Industrial relations: It is an organized relationship between two parties i.e employer and employee governed by a system of rules and regulations and established procedures regarding matters of collective interest.
According to Industrial Dispute act, 1947, “Industrial relations are relations between employers and employees, employees and employees, and employees and trade union and the process by which people and their organisations interact at the place of work to establish the terms and conditions of employment.”
Nature of Industrial relations:
Complex Relationship: It is a complex relationship depending on the economic, historical, social, psychological, ethical, political, legal and other variables.
Multidimensional Relationship: It is multi dimensional since win-win situations are considered for the employees, employer and trade union who are the major players in managing a harmonious industrial relationship.
Mixture of Cooperation and conflict relationship: This is because both the group(employer and employee) develop different perceptions of their interest which at times leads to negative images about each other. There are no fixed mutually norms to prove which party is right or wrong. In the absence of such specified norms, both the groups claim their demands as rational.
Multi-prolonged relationship: Such relationship evolves from the inception of the organization till the closure of the business which is quite prolonged, sometimes in favour of employees or at times in favour of the employer.
Governed by Institutional Factors: These factors include the state policy, labour laws, voluntary demands, collective agreements, social institutions such as caste, community, system of beliefs, power status, nearness to the centers of power etc
Functions of Industrial relation
- To establish a communication line between the workers and the management
- To establish a rapport between the management, trade union and employees
- To maintain cordial relationship between workers and employers
- To ensure industrial democracy
- To avoid industrial conflicts and maintain harmonious relations which are essential for production efficiency
- To safeguard the interest of both, workers and management
- To avoid unhealthy atmosphere in the industry like strikes, lock outs, gheraos etc
- To ensure better worker’s participations and involvement in production process
- To enact appropriate laws, rules and regulations and to establish appropriate procedures so that the rights of different of different actors are protected.
Evolution of Industrial Relations in India
The evolution of industrial relations in India began a long time ago. The caste system greatly influenced the ancient industries and their development. Due to successive foreign invasions in India, the living conditions of slave and artesian couldn’t be differentiated. Furthermore, under the autocratic regime of Muslim rulers, the conditions of employees worsened. Wages were not guaranteed, the living conditions of workers were harsh, and there was no proper management. The coming of the British didn’t improve the working conditions. After some time, however, most Indian industries were modeled after the British system of business, and this led to growth in various sectors.
Industrial Relations under British Rule: During British rule, India was expected to be a colonial market for British goods up until a cotton mill was established in Mumbai in 1853 and a jute mill was established in Kolkata in 1955. The working conditions of workers, however, were still very harsh with low pay, and this gave rise to various disputes involving the management and employees. On the other hand, Tata Iron and Steel industry was also established in Jamshedpur in 1911. While there was great demand of iron and steel before and during the First World War, the working conditions of workers hadn’t improved. Hence, the Factories Act of 1881 was established, and it granted workers certain rights.
Industrial Relations in First World War: The First World War was an opportunity in disguise for local factories in India. Prices of virtually all products went up and profits soared, however, wages of lower employees were still the same. There were various strikes and disputes between management and employees. During this time, the Workmen’s Compensation Act (1923), the Trade Union Act (1926), and the Trade Disputes Act (1917) were established. While the wages of employees remained the same, they were given a certain share of profits made by their hiring industry. Strikes, however, were sometimes prohibited under the Emergency Rules. The years following World War II involved the most workers’ upheaval, and saw the establishment of Industrial Employment Act (1946) and Industrial Disputes Act (1947).
Post-Independence Industrial Relations: The post-independence era saw a developing relation between industry and labor. A conference called the Industrial Truce Resolution took place in 1947, and foresaw the establishment of the Minimum Wages Act, Factories Act, and Employees State Insurance Act in 1948. This ensured peace between labor and industry. While industrial relations in India have evolved a long way, some features of the early system still exist today. Modern industrial relations are dynamic, and may integrate industrial policies of American and British businesses.
Three actors and their role in Industrial Relations
Government: It plays a role of custodian and influences the industrial relations through labour policy, industrial relations policy, process of conciliation and adjudication by playing a mediator. It regulates the activities and behaviour of employees, employer and trade union.
Role of government in IR:
- Custodian of interest of the community (employer, employees and trade union)
- Responsible for welfare programs
- Recognition of the right of the workers
- Encouragement to mutual settlement, collective bargaining and voluntary arbitration
- Maintenance of industrial peace
- Ensure fair wage structure and provision of social security
- Enhancing the status of workers in the industry
- Tripartite consultation
- Adequate enforcement of legislation
Employers: They play an important role in industrial relations. The employers pay wages, various allowances, regulates working relations through various rules, regulations and laws.
After globalization, industrialization started due to which number of trade unions has increased. With this, employers as a class are increasingly coming under pressure for providing increased wages, better working conditions and higher benefits. This is resulted in a decline in their bargaining power as compared to the past. Therefore in order to create a counter force, employers have created associations for protecting their rights as employers such as trade and commerce bodies which regularly hold meetings and discussions with various trade unions and government.
Employer/Management can also affect worker’s interests by exercising their right to relocate, close or merge the factory or to introduce technological changes. They also have the right to hire and fire.
Employees: The total employees play an important role in industrial relations. Labors are considered as a weaker party compared to its employers. In order to protect their rights, interest and issues they form collectively its own representatives which are commonly called trade unions. The trade unions act as a pressure group on employers in order to obtain concessions and benefits from the employers. These benefits may be in the form of higher wages, better working conditions, improved safety and health measures, housing and transportation facilities, enhanced job security etc. Trade unions tend to influence the government in enacting laws and regulations for the interest of workers.
Approaches to Industrial Relations
This approach is based on Gandhian fundamental principles like a) Truth and Non-Violence b) Non Possession. This approach aimed at peaceful settlement of disputes, mutual negotiations, collective bargaining and voluntary arbitration. These principles lead to cooperation, understanding, sacrifice and trusteeship. According to Gandhiji-
- Labour and capital must co exists in our industrial system and must understand each other.
