INDUSTRIAL MANAGEMENT

UNIT I Industrial relations- Definition and main aspects. Industrial disputes and strikes.
Collective bargaining. Labour Legislation- Labour management cooperation/worker’s
participation in management. Factory legislation. International Labour Organization.

Industrial Relations

The relationship between Employer and employee or trade unions is called Industrial
Relation. Harmonious relationship is necessary for both employers and employees to
safeguard the interests of the both the parties of the production. In order to maintain
good relationship with the employees, the main functions of every organization should
avoid any dispute with them or settle it as early as possible so as to ensure industrial
peace and higher productivity. Personnel management is mainly concerned with the
human relation in industry because the main theme of personnel management is to get
the work done by the human power and it fails in its objectives if good industrial
relation is maintained. In other words good Industrial Relation means industrial peace
which is necessary for better and higher productions.

The main aspect of Industrial Relations

The main aspects or dimensions of industrial relations are.
I. Labour Relations, i.e. relations between union and management.
II. Employer-employees relations, i.e. relations between management and employees.
III. Group relations, i.e. relations between various groups of workmen.
IV. Community or Public relations, i.e. relations between industry and society
V. Promotions and development of healthy labour-managements relations.
VI. Maintenance of industrial peace and avoidance of industrial strike
VII. Development of true industrial Democracy.

Industrial Disputes
Industrial disputes are conflicts, disorder or unrest arising between workers and
employers on any ground. Such disputes finally result in strikes, lockouts and mass
refusal of employees to work in the organization until the dispute is resolved. So it can
be concluded that Industrial Disputes harm both parties employees and employers and
are always against the interest of both employees and the employers.

Industrial Dispute means a conflict or unrest or dispute or any sort of difference

between employees and employers which may relate with the employment or the terms
of employment or working conditions. For a dispute to become Industrial Dispute there
must be a dispute difference between:
1. Employers and employees
2. Employers and workmen
3. Workmen and workmen
It is connected with the employment or terms of employment or with the conditions of
labour.

Forms of Industrial Dispute:

The outcome of industrial dispute is locking out from the employer side and workers
may resort to strike, Gherao, picketing etc.
1. Strike: - Strike is quitting work by a group of workers for getting their demands
accepted by the employer. It is a powerful tool used by the trade unions to pressurize
the management to accept their demands. Various types of strikes are
∙ Economic Strike: - Strike in concern with economic reason like wages bonus or
working conditions.
∙ Sympathetic Strike: - Strike to support the other group of workers on strike within
the organization or for the sympathy to union workers on strike in other industries.
∙ General Strike: - Strike of all the unions in a region or workers of a particular
industry for the common demands of the workers concerned.
∙ Sit down Strike: - When workers stop doing the work but also do not leave the
place of work. It is also known as tool down or pen down strike
∙ Slow Down strike: - When workers remain on their jobs but slow down the output
of their work.
2. Lock Out: - Lockout is the step taken by the employer to put pressure on workers.
Employer close down the workplace until the workers agree to continue the work on
the terms and conditions as given by the employer

3. Gherao: - Gherao is the action taken by workers under which they restrict the
employer to leave the work premises or residence. The person concerned is put away in
a ring made of human beings i.e. workers. Gheraos are also being adopted by
educational and others institutions. It is an illegal act according to the Law.

4. Picketing: - When workers are not allowed to report for the work by deputing some
men at the factory gates. If picketing does not involve any violence it is perfectly legal.
It is done to bring into the notice of public that there is dispute between workers and
management.

The term industrial unrest is used to describe activities undertaken by the labour and
other working people when they feel grievances and protest against pay or conditions
of
 their employment. Industrial unrest can also be defined as the total range of behaviours
and attitudes that express opposition and divergent orientations between industrial
owners and managers, on the one hand, and working people and their organisations on
the other.

