MODULE 1: INDUSTRIAL RELATIONS

Definition – Nature - Evolution of IR in India - Context and environment of IR. - Three

actors and their roles in IR -Approaches to IR &HR Relations - Gandhian approach -
Marxian approach and Dunlop’s Systems approach. Emerging Trends in IR, Future of IR
in India.

Introduction to industrial relation: The term ‘Industrial Relations’ comprises of two terms:
‘Industry’ and ‘Relations’. “Industry” refers to “any productive activity in which an individual
(or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist
within the industry between the employer and his workmen.” The term industrial relations
explain the relationship between employees and management which stem from union employee
relationship. Industrial relations are the relationships between employees and employers within
the organizational settings. The field of industrial relations looks at the relationship between
management and workers, particularly groups of workers represented by a union. Industrial
relations are basically the interactions between employers, employees and the government, and
the institutions and associations through which such interactions are mediated. Definitions of
industrial relation: 1. Dale Yoder defines it as a "whole field of relationships that exists because
of the necessary collaboration of men and women in the employment process of an industry." 2.
According to V. Agnihotri “The term Industrial relations explains the relationship between
employees and management which stem directly or indirectly from unionemployer relationship”
3. According to – C.B Kumar “Industrial relations are broadly concerned with bargaining
between employers and trade union on wages and other terms of employment. The day-to-day
relations within a plant also constitute one of the important elements and impinge on the broader
aspects of industrial relations” 4. J.Henry defines IR as “Industrial relation is an art of living
together for the purpose of production” 5. J.T. Dunlop defines industrial relations as “the
complex inter-relations among managers, workers and agencies of the governments

. According to Dale Yoder: “Industrial relations is the process of management dealing with one
or more unions with a view to negotiate and subsequently administer collective bargaining
agreement or labour contract”. Employee relationship Management: Employee Relations
involves the body of work concerned with maintaining employeremployee relationships that
contributes to satisfactory productivity, motivation, and morale. Essentially, Employee Relations
is concerned with preventing and resolving problems involving individuals that arise out of or
affect work situations. “Employee relationship management is a process that companies use to
effectively manage all interactions with employees, ultimately to achieve the goals of the
organization.” OR “Employee relationship management refers to managing the relations between
the various employees in an organization. The relationship can be between employee and the
employer as well as between employees at the same level.” Nature / Objectives of Industrial
Relations: 1. Protect management and labour interests by securing mutual relations between the
two groups. 2. Avoid disputes between management and labour, and create a harmonizing
relationship between the groups so productivity can be increased. 3. Ensure full employment and
reduce absenteeism, hence, increasing productivity and profits. 4. Emphasize labour employer
partnership to establish and maintain industrial democracy. This is done to ensure the sharing of
profit gains, and personal developmental of all employees. 5. Provide better wages and living
conditions to labour, so misunderstandings between management and labour are reduced to a
minimum. 6. To bring about government control over plants where losses are running high, or
where products are produced in the public interest.

To bridge a gap between various public factions and reshape the complex social relationships
emerging out of technological advances by controlling and disciplining members, and adjusting
their conflicts of interests.

SCOPE / AREAS OF INDUSTRIAL RELATIONSHIP

Industrial Relations scope includes all the aspects of relations in industry such as developing and
maintaining cordial and effective labour management relations, industrial peace and industrial
democracy. The cordial and effective labour management relations can be developed by-