- Gandhiji accepted the right of labour to strikes but it should be for reasonable cause and peaceful and non violent
- The nature of production should be determined by the necessities of the society and not by the whims of the persons
- Laborers can have their grievance redressed by resort to non violent and non cooperation which means peaceful strike
This perspective focuses on the fundamental division of interest between capital(employers) and labour. It is assumed that conflict in employment relationship is reflective of the structure of the society. Conflict is therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by capital.
Dunlop’s System Approach:
Dunlop’s model identifies three key factors to be considered in conducting an analysis of the management-labor relationship:
- Environmental or external economic, technological, political, legal and social forces that impact employment relationships.
- Characteristics and interaction of the key actors in the employment relationship: labor, management, and government.
- Rules that are derived from these interactions that govern the employment relationship.
Dunlop emphasizes the core idea of systems by saying that each of them more or less intimately affects each of the others. Industrial relations is the system which produces the rules of the workplace. Such rules are the product of interaction between three key “actors” – workers/unions, employers and associated organizations and government. The Dunlop’s model gives great significance to external or environmental forces. In other words, management, labor, and the government possess a shared ideology that defines their roles within the relationship and provides stability to the system
Emerging Issues in Industrial Relations
Wage Bargaining: Wages will remain at the center if future contract negotiations because the size and security of income will continue to be of vital importance to workers.
Women’s Issue: Rise in women workforce will give rise to new challenges in meeting the concerns and problems of female workers on the job. This issue has been going on for some time now and will accelerate in future.
Job Security: Due to technological advancement and change has been always a major concern for the unions. Use of automation and computer aided machines give a threat to the workers in losing their jobs and has been a major reason for the labour unrest. This scenario will continue in future too.
Productivity: Re-approachment between labour and management recognizing the necessity of co-operation to raise the productivity is emerging which has created a win-win situation to gain financially for both the parties.
Quality of Work Life: Employees are beginning to demand improvements in economic and non-economic benefits from their jobs. The importance of non-economic rewards is increasing relatively specially among the white collar and educated employees.
Dilution of collective bargaining: Contract staffing, part time employment have gone high recently in India. Due to this the eligibility and interest among these working group in participating in industrial movements have come down which has weakened the collective bargaining power of the trade unions. The private sector uses a sophisticated term for such provisions—the provision of ‘labour flexibility’.
Rise of Independent Industry Unions: In recent years, instead of getting affiliated to unions supported by political parties, the employees are organising independent industry-wise unions, for example, the United Forum of Bank Employees, the National Co-ordination Committee of Electricity Employees and Engineers (NCCOEE) etc. The rise of independent unions have also weakened the role of politically affiliated unions.
Trade Unions and Emerging New Sectors: NEW sectors, such as Information Technology (IT) and Business Process Outsourcing (BPO) with large potential for increasing employment opportunities, are emerging. The knowledge sector employees get hefty pay packets which give them a certain kind of arrogance not to be a part of trade unions with other industrial workers. But in reality they are “cyber collies” who becomes victim of emotional stress resulting in nervous and physical disorders. Now the trade unions have to convince these workers to shed their class arrogance and be part of the broad labour movement.
Future of IR in India
Change in economic system: Industrial relations need to respond to the changes in the economic system. Due to globalization, the standard of health, welfare and safety provisions will improve in the coming future.
Change in the labour demographics: The employees participating in the industrial relations are more educated in coming future; hence the employers will have a challenge in keeping up to the expectations of labour force. Fulfillment of basic necessities will no more engage the employees. Employers have to come up with innovative HR practices to attract, motivate and retain the employees.
Reductions in industrial disharmony: Gradually the unions are losing their powers in terms of collective bargaining since the Gen Y & Z employees are more learned who will not fall in the traps of unions backed up by the political parties.
It is a misunderstanding, difference of opinion or a conflict arises between employers & workmen, workmen & workmen and employers & employers due to employment terms and conditions to work
Features of Industrial Dispute
- Conflict between employer & employee, Employee & Employee or employer & employer
- Affects a large of people
- Related to some problem which workers want to be removed
- It results in form of a demand which should be met
- Cost- Benefit consciousness arises
- Take form of strikes, lock out, gehraos, dharna, go-slow etc
Types of Disputes:
- Interest dispute – determination of new wage level
- Rights dispute – conditions of work
Under Rights Dispute
- Grievance Dispute – Employee Ill-treatment,, dismissal, working time, promotion, transfer, job classification, work rules, safety & health
Forms of Dispute
- Un-official strikes
- Un- authorized stop work meetings
- Sympathetic strike( strikes in support of a group of workers already in strike)
- Political or protest strike
- Work stoppage initiated by employers( lock out)
- Rotating or revolving strikes( workers at diff locations take turns to stop work)
Strike: It is a condition of stoppage of work by body of persons (employed in the org) refusal under common understanding (of a number of persons)
Conditions to Strike
- Getting the demands sanctioned
- If it is a registered trade union then,
- There must be at least 7 members in the Trade Union
Types of Strike
- Stay Away strike
- Sit in Strike
- Pen Down Strike
- Tools Down Strike
- Mouth Shut Strike
- Wild Strike
- Picketing – (Getting attention from public by not allowing others to enter the plant)
Lock Out: It is an action taken by the employer where temporary closing down of the business unit, factory, organisation takes place and refusing the employees to work due to closing of place of employment or due to not accepting the demand of employees but the intention to re-open must exist.
Conditions to Lock out
- No employer from public utility service allowed
- 14 days notice to be given by the employer.
Layoff: It is a condition where employer refuses to give employment due to shortage of coal, power & raw material or due to trade reasons beyond the control of employer
Exceptions to Lay Off:
- Less than 50 Employees
- Seasonal Characteristics of the organisation
- Compensation – 50% of Basic + DA
- More than 1 yr of Continuous Service & Maximum Layoff Period 45 days
- Employer – employee relationship does not come to end.
- Employer should maintain a muster role
Retrenchment: It is a situation where Termination of the services are done by the employer for any reason apart from disciplinary issue Eg: If the SBU is outsourced.
