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

Industrial Relation

1 Concepts 2 Importance 3 Industrial relations problems in the public sector 4 Growth of Trade unions 5 Codes of conduct



1 Concepts

2 Importance

3 Industrial relations problems in the public sector

4 Growth of Trade unions

5 Codes of conduct


1 Concepts of Industrial Relations.


Industrial Relations


The Term ―Industrial Relations‖ commonly denotes ―employee – employee relations‖, in both organized and unorganized sectors of the economy. Industrial Relations (also known as labour – management relations or labour relations) will be treated here as the study of employee – employer relationship and the outcome of such relationship.




According to Kapoor defined as the ―Industrial Relations is a developing and dynamic concept and such no more limits itself merely to the complex relations between the unions and management but also refers to the general web of relationships normally obtaining between employees – a web much more complex than the single concept of labour capital conflict‖.


Features of Industrial Relations


Ø    Industrial Relation do not emerge in vacuum they are born of employment relationship in an industrial setting. Without the existence of the two parties, i.e., labour and management, this relationship cannot exist.

Ø    It provides the environment for industrial relations.


Ø    Industrial Relation are characterized by both conflict and co-operations.


Ø    The focus of Industrial Relations in on the study of the attitudes, relationships, practices and procedure developed by the contending parties to resolve or at least minimize conflicts.


The main objectives of industrial relations system are


Ø   To safeguard the interest of labor and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production.


Ø   To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the productivity of workers and the industrial progress of a country.


Ø   To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and frequency absenteeism.


To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits and of managerial decisions, so that ban individuals personality may grow its full stature for the benefit of the industry and of the country as well.


Ø   To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages, improved living and working conditions, said fringe benefits.


Ø   To improve the economic conditions of workers in the existing state of industrial managements and political government.


Ø   Socialization of industries by making the state itself a major employer


Ø   Vesting of a proprietary interest of the workers in the industries in which they are employed.



Scope of industrial relations

Ø  Protecting the interest of the employees


Ø  Providing reasonable wages to employees


Ø  Providing safe and hygienic working conditions


Ø  Providing social security measures


Ø  Maintaining strong Trade Unions


Ø  Collective bargaining


Industrial peace and democracy could be developed and maintained by:

Ø  Settlement of industrial disputes through mutual understanding and agreements


Ø  By evolving various statutory measures


Ø  By formation of various machineries such as works committee, boards of conciliation labour courts etc.

Ø  Workers participation in management


Ø  Recognizing human rights


The main aspects of Industrial Relations are:-


Ø  Labor Relations, i.e. relations between union and management


Ø  Employer-employees relations, i.e. relations between management and employees


Ø  Group relations, i.e. relations between various groups of workmen


Ø  Community or Public relations, i.e. relations between industry and society.


Ø  Promotions and development of healthy labor-managements relations.


Ø  Maintenance of industrial peace and avoidance of industrial strife


Ø  Development of true industrial Democracy


2 Importance of industrial relation


Ø    Uninterrupted production


Ø    Reduction in Industrial Dispute


Ø    High morale - Industrial relation improves the morale of employees


Ø    Mental revolution


Ø    Economic growth and Development


Ø    Discourages unfair practices


Ø    Enactment of statutory provisions


Uninterrupted Production

Ø  To ensure continuity of production.


Ø  continuous employment for all from manager to workers


Ø  The resources are fully utilized, resulting in the maximum possible production. There is uninterrupted flow of income for all.


Reduction in Industrial Disputes


Good industrial relation reduces the industrial disputes.Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations.


High morale


Good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e. to increase production.


Mental Revolution


The main object of industrial relation is a complete mental revolution of workers and employees. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of leadership in the ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of true democracy.


New Programmes


New programmes for workers development are introduced in an atmosphere of peace such as training facilities, labor welfare facilities etc. It increases the efficiency of workers resulting in higher and better production at lower costs.


Reduced Wastage


Good industrial relations are maintained on the basis of cooperation and recognition


of each other. It will help increase production. Wastages of man, material and machines are reduced to the minimum and thus national interest is protected.


