UNIT – 2

ERLL
 Collective Barganing
• Industrial disputes between the employee and employer can also be
settled by discussion and negotiation between these two parties in order
to arrive at a decision. This is also commonly known as collective
bargaining as both the parties eventually agree to follow a decision that
they arrive at after a lot of negotiation and discussion.
• According to Beach, “Collective Bargaining is concerned with the relations
between unions reporting employees and employers (or their
representatives). It involves the process of union organization of
employees, negotiations administration and interpretation of collective
agreements concerning wages, hours of work and other conditions of
employees arguing in concerted economic actions dispute settlement
procedures”.
• According to Flippo, “Collective Bargaining is a process in which the
representatives of a labor organization and the representatives of
business organization meet and attempt to negotiate a contract or
agreement, which specifies the nature of employee-employer union
 Collective Barganing
• Collective Bargaining Involves:
• (i) Negotiations
• (ii) Drafting
• (iii) Administration
• (iv) Interpretation of documents written by
employers, employees and the union
representatives
• (v) Organizational Trade Unions with open
mind.
 Collective Barganing
• Forms of Collective Bargaining:
• The working of collective bargaining assumes
various forms. In the first place, bargaining may be
between the single employer and the single union,
this is known as single plant bargaining. This form
prevails in the United States as well as in India.
• Secondly, the bargaining may be between a single
firm having several plants and workers employed
in all those plants. This form is called multiple
plants bargaining where workers bargain with the
common employer through different unions.
 Collective Barganing
• Thirdly, instead of a separate union bargaining with separate
employer, all the unions belonging to the same industry
bargain through their federation with the employer’s
federation of that industry. This is known as multiple employer
bargaining which is possible both at the local and regional
levels. Instances in India of this industry-­wide bargaining are
found in the textile industry.
• The common malady of union rivalry, small firms and
existence of several political parties has given rise to a small
unit of collective bargaining. It has produced higher labour
cost, lack of appreciation, absence of sympathy and economic
inefficiency in the realm of industrial relationships. An
industry-wide bargaining can be favourable to the economic
and social interests of both the employers and employees.
 Collective Barganing
• Essential Pre-Requisites for Collective Bargaining:
• Effective collective bargaining requires the following pre­requisites:
• (i) Existence of a strong representative trade union in the industry
that believes in constitutional means for settling the disputes.
• (ii) Existence of a fact-finding approach and willingness to use new
methods and tools for the solution of industrial problems. The
negotiation should be based on facts and figures and both the
parties should adopt constructive approach.
• (iii) Existence of strong and enlightened management which can
integrate the different parties, i.e., employees, owners, consumers
and society or Government.
• (iv) Agreement on basic objectives of the organisation between the
employer and the employees and on mutual rights and liabilities
should be there.
 Collective Barganing
• (v) In order that collective bargaining functions properly, unfair
labour practices must be avoided by both the parties.
• (vi) Proper records for the problem should be maintained.
• (vii) Collective bargaining should be best conducted at plant level. It
means if there are more than one plant of the firm, the local
management should be delegated proper authority to negotiate
with the local trade union.
• (viii) There must be change in the attitude of employers and
employees. They should realise that differences can be resolved
peacefully on negotiating table without the assistance of third party.
• (ix) No party should take rigid attitude. They should enter into
negotiation with a view to reaching an agreement.
• (x) When agreement is reached after negotiations, it must be in
writing incorporating all term of the contract.
Main Features of Collective Bargaining:
• It is a Group Action
• It is a Continuous Process
• It is a Bipartite Process
• It is a Process
• It is Flexible and Mobile and not Fixed or Static
• It is Industrial Democracy at Work
• It is Dynamic
• It is a Complementary and not a Competitive
Process
• It is an Art
 Means of Collective Bargaining:
• Generally, there are four important methods of collective
bargaining, namely, negotiation, mediation, conciliation and
arbitration for the settlement of trade disputes. In this context R.F.
Hoxie said that arbitration is often provided for in collective
bargaining under certain contingencies and for certain purposes,
especially when the parties cannot reach agreement, and in the
interpretation of an agreement through negotiation.
• Conciliation is a term often applied to the art of collective
bargaining, a term often applied to the action of the public board
which attempts to induce collective bargaining.
• Mediation is the intervention usually uninvited, of some outside
person of body with a view of getting conciliation or to force a
settlement, compulsory arbitration is extreme mediation. All these
things are aids or supplement to collective bargaining where it
breaks down. They represent the intervention of outside parties.
 Constituents of Collective Bargaining:
• There are three distinct steps in the process
of collective bargaining:
• (1) The creation of the trade agreement,
• (2) The interpretation of the agreement, and
• (3) The enforcement of the agreement.
• Each of these steps has its particular character
and aim, and therefore, each requires a
special kind of intellectual and moral activity
and machinery.
 Constituents of Collective Bargaining:
• The Creation of the Trade Agreement:
• In negotiating the contract, a union and management
present their demands to each other, compromise their
differences, and agree on the conditions under which the
workers are to be employed for the duration of the contract.
The coverage of collective bargaining is very uneven; in some
industries almost all the workers are under agreement, while
in others only a small portion of the employees of the firms
are covered by the agreement.
• The negotiating process is the part of collective bargaining
more likely to make headline news and attract public
attention; wage increases are announced, ominous
predictions about price increase are reduction in
 Constituents of Collective Bargaining:
• The Interpretation of the Agreement:
• The administrative process is the day-to-day
application of the provisions of the contract to the
work situation. At the time of writing the contract,
it is impossible to foresee all the special problems
which will arise in applying its provisions.
Sometimes, it is a matter of differing interpretations
of specific clause in the contract, sometimes; it is a
question of whether the dispute is even covered by
the contract. Nevertheless, each case must
somehow be settled. The spirit of the contract
 Constituents of Collective Bargaining:
• Enforcement of the Agreement:
• Proper and timely enforcement of the contract is very essential
for the success of collective bargaining. If a contract is enforced in
such way that it reduces or nullifies the benefits expected by the
parties, it will defeat basic purpose of collective bargaining. It may
give rise to fresh industrial disputes. Hence, in the enforcement of
the contract the spirit of the contract should not be violated.
• However, new contracts may be written to meet the problems
involved in the previous contract. Furthermore, as day-to-day
problems are solved, they set precedents for handling similar
problems in future. Such precedents are almost as important as
the contract in controlling the working conditions. In short,
collective bargaining is not an on-and-off relationship that is kept
in cold storage except when new contracts are drafted.
 Theories of Collective Bargaining:
• The Marketing Concept and the Agreement as a Contract:
• The marketing concept views collective bargaining as a contract for the sale of labour. It
is a market or exchange relationship and is justified on the ground that it gives