– Voluntary retirement, Ill health cant be the grounds for retrenchment
– ONE-MONTH Notice in writing from the employer side stating the reason
– In the event of closure of business, 60 days notice to be given.
– Retrenchment has be on LAST COME – FIRST GO basis
Compensation: 15 days Average pay for every completed year of continuous service
Causes of Industrial Disputes
- Direct compensation incentive system (below par with the company profits/ incentive vs performance/ calculation of incentives)
- Revision of wages ( due to wage diff in industry/region)
- Investment in improving the working conditions
- Benefits – Leave with Wages, Medical Benefits etc
- Work Standards ( Work Schedule, Working hours, Shift System)
- Unfair Labour practices – managing unions according to management wishes
- Forcing workers to join a particular union
- Restrict workers from joining a trade union
- Dismiss workmen – by discrimination/ victimizing
- Assigning such work for which is he is not hired for
- Put workers for unduly long period(for temporary basis) – or else they will have to be paid for the benefits of permanent employees
Trade union Practices
- Inter Union Rivalry – To attract more support from workers
- Tendency of Unions to follow political parties
- Non- Cooperative approach of Trade Unions
- Lack of value system among the Unions
Legal & Political Factors
- Multiple Labour Laws (108)- Contradict with each other
- Labour laws not updated (Based on the current situations)
- Political interference with the unions
Prevention of Industrial Disputes
- Adoption of well defined, clear , hr policies
- Timely updation of hr policies
- Keeping wage policy fair & reasonable
- Effective two way communication
- Proving good working conditions
- Implementing speedy grievance redressal procedure
- Recognition to trade unions
- Joint consultation at different levels
Prevention of Industrial Disputes
- Adoption of well defined, clear HR policies
- Timely updation of HR policies
- Keeping wage policy fair and reasonable
- Effective two way communication
- Proving good working conditions
- Implementing speedy grievance redressal procedure
- Recognition of Trade Unions
- Joint Consultation at different levels
Ways of resolving disputes
- Appointment of Labour Welfare Officer
- Tripartite and Bipartite Bodies: Dispute Resolution Committee established by govt. of India to resolve disputes. Eg Indian Labour Conference (ILC), Standing Labour Committee etc
- Standing Orders – Conditions of employment
- Grievance Procedure – reasonable/ prompt : Employee should submit the grievance to a cell. The cell Consist of 4 members ( 2 appointed from Management + 2 appointed from workers) which must take a decision within 2 months
- Collective bargaining: Process in which employees act a group in seeking to shape conditions and relationships in their employment
- Strong Trade Union
- Joint Consultation
- Code of Discipline: Written Responsibilities between Management & Workers
- Arbitration: Third Party (individual or group) listens to the both the parties, studies the full matter, give suggestions and the solutions is compulsory for both to accept
- Adjudication: Mandatory settlement by labour court(legal authority) only when both the parties fail to arrive at a settlement through voluntary methods
- Conciliation: Representatives of Workers & Employers are brought together before third Party – (mediators) to arrive at agreement by mutual discussion. The conciliation officer will submit the report within 14 days from the date of commencement of the process. No Strike or Lock during this process is allowed.
Settlement of industrial disputes
- Collective Bargaining
- Code of Discipline
- Grievance Procedure
Tripartite committee: It is a dispute resolution committee established by government of India to resolve disputes. Examples: Indian Labour Conference (ILC), Standing Labour Committee and Industrial Committee
Arbitration: Its is a method of resolving disputes where the third party listens to both., studies the full matter and give suggestions and solutions. The solution is compulsory for both to accept
Conditions to Arbitration
- Both parties must agree in writing for the process
- must be signed by parties in the prescribed form
- agreement must be attached with the consent
- agreement must contain the issues to be decided
- the arbitrator’s details must be specified
Adjudication: It is a mandatory settlement by labour court. Only when both the parties to arrive at a settlement through voluntary methods
Difference between Arbitration & Adjudication:
In arbitration, the parties agree to the third party which can be an individual or a group whereas in Adjudication, the parties agree to the legal authority – Judge, Magistrate etc.
The government by notification in the official gazette constitutes one or more labour courts for adjudication of industrial disputes relating to any matters. A labour court consists of one person only to be appointed by the government known as Presiding Officer of Labour Court.
The judge of the labour court should have the qualification as the judge of High Court who has been appointed as the district judge or additional district judge for period of not less than three years. The judge should have held any judicial office in India for not less than seven years or he has been the presiding officer of a labour court not less than five years.
- Representatives of Workers & Employers are brought together before third party– (mediators)
- To arrive at agreement by mutual discussion
- The conciliation officer will submit the report within 14 days from the date of commencement of the process
- No Strike or Lock during this process
Code of Discipline: Responsibilities between Management & Workers
Objective of Code of Discipline:
- Maintain Discipline
- Prevent Dispute
- Avoid Stoppage of work
- Growth of Trade Union
Grievance is a dis-satisfaction or distress or suffering unnecessarily in the organisational environment. It is a complaint made in writing regarding violation of employment agreement and unfair treatment. Grievances can be imaginary or disguised also.
Characteristics of Grievances
- Perception that some injustice, unfairness is done in an organisation
- Problem faced by employees
- Related to terms & conditions of work
- It can be factual supported by data
- It can be Imaginary which are not based on facts
- It can be disguised such as day to day frustration at work
Causes of Grievance
- Wage Adjustment not done or revisions not done
- In Appropriate Incentive Schemes
- Job Classification is not appropriate
- Complaint Against particular employee
- Inappropriate Disciplinary Measures
- Discrimination among the workers from the supervisors
- Promotion denied
- Unsatisfactory Performance Evaluation
- Inadequate safety & health services
- Transfer or shift duty
- Work Procedure and Work Load
A grievance management procedure is a formal system for solving or re addressing any grievance. It acts as a Psychotherapy of Industrial Relations. Here problems are solved before they become big issue.