1. Protecting the interest of the employees 2. Providing reasonable wages to employees

3. Providing safe and hygienic working conditions

4. Providing social security measures 5. Maintaining strong Trade Unions

6. Collective bargaining Industrial peace and democracy could be developed and maintained by:

1. Settlement of industrial disputes through mutual understanding and agreements 2. By evolving

various statutory measures 3. By formation of various machineries such as works committee,
boards of conciliation labour courts etc. 4. Workers participation in management 5. Recognizing
human rights Evolution of Industrial Relations in India: • 1890-1918: Trade unions were largely
sectarian in character; they lacked definite aim and had no striking power. • 1919-1923: During
this period many ad hoc unions disappeared and several large and medium sized unions came
into existence. India’s first central organization of labour, the AITUC was set up in 1920 • 1924-
1935: This period saw the rise of Left-wing Trade unions as the political situation in India was
favorable for the reception of Communist ideology. Number of Acts like Mines Act, Trade
Unions Act, and Workmen’s Compensation Act were passed. • 1936-1939: There was
phenomenal increase in the number of trade unions and their members due to the passing of the
Government of India Act which gave increased representation of labour in the Legislative
Assemblies • 1940-1946: Second World War started in 1939 and it led to a rift in AITUC
leadership wherein many leaders in AITUC wanted to form a separate Union thus giving rise to
INTUC in May 1947 • After 1947: There was large-scale unionization of white-collar workers
whereby white collar workers joined the already existing unions of blue-collar workers. National
Commission on Labour was set up in 1966. The protective phase (1947-56; 1st & 2nd five-year
plans):  Import-Substitution Industrialization.  National capitalism  Economy grows @ 2%-
3%/year.  Formation of large employment- intensive public enterprises.  Largely centralized
bargaining with static real wages. Relative industrial peace. The Consolidation Phase(1956-
1965)  There should be no lockout or strike without notice.  No unilateral action should be
taken in connection with any industrial matter.  There should be no recourse to go slow tactics.
 No deliberate damage should be caused to plant or property.  Awards and agreements should
be speedily implemented. Conflict Ridden Interventionist phase (1967-80; 4th & 5th five -year
plans):  Economic stagnation.  Economy grows at @ 2%/year ; two oil price shocks 
Considerable slowdown in employment growth &declining real wages.  Crisis in IR system:
massive strikes & industrial conflict, multiple unionism & decline in strength. Conflict, multiple
unionism & decline in strength.  Government loosing control over the IR system. The
productivity- Efficiency- Quality- orientation phase (1981-91; 6th & 7th five-year plans): 
Initial domestic economic liberalization; economy grows @ 5.7%/year.  Regional variation in
economic development increases.  Variation in wage growth: skilled versus unskilled, labour
productivity increases, period of ‘jobless 'growth.  Rise of ‘independent 'enterprise unionism.
The Post-Reform Decade, 1992-2009  Stabilization & Structural Adjustment Reforms:
Economy grows @ 6.2%-6.5%  In the five years (2004-09) growing @ 7%-8%/year.  Regional
variation increases massively.  Max growth in services: IT, IT-enabled services, ‘hotels, trade &
restaurants’’, but also in autos & ancillaries; more recently in overall manufacturing. Role of
Three Actors to Industrial Relations – State, Employer & Employees 1. Provider of procedural
and substantive rules The state exerts influence over industrial relations system by regulating
relations between the actors. This regulation or laws is the substantive and procedural rules of the
industrial relations system.(a) Substantive rules directly regulate the terms and conditions of
employment. They include legislation for minimum standards(e.g. annual leave, sick leave, equal
employment opportunity, working hours, termination of employment, and the form in which
wages are paid) - state legislation (e.g. occupational health and safety) legislation for public
sector (wages and conditions) (b) Procedural rules regulate the behaviour of actors participating
in industrial relations bargaining. 2. Ability to manipulate social and economic environment The
state impacts industrial relations by its social and economic policies, and its ownership and
management of public services and utilities: (a) Social and economic policies - Welfare policies
impact on labour mobility and employment levels - Education policies impact on skill levels and
occupational mobility - Health policies impact on absenteeism and health and safety - Taxation
policies impact on wage rates and work incentives - Monetary policies impact on employment
levels and real wage rates - Tariff policies impact on employer profits and collective bargaining
outcomes - Employment policies impact on employment and dispute levels (b) Ownership and
management of public services and utilities: all require direct state involvement in setting wages
and working conditions for employees. These services and utilities include: - infrastructure e.g.
ports, roads, railways and bridges - essential services e.g. hospitals and schools - public utilities
(unprivatised) e.g. water, power, gas and public transport - public corporations e.g. insurance and
telecommunications companies 3. Influence as a major employer The state is influential as a
major employer, directly responsible for employees’ wages and conditions. In Australia, public
sector employees work at federal, state and municipal levels, and (where the service is not
privatised) provide: - immigration service’s - judiciary services - education service - pension
services - port services - health services - welfare services - transport services - prison services -
unemployment services - road maintenance - military services - law enforcement - garbage
collection 4. through the attitudes and policies of political parties. In pluralist democracies,
political parties influence industrial relations. In India major Indian political parties have
different attitude toward labour issues. Three major participants or actors of industrial relations,
viz., workers and their organizations, management and government are identified. Role of
employer/ management in industrial relations Management must make genuine efforts to provide
congenial work environment.  They must make the employees feel that they are genuinely
interested in their personal development. To this end, adequate opportunities for appropriate
programmes of training and development should be provided.  Managements must delegate
authority to their employees commensurate with responsibility.  They must evolve well
conceived and scientific wage and salary plan so that the employees may receive just
compensation for their efforts. They must devise, develop and implement a proper incentive plan
for personnel at all levels in the organization.  There must be a well-planned communication
system in the organization to pass on information and to get feedback from the employees. 
Managements must pay personal attention to the problems of their employees irrespective of the
fact whether they arise out of job environment or they are of personal nature.  They must
evolve, establish and utilize appropriate machineries for speedy redressal of employees’
grievances.  Management must provide an enlightened leadership to the people in the
organization. An environment of mutual respect, confidence, goodwill and understanding on the
part of both management and employees in the exercise of their rights and performance of their
duties should prevail for maintaining good industrial relations