assurance of voice on the part of the organised workers in the matter of sale. The same
objective rules which apply to the construction of all commercial contracts are invoked
since the union-management relationship is concerned as a commercial one.
• According to this theory, employees sell their individual labour only on terms
collectively determined on the basis of contract which has been made through the
process of collective bargaining.
• The uncertainty of trade cycles, the spirit of mass production and competition for jobs
make bargain a necessity. The trade union’s collective action provided strength to the
individual labourer.
• It enabled him to resist the pressure of circumstances in which he was placed and to
face an unbalanced and disadvantageous situation created by the employer. The object
of trade union policy through all the maze of conflicting and obscure regulations has
been to give to each individual worker something of the indispensability of labour as a
whole.
• It cannot be said whether the workers attained a bargaining equality with employers.
But, collective bargaining had given a new- relationship under which it is difficult for the
 Theories of Collective Bargaining:
• The Governmental Concept and the Agreement as Law:
• The Governmental Concept views collective bargaining as a constitutional
system in industry. It is a political relationship. The union shares sovereignty
with management over the workers and, as their representative, uses that
power in their interests. The application of the agreement is governed by a
weighing of the relation of the provisions of the agreement to the needs and
ethics of the particular case.
• The contract is viewed as a constitution, written by the point conference of
union and management representative in the form of a compromise or trade
agreement. The agreement lays down the machinery for making executing and
interpreting the laws for the industry. The right of initiative is circumscribed
within a framework of legislation.
• Whenever, management fails to conform to the agreement of constitutional
requirements, judicial machinery is provided by the grievance procedure and
arbitration.
• This creates a joint Industrial Government where the union share sovereignty
with management over the workers and defend their group affairs and joint
 Theories of Collective Bargaining:
• The Industrial Relations (Managerial) Concept as Jointly Decided
Directives:
• The industrial relations concept views collective bargaining as a system of
industrial governance. It is a functional relationship. Group Government
substitutes the State Government. The union representative gets a hand
in the managerial role. Discussions take place in good faith and
agreements are arrived at. The union joins with company officials in
reaching decisions on matters in which both have vital interests. Thus,
union representatives and the management meet each other to arrive at
a mutual agreement which they cannot do alone.
• To some extent, these approaches represent stage of development of the
bargaining process itself. Early negotiations were a matter of simple
contracting for the terms of sale of labour. Developments of the latter
period led to the emergence of the Government theory. The industrial
relations approach can be traced to the Industrial Disputes Act of 1947 in
our country, which established a legal basis for union participation in the
 Importance of Collective Bargaining:
• The collective bargaining advances the mutual understanding
between the two parties i.e., employees and employers.
• The role of collective bargaining may be evaluated from the
following point of view:
• (1) From Management Point of View:
• The main object of the organisation is to get the work done by
the employees at work at minimum cost and thus earn a high
rate of profits. Maximum utilization of workers is a must for the
effective management. For this purpose co-operation is required
from the side of the employees and collective bargaining is a
device to get and promote co-operation. The labour disputes are
mostly attributable to certain direct or indirect causes and based
on rumors, and misconceptions. Collective bargaining is the best
remedial measure for maintaining the cordial relations.
 Importance of Collective Bargaining:
• (2) From Labour and Trade Union Point of View:
• Labour has poor bargaining power. Individually a worker has no existence
because labour is perishable and therefore, the employers succeed in exploiting
the labourers.
• The working class in united form becomes a power to protect its interests against
the exploitation of the employers through the process of collective bargaining.
• The collective bargaining imposes certain restrictions upon the employer.
Unilateral action is prevented. All employees are treated on equal footings. The
conditions of employment and rates of wages as specified in the agreement can
be changed only through negotiations with labour. Employer is not free to make
and enforce decisions at his will.
• Collective bargaining can be made only through the trade unions. Trade unions
are the bargaining agents for the workers. The main function of the trade unions
is to protect the economic and non- economic interests of workers through
constructive programmes and collective bargaining is one of the devices to attain
that objective through negotiations with the employers, Trade unions may
negotiate with the employer for better employment opportunities and job
security through collective bargaining.
 Importance of Collective Bargaining:
• (3) From Government Point of View:
• Government is also concerned with the process of collective
bargaining. Government passes and implements several labour
legislations and desires it to be implemented in their true sense. If
any person violates the rules and laws, it enforces them by force.
• Collective bargaining prevents the Government from using the force
because an amicable agreement can be reached between employer
and employees for implementing the legislative provisions. Labour
problems shall be minimised through collective bargaining and
industrial peace shall be promoted in the country without any force.
• Collective bargaining is a peaceful settlement of any dispute
between worker and employers and therefore it promotes
industrial peace and higher productivity resulting an increase in the
Gross National Product or the national income of the country.
Main Hindrances for Collective Bargaining:
• (1) Competitive Process
• (2) Not Well-Equipped
• (3) Time to Protest
• (4) Where Prices are Fixed by the Government
• (5) Outside Leadership
• (6) Multiplicity of Trade Unions
• (7) Appointment of Low-Status Executive
• (8) Statutory Provisions
• (9) Fresh Demands at the Time of Fresh Agreement
• (10) Agreements in Other Industrial Units
 Scope, Growth, Issue, Reasons of Collective
Barganing
• Scope of Collective Bargaining
• Collective bargaining broadly covers subjects and issues entering into the
conditions and terms of employment. It is also concerned with the development
of procedures for settlement of disputes arising between the workers and
management.
• A few important issues around which collective bargaining enters in this
developing country are as follows:
• “Recognition of the union has been an important issue in the absence of any
compulsory recognition by law. In the under-developed countries in Asia,
however, on account of the tradition concept of management functions and the
immaturity of the industrialist class there is much resistance from the employers
to recognise the status of the unions.”
• Bargaining upon wage problems to fight inflation or rising cost of living and to
resist wage cuts during depression has resulted in several amicable agreements.
But, no statistics are available for such amicable settlements. Therefore, Daya,
points out, “It has been customary to view collective bargaining in a pattern of
conflict; the competitively small number of strikes and lock-outs attract more
attention than the many cases of peaceful settlement of differences.”
 Scope, Growth, Issue, Reasons of Collective
Barganing
• Another issue on which bargaining takes place is seniority, but in India, it
is of less importance than in western countries. But, in India, lay-off,
retrenchment, dismissal, rationalisation and participation in the union
activities have been important issues for collective bargaining.
• Regarding bargaining on hours of work, it has recognized that “in one