Pre-requisites of Grievance Management
- Sound channel should be there to for grievance readdressing
- Procedure for Receiving the grievance should be kept transparent
- Should be Simple, Definite & Prompt
- Steps should be Clearly Defined
- It should be analysed keeping the Economic, Social, Psychological and Legal issues
Grievance Handling Procedure
- Step1 : Employee explains verbally to supervisor or in a discussion
- Step 2: Arises if it is not solved by supervisor. It is sent to higher level manager with a note (time, place & nature of action which the employees object)
- Step 3: Arises if it is not solved by higher level manager. Now sent to grievance committee comprising of representatives from employees, union and management
- Step 4: If the decision given by the grievance committee is not accepted by the grievant/employee, then he may approach the management or corporate executive
- Step 5: Final step when it is referred to arbitrator
It is a personal approach to understand the employee grievance to find out the facts behind the issue which helps to understand the hidden matters and reduce the degree of the problem.
Mode of Grievance Procedure
- Judicial Mode: Provides maximum opportunity to bring out his side of the case.
- Humanistic Mode: Emphasize on Interpersonal Relationship
- HRD: Theory Y i.e by motivating the employees and developing skills
- Deal with indiscipline by imposing strict legal penalizing way to dealing
- Managing grievance by democratic way of dealing the issue
Misconduct: It is an improper behavior or misbehavior of an employee towards any stake holders in the organisation. It is misconduct when workers show anger, dis-obedience, refuses to obey law & order, showing negligence to work
- Adherence to Rules & Regulations of the organisation
- Orderly behavior & respect the authority
- Follow the company procedures
- Positive or Negative way of Force to follow discipline
Procedure – Departmental/ Domestic Enquiry (Procedure for taking Disciplinary Action)
- Issuing Charge Sheet
- Explanation of the employee upon receiving the charge sheet
- Issue of Show cause notice
- Notice of Inquiry
- Holding of an Inquiry
- Inquiry report & action taken on it
- Follow up after the disciplinary action
It is a process of negotiation between employers and a group of employees aimed at reaching agreements to regulate working conditions. The interests of the employees are commonly presented by representatives of a trade union to which the employees belong.
Pre- Requisites of Collective bargaining
Mutual Recognition – The parties must be ready to enter agreements. – They must recognize each other and realize that adjustment and understanding is essential for the achievement of organisational goals.
The parties must attain a sufficient degree of organisation – If the workers’ organisation is weak, employers can say that it does not represent the workers and will refuse to negotiate with it. Unless the workers are able to form strong and stable unions, collective bargaining will not be successful.
Agreement must be observed by those to whom they apply. – The workers’ organisation must be strong enough to exercise its authority over its members. If the trade union has no power over its members, collective bargaining will not be effectively implemented.
There must be a favorable political climate, essential for successful collective bargaining – If the government encourages collective bargaining as the best method of regulating conditions of employment, it will be successful. Where the governments restrict trade union activities, there can be no collective bargaining.
A give and take policy must prevail in the organisation. The difference between two parties can be adjusted only by compromise so that an agreement can be reached. Neither side should be too rigid on its demand.
Freedom of association is essential for collective bargaining. Where there is no freedom of association, there can be no collective bargaining. Freedom of association implies that the workers as well as the employers will have the right to form an organisation of their own to protect their interests.
- Negotiation is successful only when the parties rely on facts & figures to support their points of view
- Unfair practices should be avoided from both the parties
- The terms of agreement should be clearly & precisely written down in detail
- It is best conducted at plant level
- Agreement reached should be honored and fairly implemented
- A provision of arbitration should be incorporated in the agreement
- Both the parties must have an understanding about the needs, aspirations, objectives and problems of other parties
- Both the parties should maturity in leadership. Both should have negotiation skills.
- The trade union participating in the collective bargaining process must be strong & democratic.
Characteristics of Collective Bargaining
- The various parties of Collective Bargaining are employees, employers and trade unions
- The group action is initiated through representatives of workers
- It is industrial democracy at work
- It is complementary process and not a competitive process
- Complex Process such as psychological, power, politics are involved
Types or Forms of Collective Bargaining
- Simple Plant Bargaining – Trade union bargaining with the management.
- Multiple Plants Bargaining – Single factory having several plants
- Multiple Employer Bargaining – Bargaining between all trade unions in the same industry and the employer
- Association of employers in the industry with single union in a region
Type of Consignments Bargaining Agreements
- Voluntary Agreement : Direct Negotiation between the parties
- Settlements: Combination of Voluntary & compulsion. negotiated by the officers
- Consent Awards: Agreement reached between the parties when the matter is under industrial court
Collective Bargaining Process – 6 STEPS
- Preparing for Negotiation
- Identifying bargaining issues
- Reaching the agreement
- Ratifying the agreement
- Administration of the agreement
Step 1- Preparation for Negotiations
From employer side
- Prepare specific proposals for change in the contact
- Determine the economic package that company can offer
- Prepare Supportive data/ Statistical Data
- Bargaining Book – Points to be discussed, order of discussion
From Employee side
- Financial position of the company & ability to pay
- Management’s attitude towards various issues in past
- Attitude and Desires of Employees
Step 2- Identifying bargaining issues
- Wage Related Issues
- Supplementary Economic Benefits
- Institutional Issues
- Administrative Issues
STEP 3 – Negotiation
- Each side presents its initial demand
- Goes for days till final agreement is reached
- Battle of wits/ playing of words/ threats of lock outs & strikes
STEP 4 & 5 – Settlement & Contract Agreement
- After initial agreement, both the parties return to their constituencies and discuss if they have taken the right steps.
- Ratification – Union Negotiation team explains & puts the agreement to the union members for a vote
- Once voting is done, it formalizes as a contract
STEP 6 – Administration of the agreement
- Signing the agreement
- Implementation of the agreement ( day to day adherence)
It is a set of rules and regulations for the employment. The terms and condition od employment such as recruitment, disciplinary actions, fines, leave, holidays etc were earlier governed by a contract between the employer and the employees which was called as standing orders. The standing orders are empowered under the Industrial Employment Act.
