galore.

Subject Plan
Book

This subject plan contains the syllabus,

detailed session plan, Model question
papers

Ms. Viraja. R. Kanawally

Study material
Subject: Industrial & Employee Relations
Course: MBA (III)
Semester: 3
Batch: 2019-2021
Prepared By: Prof.Viraja.R.Kanawally
 Table of Contents for the session Plan

Sl.No Particulars of Topics covered Page No.

1 Syllabus
2 c Plan
3 Model Question Paper 1
4 Model Question Paper 2
5 Model Question Paper 3
6 Assignments
7 Case Study
8 Topics for Student Presentation
9 Bibliography
 1. Syllabus
HUMAN RESOURCE MANAGEMENT SPECIALISATION

Paper Name: Industrial and Emloyee Relation

Paper Code: 3.5.2

MODULE 1: INDUSTRIAL RELATIONS 8 HOURS

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

MODULE 2 : IR POLICIES 12 HOURS

The state and IR policies - Evolution of IR policies - National Commission on Labour& IR policy (1969) - Grievance
procedure – discipline - Labour courts - Collective bargaining: concept and development - Industrial unrest in India
Industrial Disputes Act 1947 - Objects Of The Act - Important Definitions: Authorities Under The Act - Causes Of
Industrial Disputes - Types Of Industrial Disputes - Prevention Of Industrial Disputes - Reference Of Disputes Settlement -
Strikes - Lockouts - Lay Off-Retrenchment - Unfair Labour Practices - Standing Orders - Service Rules –Misconduct -
Principles Of Natural Justice - Domestic Enquiry - Remedial Counseling

MODULE 3: TRADE UNIONS 10 HOURS

Reasons and types of trade unions - Trade union movement in India - Problems and challenges of trade unions -
Functions of trade unions - Strengthening trade unions, Indian Trade Unions Act, 1926 – Registration, need for
recognition and rights, Central trade unions in India - Participative management - Forms and levels of participation -
Process of negotiation - Prerequisites of collective bargaining -Employee empowerment - Tripartite and bipartite bodies
- Joint Management council - Conciliation machinery : Mediation, arbitrations -adjudication.

MODULE 4: LABOUR LEGISLATIONS 10 HOURS

Labour legislation in India - Social security and welfare legislations - Concept of social security - ILO and social security
-Social security measures in India - Workmen’s Compensation Act,1923 - Employees State Insurance Act, 1948
-Employees Provident Fund and (Miscellaneous Provisions) Act, 1952 - Maternity benefit Act,1961,Payment of
Gratuity Act 1972, Payment of Bonus Act 1965.

MODULE 5: WELFARE LEGISLATIONS 10 HOURS

The Factories Act 1948 - Plantation Labour Act 1951 - Contract Labour (Regulations and Abolitions Act-1970, Shops and
Establishment Act, Latest rules regarding industrial relations in IT and ITES industries. Functions of Labour Department in
Karnataka, Officers under the department and their duties and responsibilities.

MODULE 6: EMERGING ISSUES06 HOURS

Labour legislation pertaining to employees working on night shifts; specific provisions for female employees, ethical
issues arising due to night shift and HR intervention; impact of night shift working on family and social life

Module - 1

Concept and characteristic of Industrial Relations:

Definitions of Industrial Relation:

Dale Yoder defined industrial relation as “a relationship between management and employees or among
employees and their organizations, that characterize & growout of employment”.

According to ILO, “Industrial relations deal with either the relationships between the state and the employers
and the workers’ organisation or the relationship between the occupational organizations themselves”.

[ * Source : VSP RAO, Page 584]

Functions of Industrial Relations

Industrial relations systems fulfils atleast 3 major functions:-

Firstly: - It defines the relative rights and responsibilities of workers, managers & the state and establishes the
power relationships between them.

Secondly: - It channels and controls the responses of workers and managers to the dislocation, frustrations and
insecurities inherent in the industrial process.

Thirdly: - It establishes the net-work of rules-both substantiative and procedural which governs the workplace
and work community.

[*Source: IR of developing economy – Dr. Biswanath]

Objectives of Industrial Relations:

1. To maintain and develop good employer-employee relations.
2. To enhance the economic status of the worker
3. To regulate the production by minimizing industrial conflicts through state control.
4. To provide an opportunity to the workers to have a say in the management and decision-
making.
5. To improve workers’ strength with a view to solve their problems through mutual
negotiations and consultations with the management.
6. To encourage and develop trade unions in order to improve the workers’ collective
strength.
7. To avoid industrial conflicts and their consequences.
8. To encourage collective bargaining as a means of self-regulation.
9. To safeguard the interests of labour & management.

Significance of Industrial Relations:

 Good Industrial relations implies peaceful, harmonious fruitful relations between labour and
management. In such a situation, both labour and management realize their mutual obligations
toward each other and resort to actions that promote harmony and understanding. Following are
the benefits arising out of good industrial relations:-
  Industrial Peace: Unilateral actions disappear, both parties consult each other before initiating
any action, they primarily focus on goals that are realizable without overstepping their territories.
This leads to peaceful co-existence.

 Industrial Democracy: The process of joint consultation paves the way for industrial democracy.
This motivates workers to give of their best to the organization and share the fruits of progress
jointly with management.

 Improved Productivity: Cordial relations between labour and management ensure uninterrupted
production and single minded pursuit of pre-determined goals. It becomes easy to realize even
difficult targets I such an atmosphere.

 Benefits to workers: Cordial labour-mgmt relations ensure higher productivity. The company
would be in a position to offer fair economic and non-economic incentives to its employees. This
in turn, would speer people to realize targets and get ahead productively. It becomes easy for
management to initiate needed changes quickly, in line with market continuously. Sound
Industrial relations enable a company to take full advantage of technological advancements and
pass on some of these benefits to workers as well.

Participants in Industrial Relations:

The Industrial Relations system is an organization of recognized major variables which exert a
controlling influence on industrial relations. On this basis there are three major Variables:

Workers & their Organizations: Here, the emphasis is on the members of organizations, the
Personal characteristics of workers, their Culture and educational attainments, qualifications,
skills and attitudes to work, etc.

Managers and their Organizations: Here, the emphasis is on the work groups, teams, the
variations in their sizes, composition and the extent of specialization they impose. Provision is
made for internal communication, for the structure of status and authority and for such ancillary
organisations such as trade unions and employers’ associations.

Role of the Government: Here the emphasis is on the role and responsibilities of governmental
agencies, the extent of official intervention, assistance and regulation of working conditions and
working communities.
 Employee

Actors in
IR

Management Government

Approaches to Industrial Relations:

The industrial relations scenario and factors affecting it, has been perceived differently by different practitioner
and theorist. Some have viewed it in terns of class conflict; some have viewed it in terms of mutuality of
interest of different groups; some have viewed it as a consequence of interaction of various factors both within
an organization and outside it. Based on these orientations, several approaches have been developed to explain
the dynamics of IR.