form or another subject of working time will continue to play an
important part in collective bargaining; although the crucial battles may
be well fought in the legislative halls.”
• Overtime work, holidays, leave for absence and retirement continue to
be issues for bargaining in India, although they are not regarded as
crucial.
• The union security has also been an issue for collective bargaining, but it
could not acquire much importance in the country, although stray
instances are found. The Tata Workers union bargained with M/s Tata
Iron and Steel Co. Ltd., Jamshedpur, on certain issues, one of which was
union security and in the resulting agreement some of the union security
 Scope, Growth, Issue, Reasons of Collective
Barganing
• The production norms, technical practices, details of working rules,
standards of performance, allowance of fatigue, hiring and firing,
protection of life and limb, compensation for overtime, hours of
work, wage rates and methods of wage payments, recognition of
unions, retrenchment, union security, holidays and competence of
workmen form the subjects of negotiations and agreements through
collective bargaining. Customary practices are evolving procedures
to extend the area of collective bargaining. Collective bargaining has
been giving official sanction to trade experiences and agreements.
• Collective bargaining, thus, covers the negotiation, administration,
interpretation, application and enforcement of written agreement
between employers and unions representing their employees setting
forth joint understanding, as to policies and procedures governing
wages, rates of pay, hours of work and other conditions of
employment.
Scope, Growth, Issue, Reasons of Collective
Barganing
• The collective bargaining reached has been of three
types:
• (1) Agreement arrived at after voluntary direct
negotiations between the parties concerned. Its
implementation is purely voluntary;
• (2) Agreements between the two parties, though
voluntary in nature, are compulsory when registered
as settlement before a conciliator; and
• (3) Agreement which have legal status negotiated
after successful discussion between the parties
when the matter of dispute is under reference to
 Scope, Growth, Issue, Reasons of Collective
Barganing
• Issues Involved in Collective Agreements:
• A study conducted by the Employer’s Federation of India revealed that out of
109 agreements, ‘wages’ was the most prominent issue in 96 cases (88 percent)
followed by dearness allowance (59 cases) retirement benefits (53 cases), bonus
(50 cases) other issues involved were annual leave, paid holidays, casual leave,
job classification, overtime, incentives, shift allowance, acting allowance, tiffin
allowance, canteen and medical benefits.
• A study of various collective agreements entered into in India, certain trends in
collective bargaining are noticeable.
• These are:
• (i) Most of the agreements are at plant level. However, some industry-level
agreements are also there;
• (ii) The scope of agreements has been widening now and now includes matters
relating to bonus, productivity, modernisation, standing orders, voluntary
arbitration, incentive schemes, and job evaluation;
• (iii) Long term agreements ranging between 2 to 5 years, are on increase;
• (iv) Joint consultation in various forms has been provided for in a number of
 Scope, Growth, Issue, Reasons of Collective
Barganing
• Reasons for the Growth of Collective Bargaining:
• (1) Statutory Provisions
• (2) Voluntary Measures:
• (3) Several Governments Measures
• (4) Amendments to the Industrial Disputes Act
• (5) Industrial Truce Resolution
• (6) Government Policy to Encourage Collective
Bargaining
 Advantages of Collective Bargaining
• Perhaps the biggest advantage of this system is that, by reaching a formal agreement, both
sides come to know exactly what to expect from each other and are aware of the rights they
have. This can decrease the number of conflicts that happen later on. It also can make
operations more efficient.
• Employees who enter collective bargaining know they have some degree of protection from
employer retaliation or being let go from the job. If the employer were dealing with just a
handful of individuals, he might be able to afford to lose them. When he is dealing with the
entire workforce, however, operations are at risk and he no longer can easily turn a deaf ear
to what his employees are saying.
• Even though employers might need to back down a little, this strategy gives them the
benefit of being able to deal with just a small number of people at a time. This is very
practical in larger companies where the employer might have dozens, hundreds or even
thousands of workers on his payroll. Working with just a few representatives also can make
the issues at hand seem more personal.
• Agreements reached through these negotiations usually cover a period of at least a few
years. People therefore have some consistency in their work environment and policies. This
typically benefits the company’s finance department because it knows that fewer items
related to the budget might change.
• On a broad scale, using this method well can result in more ethical way of doing business. It
promotes ideas such as fairness and equality, for example. These concepts can spill over into
 Disadvantages of Collective Bargaining
• A major drawback to using this type of negotiation system is that, even
though everyone gets a say in what happens, ultimately, the majority rules,
with only a few people determining what happens too many. This means
that a large number of people, particularly in the general workforce, can be
overshadowed and feel like their opinion doesn’t really matter. In the worst
case scenario, this can cause severe division and hostility in the group.
• Secondly, it always requires at least two parties. Even though the system is
supposed to pull both parties together, during the process of trying to
reach an agreement, people can adopt us-versus-them mentality. When
the negotiations are over, this way of looking at each other can be hard to
set aside, and unity in the company can suffer.
• Collective bargaining can also be costly, both in terms of time and money.
Representatives have to discuss everything twice—once at the small
representative meetings, and again when they relay information to the
larger group. Paying outside arbitrators or other professionals quickly can
run up a fairly big bill, and when someone else is brought in, things often
get slower and more complex because even more people are involved.
 Disadvantages of Collective Bargaining
• Some people point out that these techniques have a tendency to restrict the power
of employers. Employees often see this as a good thing, but from the company’s
perspective, it can make even basic processes difficult. It can make it a challenge to
deal with individual workers, for example.
• The goal of the system is always to reach a collaborative agreement, but sometimes
tensions boil over. As a result, one or both parties might feel they have no choice but
to muscle the other side into giving up. Workers might do this by going on strike,
which hurts operations and cuts into profits. Businesses might do this by staging
lockouts, which prevents members’ of the workforce from doing their jobs and
getting paid, negatively effecting income and overall quality of living.
• Lastly, union dues are sometimes an issue. They reduce the amount of take-home
pay a person has, because they usually are deducted right from his paycheck. When
things are good in a company and people don’t feel like they’re getting anything from
paying the dues, they usually become unhappier about the rates.
• The idea of collective bargaining emerged as a result of industrial conflict and growth
of trade union movement and was first given currency in the United States by Samuel
Crompers. In India the first collective bargaining agreement was conducted in 1920 at
the instance of Mahatma Gandhi to regulate labour management relation between a
group of employers and their workers in the textile industry in Ahmadabad
 The Industrial Employment (Standing
Orders) Act 1946,1961
• Section 2(g) “Standing orders” means rules
relating to matters set out in the Schedule;
• ‘Standing Orders’ means rules of conduct for
workmen employed in industrial establishments.
• The object of the Act is to require employers in
industrial establishments to formally define
conditions of employment under them.
Misconduct, Disciplinary Action, Types of Punishments, Code of Discipline,
Domestic Enquiry