ROLE OF UNION IN INDUSTRIAL RELATION

1. Collective Bargaining Labour unions developed to grant employees equal bargaining power
with their employers, who traditionally had the ability to exclusively set the terms and conditions
of work and pay. Unions represent workers within a given industry in negotiations with their
employers. Since the union comprises a group of workers, it has a greater voice than if
employees were dealing with employers individually. For example, unions are credited with
abolishing sweatshops and child labour in the United States because they pushed for these
practices to end. The National Labour Relations Act guarantees employees’ right to bargain
collectively through their chosen labour union representatives. Unions can organize strikes,
boycotts, go-slows and sit-ins to get employers to consider their proposals. Employee Welfare
Unions have successfully fought for better terms and conditions for workers. They represent
workers’ interests and have secured a variety of benefits, such as higher wages for unionized
employees, work-life balance characterized by reasonable work schedules, job security and
protection from arbitrary action by employers. Unfair Practices Labour unions check the unfair
labour practices of employers. it is unlawful for employers to dominate a union, discriminate
against workers engaged in union activity, victimize workers or interfere with employees
engaged in concerted union activity. If the employer does any of these prohibited acts, the union
can take it up on behalf of the employees. Legislation Unions also play a key role in developing
labour laws and regulations for effective worker protection. The unions initiate the push for
regulation in areas that concern employees in the workplace. Approaches to Industrial Relations
Psychological approach: The problems of IR have their origin in the perceptions of the
management, unions and the workers. The conflicts between labour and management occur
because every group negatively perceives the behaviour of the other i.e. even the honest intention
of the other party so looked at with suspicion. The problem is further aggravated by various
factors like the income, level of education, communication, values, beliefs, customs, goals of
persons and groups, prestige, power, status, recognition, security etc are host factors both
economic and non-economic which influence perceptions unions and management towards each
other. Industrial peace is a result mainly of proper attitudes and perception of the two parties.
Sociological approach Industry is a social world in miniature. The management goals, workers’
attitudes, perception of change in industry, are all, in turn, decided by broad social factors like
the culture of the institutions, customs, structural changes, status-symbols, rationality,
acceptance or resistance to change, tolerance etc. Industry is, thus inseparable from the society in
which it functions. Human relations approach Human resources are made up of living human
beings. They want freedom of speech, of thought of expression, of movement, etc. When
employers treat them as inanimate objects, encroach on their expectations, throat-cuts, conflicts
and tensions arise. In fact major problems in industrial relations arise out of a tension which is
created because of the employer’s pressures and workers’ reactions, protests and resistance to
these pressures through protective mechanisms in the form of workers’ organization, associations
and trade unions.