Unitary Approach

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 endeavors. 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.

PLURALISTIC APPROACH

In pluralism the organization is perceived as being made up of powerful and divergent sub-groups -
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 channeled towards evolution and positive change.
Realistic managers should. accept conflict to occur. There is a greater 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.

Radical Approach
This view of industrial relations is a by product of a theory of capitalist society and social change. Marx argued
that:

Weakness and contradiction inherent in the capitalist system would result in revolution and the ascendancy of
socialism over capitalism. Capitalism would foster monopolies. Wages (costs to the capitalist) would be
minimized to a subsistence level. Capitalists and workers would compete/be in contention to win ground and
establish their Constant win-lose struggles would be evident. This perspective focuses on the fundamental
division of interest between capital and labor, and sees workplace relations against this background. It is
concerned with the structure and nature of society and assumes that the 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.

GANDHIAN APPROACH: Gandhiji’s approach to industrial relations is based on these fundamental principles
of truth, non-violence and non-possession. Based on these fundamental principles evolved the concept o f non-
cooperation and trusteeship on which his philosophy o f industrial relations rests. Gandhiji’s philosophy
presumes the peaceful co-existance of capital and labour which calls for the resolution o f conflict by non-
violent, non cooperation that is peaceful strike. Gandhiji further states that workers have the right to strike but
this right has to be exercised in a just cause and that too in a peaceflil and non violent manner and it should be
resorted to only after the employers have failed to respond to the moral appeals o f the employees. Gandhiji’s
principle o f trusteeship does not recognize the right to property except to the extent permitted by the society for
its own welfare, the individual does not have any right to hold or use wealth for his interest but for the interest
of the society. The character of production is to be determined by social necessity rather than by personal
whims or greed. The capitalist is to act as a trustee o f the community and hold the industiy as a trustee and
assume the workers as a co-trustee of the society. The trusteeship theory o f Gandhiji gives no room for conflict
because the wealth legally belongs to the owners morally it belongs to the society and so there should be no
conflict of interests. Gandhiji was also of the opinion that without the co-operation o f the workers the capitalist
cannot work and this should be known by everyone the capitalist and the employees. Exploitation by capitalist
should be taken care through non co-operation and non violence.

For resolving the disputes the following rules should be observed according to Gandhiji.

1. The workers should make their reasonable demands through collective action.

2. Strikes by the trade unions must be peaceful and non violent.

3. Where essential services are concerned workers should avoid strikes as far as possible.

4. The workers should avoid the formation of unions in philanthropic organisations.

5. Strike should be used as a last resort when other measures have failed.

6. Workers should go for voluntary arbitration for settlement of disputes.

India’s industrial relations system has been highly influenced by the Gandhian approach this approach
emphasis on peaceful settlement of industrial disputes and expects to resolve their disputes peacefully through
mutual negotiations. This approach also emphasis on 3 6 direct action like strike but only after exhausting the
available means for resolving disputes. It is this approach which has been widely accepted in the Indian
industries and by many trade unions. This approach seems to be more realistic and more practical.

The System 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. The actors in the system are the managers, the workers
and their representatives, and the government agencies. The rules in the system are classified
into two categories:

Substantive rules and Procedural rules.

 The substantive rules determine the conditions under which people are employed. Such
rules are normally derived from the implied terms and conditions of employment,
legislations, agreements, practices and managerial policies and directives.

 The procedural rules govern how substantive rules are to be made and understood.
Ultimately, the introduction of new rules and regulations and revisions of the existing
rules for improving the industrial relations are the major outputs of the industrial relations
system. These may be substantive rules as well as procedural rules." The context in the
system approach refers to the environment of the system which is normally determined
by the technological nature of the organization, the financial and other constraints that
restrict the actors of industrial relations, and the nature of power sharing in the macro
environment, namely, the society.

Evolution of Industrial Relations in India

In India the industrial relations have been seen through the following two stages:

1.Occupations in India
Labour in medieval India
Guilds and union.

2.Industrial Relations in India

Early British Rule
1st World War to Pre-Independence Period
Post independence period.

1. Occupations in ancient India:

In those days, the prime occupation in India was “Agriculture”. Trading was of second importance. Manual
service formed the third area of preference. Majority of the states were ruled by kings. India was greatly
advanced in the industrial field, this is evident from the “Kautilya’s Arthashastra”. This gives a comprehensive
picture of the organisations and functions of the social and political institutions in ancient India.

The caste system had great influence on the development and progress of these industries and occupation. The
concept of caste systems was originally based on the transfer of skills and specializations which ultimately led
to standardization of professions. The “Atarvana” Veda divides the community into four categories:

1. Kshatriya
2. Vaishya
3. Shudra
4. Arya

The following professions become hereditary:

Goldsmiths, weavers, potters, blacksmiths, carpenters, hunters, charioteers, architects, sculptors, armourers.
Persons engaged in these occupations become separate communities.

(a) Labour Medieval India: The caste system unified a number of persons belonging in particular
occupations and formed the basis of occupational guilds. Indian works of art and crafts were badly ruined with
the foreign invasions, which lasted 700 years. These artisans gradually lost the traditional skills. This led to the
state that there was no difference between a slave and these artisans.
The situation improved only after restoration of law and order under the Mughals. Under Akbar, government
factories operated in Agra, Lahore, Fatehpur and Ahmedabad, where employees could develop respective art. A
large number of occupations were also carried on by small manufacturers and traders in their cottages mostly on
a hereditary basis. A majority of artisans lived in the fringe of starvation.

(b) Guilds and Unions: From early days, craftsmen and workers felt the need of being united. Different
terms such as Gana and Vrat as in “Rigveda” Sheshthi in Aitareya Brahmana; Gana and Ganapati in Vajasaneyi
Samhita; Sreni in Arthashastra and Puga, Gana, Vrat, Shremi and Sangha have been used to indicate what
Katyanyana calls group.

These unions gradually gained strength and were helpful not only in the evolution of arts but were powerful
centers of arts in themselves. Only responsible persons could become their members. The union followed
democratic principles. In event of a dispute between the president and the members, the king intervened and
brought about conciliations.

Kautilya has given a good description of the unions of employees, craftsmen or artisans. According to him the
work of unions should be controlled by the board of 3 directors, members should pay the entrance fee to the
president and the profits earned by the unions should be equally distributed among their members.

