CHAPTER 1 INDUSTRIAL RELATION

1.1 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.
Definition
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

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.
It provides the environment for industrial relations.
Industrial Relation are characterized by both conflict and co-operations.
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

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.
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.
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.
To eliminate or minimize the number of strikes, lockouts and gheraos by providing
reasonable wages, improved living and working conditions, said fringe benefits.
To improve the economic conditions of workers in the existing state of industrial
managements and political government.
Socialization of industries by making the state itself a major employer
Vesting of a proprietary interest of the workers in the industries in which they are employed.
Scope of industrial relations
Protecting the interest of the employees
Providing reasonable wages to employees
Providing safe and hygienic working conditions
Providing social security measures
Maintaining strong Trade Unions
Collective bargaining

Industrial peace and democracy could be developed and maintained by:

Settlement of industrial disputes through mutual understanding and agreements
By evolving various statutory measures
By formation of various machineries such as works committee, boards of conciliation labour
courts etc.
Workers participation in management
Recognizing human rights

The main aspects of Industrial Relations are:-

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

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

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

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

Promotions and development of healthy labor-managements relations.

Maintenance of industrial peace and avoidance of industrial strife

Development of true industrial Democracy

1.2 Importance of industrial relation

Uninterrupted production
Reduction in Industrial Dispute
High morale - Industrial relation improves the morale of employees
Mental revolution
Economic growth and Development
Discourages unfair practices
Enactment of statutory provisions
Uninterrupted Production
To ensure continuity of production.
continuous employment for all from manager to workers
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 timekeeper, 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.

1.2 Industrial relations problems in the public sector

Public Enterprise
Company whose shares are available and traded on the stock market or other over-
thecounter 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

1.4 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

To secure fair wages for workers.

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

To enlarge opportunities for promotion and training.

To improve working and living conditions.

To provide for educational, cultural and recreational facilities.

To cooperate and facilitate technological advancement by broadening the understanding of

workers in the issues involved in their jobs.

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

To offer responsive cooperation in improving levels of production and productivity,

discipline and high standards of quality.

To promote individual and collective welfare.

Features
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;
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;
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

1.5 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

Objectives of Code of Conduct

To ensures that the employers and employees recognize each other‘s rights and obligations.
To avoid work stoppage.
To facilitate the free growth of trade unions.
To maintain discipline in industry.
Principles of code of conduct.
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.
There shall be no dual membership of unions.
There shall be regular and democratic elections of executive bodies.
Casteism, communalism and provincialism shall be eschewed by all unions.  There shall
be no violence, cocercion, intimidation, or personal vilification in inter – union dealings.
All Central unions shall combat the formation or continuance of company unions.

What a Code Can Help to Accomplish

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:
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.
Foster greater employee loyalty and retention. When employees feel included and engaged
in the company‘s culture and success, they feel more committed.
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.
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.
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.
Build a stronger reputation for integrity by helping the company to do what it says it will do.
How a Code Works
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:
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.
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.
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.
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.
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
A code of conduct publication does not work in a vacuum. Important factors for a
successful code include:
Foundations that support a successful code program.
Components of a successful code program.
Dimensions for an effective code publication.

Foundations for a Program

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.
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.‘
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.
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.
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.
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) 
Recognition of employers and workers must be defined by laws and agreements.
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  No
Unilateral action should be taken
Existing machinery for settlement of dispute.
No strike or lockout without notice
Must follow the democracy principles by mutual negotiation, conciliation and voluntary
arbitration
Must promote constructive cooperation
In Grievance based speedy and full investigation must be followed.
Educate the Management and workers regarding obligations
Part3: Management Agrees
Not to increase workloads
Not to support or encourage any unfair labor practice as interference, discrimination,
victimization
To take prompt actions as settlement of grievance Implementation of settlements, awards,
decisions and orders
To take appropriate disciplinary action against officers and members in which they are
responsible for indiscipline among employees.
Warning, reprimand, suspension will appeal through normal grievance procedure.
Must follow the rules of Indian Labor conference held in May 1958.
Part4:Union(s) Agree
Not to encourage any form f physical duress
Not to Permit demonstrations
Unless law, agreement or practice the employee must not engage in any union activity
during working hours
Discourage unfair labour practices as damage to property, careless operation  To take
prompt action to implement awards , agreements and decisions.
To display the rules in local languages at important places in union offices.
Moral sections of code of conduct
To ask the unit to explain the infringement of the code
To give notice to the unit within specific period
Not to give countenance to non members who did not observe the code
A dispute must not be referred for strikes and lockouts