Objectives of Standing Orders:
- To define the conditions of employment in the industrial establishments
- To regulate the standards of conduct of the employers and employees
- To maintain proper discipline, harmonious relations, working conditions and satisfactory employment
- To provide redressal of grievances rising out if employment or relating to unfair treatment of employees against the employer
- To specify the duties and responsibilities of both the employers and the employees
- To provide statutory sanctity to the employees and employers
Contents of Standing Orders
Classification of workers i,e temporary, permanent, apprentices or probationers
- Manner of intimating to workmen periods and hours of work, holidays, paydays and wage rates
- Shift workings
- Attendance and late coming rules
- Procedure to applying and grant of leaves and holidays
- Requirement to enter premises by certain gates and liability to search
- Rights and liabilities of the employer
- Termination of employment and notice thereof to be given by the employer and employee
- Suspension and dismissal for misconduct and acts which constitutes misconduct
- Means to redress for workmen against unfair treatment or wrongful actions by employer or employee
Participative management: It is a process by which subordinate employees, either individually or collectively, become involved in one or more aspects of organizational decision making within the enterprises in which they work.
Workers’ Participation in Management (WPM) refers to participation of non-managerial employees in the decision-making process of the organization.
Reason behind WPM
The main implications of workers’ participation in management as summarized by ILO:
- Workers have ideas which can be useful;
- Workers may work more intelligently if they are informed about the reasons for and then intention of decisions that are taken in a participative atmosphere
Objectives of Workers Participation in Management
- To raise level of motivation of workers by closer involvement.
- To provide opportunity for expression and to provide a sense of importance to workers.
- To develop ties of understanding leading to better effort and harmony.
- To act on a device to counter-balance powers of managers.
- To act on a solution for solving industrial relation problems.
Essential Conditions for Successful Working of Worker’s participation
- Impartial attitude
- Genuine Faith in the system
- Workers should be trained with the nature of participation
- Two way communication/ Transparency
- Rational precise, clear cut objectives
- Strong trade union
- Industrial Peace and Harmony
- Workers should act responsible, duty conscious manner
Forms of Participation
Participation through Collective Bargaining
- Through the process of CB, management and workers may reach collective agreement regarding rules for the formulation and termination of the contract of employment, as well as conditions of service in an establishment, even though these agreements are not legally binding
- For CB to work, the workers’ and the employers’ representatives need to bargain in the right spirit. But in practice, while bargaining, each party tries to take advantage of the other.
- This process of CB cannot be called WPM in its strongest sense as in reality; CB is based on the crude concept of exercising power for the benefit of one party.
- WPM, on the other hand, brings both the parties together and develops appropriate mutual understanding and brings about a mature responsible relationship.
Participation through Suggestion Schemes
- Employees’ views are invited and reward is given for the best suggestion.
- With this scheme, the employees’ interest in the problems of the organization is aroused and maintained.
- The ideas could range from changes in inspection procedures to design changes, process simplification, paper-work reduction and the like.
- Out of various suggestions, those accepted could provide marginal to substantial benefits to the company. The rewards given to the employees are in line with the benefits derived from the suggestions.
Participation through Staff and Works Councils
- Staff councils or works councils are bodies on which the representation is entirely of the employees.
- There may be one council for the entire organization or a hierarchy of councils.
- The employees of the respective sections elect the members of the councils.
- Their role of such council ranges from seeking information on the management’s intentions to a full share in decision-making.
- Such councils have not enjoyed too much of success because trade union leaders fear the erosion of their power and prestige if such workers’ bodies were to prevail.
Participation through Joint Councils and Committees
- Joint councils are bodies comprising representatives of employer and employees.
- Work committees are a legal requirement in industrial establishments employing 100 or more workers.
- Such committees discuss a wide range of topics connected to labour welfare.
Examples of such committees are welfare committee, safety committee, etc.
- Such committees have not proven to be too effective in promoting industrial democracy, increasing productivity and reducing labour unrest.
Participation through Shop Council
- Applicable for any industrial unit having MORE THAN 500 employees.
- The decision taken SHOP COUNCIL will be taken will be considered based on Consensus(every ones agreement).
- Role is to increase the productivity, production & overall efficiency.
Participation through Works Committee
- Discussion/ Suggestion of conditions of work place like lighting, ventilation, temperature, sanitation, etc.
- Advise on welfare finds, educational activities
- Ensuring good relations between the employers and employees.
Participation at the Board level
- This would be the highest form of industrial democracy. The workers’ representative on the Board can play a useful role in safeguarding the interests of workers.
- He or she can serve as a guide and a control element. He or she can prevail upon top management not to take measures that would be unpopular with the employees.
He or she can guide the Board members on matters of investment in employee benefit schemes like housing, and so forth.
- The Government of India took the initiative and appointed workers’ representatives on the Board of Hindustan Antibiotics (Pune), HMT (Bangalore), and even nationalized banks
Participation through ownership
This involves making the workers’ shareholders of the company by inducing them to buy equity shares.
In many cases, advances and financial assistance in the form of easy repayment options are extended to enable employees to buy equity shares.
- This method involves less consultations or even joint decisions. Performance of the organization is linked to the performance of the employee.
- The logic behind this is that if an employee has a financial stake in the organization, he/she is likely to be more positively motivated and involved.
- Some schemes of financial participation:
o Profit-linked pay
o Profit sharing and Employees’ Stock Option schemes.
o Pension-fund participation.
Participation through Quality Circles:
- A QC consists of seven to ten people from the same work area who meet regularly to define, analyze, and solve quality and related problems in their area.
- Training in problem-solving techniques is provided to the members.
- QCs are said to provide quick, concrete, and impressive results when correctly implemented.
- Employees become involved in decision-making, acquire communication and analytical skills and improve efficiency of the work place.
Organization gets to enjoy higher savings-to-cost ratios.
- Chances of QC members to get promotions are enhanced
It is a voluntary organisation formed by the workers to resist employer’s exploitation, protect and safeguard their interest by collective action.
Employees join trade union to strengthen collective action and protect themselves and their co workers with their rights and privileges.