Almost every craft, profession or occupation had its own union which was called “Shreni”. Every “Shreni”
included about 1000 members. The Shreni elected its chief who was called the “Pramukha” or “Jyeshta”. These
guilds and corporations wielded considerable political power and influence.

2. Industrial Relation in India

However due to the autocratic regime of the Muslim rulers, the economic conditions of the employees was
deplorable. Laborers could be forced to leave home to work on wages, as per the “Forman” of the emperor or
the Governor, as the case may be. There were no organisations of the workers during the Mughal rule which
could deal with the difficulties and problems of the members.

The wages, if paid were very meager and insufficient for a day meal too. They were also paid in the form of old,
used and tattered clothes and such other articles, when the emperor and his officials dealt harshly with the
workers cordial relations between layout and capitol could not be expected to exist.

Commercial character of the East India Company did not change the conditions of the workers. The
underdevelopment of the economy continued even under the British rule. But collective relations in industry
were modeled on the British pattern. In fact the growth of industries in different parts of the country was based
on the need for good industrial relations.

(a) Early British Rule: There was not much if scope for industrial development in India during the early
British rule. India was expected to be colonial market for British goods till the second half of the 19 th Century.
A cotton mill was established in Bombay and Calcutta. The workers were to work in subversive and deplorable
conditions, while they were exploited by their contractors. Their relations had been strained and the workers
abstained themselves from work. As a result, many disputes rose. Mining industry also started slowly. Tata Iron
and Steel industry had been established in Jamshedpur, which produced on a moderate scale. Engineering and
railway workshops, iron and brass foundries etc had also been developed in a moderate way prior to World
War-I. The modern industry in India owes a great deal to the initiative of the Europeans. However the workers
were not satisfied with the working conditions and the worker-management relations were not cordial. Hence
the Factories Act of 1881 was passed which gave an impetus to the worker’s approach for redressal.

(b) World War-I: This was period of Boom for all employers. With the rising prices, the profit also went
up enormously. The wages of the workers, however did not keep pace with this tendency. The economic
distress brought workers together and an organised working class movement began in the country. The unrest
among the workers found an outlet in increased strike actions among which the one at Ahmedabad and other at
Chennai are famous. During this period, as a result of ILO influence, various laws were enacted (Workmen’s
compensation act -1923, the trade unions act-1926 and the Trade disputes act – 1917)
During the second war, employers made enormous profits. The workers demanded a share in them. Bonus and
dearness allowance were granted to them but as money wages did not increase in proportion to the rise in prices,
the government tried to check dissatisfaction of workers and consequential strike activity by prohibiting strikes
under the emergency rules.

(c) Post Independence Era: Immediately after independence, in the interests of the national economy, it
was considered necessary to put a stop to strikes and lockouts that interrupted production. A tripartite
conference was adopted, giving paramount importance to the maintenance of industrial peace. The minimum
wages act, the factories act and Employees State insurance Act were all enacted 1948.
Post independence industrial relations were very much influenced by the pre-independence industrial
environments and labour management relations. Industrial unrest and shattered worker management relations
prevailed everywhere when India became independent in 1947. Government has emerged as an arbitrator
between management and workers. During the second five year plan, certain norms, mechanisms and practices
were evolved which formulate the need of minimum wage, wage boards, guidelines on rationalization, code of
discipline, code of conduct, scheme for workers participation in management.

*Source My Notes of MBA*

 Factors Affecting Industrial Relations:

The industrial relations system of an organization is influenced by a variety of factors. A few important are:

1. Institutional Factors: Under institutional factors are included items like state policy, labour laws, voluntary
codes, collective bargaining agreements, labour unions, employers’ organizations/federation etc.

2. Economic factors: Under economic factor are included economic organizations, (socialist, communist,
capitalist, type of ownership, individual, company-whether domestic or MNC, Government, co-operative
ownership) nature and composition of the workforce, the source of labour supply, labour market relative status,
disparity of wages between groups, level of unemployment, economic cycle. These variables influence
industrial relations in myriad ways.

3. Social factors: Under social factors items like social group (like caste or joint family) creed, social values,
norms, social status (high or low) – influenced industrial relations in the early stages of industrialization. They
gave rise to relationship as master and servant, haves and have-nots, high caste and low caste etc. But with the
acceleration of industrialization, these factors gradually lost their force but one cannot overlook their
importance.

4. Technological factors: Under technological factors fall items like work methods, type of technology used, rate
of technological change R & D activities ability to cope with emerging trends etc. These factors considerably
influence the patterns of industrial relations, as they are known to have direct influence on employment status,
wage level, collective bargaining process in an organization.

5. Psychological Factors: Under psychological factors fall items pertaining to industrial relations like owners’
attitude, perception of workforce, workers’ attitude towards work, their motivation, morale, interest, alienation,
dissatisfaction and boredom resulting from man-machine interface. The various psychological problems
resulting from work have a far-reaching impact on workers’ job and personal life, that directly or indirectly
influences industrial relation system of an enterprise.

6. Political Factors: The political factors are political institutions, system of government, political philosophy,
attitude of government, ruling elite and opposition towards labour problems. For instance, the various
communist countries prior to the adoption of new political philosophy, the industrial relations environment was
very much controlled by the Government ever since change has altered considerably like other capitalist
economies. There too, unions are now at the helm of labour unions are controlled by political parties, so here
the industrial relations are largely shaped by the gravity of involvement of political parties in trade union
activities.

7. Enterprise Related Factors: Under enterprise-related factors, fall issues like style of management prevailing in
the enterprise, its philosophy and value system, organizational climate, organizational health, extent of
competition, adaptability to change and the various human resources management policies.

8. Global Factors: The various issues included are international relations, global conflicts, dominant economic-
political ideologies, global cultural milieu, economic and trading policies of power blocks, intervational trade
agreements and relations, international labour agreements.

Changing Profile of Industrial Workers:

With increasing education level of workers, growing industries, foreign companies coming in, etc requires our
scrutiny of relations with industrial workers. There should be a shift in the maintenance of industrial relations in
the light of above changes Structure

 Introduction

Managing Industrial Relations changes. There are phenomenal changes in industrial relations field in India why
globally also the same thing. To improve the working conditions in industries and also to safeguard the interest
of the workers and to put a check on amassment of wealth by industrialists, in early fifties Nationalisation of
industries galore started. This has resulted in public sector undertakings, with improved industrial relations.
Now after half a century the myth of socialistic pattern public sector mode is having a shift to privatization
which has become a global necessity also. Need for cordial relation became necessary.
1. To have workers whole hearted co-operation in our modernization endeavors
2. More transparency is required everywhere and this helps in better collective bargaining
3. This will not only facilitate enhancement in production but also improve productivity
4. The net outcome of increasing efficiency and profit will go to industrialists as well as to workers.