Different forms of unrest organised unrest:

- Collective in nature, involves groups of employees or trade unions,Open (or overt),
obvious to all that it is occurring, takes the form of:
*Strikes
*Lockouts
*Overtime bans, working to rule, restrictions on output
*Political action
*Go slow
*Sit-in

Unorganised unrest:
Individual in nature, only involves single employees, Hidden (or covert), not obvious it
is occurring,- takes the form of
- Absenteeism
- Labour turnover
- Low productivity
- Acts of indiscipline and sabotage
- Working without enthusiasm

Industrial Disputes
 Industrial disputes are organised protests against existing terms of employment or conditions of work.
According to the Industrial Dispute Act, 1947, an Industrial dispute means
“Any dispute or difference between employer and employer or between employer and workmen or
between workmen and workmen, which is connected with the employment or non-employment or terms of
employment or with the conditions of labour of any person”
  In practice, Industrial dispute mainly refers to the strife between employers and their employees. An
Industrial dispute is not a personal dispute of any one person. It generally affects a large number of
workers’ community having common interests.

Prevention of Industrial Disputes:

The consequences of an Industrial dispute will be harmful to the owners of industries, workers, economy
and the nation as a whole, which results in loss of productivity, profits, market share and even closure of
the plant. Hence, Industrial disputes need to be averted by all means.
                               Prevention of Industrial disputes is a pro-active approach in which an organisation
undertakes various actions through which the occurrence of Industrial disputes is prevented. Like the old
saying goes, “prevention is better then cure”.

1.       Model Standing Orders: Standing orders define and regulate terms and conditions of employment and
bring about uniformity in them. They also specify the duties and responsibilities of both employers and
employees thereby regulating standards of their behaviour. Therefore, standing orders can be a good
basis for maintaining harmonious relations between employees and employers.
 Under Industrial Dispute Act, 1947, every factory employing 100 workers or more is required to frame
standing orders in consultation with the workers. These orders must be certified and displayed properly by
the employer for the information of the workers.

2.       Code of Industrial discipline: The code of Industrial discipline defines duties and responsibilities of
employers and workers. The objectives of the code are:
⇨  To secure settlement of disputes by negotiation, conciliation and voluntary arbitration.

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

⇨  To maintain discipline in the industry.

⇨  To avoid work stoppage.

⇨  To promote constructive co-operation between the parties concerned at all levels.

3.       Works Committee: The Industrial Dispute Act, 1947 has provided for the establishment of works
committees. In case of any industrial establishment in which 100 or more workers are employed, a works
committee consisting of employees and workers is to be constituted; it shall be the duty of the Works
Committee to promote measures for securing and preserving amity and good relations among the
employees and workers.

4.       Joint Management Councils:

5.       Suggestion Schemes:

6.       Joint Councils:

7.       Collective Bargaining: Collective Bargaining is a process in which the representatives of the employer

and of the employees meet and attempt to negotiate a contract governing the employer-employee-union
relationships. Collective Bargaining involves discussion and negotiation between two groups as to the
terms and conditions of employment.

8.       Labour welfare officer: The factories Act, 1948 provides for the appointment of a labour welfare officer
in every factory employing 500 or more workers. The officer looks after all facilities in the factory provided
for the health, safety and welfare of workers. He maintains liaison with both the employer and the
workers, thereby serving as a communication link and contributing towards healthy industrial relations
through proper administration of standing orders, grievance procedure etc.

9.       Tripartite bodies: Several tripartite bodies have been constituted at central, national and state levels.
The India labour conference, standing labour committees, Wage Boards and Industries Committees
operate at the central level. At the state level, State Labour Advisory Boards have been set up. All these
bodies play an important role in reaching agreements on various labour-related issues. The
recommendations given by these bodies are however advisory in nature and not statutory.

Machinery for settlement of Industrial Disputes:

1.       Conciliation: Conciliation refers to the process by which representatives of employees and employers
are brought together before a third party with a view to discuss, reconcile their differences and arrive at an
agreement through mutual consent. The third party acts as a facilitator in this process. Conciliation is a
type of state intervention in settling the Industrial Disputes. The Industrial Disputes Act empowers the
Central & State governments to appoint conciliation officers and a Board of Conciliation as and when the
situation demands.
Conciliation Officer: The appropriate government may, by notification in the official gazette, appoint such
number of persons as it thinks fit to be the conciliation officer. The duties of a conciliation officer are:
a)      To hold conciliation proceedings with a view to arrive at amicable settlement between the parties
concerned.
b)      To investigate the dispute in order to bring about the settlement between the parties concerned.
c)       To send a report and memorandum of settlement to the appropriate government.
d)      To send a report to the government stating forth the steps taken by him in case no settlement has been
reached at.
                           The conciliation officer however has no power to force a settlement. He can only
persuade and assist the parties to reach an agreement. The Industrial Disputes Act prohibits strikes and
lockouts during that time when the conciliation proceedings are in progress.