Objectives or relevance of Trade Union
- To improve collective bargaining of employees
- To give better working conditions, ensure fair wages, compensation during accidents adherence of working hours
- To ensure cooperation among the workers and management
- To increase cooperative feeling among the employees and lead to unity among workers
- To help in securing the facilities for the workers, protect their rights and safeguard their interests
- To help in enhancing the feeling of oneness among the workers
- To avoid exploitation of workers in an organisation
- To resolve industrial disputes through collective bargaining
- To help in maintaining discipline among workers
Functions of trade unions:
- To secure fair wages
- Better working and living conditions for the members
- To raise the status of the workers as partners in an organization
- To increase the self confidence among the workers
- To encourage sincerity and discipline among the workers
- To enlarge opportunities for promotion and training
- To provide the educational, cultural and recreational facilities
- To promote individual and collective welfare
- Promotion of national integration
- Influence the socio economic policies of the community through the active participation in their formulation at various levels
- Intra –Mural Functions: These functions include protecting the workers interest i.e hike in wages, providing more benefits, job security, etc through collective bargaining, and direct action such as strikes, gheraos etc.
- Extra-Mural Functions: These functions include providing financial and non-financial assistance to workers during the periods of strikes and lock outs, extension of medical facilities during sickness and causalities, provision of education, recreational and housing facilities and provision of social and religious benefits etc.
- Political functions: These functions include carrying out social service activities, discharging social responsibilities through various sections of the society
Types of trade unions
- Paper Unions: They are established to get a platform or a voice in a political setting. Most of the trade unions in India are paper unions
- Ad Hoc Unions: These established to secure definite and immediate objective. These unions are strike committees or action committees. Their membership is of limited duration. They are not trade unions in real sense.
- Craft Unions: They are an organisation of workers following a particular occupational union. Some of the craft unions are Ahmedabad weavers union, Kanpur suti mill mazdoor sabha etc
- Industrial Union: It is an organisation of workers in a single industry without any distinction as to occupation, skill and sex. The common bond here is the industry in which the workers are employed. Eg. The textile Labour Association of India, The rashtriya mill mazdoor sangh, Mumbai.
- General Union: It is an organisation of workers, irrespective of their trade or craft. General unions are useful for employees in small concerns such hotels, commercial establishments etc.
- Local Unions: The term local union refers to a branch of a big union or a small union of local importance
- National Unions: They are spread across the nations and large at scale such as All India Trade Union Congress, United Trade Union Congress, Bharatiya Mazdoor Sangh.
Reasons for employees to join Trade Union
- Trade union protect the workers from management and employer’s exploitation
- To strengthen collective action and to secure for themselves as well their colleagues, their rights and privilege
- To secure fair wages, safe guard security of tenure and improve conditions of work
- Trade unions gives the employees a sense of identity, oneness and provides educational, cultural and recreational facilities
- To promote individual and collective welfare
Registration of trade Union
- Any 7 or more members of a trade union may, by subscribing their names to the rules of the trade union and its compliance.
- Not less than 10%, or 100 of the workmen, whichever is less, subject to a minimum of 7, engaged or employed in an establishments etc.
- It has on the date of making application not less than 7 persons as its members, who are workmen engaged or employed in the establishment or industry with which it is connected.
Cancellation of registration
- If the certificate has been obtained by fraud or mistake or it has ceased to exist or has willfully contravened any provision of this Act.
- If it ceases to have the requisite number of members
Need for recognition of Trade Union
- To get the validity of trade union as per the law
- To sue and to be sued in any settlement of disputes
- To get a protection under criminal conspiracy
- To take collective action against the employer
- To enter into any agreement officially
- To get a perpetual succession, common seal, to get a name for the body and to hold movable and immovable property as per the law
- To donate funds to the political parties
- To conduct a strike for genuine purpose
Rights of Trade Union
- To collect the membership fees in the premises of the factory without interference by the management
- To fix notices of the meeting of the union and of the activities of the union on the premise of the factory
- To conduct strike by peaceful method
- To raise funds for political purpose at the option of the members
- To send the registrar, an audited statement of receipt and expenditure on a yearly basis
- To appoint outsiders as members which are not more than one half of the total number of office bearers to the executive by the union
Problems and challenges of trade unions
- Uneven Growth: Trade unions are mostly concentrated in the large scale industrial sector and that too where manual labors are involved. Hardly any trade union activity exists in small scale enterprises among domestic servants and agricultural labor. Moreover, only few states in India have a climate of supportive trade unionism from the government like Kerela ,West Bengal and Mumbai.
- Small Size: Most of the unions are characterized by their size and membership. First of all there are multiple unions which break the average size of an union, secondly the women employees with low literacy do not join the trade union which makes them further small in size. Due to this collective bargaining becomes weak.
- Financial Weakness: The average annual income of the unions are quite low due to the workers attitude in non contribution of their hard earned money to the union funds which reflects lack of commitment among the union. Due to multiplicity of the unions, subscription rates are unduly low. Union’s expenses are very high and they don’t get any financial support from the government agencies also. Hence taking welfare measures becomes a challenge for the employees.
- Multiple Unions and Inter-union rivalry: The existence of different conflicting or rival organizations with divergent political views leads to unhealthy growth of the trade unions. Inter-Union rivalry reduces the strength of the unions, weakens the collective bargaining power and reduces the effectiveness.
- Issues of Leadership: The main trade union leader is generally from outside the factory that is not well versed with the situation of the employees who meet them neither having the slightest idea of the actual problem.
- Unions and Politics: The unions get under the influence of political parties and lose their focus of employee welfare. The decisions are taken by political parties sacrificing the workers interest.
- Problem of Recognition: Employers are not obliged to recognize any union. The employers many a times have refused recognition to trade unions either on the basis that unions consists of only a minority of employees or that two or more unions already existed
Strengthening trade unions:
- The registrations of trade unions are essential to strengthen them without which they cannot be operative in their activities
- Appointment of strong bargaining officer to make effective collective bargaining and to have a strong trade union
- Appointment of strong office bearers or any executive to lead the demands of the workers
- By establishing a separate registered office, a trade union can have a stronger presence in front of the employer.
- Educating the benefits of joining the trade union to the workers will increase their strength.