 P.M and H.R.M – Industrial Relations

Companies have started to improve their personal management, instead of personal management, concept of
human relations management. has taken over this aspect. This has created new ways to improve relation.
1.This enables to consider work force as a part of management and proper motivation and career planning etc
are attended to properly.
2. By developing team spirit ‘give and take’ policy is pumped in, the memorandum of understanding M.B.O
approach which fixes the thing at proper perspective is gaining momentum by improving relations
3. The above approach and flattened hierarchical set up, improves the communication and no room is given for
suspicion misunderstanding.
5. Since there is ‘spelt out’ career growth this helps to improve efficiency of workers for mutual benefit.
6. H.R.M is giving more scope for proper union activities resulting in better negotiations and meaningful
settlements.
7. The participative forums envisaged right from 1947 thro Factories Act etc is gaining momentum improving
Industrial Relations.

H.R.M replacing personal management has made lot of changes in personal relationships andpersonal handling
the Industrial Relations changes are visible as follows.
1. The rules regulations etc are now days so tailored to suit the workers they are seen with a humanitarian
approach. The old pattern, I don’t know what you will do is changed, a co-operative attitude is taken now, this
has resulted in a jump in IndustrialRelations.
2. The laid out procedures are contracted as per need of the hour – The focus is to get the things done not to
stick to reties and get stuck up.
3. The superintendence pattern is shifted and a guidance pattern is adopted by managers hence workers feel
homely and as a team.
4. The managers facilitate the works under the transformed leadership – not the old transfixed position.
5. Team work is facilitated ‘Go and do it’ is changed into ‘let us go and do it’
6. Industrial workers are industrial assets has become the motto of Tata iron and steel company’s motto is Tata
family a feeling of oneness this has resulted in owning of the industry. This motto has paved way for its
phenomenal growth and diversification more or less it is coming towards Japanese style.
7. Higher thrust is given for the development of workers, skill improvement, management development career
growth planning etc has improved the industrial relations.

 Industrial Relations Changes has brought lot of changes in

a) Management, entrepreneurs, employees because of necessity and compelling circumstances.
b) In the trade unions
c) In the workers themselves
d) Attitude of the government, politicians
e) Judiciary also.

This can be discussed as follows:

A. Management, Entrepreneurs

1. Management has changed Human Relations Management policies.

2. Employers have formed their effective associations to tackle not only their workers but also to compete.
3. Linkage with international business organisations, participation in world trade suggesting requisite changes in
commercial laws etc. has become the order of the day.
4. Linkage with international labour organization they can, up to date, the information’s to see their suggestions
and improve workers conditions.
5. ASSO CHAM chamber of commerce etc have emerged as confederations of Indian Industries.

B. Status of Trade unions: After independence of our country more and more industries were coming, trade
unions were becoming stronger.
In private sectors trade unions were masters they could to strong arms tactics at the same time some
industrialists could suffocate the unions with their ‘gangs’ Things were extreme union leaders were in the
pocket of industrialists.

4. When nationalization of industries started, more public sectors came in to being public sector bureaucrats
cannot purchase or give pressure on union leaders like private management hence they have to take other steps
to keep the relations better. Hence industrial relations had to be attended to keep industries running smoothly.

5. With Nationalization spree trade unions affiliated themselves to political parties more vigorously; rather
unions became a pawn in the hands of politician. Real union leaders lost their faces. Masked politicians became
the string pullers in industrial affairs

C. Change and Workers

1. Workers have started making hay while the sun shines they joined unions which are powerful, not unions
which are principled.
2. Might is right those who can get us more will be our leader, their’s is our union.
3. Interests of management, justifiable demands etc gone with the winds the net result employers dilemma and
lack of their enthusiasm. This was a stage at which the most union minded comradary states Kerala and west
Bengal – became almost devoid of industries worth the name in Bengali language ‘for going to office wages,
and to work O.T’ was a saying.
4. Gamut of industrial social security Acts came into being only keeping in mind the interest of industrial
workers without any thought about the industry or the employers.

D. Attitude of government and politician

1. Politicians were jubilant while there was nationalization since they can hold the reins
2. The profit loss of P.S.U were linked with government money, which is unlimited, as such politician and
government machineries were comfortable industrial relations got a boom.
3. Back bone less management was seen in most of the industries, worker’s wages enhanced, without increasing
their responsibility or accountably.
4. Almost after half a century after independence when the euphoria of independence waned – there was a
sudden stop on nationalization, reversal started.
5. More privatization disinvestments started, this has created strain or industrial relations.
6. Amalgamation, merger, takeover, N.R.1. Companies, Foreign Companies invasion, started with full speed,
workers baffled, unions got submerged, global competition necessity was felt by one all as such industrial
relations was at balance.
7. The new pattern of employment in information Technology, computer world- the word workers disappeared
hence unions become out of questions. If persons are posted as supervisors and managers straight away – they
are not coming under workmen Act. The new employment set up of the country has money and comfort as such
the relations of employers’ employee is cordial.
8. Industries which were having workers saw the competitive world and both employer employee appreciated
the necessity for good relations – to compete with others. This has become a golden relations’ period.

E. Change in Judiciary
1. Judicial Activism was pronounced, judges were free to decide for the country’s welfare
2. A slight shift was perceptible in some place where employers’ action was justified.
3. Through there were frequent brushings between judiciary and parliament, by and large development of the
nation got a boom.

Labour Policy:
LABOUR POLICY 2001

INTRODUCTION

During the period of foreign rule, Britishers introduced industrialization and thereby heralded the advent of
labour sector in this country. With the emergence of native industrialists the labour sector expanded. The pace
of industrialization and the expansion of labour sector were accelerated by the first and second world wars. In
the early years the workers organised to obtain wages to meet limited needs for livelihood and convenience to
work decently. Labour struggle became a part of national movement. The concepts of freedom, democracy,
secularism and socialism, were indoctrinated in the labour movement, thanks to agitations for rights of workers.
The trade union leaders of yesteryears played a glorious role in this respect. We are still striving to ensure social
security measures envisaged in the directive principles of the Indian Constitution such as right to work, living
wages, security in work place etc. Today the economy of the nation itself is facing grave crisis due to the impact
of globalization, and the labour sector is in the dark shadows of economic and social problems. The threats
faced by the economy of the nation, industry, agriculture and thereby the labour sector are due to the impact of
the global pressures and hence beyond our control. Yet we are compelled to defend ourselves to protect our
economic and social security. We have to initiate an urgent action plan in this regard.

Labour Policy is a step by this Government in this context.