• Disciplinary Enquiry
• The disciplinary enquiry is carried out by the disciplinary
committee of the respective establishment in relation to the
matters of misconduct of the employees. Such committee
generally comprises of:
• Workers Representative, such as the member of Trade Union, as
specified underRule 14 (4)(b-a) of the Industrial Employment
(Standing Orders) Central Rules, 1946.
• Employers Representative, such as the head of the department
where the workman was employed, and
• An Independent Officer, i.e. an enquiry officer.
• An internal hearing, to ascertain the guilt of the workmen of the
alleged misconduct, is conducted by the administrative officer.
Domestic Enquiry is mandatory in order to dismiss an employee;
however, it is not necessary for suspending him by way of
Misconduct, Disciplinary Action, Types of Punishments, Code of Discipline,
Domestic Enquiry

• Administrative Rules for Disciplinary Enquiry

• The Principle of Natural Justice
• The management of the industrial establishments must
satisfy the principles of natural justice while maintaining a
neutral attitude towards the workmen. The delinquent
employee must be apparently informed about the charges
levelled against him and shall be provided with an
opportunity to be heard so he can refute them and establish
his innocence. He must be given an occasion to cross-examine
the witnesses in his defence and evidence at the enquiry
should be adduced in his presence. The punishment awarded,
if proven guilty, should be in proportion to the misconduct
committed. These principles of natural justice are specified in
Sections 2(b), 5(2), 10A (2) and 13A of The Industrial
Employment (Standing Orders) Act, 1946.
Misconduct, Disciplinary Action, Types of Punishments, Code of Discipline,
Domestic Enquiry

• Right to Make Representation

• A delinquent workman should have a right to
represent against the findings recorded in the
enquiry report to the disciplinary authority.
The right has been laid down in the case
of Union of India vs. Mohd. Ramzan
Khan, 1991 AIR 471, 1990 SCR Supl. (3) 248.
Procedure for a Disciplinary Enquiry
 Procedure for a Disciplinary Enquiry

• Complain
• Preliminary Enquiry
• Appointment of Enquiry Officer
• Suspension Pending Enquiry
• Explanation by Employee
• Notice of Enquiry
• Supply of relevant materials
• Examination of Witnesses
• Report of Enquiry Officer
Grievance Function in IR: Grievance Settlement Procedure