Trade Unions Act, 1926
Objective of the act: To make provisions for the registration of trade unions formed by the workers to protect their legitimate rights while bargaining with the employers. Also this act provides the provisions for the trade unions to get a legal and corporate status of the union.
The act is applicable to whole of India. It consists of 33 sections divided into 5 chapters.
Chapter 1 deals with title, extent and commencement of the act along the important definitions
Chapter 2 discusses the various aspects of registration of the trade unions
Chapter 3 describes the rights and liabilities of registered trade unions
Chapter 4 deals with the powers to make regulations and publication of regulations
Chapter 5 deals with the consequences of failure to submit returns, supplying false information regarding trade unions and details of offences and penalties.
The trade unions act 1926 has been periodically amended from time to time in 1947, 1960,1962 , 1982 and 2001.
Amendment in 2001: With regards to the number of minimum membership to 7, revised membership fees, office bearers tenure to maximum of 3 years.
Central trade unions in India
- AITUC ( All India Trade Union Congress) :It started in 1920,controlled by communist party of India(CPI) and it is the oldest trade union in India at National Level
- INTUC( Indian National Trade Union Congress): It was started in 1947 and controlled by Indian National Congress. This is the second largest trade union in India.
- HMS(Hind Mazdoor Sabha) : It was started in 1948 by Praja Socialist Party(PSP)
- UTUC(United Trade Union Congress) : It was started in the year 1949 by revolutionist socialist party(RSP)
- BMS( Bharatiya Mazdoor Sangh): It is controlled by Bharatiya Jantha Party which was also a big trade union.
- CITU (Central Indian Trade Union): It was started in the year 1970 controlled by communist party of India(Marxist)
Recent Trends in Trade union movement in India
- Trade Unions have changed their approach from calling for strikes, bandhs, gheraos and violence to being increasingly responsive, matured and realistic in their thinking and action.
- They have realized the problems of surplus labor and whole heartedly accepting the VRS, golden handshake etc.
- Their focus has turned towards the adopting newer technology and processes such as TQM, Six Sigma Etc.
- Independent unionism: The trade unions have slowly started moving away from the political associations since they have realized the futility of political influence.
- Unions have realized the disadvantage of establishing multiple unions which have weakened their bargaining power hence they are jointly focusing on single union formation.
- There is a universal trend of declining membership of unions especially in the service sector and their importance is reducing in industrial sector too. This is mainly due to the current generation work forces which are more educated and management support oriented.
The Factories Act 1948
Applicability of the Act : Any premises whereon 10 or more persons with the aid of power or 20 or more workers are/were without aid of power working on any day preceding 12 months, wherein Manufacturing process is being carried on.
Employer to ensure health of workers pertaining to the following
- Cleanliness Disposal of wastes and effluents
- Ventilation and temperature dust and fume
- Overcrowding – Minimum space between workers in 500 cubic feet
- Artificial humidification and sufficient Lighting
- Drinking water and Spittoons.
- Fencing of machinery work on near machinery in motion.
- Employment prohibition of young person’s on dangerous machines.
- Striking gear and devices for cutting off power.
- Casing of new machinery.
- Prohibition of employment of women and children near cotton-openers.
- Hoists and lifts with good mechanical construction, sound material and adequate strength which is to examined after every 6 months by competent persons
- Suitable glasses, goggles to be provided for the protection of eyes
- Washing facilities separate for men and women workers
- Facilities for storing and drying clothing
- Facilities for sitting
- First-aid appliances – one first aid box not less than one for every 150 workers.
- One ambulance room with equipments and medical incharge with nurse if more than 500 workers are working
- Canteens when there are 250 or more workers.
- Shelters, rest rooms and lunch rooms when there are 150 or more workers.
- Separate enclosed accommodation for male and female employees
- Appointment of sweepers to keep clean latrines, toilets, urinals and washing places where more than 250 employees are employed.
- Creches when there are 30 or more women workers.
- Welfare office when there are 500 or more workers
Working Hours, Spread Over & Overtime of Adults
- Weekly hours not more than 48.
- Daily hours, not more than 9 hours.
- Intervals for rest at least ½ hour on working for 5 hours.
- Spread over not more than 10½ hours.
- Overlapping shifts prohibited.
- Extra wages for overtime double than normal rate of wages.
- Restrictions on employment of women before 6AM and beyond 7 PM.(now not applicable)
Employment of Young Persons
- Prohibition of employment of young children e.g. 14 years.
- Non-adult workers to carry tokens e.g. certificate of fitness.
- Working hours for children not more than 4 ½ hours and not permitted to work during night shift.
Annual Leave with Wages
- A worker having worked for 240 days @ one day for every 20 days and for a child one day for working of 15 days.
- Accumulation of leave for 30 days.
Industrial Relations in IT & ITes Industry in India
A common misconception in the IT industry is that Trade Unions Act is not applicable to the IT industry. Employers as well as employees strongly believe that employees of an IT Company do not have the right to form a Trade Union. However, nothing is further from the truth than this. The Fundamental Right to form associations or unions is accorded to all citizens under Article 19 (1) (c) of the Constitution of India and therefore, like all citizens, even IT employees can form and/or join Trade Unions.
Barriers in formation of Trade Unions in IT & ITeS Industry
- Flat organization structure
- Non Applicability of the term Labor or Workman to the IT Executives
- Direct Communication of management to employees
- Pay structure has shifted from Time Based to Performance Based
- Lack of Interest among young employees and female employees to join Trade Unions
Definition of Workmen in IT & ITeS Industry
The Industrial Dispute Act which is applicable to all industrial and commercial establishments defines employee/workmen and both skilled and unskilled persons may be considered as ‘workmen’. However, a person employed mainly in a managerial or administrative capacity or if the nature of services rendered by an employee is supervisory in nature, the employee may not be considered as workman. In view thereof, the Head, Project Managers, Manager (business development) of the project teams at an IT or outsourcing company may not be termed as ‘workmen’ subject to actual assessment of their roles and responsibilities. However, it is likely that the other team members, associates, trainees employed by an IT company may be considered ‘workmen’ subject to assessment of their specific job profiles, roles and responsibilities.