I. LABOUR SECTOR TODAY

1. It is the declared objective of this Government to formulate a new Labour Policy, which is responsive to the
changing needs of the Labour and Industry, and to suit the requirements of economic development.
2. Governments have formulated Labour policies as a part of Industrial policy. This has also been a constraint in
formulating labour policies independent of the industrial policy. Consequent on the grave crisis in the Indian
economy, significant reforms based on liberalisation, globalisation were enforced from 1991. It was these
economic reforms that dictated the industrial policy from then on. Only after a couple of years of reforms that
negative effects on other sectors of polity came to be felt, the most affected being the Labour.

3. Though the new industrial policy was aimed at speedy industrial growth, Kerala has not been able to share in
the spurt of industrial activity. The tardy growth in industrialization has accentuated the problem of
unemployment and the numbers have increased to 43lakhs.

4. The state has a work force of around 83 lakhs of which 19 lakhs are women workers.The vast majority work
in the unorganised, or informal sector; sometimes in conditions of partial employment, often without adequate
access to decent wages or Social Security protection. The attention of Government has been largely focused on
protecting the working conditions and the rights of the relatively privileged minority of workers in the organised
sector.

5. Unemployment is one of the basic problems confronting the State, and Government has to spur the creation
of new employment opportunities. There are presently around 43 lakhs of young people registered on the
unemployment rolls of the State. Productive employment is being created in the State’s economy at very low
rates. Despite the relatively high skill and adaptability levels of the State’s workforce, labour market has not
been perceived as a positive factor by prospective investors in Kerala.

6. Labour Sector problems in Kerala are:-

(a) The high rates of unemployment and underemployment.

(b) The low rates of productive employment creation.
(c) The unprotected conditions in the unorganized sector.
(d) The perception of adversarial labour relations.
(e) The inadequate levels of skill creation and training.
(f) The inefficiently targeted Social Security regime.
(g) Labour legislation that is becoming out of tune with the times.

7. The competitive market reform policies have turned many industrial units unviable. The plantation sector is
also facing a grave situation due to unremunerative prices for commodity products like Coffee, Tea and Rubber.
All this has led to retrenchment and closure of many industrial units and estates in the plantation sector.

8. The forces of globalization, the dismantling of trade barriers, the new production paradigms in `sunrise` areas
like information technology and biotechnology, the practice of home working, intangible value addition and
other phenomena are making their presence felt in India also. The organized sector worldwide is moving away
from an employment security regime, towards an income security regime. The new environment demands a
high degree of adaptability and flexibility in the Labour market, but the challenge before the government is to
ensure that this flexibility is compatible with Labour market security, including protection against arbitrary loss
of employment, arbitrary reductions in income and unhealthy work practices.

9. Hence labour policy initiatives are aimed at creating a favorable environment for a planned effort, facilitating
industrial promotion and revival along with legislative and structural changes to bring in an environment devoid
of restrictive labour practices, but protecting the rights and interests of the workers.
10. Given this context, the policy objectives of Government arise from the following strategic goals.

(a) Fostering an enabling environment for rapid employment generation through enhanced private and public
investment, in order to achieve the goal of creating 15 laks of new jobs in the coming five years.
(b) Retraining and rehabilitation of retrenched labour in closed and sick units.
(c) Improving working conditions, providing decent wages and basic lifeline Social Security for workers,
especially in the unorganized sector.
(d) Minimizing adversarial Labour relations and providing Labour market security, employment security, work
security, and income security for the working population.

II. SOCIAL SECURITY

(i) Kerala has made considerable progress in extending Social Security coveragethrough the mechanism of
tripartite welfare fund boards. However, many of these schemes lack clear perspective, and need to be
restructured. Their delivery mechanisms are often inefficient and expensive. A “Frame Legislation” will be
enacted to bring in a degree of perspective and order for all Social Security initiatives,aimed at consolidating the
current set of enactment’s, executive orders, provide guidelines for working out future schemes and obviate the
need for individual legislation’s, apart from providing a standards set of basic operating polices and procedures.

(ii) Extending the coverage of the social security net to cover vulnerable workers in the unorganised sector is
one of the major priorities of the Government. New welfare schemes will be introduced for domestic workers,
self-employed workers in the service sector and other unprotected categories. These new schemes will be
introduced by utilizing existing administrative structures. The delivery system will be computerized to facilitate
efficient disbursement; and Social Security cards will be introduced to facilitate universal access and to prevent
leakage and malpractice.

(iii) The fund management of the welfare fund boards will be improved by deploying professional expertise,
keeping in view the twin objectives of fund security and income generation. An investment policy to maximise
income and control expenditure that would be uniformly applicable to all Boards would be formulated.
Acomprehensive membership re-verification drive will be conducted in all the welfare fund boards to identify
and eliminate fraudulent registrations.

(iv) The financial resources of Government available to support the Social Service system are limited.
Government will endeavour to reprioritize the allocation of funds to ensure that vulnerable workers and
essential schemes benefit the most. The welfare fund boards would also have to be self-sustaining, drawing
upon the resources of community and non-governmental organisations.

III. EMPLOYEE -EMPLOYER RELATIONSHIPS

(i) It is a fact universally acknowledged that one of the impediments to the growth of investment in Kerala has
been the poor image still subsisting from the years of Kerala’s labour militancy. Even though this appears to be
largely a thing of the past, this residual perception hampers industrial development. We are in an era when the
various State and regions are in intense competition for attracting investment. The State’s youth have paid a
heavy price on account of inadequate employment creation arising from the very low levels of investment in
Kerala. Given the relatively high knowledge levels, skills and adaptability of the worker in Kerala, labour
should be projected as a positive factor while considering Kerala as an investment destination. Hence
Government would endeavour to promote ideal employee-employer relationships and to curb undesirable labour
practices and adversarial labour relations through suitable legislation, through conscientisation, awareness
raising and appropriate administrative interventions.

(ii) With in the purview of the existing laws, entrepreneur will have rights for engaging labour and shall not be
inhibited by any claims from ‘sons of the soil’, displaced persons from acquired land, construction, contract
labour and dependents of employees.

(iii) All restrictive labour practices including intimidation, “gherao”, harassment of managers and their families,
and extortion of any kind will be treated as criminal offences and dealt with accordingly.

(iv) Management will have the prerogative to deploy workers in any section of the unit as part of a multi craft
approach.

(v) Government will endeavour to prevent stoppages of work in projects on account of industrial disputes;
especially during the first five years of the project. The Government will also severely discourage deleterious
practices such as ‘go-slow’.