2.       Arbitration: A process in which a neutral third party listens to the disputing parties, gathers information
about the dispute, and then takes a decision which is binding on both the parties. The conciliator simply
assists the parties to come to a settlement, whereas the arbitrator listens to both the parties and then
gives his judgement.

Advantages of Arbitration:
⇨  It is established by the parties themselves and therefore both parties have good faith in the arbitration
process.
⇨  The process in informal and flexible in nature.

⇨  It is based on mutual consent of the parties and therefore helps in building healthy Industrial Relations.
Disadvantages:
⇨  Delay often occurs in settlement of disputes.

⇨  Arbitration is an expensive procedure and the expenses are to be shared by the labour and the
management.
⇨  Judgement can become arbitrary when the arbitrator is incompetent or biased.
There are two types of arbitration:
a)      Voluntary Arbitration: In voluntary arbitration the arbitrator is appointed by both the parties through
mutual consent and the arbitrator acts only when the dispute is referred to him.
b)      Compulsory Arbitration: Implies that the parties are required to refer the dispute to the arbitrator
whether they like him or not. Usually, when the parties fail to arrive at a settlement voluntarily, or when
there is some other strong reason, the appropriate government can force the parties to refer the dispute
to an arbitrator.

3.       Adjudication: Adjudication is the ultimate legal remedy for settlement of Industrial Dispute. Adjudication
means intervention of a legal authority appointed by the government to make a settlement which is
binding on both the parties. In other words adjudication means a mandatory settlement of an Industrial
dispute by a labour court or a tribunal. For the purpose of adjudication, the Industrial Disputes Act
provides a 3-tier machinery:
a)      Labour court
b)      Industrial Tribunal
c)       National Tribunal
a)      Labour Court: The appropriate government may, by notification in the official gazette constitute one or
more labour courts for adjudication of Industrial disputes relating to any matters specified in the second
schedule of Industrial Disputes Act. They are:
❖  Dismissal or discharge or grant of relief to workmen wrongfully dismissed.

❖  Illegality or otherwise of a strike or lockout.

❖  Withdrawal of any customary concession or privileges.

 Where an Industrial dispute has been referred to a labour court for adjudication, it shall hold its
proceedings expeditiously and shall, within the period specified in the order referring such a dispute,
submit its report to the appropriate government.
b)      Industrial Tribunal: The appropriate government may, by notification in the official gazette, constitute
one or more Industrial Tribunals for the adjudication of Industrial disputes relating to the following matters:
❖  Wages

❖  Compensatory and other allowances

❖  Hours of work and rest intervals

❖  Leave with wages and holidays

❖  Bonus, profit-sharing, PF etc.

❖  Rules of discipline

❖  Retrenchment of workmen

❖  Working shifts other than in accordance with standing orders

                     It is the duty of the Industrial Tribunal to hold its proceedings expeditiously and to submit its
report to the appropriate government within the specified time.
c)       National Tribunal: The central government may, by notification in the official gazette, constitute one or
more National Tribunals for the adjudication of Industrial Disputes in
❖  Matters of National importance

❖  Matters which are of a nature such that industries in more than one state are likely to be interested in, or
are affected by the outcome of the dispute.
It is the duty of the National Tribunal to hold its proceedings expeditiously and to submit its report to the
central government within the stipulated time.