• Grievance means any type of dissatisfaction or

discontentment’s arising out of factors related to an
employee’s job which he thinks are unfair. A grievance
arises when an employee feels that something has
happened or is happening to him which he thinks is unfair,
unjust or inequitable. In an organization, a grievance may
arise due to several factors such as:
• Violation of management’s responsibility such as poor
working conditions
• Violation of company’s rules and regulations
• Violation of labor laws
• Violation of natural rules of justice such as unfair
Grievance Function in IR: Grievance Settlement Procedure

• Various sources of grievance may be categorized under

three heads: (i) management policies, (ii) working
conditions, and (iii) personal factors
• [Link] resulting from management policies include:
• Wage rates
• Leave policy
• Overtime
• Lack of career planning
• Role conflicts
• Lack of regard for collective agreement
• Disparity between skill of worker and job responsibility
Grievance Function in IR: Grievance Settlement Procedure

• Grievance resulting from working conditions include:

• Poor safety and bad physical conditions
• Unavailability of tools and proper machinery
• Negative approach to discipline
• Unrealistic targets
• Grievance resulting from inter-personal factors
include
• Poor relationships with team members
• Autocratic leadership style of superiors
• Poor relations with seniors
• Conflicts with peers and colleagues
Grievance Function in IR: Grievance Settlement Procedure

• valuable communication tool for the organization.

• Grievance Procedure:
• Grievance procedure is a Step by step process an
employee must follow to get his or her complaint
addressed satisfactorily. In this process, the formal
(written) complaint moves from one level of authority (of
the firm and the union) to the next higher level.
• Grievance procedure is a formal communication between
an employee and the management designed for the
settlement of a grievance. The grievance procedures differ
from organization to organization.
• Open door policy
Grievance Function in IR: Grievance Settlement Procedure

• Open door policy: Under this policy, the aggrieved employee is free to
meet the top executives of the organization and get his grievances redressed.
Such a policy works well only in small organizations. However, in bigger
organizations, top management executives are usually busy with other
concerned matters of the company. Moreover, it is believed that open door
policy is suitable for executives; operational employees may feel shy to go to
top management.
• Step ladder policy: Under this policy, the aggrieved employee has to follow
a step by step procedure for getting his grievance redressed. In this procedure,
whenever an employee is confronted with a grievance, he presents his
problem to his immediate supervisor. If the employee is not satisfied with
superior’s decision, then he discusses his grievance with the departmental
head. The departmental head discusses the problem with joint grievance
committees to find a solution. However, if the committee also fails to redress
the grievance, then it may be referred to chief executive. If the chief executive
also fails to redress the grievance, then such a grievance is referred to
voluntary arbitration where the award of arbitrator is binding on both the
 How to handle an employee grievance?

• Establish whether the grievance needs to be resolved formally or

informally.
• Choose an appropriate manager to deal with the grievance.
• Carry out a full investigation and gather all relevant evidence, sending it to
the employee in advance of the meeting.
• Arrange the grievance meeting, inviting the employee and reminding
them of their statutory right to be accompanied.
• Make sure accurate notes are taken throughout by a person who is not
involved in the case.
• Give the employee the opportunity to explain the details of their
grievance and what they would like the outcome to be.
• Adjourn the meeting consider the evidence before making a decision.
• Inform the employee in writing of the decision, explaining how and why
the decision was reached.
• Notify the employee of their right to appeal against the outcome of the
GRIEVANCE PROCEDURE IN INDIAN INDUSTRY

• The 15th session of Indian Labor Conference held in 1957

emphasized the need of an established grievance procedure
for the country which would be acceptable to unions as well
as to management. In the 16th session of Indian Labor
Conference, a model for grievance procedure was drawn up.
This model helps in creation of grievance machinery.
According to it, workers’ representatives are to be elected for
a department or their union is to nominate them.
Management has to specify the persons in each department
who are to be approached first and the departmental heads
who are supposed to be approached in the second step. The
Model Grievance Procedure specifies the details of all the
steps that are to be followed while redressing grievances.
These steps are:
GRIEVANCE PROCEDURE IN INDIAN INDUSTRY

• STEP 1: In the first step the grievance is to be submitted to departmental

representative, who is a representative of management. He has to give his
answer within 48 hours.
• STEP 2: If the departmental representative fails to provide a solution, the
aggrieved employee can take his grievance to head of the department, who
has to give his decision within 3 days.

STEP 3: If the aggrieved employee is not satisfied with the decision of

departmental head, he can take the grievance to Grievance Committee. The
Grievance Committee makes its recommendations to the manager within 7
days in the form of a report. The final decision of the management on the
report of Grievance Committee must be communicated to the aggrieved
employee within three days of the receipt of report. An appeal for revision
of final decision can be made by the worker if he is not satisfied with it. The
management must communicate its decision to the worker within 7 days.
• STEP 4: If the grievance still remains unsettled, the case may be referred to
voluntary arbitration.
Settlement Machinery for Industrial Disputes

• The definition of Industrial disputes is as follows:

• According to Section 2(k) of the Industrial Disputes Act, 1947
“industrial dispute” is defined as, “Any disputes or differences
between employers and employers, or between employers and
workmen, or between workmen and workmen, which is connected
with the employment or non-employment or the terms of
employment or with the conditions of labour, of any person”.
• Does this sound very confusing? Let me simplify this for you. Let us
understand that the definition identifies three parties to disputes.
• They are:
• Employers
• Employees
• Workmen
Settlement Machinery for Industrial Disputes

• Analysis of the provision of the Act reveals the following:

• Industrial dispute is a dispute or difference:
• (i) Between employers and employers, or
• (ii) Between employers and workmen or
• (iii) Between workmen and workmen.
• Industrial dispute is connected with:
• (i) Employment or
• (ii) Non-employment or
• (iii) Terms of employment or
• (iv) Conditions of labour of any person
 Industrial Disputes have the following characteristics or
essentials:

• (1) Parties:
• Industrial disputes may be among different parties.
• Ordinarily, it is among the following parties:
• (i) Employers and employers,
• (ii) Employers and workmen and
• (iii) Workmen and Workmen.
 Industrial Disputes have the following characteristics or
essentials:

• (2) Relation:
• Matter of dispute may relate to worker or to employer or to
both. Normally, it relates to an appointment or termination of
a person; conditions of employment or conditions of work.
• (3) Forms:
• Industrial disputes may manifest themselves in different
forms, such as strikes, lock-outs, Gheraos, go slow tactics,
pens down strike, etc.
• (4) Oral or Written:
• Industrial dispute need not be written. It may be oral.
 Industrial Disputes have the following characteristics or
essentials:

• (5) Real:
• It should be real. It should relate to employment of the worker,
termination of employment, terms of employment, conditions
of employment, etc. Matters relating to the personal life of the
worker do not constitute industrial dispute.
• (6) Substantial Interest:
• In matter relating to industrial dispute interest either of the
employer or the worker must be involved.
• (7) Related to Industry:
• A dispute can be included in industrial dispute when it
concerns with industry. Usually, disputes must belong to an
industry which is functioning. Disputes belonging to an
industry that has since been closed down should not be
 Conciliation, Arbitration & Adjudication

• Some of the major industrial dispute settlement machinery are as

follows:
• Conciliation
• Court of Inquiry
• Voluntary Arbitration
• Adjudication (Compulsory arbitration).
• This machinery has been provided under the Industrial Disputes
Act, 1947. It, in fact, provides a legalistic way of setting the
disputes. As said above, the goal of preventive machinery is to
create an environment where the disputes do not arise at all.
• Even then if any differences arise, the judicial machinery has been
provided to settle them lest they should result into work
stoppages. In this sense, the nature of this machinery is curative
for it aims at curing the aliments.
 Conciliation

• Conciliation, is a form of mediation. Mediation is the act of making

active effort to bring two conflicting parties to compromise.
Mediation, however, differs from conciliation in that whereas
conciliator plays only a passive and indirect role, and the scope of his
functions is provided under the law, the mediator takes active part
and the scope of his activities are not subject to any statutory
provisions.
• Conciliation is the “practice by which the services of a neutral party
are used in a dispute as a means of helping the disputing parties to
reduce the extent of their differences and to arrive at an amicable
settlement of agreed solution.”
• The Industrial Disputes Act, 1947 provides for conciliation, and can
be utilised either by appointing conciliation officers (permanently or
for a limited period) or by constituting a board of conciliation. This
conciliation machinery can take a note of a dispute or apprehend
 Conciliation

• Conciliation Officer:
• The law provides for the appointment of Conciliation Officer by the Government to
conciliate between the parties to the industrial dispute. The Conciliation Officer is
given the powers of a civil court, whereby he is authorised to call the witness the
parties on oath. It should be remembered, however, whereas civil court cannot go
beyond interpreting the laws, the conciliation officer can go behind the facts and
make judgment which will be binding upon the parties.
• On receiving information about a dispute, the conciliation officer should give formal
intimation in writing to the parties concerned of his intention to commence
conciliation proceedings from a specified date. He should then start doing all such
things as he thinks fit for the purpose of persuading the parties to come to fair and
amicable settlement of the dispute.
• Conciliation is an art where the skill, tact, imagination and even personal influence
of the conciliation officer affect his success. The Industrial Disputes Act, therefore,
does not prescribe any procedure to the followed by him.
• The conciliation officer is required to submit his report to the appropriate
government along with the copy of the settlement arrived at in relation to the
dispute or in case conciliation has failed, he has to send a detailed report giving out
 Conciliation

• Board of Conciliation:
• In case Conciliation Officer fails to resolve the differences between the parties,
the government has the discretion to appoint a Board of Conciliation. The
Board is tripartite and ad hoc body. It consists of a chairman and two or four
other members.
• The chairman is to be an independent person and other members are
nominated in equal number by the parties to the dispute. Conciliation
proceedings before a Board are similar to those that take place before the
Conciliation Officer. The Government has yet another option of referring the
dispute to the Court of Inquiry instead of the Board of Conciliation.
• The machinery of the Board is set in motion when a dispute is referred to it. In
other words, the Board does not hold the conciliation proceedings of its own
accord. On the dispute being referred to the Board, it is the duty of the Board
to do all things as it thinks fit for the purpose of inducing the parties to come
to a fair and amicable settlement. The Board must submit its report to the
government within two months of the date on which the dispute was referred
to it. This period can be further extended by the government by two months.
 Conciliation

• Court of Inquiry:
• In case of the failure of the conciliation proceedings to settle a dispute,
the government can appoint a Court of Inquiry to enquire into any matter
connected with or relevant to industrial dispute. The court is expected to
submit its report within six months. The court of enquiry may consist of
one or more persons to be decided by the appropriate government.
• The court of enquiry is required to submit its report within a period of six
months from the commencement of enquiry. This report is subsequently
published by the government within 30 days of its receipt. Unlike during
the period of conciliation, workers’ right to strike, employers’ right to
lockout, and employers’ right to dismiss workmen, etc. remain unaffected
during the proceedings in a court to enquiry.
• A court of enquiry is different from a Board of Conciliation. The former
aims at inquiring into and revealing the causes of an industrial dispute. On
the other hand, the latter’s basic objective is to promote the settlement of
an industrial dispute. Thus, a court of enquiry is primarily fact-finding
 Conciliation