(vi)The new economic policies have substantially reduced the intervention of government in running business.
Government is actively pursuing steps to make the regulations for setting up and managing industry simple and
transparent in tune with the new liberalisation policies. The state has entrenched trade unions led by
knowledgeable and experienced leaders. Government will encourage by-partism inindustrial disputes.
Necessary amendments will be enacted to ensure presence of employers and employees in conciliation
proceedings. An arbitration machinery will be constituted to settle disputes not resolved by conciliation.
Government will also encourage long-term settlements in industries focusing on productivity and sound
managerial practices.

(vii) To prevent the occurrence of disruptive wildcat strikes and lockouts, Government will declare certain vital
industries and establishments as “public utilities” under the Industrial Disputes Act.

(viii) Special conciliation mechanisms will be set up by Government, if required, exclusively for entrepreneurs
and projects with investment of Rs.150 crores or more in order to ensure that labour disputes are handled on site
in a pro-active manner.

(ix) The viability of a project depends on the completion of construction and commissioning within the time and
cost estimate. Work stoppages whether due to labour dispute or non-fulfillment of obligations by builders will
not be permitted.

(x) Industrial Relations Committees have the pivotal role to create an atmosphere of complete understanding
between labour and management. Tripartite industrial relations committees will be set up for key sectors and
industries. The Government will endeavor to accord statutory legitimacy and protection to these committees.

IV.LABOUR LAW REFORMS

(i) Many of the labour laws, which were enacted at a time when the production paradigm and environment were
different, have become outmoded. The Government of India is amending seminal labour legislation like The
Industrial Disputes Act, The Trade Unions Act, The Contract Labour (Regulation and Abolition) Act and
others. The Second National Labour Commission, which is looking into the new legal regime in the sector, is
expected to submit its report shortly. An expert committee will be constituted to study and make
recommendations for simplifying and amending labour laws and rules.
(ii) Government will attempt to reduce the needless proliferation of Trade unions in establishments, without
detriment to the rights and interests of the work force. Legislation will be enacted for conduct of referenda and
laying down norms for the recognition of Trade Unions in industries and establishments.

(iii) There is a need to expedite the industrial dispute resolution mechanism of the labour judiciary, including
the Labour courts, Industrial Tribunals, Workmen’s Compensation Commissioners etc. Government will make
requisite amendments to the rule and procedures governing the functioning of these bodies to speed up and
streamline this process. The provisions for publication of the awards of Labour Courts and Tribunals in the
Government Gazette will be amended to expedite enforcement.

(iv)The Government will also enact requisite State amendments to the Industrial Disputes Act to enable
workmen or managements to approach Labour Courts/Industrial Tribunals directly, if the conciliation process
proves to be ineffective.

(v) The Kerala Headload Workers Act 1978 is an enactment providing social security net to a category of
workers. However certain unforeseen practices relating to loading and unloading have since become an irritant
phenomenon perceived as a stumbling block for industrial growth in the State. A separate legislation to do away
with these practices without affecting the rights and interests of the labour will be enacted.

V. WORKPLACE SECURITY AND INCOME SECURITY

(i) The rapidly changing economic environment accentuates the need to fortify the enforcement machinery of
the Labour Department to ensure that workers rights including income security & work security are adequately
protected. Kerala has along history of activism for securing the rights of the working population. The
Government will endeavour to ensure that the working conditions and the rights of workers are protected by
enforcing welfare legislation.

(ii) A special monitoring system will be instituted for ensuring work place security and dignified working
conditions for women workers.

(iii) Enforcement committees will be constituted at district levels on a sectoral basis for monitoring the
enforcement of statutory rules, welfare measures and safety conditions of workers.

(iv) For the effective implementation of the Minimum Wages Act, Government will expand the category of
employment’s under the schedule to the Act. Wages shall be revised for each category of employments without
delay and the payment of minimum wages effectively upervised. Government shall take initiative to implement
minimum wage for South Indian States, as part of the measures to implement the national minimum wage
policy.

(v) The Child Labour (Prohibition & Regulation) Act will be aggressively enforced and Government will
endeavour to make Kerala the first State in the country to be free of Child Labour.

(vi) Outbound migrant workers, especially women from Kerala require special attention, especially in sectors
like fish processing. Government will strengthen the monitoring system for migrant workers to ensure proper
implementation of the existing laws and to minimise the chances of their exploitation by intermediaries or
principal employers.

(vii) The quality of medical care made available under the Employees State Insurance scheme has to be
improved. Government will endeavour to provide better access to modern medical facilities to insured
employees under the Employees State Insurance Scheme. The ESI coverage will be widened in order to
increase its area of operation.

(viii) The enforcement of laws & measures like the Factories Act and Rules for assuring workplace security and
for the abatement of occupational hazards and diseases will be made more effective. Enforcement of Acts
relating to industrial safety and prevention of pollution would be strengthened. Special attention will be
focussed to identify hazardous industries and sectors including those in the unorganized sector.

(ix) The labour enforcement machinery is grossly inadequate to cope with the multitude of labour laws and the
various establishments that require surveillance. The enforcement strategy will be to reduce the burden on the
existing machinery and to encourage employers and other stakeholders to proactively participate in the
implementation of this strategy on a voluntary compliance basis.

VI.PLANTATION SECTOR

Kerala accounts for 71% of production of plantation crops in the country. About 14.5 lakh families are
dependent on plantation sector for livelihood. Excluding the marginal farmers the labour employed in the
plantation sector comes to about 4 and a half lakhs, while the total number of factory workers in the industrial
sector is 4.51 lakhs. This points to the importance of plantation sector. Problems faced by plantation sector are
mainly due to unremunerative prices for products and lack of productivity. Estates remain closed and those
functioning are not profitable. Increased productivity coupled with scientific management, technological
innovations can only salvage the plantations from ruin. Government will encourage and promote Non Resident
investment in this sector.

VII. DISPLACED WORKERS

Government will prepare special rehabilitation packages for workers who are displaced by the closure of
industries and sick sectors. Government is particularly concerned about the conditions and prospects of workers
in sectors that have been severely affected, including the plantation sector, the Beedi sector, the Cashew, Coir,
Handloom and the Agricultural sector. This package will include retraining and resettlement schemes where
required.

VIII. EMPLOYMENT REGISTRATION AND INDUSTRIAL TRAINING

(i) The functioning of Employment Exchanges needs to be completely overhauled. These exchanges will be
computerised over the next 5 years and the database updated. It is expected that private sector employers
will also source their requirements from the employment exchanges when this computerisation process
is completed. The Government will also play a more proactive role in enabling accessto employment
opportunities overseas.

(ii) The quality of industrial training provided through the network of Industrial Training Institutes /
Industrial Training Centres is out of phase with current employer requirements, and needs to be revamped.
The curriculum and the course content of these Industrial Training Institutes/ Industrial Training Centres
will be completely restructured in line with prospective employer requirements.