What are the Theoretical approaches to industrial relations?

1. Unitary Perspective In unitarism, the organization is perceived as an integrated and

harmonious system, viewed as one happy family. A core assumption of unitary approach is
that management and staff, and all members of the organization share the same objectives,
interests and purposes; thus working together, hand-in-hand, towards the shared mutual
goals. Furthermore, unitarism has a paternalistic approach where it demands loyalty of all
employees. Trade unions are deemed as unnecessary and conflict is perceived as disruptive.
From employee point of view, unitary approach means that:
 Working practices should be flexible. Individuals should be business process
improvement oriented, multi-skilled and ready to tackle with efficiency whatever tasks are
required.
 If a union is recognized, its role is that of a further means of communication between
groups of staff and the company.
 The emphasis is on good relationships and sound terms and conditions of employment.
 Employee participation in workplace decisions is enabled. This helps in empowering
individuals in their roles and emphasizes team work, innovation, creativity, discretion in
problem-solving, quality and improvement groups etc.
 Employees should feel that the skills and expertise of managers supports their endeavours.
From employer point of view, unitary approach means that:
 Staffing policies should try to unify effort, inspire and motivate employees.
 The organization's wider objectives should be properly communicated and discussed with
staff.
 Reward systems should be so designed as to foster to secure loyalty and commitment.
 Line managers should take ownership of their team/staffing responsibilities.
 Staff-management conflicts - from the perspective of the unitary framework - are seen as
arising from lack of information, inadequate presentation of management's policies.
 The personal objectives of every individual employed in the business should be discussed
with them and integrated with the organization’s needs.

2. Pluralistic-Perspective In pluralism the organization is perceived as being made up of

powerful and divergent subgroups - management and trade unions. This approach sees
conflicts of interest and disagreements between managers and workers over the distribution
of profits as normal and inescapable. Consequently, the role of management would lean less
towards enforcing and controlling and more toward persuasion and co-ordination. Trade
unions are deemed as legitimate representatives of employees. Conflict is dealt by collective
bargaining and is viewed not necessarily as a bad thing and if managed could in fact be
channelled towards evolution and positive change. Realistic managers should accept conflict
to occur. There is a grealter propensity for conflict rather than harmony. They should
anticipate and resolve this by securing agreed procedures for settling disputes. The
implications of this approach include:  The firm should have industrial relations and
personnel specialists who advise managers and provide specialist services in respect of
staffing and matters relating to union consultation and negotiation.  Independent external
arbitrators should be used to assist in the resolution of disputes.  Union recognition should
be encouraged and union representatives given scope to carry out their representative duties
 Comprehensive collective agreements should be negotiated with unions 3. Marxist
Perspective The Marxist approach looks at industrial relations from a societal perspective. It
views industrial relations as a microcosm of the wider capitalist society. The basic
assumption of this approach is that industrial relations under capitalism are an everlasting
and unavoidable source of conflict According to this approach, industrial conflicts are the
central reality of industrial relations, but open conflicts are uncommon. The Marxist
approach views industrial disputes as a class struggle and industrial relations as a politicized
 concept and an element of the class struggle. As per the Marxist approach, the understanding
of industrial relations requires an understanding of the capitalized society, the social
relations of production and the mechanism of capital accumulation. The Marxist approach
views the power relationship between the two classes, namely, the employer (capital) and
the employee (labour), as the crux of the industrial relations. Both classes struggle hard to
consolidate their respective positions so that they can have a greater leverage over the other
in the process of bargaining. The proponents of this approach perceive that the employers
can survive longer without labour than the employees can without work. As far as theory is
concerned, the compensation payable to the employees is an outcome of the power struggle.
For instance, the employers seek to maximize their profits by paying less compensation to
the employees, while the latter resist such attempts, and this resistance results in industrial
conflicts. However, the weakness of this theory is that it is narrow in approach as it views
industrial relations as a product or outcome of the industrial conflict. Briefly describe system
approach in industrial relation. The System Approach/Dunlop approach The system
approach was developed by J. P. Dunlop of Harvard University in 1958. According to this
approach, individuals are part of an ongoing but independent social system. The behaviour,
actions and role of the individuals are shaped by the cultures of the society. The three
elements of the system approach are input, process and output. Society provides the cue
(signal) to the individuals about how one should act in a situation. The institutions, the value
system and other characteristics of the society influence the process and determine the
outcome or response of the individuals. The basis of this theory is that group cohesiveness is
provided by the common ideology shaped by the societal factors. According to Dunlop, the
industrial relations system comprises certain actors, certain contexts, and an ideology, which
binds them together and a body of rules created to govern the actors at the workplace and
work community. Environmental forces Participants in the Outputs System 1. Market or
budgetary restraints 2. Technology 3. Distribution of power in society Union Management
Government Rule of the workplace