• Voluntary Arbitration:
• On failure of conciliation proceedings, the conciliation officer many persuade
the parties to refer the dispute to a voluntary arbitrator. Voluntary arbitration
refers to getting the disputes settled through an independent person chosen
by the parties involved mutually and voluntarily.
• In other words, arbitration offers an opportunity for a solution of the dispute
through an arbitrator jointly appointed by the parties to the dispute. The
process of arbitration saves time and money of both the parties which is
usually wasted in case of adjudication.
• Voluntary arbitration became popular as a method a settling differences
between workers and management with the advocacy of Mahatma Gandhi,
who had applied it very successfully in the Textile industry of Ahmedabad.
However, voluntary arbitration was lent legal identity only in 1956 when
Industrial Disputes Act, 1947 was amended to include a provision relating to it.
• The provision for voluntary arbitration was made because of the lengthy legal
proceedings and formalities and resulting delays involved in adjudication. It
may, however, be noted that arbitrator is not vested with any judicial powers.
 Conciliation

• Adjudication:
• The ultimate remedy for the settlement of an industrial dispute is its
reference to adjudication by labour court or tribunals when conciliation
machinery fails to bring about a settlement. Adjudication consists of settling
disputes through intervention by the third party appointed by the
government. The law provides the adjudication to be conducted by the
Labour Court, Industrial Tribunal of National Tribunal.
• A dispute can be referred to adjudication if hot the employer and the
recognised union agree to do so. A dispute can also be referred to
adjudication by the Government even if there is no consent of the parties in
which case it is called ‘compulsory adjudication’. As mentioned above, the
dispute can be referred to three types of tribunals depending on the nature
and facts of dispute in questions.
• These include:
• (a) Labour courts,
• (b) Industrial tribunals, and
 (а) Labour Court:
• A labour court consists of one person only, who is normally a sitting or an
ex-judge of a High Court. It may be constituted by the appropriate
Government for adjudication of disputes which are mentioned in the
second schedule of the Act.
• The issues referred to a labour court may include:
• (i) The propriety or legality of an order passed by an employer under the
Standing Orders.
• (ii) The application and interpretation of Standing Orders.
• (iii) Discharge and dismissal of workmen and grant of relief to them.
• (iv) Withdrawal of any statutory concession or privilege.
• (v) Illegality or otherwise of any strike or lockout.
• (vi) All matters not specified in the third schedule of Industrial Disputes
Act, 1947. (It deals with the jurisdiction of Industrial Tribunals).
 (b) Industrial Tribunal:
• Like a labour court, an industrial tribunal is also a one-man body. The matters which fall within the jurisdiction of
industrial tribunals are as mentioned in the second schedule or the third schedule of the Act. Obviously,
industrial tribunals have wider jurisdiction than the labour courts.
• Moreover an industrial tribunal, in addition to the presiding officer, can have two assessors to advise him in the
proceedings; the appropriate Government is empowered to appoint the assessors.

• The Industrial Tribunal may be referred the following issues:

• Wages including the period and mode of payment.
• Compensatory and other allowances.
• Hours of work and rest intervals.
• Leave with wages and holidays.
• Bonus, profit sharing, provident fund and gratuity.
• Shift working otherwise than in accordance with the standing orders.
• Rule of discipline.
• Rationalisation.
• Retrenchment.
• Any other matter that may be prescribed.
 (c) National Tribunal:
• The Central Government may constitute a national tribunal for
adjudication of disputes as mentioned in the second and third schedules
of the Act or any other matter not mentioned therein provided in its
opinion the industrial dispute involves “questions of national importance”
or “the industrial dispute is of such a nature that undertakings established
in more than one state are likely to be affected by such a dispute”.
• The Central Government may appoint two assessors to assist the national
tribunal. The award of the tribunal is to be submitted to the Central
Government which has the power to modify or reject it if it considers it
necessary in public interest
• It should be noted that every award of a Labour Court, Industrial Tribunal
or National Tribunal must be published by the appropriate Government
within 30 days from the date of its receipt. Unless declared otherwise by
the appropriate government, every award shall come into force on the
expiry of 30 days from the date of its publication and shall remain in
operation for a period of one year thereafter.
 Objectives, Employee Participation
• Participative management is a tool that is used to motivate the employees.
When subordinates are involved in decision-making at all levels it is known as
participation. According to New-storm and Davis, ‘participation is the mental
and emotional involvement of people in group situations that encourages them
to contribute to group goals and share responsibility for them’.
• Objectives
• Participation involves mental as well as emotional involvement of the
employees.
• It instills teamwork among the employees.
• It is a motivational technique.
• An employee can identify his own strengths as well as weaknesses.
• It is an all-pervasive function.
• Employees become better through contribution in the decision-making process.
• The participation of workers can be applied under various methods, such as
participation at board level, through work committees and quality circles.
 Objectives, Employee Participation
• Whatever be the nature, participation can give the follow­ing significant
results:
• Participation tends to improve motivation because employees feel more
involved and committed to the organizational tasks.
• Their self-esteem, job satisfaction, and cooperation with the higher authorities
also improve.
• Participation can reduce stress and conflict among the employees.
• Employee turnover and absenteeism may reduce when employees realize that
they are a part of the organization.
• It can boost up the morale of the employees.
• The values and dignity of employees are protected through participation.
• The mental and physical health of employees can be improved by minimizing
the effect of alien­ation at work place.
• It is a democratic process in contradiction to authoritarian organization.
• A sense of self-respect can be inculcated among every employee.10. Finally, the
act of participation in itself establishes better communication, as employees
 Advantages of Employee Participation
• Motivation:
• Increases Goodwill
• Work Enthusiasm
• Better operations
• Positive work environment
• Increases creativity and innovation
• Accept of Decision
• Increase trust
• Increase capacity & influence of management
• Less cost and time
 Disadvantages
of Employee Participation
• Communication Complexity
• Manager-Employee Boundary
 Employee Participation in India
• Workers’ Participation in Management After Independence:
• In fact, the first major step in the direction of workers’ participation in
management in India was the enactment of the Industrial Disputes
Act, 1947 with the dual purpose of prevention and settle­ment of
industrial disputes. The Industrial Policy Resolution, 1948 advocated
WPM by suggesting that labour should be in all matters concerning
industrial production. Article 43 A of the Constitution of India has
provided for WPM in these words:
• “The State shall take steps, by suitable legislation, or in any other way,
to secure the participa­tion of workers in management of
undertakings, establishments or other organisations engaged in an
industry”.
• The First Five-Year Plan and the successive plans emphasised the need
for workers’ participation in management. For example, the Second
 Employee Participation in India
• “It is necessary in this context that the worker should be made to
feel that in his own way he is helping build a progressive state. The
creation of industrial democracy, therefore, is a prerequisite for the
establishment of a socialist society”.
• The Government of India set up a ‘Study Group on Workers’
Participation in Management’, in 1956, consisting of
representatives of the government, employers, and workers to
examine the system of WPM in the UK, Sweden, France, Belgium,
West Germany and Yugoslavia and make recommendations for the
Indian case.
 Employee Participation in India
• The Group submitted its report in May 1957 with the following
recommendations:
• WPM schemes should be introduced in selected undertakings on a
voluntary basis.
• A sub-committee consisting of representatives of workers, employers
and government should be set up for considering the WPM in India.
• The above recommendations, among other things, were accepted by
15th Indian Labour Confer­ence held in July 1957. The Conference
appointed a 12 member sub-committee to look into further details of
the scheme. The recommendations made by the sub-committee were
discussed in a “Seminar on Labour-Management Co-operation” held in
New Delhi on January 31 and February 1, 1958. It drew up a “Draft
Model Agreement” between labour and management for the
establishment of the Joint Management Councils (JMCs) which would
have the following three sets of functions:
 Employee Participation in India
• First, to fulfill its functions as an advisory body.
• Second, to receive information on certain matters.
• Third, to fulfill administrative responsibilities.
• Besides, the Seminar on Labour Management Co-operation also
took the size of the Councils, its office bearers, term of office, etc.
Thus, the Joint Management Councils (JMCs) were set up in 1958.
• Following the recommendations of the Administrative Reforms
Commission, the Government of India accepted the inclusion of
the representatives of workers on the Board of Directors of public
sector undertakings. Following this, the Nationalised Banks
(Management and Miscellaneous Provi­sions) Scheme 1970 also
provided for the appointment of worker director to their Board.
One director was from among employees (who are workmen) and
another from among officers for tenure of 3 years.
 Employee Participation in India
• Thus up to July 1975, there had been three forms of workers’
participation in management intro­duced in India: Works
Committees, Joint Management Councils and Workers-Directors
(public sec­tor) on Boards of Directors.
• Under the Government of India’s 20-Point Economic Programmes,
a new scheme of shops and plants councils was introduced in 1975
after the emergency was declared in June 1975. In the following
year 1976, the Government of India amended the constitution to
incorporate workers participation in management as one of the
Directive Principles of State Policy.
 Methods of Participation
• Participation of workers in decision-making process has resulted in
successful value creation in many organizations. Though the extent to
which employees should participate in organizational decision making is
still a matter of debate. Some say that workers’ union should participate
with management as equal partners while some believe in restricted or
bounded participation, that is, participation of employees or workers to a
limited extent. However, there are a number of ways through which
employees can participate in decision-making process of any organization.
• Participation at the Board Level
• Participation through Ownership
• Participation through Collective Bargaining
• Participation through Suggestion Schemes
• Participation through Complete Control
• Participation through Job Enrichment
• Participation through Quality Circles
 Employee Empowerment
• Empowerment is the process of enabling or authorizing an
individual to think, behave, take action, and control work and
decision-making in autonomous ways.
• Empowerment has become necessary due to the following
reasons:
• Time to respond has become much shorter.
• First-line employees must make many decisions.
• An employee feels much more control in their life since authority is
given to individual decision-making.
• There is great untapped potential among employees, which can be
revealed through empowerment.
 Employee Empowerment
• Definitions:
• According to Richard Kathnelson, ’empowerment is the process
coming to feel and behave as if one is in power and to feel as if
they owned the firm’.
• According to Bowen and Lawler, ’employee empowerment refers
to the management strategies for sharing decision-making power’.
• Employee empowerment can be done by:
• Seeking opinions from the employees.
• Facilitating the employees to try their ideas.
• Encouraging for sharing of resources and information.
• Improving the communication skills of the employees.
 Importance of Employee Empowerment:
• The investment in employees can improve productivity, which can reduce the
costs.
• Individual employees experience a feeling of self-esteem, self-efficacy and
self-confidence.
• Employee empowerment also helps in making employees more self-reliant.
• It allows independent decision-making by the employees.
• Empowerment of employees helps a firm to assign different projects to hone
the competence of employees.
• More freedom given to employees can be utilized for taking judicious
decisions.
• Assigning proper authority can improve the organizational effectiveness.
• Independent decision-making can improve self-confidence among the
employees.
• It can boost up the morale of the employees.
• The overall efficiency of an organization can be multiplied due to