Functional Requirements Of A Successful Industrial Relations Programme

Top Management Support:


Since industrial relations is a functional staff service, it must necessarily derive its authority from the line organization. This is ensured by providing that the industrial relations director should report to a top line authority to the president, chairman or vice president of an organization.


Sound Personnel Policies:


These constitute the business philosophy of an organization and guide it in arriving at its human relations decisions. The purpose of such policies is to decide, before any emergency arises, what shall be done about the large number of problems which crop up every day during the working of an organization. Policies can be successful only when they are followed at all the level of an enterprise, from top to bottom.


Adequate Practices should be developed by professionals:


In the field to assist in the implementation of the policies of an organization, a system of procedures is essential if intention is to be properly translated into action. The procedures and practices of an industrial relations department are the ―tool of management‖ which enables a supervisor to keep ahead of his job that of the time-keeper, rate adjuster, grievance reporter and merit rater.


Detailed Supervisory Training:


To ensure the organizational policies and practices are properly implemented and carried into effect by the industrial relations staff, job supervisors should be trained thoroughly, so that they may convey to the employees the significance of those policies and practices. They should, moreover, be trained in leadership and in communications.


Follow-up of Results:


A constant review of an industrial relations programme is essential, so that existing practices may be properly evaluated and a check may be exercised on certain undesirable tendencies, should they manifest themselves. A follow up of turnover, absenteeism, departmental morale, employee grievances and suggestion; wage administration, etc. should be supplemented by continuous research to ensure that the policies that have been pursued are best fitted to company needs and employee satisfaction. Hints of problem areas may be found in exit interviews, in trade union demands and in management meetings, as well as in formal social sciences research.


Difference between industrial relations and human relations:

The term ―Industrial Relations‖ is different from ―Human Relations‖. Industrial relations refer to the relations between the employees and the employer in an industry. Human relations refer to a personnel-management policy to be adopted in industrial organizations to develop a sense of belongingness in the workers improves their efficiency and treat them as human beings and make a partner in industry.


Industrial relations cover the matters regulated by law or by collective agreement between employees and employers. On the other hand, problems of human relations are personal in character and are related to the behavior of worker where morale and social elements predominated. Human relations approach is personnel philosophy which can be applied by the management of an undertaking. The problem of industrial relations is usually dealt with a three levels – the level of undertaking, the industry and at the national level. To sum up the term ―Industrial Relations‖ is more wide and comprehensive and the term ―Human Relations‖ is a part of it.


Suggestions to Improve Industrial Relation


Both management and unions should develop constructive attitudes towards each other


All basic policies and procedures relating to Industrial Relation should be clear to everybody in the organization and to the union leader. The personnel manager must make certain that line people will understand and agree with these policies.


The personnel manager should remove any distrust by convincing the union of the company‘s integrity and his own sincerity and honesty. Suspicious, rumors and doubts should all be put to rest.


The personnel manager should not vie with the union to gain workers‘ loyal to both the organization. Several research studies also confirm the idea of dual allegiance. There is strong evidence to discard the belief that one can owe allegiance to one group only.


Management should encourage right kind of union leadership. While it is not for the management to interfere with union activities, or choose the union leadership, its action and attitude will go a long way towards developing the right kind of union leadership. ―Management gets the union it deserves‖ is not just an empty phrase.



3 Industrial relations problems in the public sector


Public Enterprise


Company whose shares are available and traded on the stock market or other over-the-counter market. Subject to more regulation than a privately owned company, a public enterprise has greater access to financing. Shareholders own a percentage of the company based on the amount of stock they own.


Wage differentials


It is an area where comparison between the public and private sectors is becoming common.The policy of settlement of wage structure,equal pay for equal work,wage differentials due to levels of responsibilities etc are all the issues that concern the labour in public enterprises.


Industrial relations


―Industrial Relations is a developing and dynamic concept and such no more limits itself merely to the complex relations between the unions and management but also refers to the general web of relationships normally obtaining between employees – a web much more complex than the single concept of labour capital conflict‖.