Role of International Labour Organisation:

The International Labour Organisation (ILO) is a tripartite organisation consisting of
representatives of the government, employers and workers of the member countries.
India has been an active member of the ILO since inception. As one of the ten countries
of “chiefindustrial importance” India holds a non-elective seat on ILOs’ Governing
Body. It is a member of five committees of the Governing Body viz.
i. Programme, Finance and Administrative;
ii. Legal Issues and International Labour Standard;
iii. Employment and Social Policy;
iv. Technical Cooperation; and
v. Sectoral and Technical Meetings and Related Issues.
Purpose and Function of ILO
The purpose of the organisation is to promote the objectives set forth in the preamble to
the constitution and in the Declaration adopted in Philedelphia in 1944. The preamble to
the constitution declares that universal that universal and lasting peace can be
established
only if it is based upon social justice. Purpose of the organisation is improvement of
conditions urgently required in varied particulars:
a) The regulation of hours of work (including the establishment of maximum working
day and week);
b) The regulation of labour supply;
c) The prevention of unemployment;
d) The provision of adequate living wage;
e) The protection of the worker against sickness, disease and injury arising out of
employment;
f) The protection of children, young persons and women;
g) Provision for old age and injury;
h) Protection of toe interests of workers when employed in countries other than their
own;
i) Recognition of the principle of equal remuneration for work equal value;
j) Recognition of the freedom of association and the organisation of vocational and
technical education.
The fundamental principles on which the ILO is based include:
∙ Labour is not a commodity

∙ Freedom of expression and of association is essential to sustained progress

∙ Poverty any where constitute a danger to prosperity everywhere

The representatives of workers and employers enjoying equal status with those of
governments join with them in free discussion and democratic session with a view to
the
promotion of common welfare. The organisation seeks to improve the working and
living
conditions through the adoption of the International Labour Conventions (generally in
the form of recommendations) setting international minimum standards.
These conventions are adopted in the International Labour Conference which is held
every year. Every member country is expected to adopt these conventions to improve
the living and working conditions of the workers.
Since 1945, the ILO has expanded its work in three major directions:
∙ The establishment of tripartite international committees to deal with the problems
of some of the major industries.
∙ The holding of regional conferences and meetings of experts to study special
regional problems, particularly those of under developed regions.
∙ The development of operational activities.
Labour Legislations in India
The law has a very substantial impact on regulating industrial relations globally. In
India,
the law forms the most powerful instruments through which the government regulates
industrial relations between the employers and employees.
⮚ The Trade Unions Act, 1926;

⮚ The Industrial Employment (Standing Order) Act, 1946;

⮚ The Industrial Disputes Act, 1947;

⮚ Payment of Wages Act, 1936,

⮚ Minimum Wages Act, 1936;

⮚ Payment of Bonus Act, 1965;

⮚ The Factories Act, 1948

With their amendments and modifications constitute the main legal framework for
regulating labour management relationship.
1. The Trade Unions Act, 1926
The act was enacted with the object of providing for the registration of trade unions and
verification of the membership of trade unions registered so that they may acquire a
legal and corporate status. As soon as a trade union is registered, it is treated as an
artificial person in the eyes of law, capable of enjoying the rights and discharging
liabilities like a natural person. In certain respects, the Act attempts to define the law
relating to the registered trade unions. The Act, apart from the necessary provisions for
administration
and penalties, makes provisions for:
(a) Conditions governing the registration of trade unions;
(b) Laying down the obligations of a registered trade union; and
(c) Fixing the rights and liabilities of registered trade unions.

2. The Industrial Employment (Standing Orders) Act, 1946

The preamble of the Act clearly says that the “Standing Orders shall deal with the
conditions of employment of workers in an industrial establishment. It is obligatory
upon
all employers/covered by this Act to define precisely the employer and the employees
and to make the said conditions known to the workmen employed by them.” The Act
provides uniformity of terms of employment in respect of all employees belonging to
the
same category and discharging the same or similar work in an industrial establishment.
3. The Industrial Disputes Act, 1947
According to the Notification in the Official Gazette of India, 1946, Pt. V., the Act was
enacted to achieve the following object:
“Experience of working of the Trade Disputes Act of 1929, has revealed that its main
defect is that while restraints have been imposed on the rights of stride and lockout in
public utility services, no provision has been made to render the proceedings
institutable
under the Act for the settlement of an industrial dispute, either by reference to a Board
of Conciliation or to a Court of Inquiry conclusive and binding on either parties to the
dispute.” This is a special legislation, which applies to workmen drawing wages not
exceeding a specified amount per month and which governs the service conditions of
such persons. It may be regarded as a supplement to the Indian Contract Act, 1872,
whose aim is to regulate the contractual relationship of master and servant in ordinary
sense. This Act deals with the prevention and settlement of conflict between the two
parties and thereby try to improve relationship between them. Thus, the purpose of this
Act is to harmonize the relations between the employer and the workmen; and to afford
a machinery to settle disputes that arise between the management and the workmen
which, if not settled, would undermine the industrial peace and cause dislocation and
even collapse of industrial establishments, essential to the life of the community. This
industrial peace is secured through voluntary negotiations and compulsory
adjudication.
On the basis of the judgements given from time to time, by the Supreme Court, the
principal objectives of the Act may be stated as below:

