Accomplish


Ø   A quality code of conduct can go a long way in improving a company‘s success. Companies that view a code merely as a way to communicate legal rules miss much of the value that a code can provide. A well-developed code can help a company to:



Ø   Prevent legal and regulatory violations. This is the first objective that most companies attach to a code of conduct. When violations do occur, a code can help to detect them and mitigate their effects.


Ø   Foster greater employee loyalty and retention. When employees feel included and engaged in the company‘s culture and success, they feel more committed.


Ø   Encourage greater customer loyalty and retention. When customers learn about and then experience in practice a company‘s high standards of conduct, customers are more likely to show their appreciation.


Ø   Build stronger relationships with suppliers and other business partners. As with employees, the more that they understand what the company expects of them – and what they can expect from the company – the stronger the alliance.


Ø   Strengthen trust and respect of other stakeholders, such as local communities, regulators, NGOs, even from competitors. As codes become publicly available publications, more outside stakeholders are reviewing them and setting their expectations of the company partly based on its code. The more that a company


lives up to the expectations that it has established, the greater goodwill it engenders.


Ø   Build a stronger reputation for integrity by helping the company to do what it says it will do.


How a Code Works


Ø   A quality code of conduct helps a company‘s leadership to accomplish its strident objectives because of how the code functions. As part of an overall code of conduct program, a code works because it:



Ø   Articulates leadership’s expectations. Simply establishing these expectations regarding what leadership expects is worthwhile. It provides clarity and transparency so that staff does not have to guess at leadership‘s expectations.


Ø   Establishes leadership’s commitment. Much as been addressed regarding the importance of ―tone at the top‖; regarding expectations of responsible conduct, this tone rises in importance.


Ø   Provides staff with a roadmap and tools for their daily work. With clarity regarding leadership‘s expectations that an employee can easily and regularly reference, staff can act with consistency. Further, employees can turn to the code for guidance on questions or concerns. It is especially important to help employees to make good decisions when they face ambiguous situations or other issues that the code does not directly address.


Ø   Provides staff with comfort and confidence. As ethics consultant Frank Navran puts it, a code can provide staff with comfort that the company will support them when they act according to the code and confidence that the decisions they make when they are in line with the code.


Ø   Encourages staff to serve the company’s aspirations. A good code can encourage employees to strive to achieve the company‘s mission, vision and values in a constructive way.


Elements of an Effective Code


Ø   A code of conduct publication does not work in a vacuum. Important factors for a successful code include:


Ø   Foundations that support a successful code program.


Ø   Components of a successful code program.


Ø   Dimensions for an effective code publication.


Foundations for a Program


Ø   These foundations serve as important considerations for a successful code of conduct program. While not all of the foundations are mandatory – and in fact they will exist in each company in varying forms – the more firmly that they are established, the more likely that the code (and the larger ethics and compliance initiative) will lead to success.



Ø   Leadership commitment to the program – Without senior leadership‘s commitment, any code initiative is unlikely to truly engage employees and demonstrate to them the ―tone at the top‖ that is so critical to any business initiative – especially one focused on ‗doing the right thing.‘


Ø   Ethics and compliance processes – Leadership‘s commitment means so much more when the organization can point to procedures and processes that support a code standards and expectations. Otherwise, employees are right to wonder about how leadership expects to achieve adherence to the company‘s standards and address concerns.


Ø   Company culture A company culture focused around an enduring mission or vision and supported by lasting values sets the best foundation for a proper focus on long-term value and success. These core foundations help a code rise about a narrow focus only on the law to other commitments, promises and aspirations that the company seeks to achieve.


Ø   Understanding of risk – A company‘s awareness of the ethics and compliance risks that it faces is central to a code of conduct. With the hundreds of issues that a code could possibly address, a more targeted risk identification and assessment effort helps to focus the code‘s contents to those issues that are most important to the company‘s operations and that will provide it with a higher chance of success.


Ø   Coordination with policies – A company‘s policies often provide the detail underlying its expectations. Policies also can provide the initial framework for a new code of conduct and serve as additional resources to support a code‘s standards. Where policies exist, they provide important context for a code development or revision effort.




Four Parts


Part 1: Contains the duties and responsibilities of employers, workers, and the government in maintaining discipline in industry


Part 2: Enlists the common obligations of Management and unions Part 3 : Deals with obligations of management only


Part 4: Relates to those unions only


Part1: To maintain Discipline in Industry  ( Both in public and Private sector)

Ø   Recognition of employers and workers must be defined by laws and agreements.

Ø   Proper and willing discharge by either party of its obligation consequent on such recognition.


Part2: To Ensure Better discipline in Industry , Management and Union(s) Agree

Ø   No Unilateral action should be taken

Ø   Existing machinery for settlement of dispute.

Ø   No strike or lockout without notice

Ø   Must follow the democracy principles by mutual negotiation, conciliation and voluntary arbitration



Ø   Must promote constructive cooperation

Ø   In Grievance based speedy and full investigation must be followed.

Ø   Educate the Management and workers regarding obligations


Part3: Management Agrees

Ø   Not to increase workloads

Ø   Not to support or encourage any unfair labor practice as interference, discrimination, victimization

Ø   To take prompt actions as settlement of grievance Implementation of settlements, awards, decisions and orders

Ø   To take appropriate disciplinary action against officers and members in which they are responsible for indiscipline among employees.

Ø   Warning, reprimand, suspension will appeal through normal grievance procedure.

Ø   Must follow the rules of Indian Labor conference held in May 1958. Part4:Union(s) Agree

Ø   Not to encourage any form f physical duress

Ø   Not to Permit demonstrations

Ø   Unless law, agreement or practice the employee must not engage in any union activity during working hours

Ø   Discourage unfair labour practices as damage to property, careless operation

Ø   To take prompt action to implement awards , agreements and decisions.

Ø   To display the rules in local languages at important places in union offices.

Ø   Moral sections of code of conduct

Ø   To ask the unit to explain the infringement of the code

Ø   To give notice to the unit within specific period

Ø   Not to give countenance to non members who did not observe the code

Ø   A dispute must not be referred for strikes and lockouts


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