IX. INSTITUTIONAL AND ADMINISTRATIVE ARRANGEMENTS

(i) The Labour Department will be modernised using the tools of Information Technology to ensure meaningful
labour law enforcement, efficient delivery of social security, and harmonious industrial relations. The
functioning of the department will be made transparent. A joint cell of the Labour Department and Industries
Department will be constituted to study what changes need to be made in laws, rules and regulations and in the
administrative and institutional arrangements to achieve these objects.

(ii) Kerala Institute of Labour & Employment: In the background of a fluid and uncertain scenario emerging in
the industrial scene, labour has to be prepared to face the challenges ahead. The worker has to be educated.
Awareness of the problems in general and problems of the particular industry is inevitable for effective and
collective bargaining. The workers as well as the leaders of the trade unions has to cope with the changing
demand. Only an enlightened labour force can increase productivity and speed up the industrialisation in the
state. Workshops, seminars, orientation sessions will be conducted. KILE has a very pivotal role to play in this
regard. The scope and functioning of this institute will be enhanced in tune with the National Institute of
Labour.

(iii) Development Overseas and Employment Promotion Consultants Ltd.: The prime asset of our state is undoubtedly the
army of employed youth estimated to be around 60 laks. This human resource available with us has to be channeled to
productive sector. Skilled labour is the prime need in the International labour market in view of the rapid technological
advances. Our state is blessed with a vast army of skilled and qualified persons on the look out for suitable placements in
India and abroad. Identifying and placing the candidates is a very challenging task. Millions of job opportunities are
available in different parts of the world. It is envisaged that ODEPC will act as the catalyst between the job and the job
seekers.

(iv) A policy progress monitoring team will be constituted with Secretary (Labour) as Convenor to review the
implementation of the policy and consider necessary and appropriate interventions in accordance with the
altering needs and demands of labour in view of the fast moving changes in the industrial scene. Review of
progress of implementation of the policy will be prepared by the team for the consideration of the Minister
(Labour and Rehabilitation) and the Council of Ministers.

VISION

This policy is the statement of the concerns of this government for the welfare and protection of labour and to
endeavour to empower them and improve their quality of life. Increased production, productivity coupled with a
harmonious and peaceful labour relations and a new work culture only will create a conducive climate for rapid
industrial investment and growth. This will ensure the successful solutions to the twin problems of retrenchment
of labour and creation of new jobs for the unemployed. Government is also committed to providing labour
market security, income security and decent working conditions for the working population. This labour policy
aims to carry forward these objectives. These aims can be attained only if there is tripartite and mutually
beneficial partnership between employers, workers and the Government.

LABOUR POLICY HIGHLIGHTS

.. Creative measures to attract public and private investment. .. 15 lakh new jobs in the coming five years. .. A
unified and consolidated legislation for social security schemes. . New Social security schemes for workers in
the unorganised sector.
.. Social security cards for workers.
.. Unified and beneficial management of funds of Welfare Boards.
.. Re-prioritization of allocation of funds to benefit vulnerable workers.
.. Model employee-employer relationships.
.. Long term settlements based on productivity.
.. Vital industries and establishments declared as `public utilities`.
.. Special conciliation mechanism for projects with investments of Rs.150 crores or more.
.. Industrial Relations committees in more sectors.
.. Labour Law reforms in tune with the times. Empowered body of experts to suggest required changes.
.. Referenda for recognition of trade unions.
.. Statutory amendments for expediting and streamlining the mechanism of Labour Judiciary.
.. Amendments to Industrial Disputes Act in tune with the times.
.. Efficient functioning of Labour Department.
.. More labour sectors under Minimum Wages Act.
.. Child labour act to be aggressively enforced.
.. Modern medical facilities for workers.
.. Rehabilitation packages for displaced workers.
.. Restructuring in functioning of employment exchanges. Computerization and updating of database.
.. Revamping of curriculum and course content in industrial training.
.. Joint cell of labour department and industries department to study changes in laws and rules.
.. Kerala Institute of Labour & Employment to be upgraded.
.. Policy progress monitoring team to review progress of implementation of policy.
Unit II

International Labour Organizations-

International Labour Organizations (ILO), was established on April 19, 1919 by Versailles Peace Conference as
an autonomous body associated with the League of Nations. It was born as a result of the peace conference at
the end of World War I as Versailles. India became member of ILO in 1919, as an original signatory to the
treaty of peace. The ILO was the only International organization that survived the second world war even after
the dissolution of its parent body the League of Nations. It became specialized agency of United Nations in
1946. The ILO is a new social institution trying to make the world conscious that world peace may be affected
by unjust conditions of its working population. It deals with international labour problems. The unique feature
of ILO is that it is a tripartite body consisting namely the governments which finance it, the workers, for whose
benefit it is created and the employers who share responsibility for the welfare of the workers.

Objectives of the ILO:

The objectives of the I.L.O. are enumerated in the preamble to its constitution and in the Declaration of
Philadelphia (1944) supplemented by Article 427 of the Peace Treaty of Versailles (1919). The preamble
affirms:
(i) Whereas universal and lasting peace can be established only if it is based upon social justice
(ii) And whereas conditions of labour exist involving such injustice, hardship and privation to large
numbers of people as to produce unrest, that the peace and harmony of the world is imperiled
(iii) Whereas the failure of any nation in battering the conditions of labour would under the economic
progress of this own country.

Thus, ILO has been “attempting to promote world-wide respect for the freedom and dignity of the working men
and to create conditions in which that freedom and dignity can be more fully and effectively enjoyed”.

During the second world war a conference was convened as Philadelphia. During the discussions at this
conference the aims of ILO were redefined. This was termed as “Declaration of Philadelphia”. This was
incorporated in the constitution of ILO. The conference reaffirmed the principles of ILO namely:

(i) Labour is not a commodity

(ii) Freedom of expression and association are essential to substantial progress.
(iii) Poverty constitutes a danger to prosperity everywhere.
(iv) The war against want requires to be carried on with unrelenting vigour within each nation, and by
continuous and concerned international effort in which the representatives of wprkers and employees enjoying
equal statys with those of governments in free discussion and democratic decision with a view to the promotion
of the common welfare.
The Declaration of Philadelphia enunciated 10 objectives which the ILO was to further and promote among the
nations of the world. These are:

(a) Full employment and the raising of standards of living.