GANDHIAN APPROACH TO INDUSTRIAL RELATIONS:-

Gandhi’s View on IR’s are based on his fundamental principles of truth and non-violence, and
non possession. Out of these principles evolved the concepts of non-co-operation and trusteeship
on which his philosophy of industrial relations rests. This philosophy presumes the peaceful co-
existence of capital and labour which calls for the resolution of conflicts by non-violent. Non –
cooperation is actually the most important tool amongst all for peaceful strikes. Gandhi has
accepted the workers right to strike, but remarked that this right is to be exercised in a just cause
and in a peaceful and non-violent only after employers fail to respond to their moral appeals.
Gandhian approach has given more emphasis on peaceful settlement of Industrial disputes.
Emerging trends in IR:  Competition on the basis of cheap labour  Disinvestment 
Deregulation  New actors and the emerging dynamics  Pro labor and pro investor policies 
Declining TU density  Workers militancy replaced by employers militancy  Industrial conflicts
 Collective bargaining’s Competition on the basis of the cheap labour: Globalization and
increased competition has lead to less strikes, lockouts and less man days lost due to strikes. Also
now in the era of knowledge industry employees are educated and thus don’t believe in violent
activities. They are having responsibilities in cut throat competition and also are aware of their
rights well leading to decline in strikes. Employers also avoid lockouts because decline in
production for even hours results in heavy losses so forget about days or weeks. Disinvestment:
It changes ownership, which may bring out changes not only in work org and employment but
also in trade union (TU) dynamics.  It changes the work organization by necessitating retaining
and redeployment.  It affects the right of workers and Trade unions, including job/union
security, income security, and social security. Deregulation: it is tried to ensure that public
sector/ government employees receive similar protection as is provided in public/government
employment. The worst affected are the pension provisions. This means, usually a reduction in
pension benefits and an uncertainty concerning future provision of pension benefit due to: 
The absence of government guarantees  Falling interest rates  X Investment of pension funds
in stock markets New actors and the emerging dynamics: Earlier IR was mainly concerned with
Trade unions, mgt and government but now consumers and the community are also a part of it.
When the rights of consumers and community are affected, the rights of workers and unions and
managers / employers take a back seat. Hence there is ban on bandh and restrictions even on
protests and dharnas. Increasingly Trade unions are getting isolated and see a future for them
only by aligning themselves with the interests of the wider society. Pro labor and pro investor
policies: This leads to decline in strength and power of Trade unions if not in numbers. Unions
have to make alliances with the society, consumers and community and various civil society
institutions otherwise they will find themselves dwindling. Declining TU density: In government
and public sectors workforce is declining because of non-filling of vacancies and introduction of
voluntary / early separation schemes. New employment opportunities are shrinking in these
sectors. In the private sectors particularly in service and software sector, the new, young, and
female workers are generally less eager to join unions. Workers militancy replaced by
employer’s militancy: Industrial conflicts: Trade unions have become defensive evident from the
fact that there is significant shift from strikes to law suits. Instead of pressing for higher wages
and improved benefits, Trade unions are pressing for maintenance of existing benefits and
protection and claims over non-payment of agreed wages and benefits. Collective bargaining is a
process of negotiations between employers and the representatives of a unit of employees aimed
at reaching agreements which regulate working conditions. Total number of strikes and lockout
have declined since 2000-04 • In 2003 it was 552 and in 2004 it went down to 477. As regards
women working on night shifts, The Factories (Amendment) Bill 2005, was under consideration
to provide them flexibility and safety. Also, to simplify the procedure for managements to
maintain registers and filing returns, an amendment of Labour Laws (Exemption from
Furnishing returns and maintaining Registers by Certain Establishments) Act 1988, was under
consideration.