a) To promote measures for securing and preserving amity and good relations between
the employers and the employees, to minimise the differences and to get the dispute
settled through adjudicatory authorities
b) To provide a suitable machinery for investigation and settlement of industrial
disputes
between employers and employees, between employers and workmen; or between
workmen and workmen with a right of representation by a registered trade union of by
an association of employers c) To prevent illegal strikes and lockouts;
d) To provide relief to workmen in matters of lay-offs, retrenchment, wrongful
dismissals
and victimization;
e) To give the workmen the right of collective bargaining and promote conciliation.
4. The Payment of Wages of Act, 1936
Prior to the enactment of this Act, the employees/workers suffered many evils at the
hands of the employers, such as
i. the employers determined the mode and manner of wage payment as they liked;
ii. Even when paid in cash, wages were paid in illegal tender and in the form of
depreciated currency;
iii. A large number of arbitrary deductions were made out of the wages paid to the
workers; and
iv. The payment was usually irregular and sometimes there was non-payment
altogether.
These grave evils attracted the attention of the Royal Commission on Labour which
recommended for a suitable legislation to check these evils. Consequently the Payment
of Wages Act was passed on 23rd April 1936. It came into force from 28th March 1937. It
was amended in 1937, 1940, 1957, 1964, 1967, 1972 and 1982 with a view to make it more
comprehensive. The Act seeks to remedy the evils in wage payment:
a) Ensuring regularity of payment;
b) Ensuring payment in legal tender;
c) Preventing arbitrary deductions;
d) Restricting employers right to impose fines; and
e) Providing remedy to the workers.
5. The Minimum Wages Act, 1948
The object of the Act is to secure the welfare of the workers in a competitive market by
providing a minimum rate of wages in certain employments. In other words, the object
is
to prevent exploitation of the workers and for this purpose it aims at fixation of
minimum
rates of wages which the employer must pay. This minimum wages must provide not
merely for the bare subsistence life but also for the preservation of the efficiency of the
worker, and so it must provide for some measure of education, medical requirements
and amenities. The capacity of the employer to pay is not a consideration in fixing
wages.

6. The Payment of Bonus Act, 1965

The Bonus act is the outcome of the recommendation made by the tripartite commission
which was set up by the Government of India way back in 1961. The commission was
asked to consider the question of payment of bonus based on profit to the employees by
the employer. On September 2, 1964 the government implemented the
recommendations of the commission with certain changes. Accordingly the payment of
Bonus Ordinance 1965 was promulgated on May 26, 1965. Subsequently it was accepted
by the parliament and accordingly in the year 1965, the payment of Bonus act was
enacted. The Act was amended in 1968, 1969, 1975, 1976, 1977, 1978, 1980, 1985, and
1995. The main objectives of the Act are as under:
a) To impose statutory obligation on the employer of every establishment defined in Act
to pay bonus to all eligible employees working in the establishments.
b) To outline the principles of payment of bonus according to prescribed formula.
c) To provide for payment of minimum and maximum, bonus and linking the payment
of
bonus with the scheme of “set off” and “set on” and
d) To provide machinery for enforcement of bonus.
7. The Factories Act, 1948
The Factories Act came into force on April 1, 1949. It was enacted with a view to
removing a number of defects, revealed in the working of the Act of 1934. The Act of
1948 not only consolidates but also amends the law regulating labour in Factories. It
extends to the whole of India. Section 116 provides that unless otherwise provided, this
Act also applies to factories belonging to the Central or any State Government.
The object of this Act is, to secure health, welfare, proper working hours, leave and
other benefits for workers employed in factories. In other words, the Act is enacted
primarily with the object to regulate the conditions of work in manufacturing
establishments coming within the definition of the term ‘factory’ as used in the Act.