Surplus labour


This problem is the outcome of indiscriminate recruitment on account of political pressures,reduction of activities,structural changes and improvement in technology.


Over centralization


Management decisions taken at local shop level are turned down by the higher authorities.This type of over centralization the local management lose the prestige and confidence.


Multipricing of unions


The existence of multiple union has brought the evils of inter union rivalaries.


Political and bureaucratic influence


Public enterprises are highly prone to be influenced by political and bureaucratic set up.Generally political people influenced decision making process


4 Growth of Trade Union


Trade Union


In the words of Indian Trade Union Act, 1926, ―A trade union is any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers, or between workmen and workmen, between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more trade unions‖.


Define Trade Union.

According to Dale Yoder defined as ―A trade union is a continuous association of wage


– earners for the purpose of maintaining or improving the conditions of their working lives‖.


The growth and development of the labour movement, and for that part of the trade unions, in India, can be divided into following periods, each of them revealing different tendencies that mark it from others.


Functions of Trade Unions


Ø   To secure fair wages for workers.


Ø   To safeguard the security or tenure and improve conditions of service.


Ø   To enlarge opportunities for promotion and training.


Ø   To improve working and living conditions.


Ø   To provide for educational, cultural and recreational facilities.


Ø   To cooperate and facilitate technological advancement by broadening the understanding of workers in the issues involved in their jobs.


Ø   To promote identity of interests of the workers with their industry.


Ø   To offer responsive cooperation in improving levels of production and productivity, discipline and high standards of quality.


Ø   To promote individual and collective welfare.




The main characteristics of the trade unionism are:


Small size of membership,


Lack of adequate finance,


Non fulfillment of welfare schemes,


Control of political parties,


Outside interference in the activities of labor unions




Social Welfare period, from 1875 to 1918


The development of industries led to large scale production on the one hand and social evils like employment and exploitation of women and child labour and the deplorable working conditions, the government‘s attitude of complete indifference in respect of protection of labour from such evils, on the other


Early Trade Union period, from 1918 to 1924


The year 1918 was an important one for the Indian trade union movement. ―It market the start of a new era, an era of growth and one in which the leadership of the trade unions was to pass from the hands of the social workers into the hands of the politicians





Left-wing Trade Unionism period, from 1924 to 1934


In 1924, a violent and long-draw-out strike by unions led to the arrest, prosecution, conviction and imprisonment of many communist leaders. The AITUC emerged as the representative of the Indian working class. By 1927 it united 57 unions with a membership of 150,555. the rapid growth of the trade unionism was facilitated by the growth anti-imperialist national movement;


Ø   The brutal violence and repressive measures let loose by the British government, particularly the Jallianwala Bagh massacre, Rowlatt Act, indiscriminate arrest and imprisonment of national leaders and Satyagrahis;


Ø   The phenomenal profits earned by the capitalist in the face of falling real ages during the post-war period.


Trade Unions’ Unity period from 1935 to 1938


In mid-thirties of the 20th century the state of divided labour movement was natural thought undesirable and soon after the first split, attempts at trade union unity began to be made through the efforts of the Roy Group on the basis of ‗a platform of unity‘. The imitative taken by All-India Railwaymen‘s Federation (s neutral body) had shown fruitful results.


This Federation in its conference at Bombay, formed a Trade Union Unity committee in 1932. The Committee adopted the following ―platform of unity‖. ―A trade union is an orange of class-struggle; its basis task is to organize the workers for advancing and defending their rights and interests. Negotiation, representations and other methods of collective bargaining must remain an integral part of the trade union activates.‖


Second World War period from 1939 to 1945


The Second World War, which broke out in September 1939, created new strains in the united trade union movement. These strains arose because of the different political factions in the AITUC related in different ways to the role of India as a protagonist in the war.


Post – independence period from 1947 to date.


As pointed out earlier, when attempts to restructure the AITUC failed, those believing in the aims and ideals other than those of the AITUC separated from the organization and established the Indian National Trade Union Congress (INTUC) in May, 1947




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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