Reasons behind Formation of Trade Union in IT & ITeS Industry
Long Working Hours: Many of the companies are flouting the weekly working hours norm set by International Labor Organization. Employees working in the industry are forced to work for extra hours as managers pressurize their subordinates in the name of shrinking deadline of projects.
Work Load: Employees are pressurized by their superiors for more output so that the company can maximize profits.
Compensation Related Issues: Parameters for performance based pay are not clearly defined in the companies. Some companies are even paying lesser compensation to their employees going for overseas assignments in comparison to what they are entitled for, as per the regulations of the host country for expatriates (e.g. CSC India Pvt. Limited, Noida for its employees working in Denmark).
Appraisal & Promotion Issues: In spite of the methods like 360 degree and MBO for performance appraisal, most of the companies lack maturity in HR processes to adopt such type of robust appraisal approach. It is seen that the entire appraisal of an employee is handled by the immediate manager which generates discontentment in the employee with no appropriate solution. Also it is observed that many deserving employees are overlooked during the promotion process.
Job Insecurity: Employees in the industry are not secured about their jobs and many a times the companies are at liberty to fire employees on flimsy grounds without giving due notice. Employees fret about being given pink slip but feel totally helpless in such cases.
High Stress Levels: These jobs are very stressful leading to mental exhaustion and over-worked employees are unable to strike appropriate work-life balance. However when we see other industries, people are able to achieve work-life balance because they are not over worked and employers have a fear from trade unions.
Denial of Annual Leaves: Another major problem in most of the IT companies is that employees are not given annual leave although they are available on paper. Even it can be seen that normally an employee is not given leave for more than i-2 weeks yearly in spite of pending leaves. This means that an employee cannot take a long break to de-stress himself/ herself.
No Recognition for Extra Efforts: Extra efforts by employees in the organization are not accounted for and no compensation is given to the employees in lieu of that.
Lack of Transparency & Equity: Organizational culture is spoiled due to lack of transparency and equity as equal opportunities are not provided to all the employees. Some of the employees are even harassed at times and miserable employees are forced to quit.
Acts & Rules will be applicable for ITES & IT Industries
- Shops and Commercial Establishment Act
- Weekly Holidays Act
- Payment of Wages Act
- Minimum Wages Act
- Payment of Bonus Act
- Payment of Gratuity Act
- Equal Remuneration Act
- Maternity Benefit Act
- The Employees Provident Fund & Miscellaneous Provisions Act
- The Employees’ State Insurance Act
- Bonus Act
- Contract Labor Act
- The Workmen’s Compensation Act
- The Employment Exchanges Act
- The Child Labor (Prohibition & Regulation Act)
Trade Unions Formed in IT & ITeS Industry
Union for Information Technology and Enabled Services Professionals (UNITES)
UNITES (Union for Information Technology & Enabled Services Professionals), a trade union for IT and enabled services professionals (The Telegraph, 2006) which was set up in 2004–is seeking affiliation with the Indian National Trade Union Congress (INTUC). The political patronage will give the 8,000-member-strong union some teeth, says Karthik Skekhar, general secretary, UNITES. “Our member base is small. We won’t survive as an independent union,” he explains. But the point to remember is that political affiliations don’t swing in BPO-ITeS board rooms.
West Bengal Information Technology Services Association (WBITSA)
The Centre of Indian Trade Unions (CITU) launched a trade union arm for the software industry – the West Bengal Information Technology Services Association (WBITSA), the first association of employees in the IT sector on November 14, 2006. The WBITSA, set up under the protection of CITU, would take up the cause of employees who were denied from their rights. There are employers in the IT sector who has does not have any regard for basic labor laws. No appointment letters are issued to workers, they are denied Provident Fund and Employees State Insurance. Some units also engage contractors to provide them. Employees are thrown out of their jobs without cause / notice. The association will provide such companies a list of irregularities.
Plantation Labour Act, 1951
Acts such as Tea Districts Emigrant Labour Act, 1832, Workmen’s Breach of Contract Act, 1859, Factories Act, 1881 and other subsequent laws covered plantations labour only to a very limited extent Plantation Labour Act, 1951 was enacted to provide for their welfare for whole of India.
Purpose: To provide for the welfare of labour and to regulate the conditions of work in plantations
Applicability: To any land used or intended to be used for growing tea, coffee, rubber, cinchona or cardamom which measures 5 hectares or more and in which 15 or more persons are employed.
Provisions of plantation labour act
- Drinking water
- Medical facilities are to be provided for workers and their families
- Canteen (For one hundred and fifty workers)
- Creches (For fifty or more women workers or twenty or more children of women workers)
- Recreational facilities
- Educational facilities (For children between age of six and twelve of workmen exceeding twenty five in number)
- Housing facilities for every worker (including his family) residing in the plantation and for every worker (including his family) residing outside the plantation if he has put six months continuous service and has expressed desire to reside in the plantation
- Other facilities like umbrellas, blankets, rain-coats for protection from rain or cold.
- Welfare officer: For three hundred or more workers
- Sickness and maternity benefits: Every worker is to be entitled to obtain from his employer in case of sickness certified by a qualified medical practitioner, sickness allowance. Maternity benefits are received under Maternity Benefit Act, 1961.
- Working Hours: No adult worker shall be required or allowed to work on any plantation in excess of forty eight hours a week and no adolescent for more than twenty seven hours a week. In case of exceeding the required number of working hours, the employees are entitled to get twice the rates of ordinary wages.
- Hours of Rest: No worker shall work for more than five hours before he has had an interval for rest for at least half an hour.
- Night shift for women employees: No woman worker shall be employed in any plantation between the hours of 6 A.M and 7 P.M
- Weekly Holidays: Provide for a day of rest in every period of seven days which shall be allowed to all workers.
- Annual Leave with wages: For an adult employee, one day for every twenty days of work performed by him, and for a young person, one day for every fifteen days of work performed by him.
- Compensation: The employer shall give compensation to a worker in plantation in case of accident and the memorandum relating to such compensation needs to be registered by the employer with the Commissioner in accordance with the provisions of the Workmen’s Compensation Act, 1923.