Future of IR in India:
 The future of industrial relations in India can be reviewed from reports of the commissions
constituted by the government for this purpose. From these, certain issues are emerging which
are posing challenges to the three ‘actors’ in the system. I. The first is the issue of strengthening
collective bargaining by trying to determine a sole bargaining agent for negotiations. The State
of Maharashtra has already passed a law for the creation of a sole bargaining agency in every
unit and industry. Collective bargaining is advocated where the parties involved have a fuller
understanding. This will help to arrive at a speedier settlement of disputes, between themselves.
2. The second issue relates to the gaps that are occurring as a result of the variationsthat occur in
Central and State legislation as far as labour matters are concerned. In India, labour falls under
the Concurrent List though NCL has made a recommendation for forming a common labour code
which is yet to be adopted. Adoption of this recommendation will go a long way in solving some
of the problems that India’s legislation process is facing. 3. Another issue is that of workers’
participation in management. India has already experienced the working ofmany forms of
worker-participation schemes but none of them seems to have made any headway. The reasons
for the failure of these schemes need to be probed into. The three ‘actors’ in the system need to
take into account the effect of their actions on the consumers and society in general, owing to the
growing inter-linkages between industry and its environment. They have to evaluate and decide
on the appropriate alternatives in terms of the ‘strategy’ they are going to adopt in managing the
personnel and industrial relations functions. The environment is fast changing and the pressures
from various groups involved are starting to get more vocal and intense. The strategy chosen for
the attainment of the goals will have to depend on the objectives, values, structures available and
the environment in which they have to operate. Case Study: Heavy Engineering Corporation This
case represented a typical problem on the crucial issue of recognition and the inadequacy of legal
provisions on recognition

Summary  A new tripartite wage agreement was signed between the management of HEC, the
Bihar Labour Commission and the Hatia Project Workers’ Union  The other agreement rejected
the agreement and declared a strike till the agreement was abrogated and few others terms and
conditions were granted  Then strike, lockout and confining followed claiming a complete
disruption of normal functioning  Then the CE justified the signing of the agreement with the
HPWU and the production resumed after a long settlement Important questions: 1. Define
Industrial relations. 2. Define Employee relationship management. 3. What are the objectives of
IR? 4. Explain the scope or Area of IR. 5. Explain in detail the evolution of IR in India. 6. What
are the roles of three actors to IR? 7. Explain the approaches to IR in detail (Psychological,
Sociological and Human relations approach) 8. Explain in detail the Theoretical approach to IR.
9. Explain in detail System approach/ Dunlop approach? 10. Explain in detail the Gandhian
Approach of IR? 11. What is the future of IR in India explain in detail? 12. Explain the emerging
trends of IR in detail.