(b) The employment of workers in the occupation in which they can have the satisfaction of giving
the fullest measure of their skill and make their contribution to the common well being.
(c) The provision, as a means to the attachment of this end and under adequate guarantees for all
concerned, of facilities for training and the transfer of labour including migration for employment
and settlement.
(d) Policies in regard to wages and earnings bonus and other conditions of work calculated to ensure
a just share of the fruits of progress to all and a minimum living wage to all employed and in need
of protection.
(e) The effective recognition for the right of collective bargaining, the co-operation of management
and labour in continuous improvement of productive efficiency and the collaboration of workers
and employers in social and economic measures.
(f) The extension of social security measures to provide a basic income to all in need of such
protection and comprehensive medical care.
(g) Adequate protection for the life and health of workers in all occupations.
(h) Provision for child welfare and maternity protection.
(i) The provision of adequate nutrition, housing, and facilities for recreation and culture.
(j) The assurance of educational and vocational opportunity.

Procedure for Admission as member.

The constitution of ILO provides that all the states, who were members of ILO on 1 st November, 1945
and any original member of UN can become member of ILO by accepting its obligations of its
constitution.
The constitution of ILO was amended in 1945, and the ILO entered into arrangement with the UN.
The new rules say that:
(i) Membership of the UN does not mean membership of ILO, any original member of the UN
and any state subsequently admitted to the membership of UN may become member of ILO by
communicating to the Director General, its formal acceptance of the rules and obligations of
the ILO.
(ii) If a state is not a member of the UN, the ILO confess on the International Labour Conference
(ILC- Parlimentary wing of the ILO), the right to admit that state to membership, which it had
assumed defects during the period of the relationship of the ILO with the League.

Structure of ILO

The ILO consists of three principal organs namely:

i. The International Labour Conference

ii. Governing Body
iii. International Labour Office
The work of the conference and the Governing Body is supplemented by that of Regional
Conferences, Regional Advisory Committee and Industrial Committees.

The Conference is the supreme policy making and legislative body. The Governing Body in the
Executive Council and the International Labour Office are the secretarial, operational headquarters
and Information Centre.
 The Structure of the ILO and various Functions are depicted below check no.

ILO

International Governing International Labour

Labour Conference Council Office
Representatives of the:
(i) Examines Research
Social Problems Governments Investigation
Technical
(ii) Adopts Conventions Employees Corporation
For ratification by Publications
Governments Workers in the ratio of 2:1:1

(iii) It is the electoral

College of the
Conference International International
that elects the Centre for Institute
Governing Body. Advanced of
Technical and Labour
Vocational Studies

The ILC International Labour Conference: Is the police making organ of the ILO. It
Comprises 3 groups representing governments, employers and workers in the ratio
Of 2:1:1 ILC holds its sessions once in a year. Delegates to this session may be accompanied by advisors not
exceeding two for each item on the agenda. The government delegates are mostly ministers, diplomats or
government officials. As per the constitution, the employers and workers delegates to the conference are
nominated by the government of that state in agreement with respective organisations of employers and
workers.

One of the primary powers of the conference is to appoint committees to deal with different matters
during each session. These committees expect finance committee, are tripartite in nature.

These committees are:

(i) The selection committees
(ii) The credential Committee
(iii)The resolution Committee
(iv)A Committee for the application of Convention and recommendations
(v) The Drafting Committee
(vi)The committed on Standing orders
(vii) The Finance Committee
Functions of ILC (International Labour Conference)

1. To formulate International Labour Standards.

2. To fix amount of contribution by the member states.
3. To decide the expenditure budgeted estimate proposed by the Director General and submitted to the
Governing Body.
4. To make amendments to the constitution subject to subsequent ratification of the amendments by 2/3
member states including 5 of the 10 states of industrial importance.
5. To consider the report of the Director General giving labour problems and assist in their solution.
6. To appoint committees to deal with different matters during each session.
7. To select once in 3 years members of the Governing Body.
8. To elect its President.
9. To seek advisory opinion from the International Committee of Justice.
10. To confirm the powers, functions & Procedure of Regional Conference.

The Governing Body

It is another principal organ of the ILO. It is non-political partite body. It implements decisions of the ILC with
the help of the International Labour Office. Out of the 56 members in it, 28 represent the governments, 14
employers and 14 labours. Out of 28 government members, 10 are appointed by the member States of Industrial
Importance and the balance are delegates of the other governments. The criteria laid down for the selection of
members of industrial importance is the strength of its total industrial population. India is one of the ten states of
industrial importance. The tenure of office of this body is 3 years. It meets several times a year to take decisions
on the programmes of the ILO. The functions of this body are:

1. To co-ordinate work of the organization.

2. To prepare agenda for each session and subject to the decision of the ILC to decide what subject should
be included in the agenda of the ILC.
3. To appoint the Director General.
4. To scrutinize the budget.
5. To follow up the implementation of the conventions and recommendations adopted by ILC by member
state.
6. To fix the date, duration and agenda of the Regional conference.
7. To seek advisory opinion from the International Court of Justice with the consent of ILC.

The International and Labour Office

This is the third major and important organ of the ILO. It functions as the secretariat of the ILO in
Geneva. The director of General of the ILO is the Chief Executive of the Secretarial. He is appointed by the
Governing Body. He also acts as the Secretary General of the ILO conference. His tenure is for 10 years and his
term may be extended by the governing body. The Director General is assisted by two Deputy Director
Generals, six assistant Director of the International Centre of Advanced Technical and Vocational training and
of the staff drawn from 100 nations. The important functions for the International Labour office are:

1. To prepare documents on the times of the agency for the conference.

 2. To assist governments in forming legislations on the basis of the decisions of the ILC.
3. To carry out its functions related to the conventions.
4. To bring out publications dealing with industrial labour problems of International interest.
5. To collect and distribute information of international labour and social problems.

Finance of the ILO

The budget is prepared and fixed on the recommendation of the Governing Body and Member of states make
their contribution. Contributions are fixed on an ad hoc basis from year to year. India contributes 2.77% of the
annual budget of the ILO.

Impact of the ILO on the Indian Labour

Search from Net.

Subject: Advanced Industrial Relations

Unit III
Trade unionism:

TRADE UNION

Objectives of the Study

1. Meaning of Trade Union and Definition of Trade Union

2. Characteristic of Trade Union and Need for Trade Union
3. Nature and Scope of Trade Union
4. Purpose of Trade Union
5. Functions of Trade Union
6. Structure of Trade Union

1.1 Meaning
The trade union is an association, either of employees or employers or of independent workers. It is a relatively
permanent combination of workers and is not temporary or casual. It is an association of workers engaged in
securing economic benefits for its members.

Definition
According to Section 2(b) of the Trade Unions Act of 1926, “a trade union is any combination of persons,
whether temporary or permanent, primarily for the purpose of regulating the relations between workers and
employers, or between workers and workers and for imposing restrictive conditions on the conduct on the
conduct of any trade or business, and includes the federation of two or more trade unions.

Sydney and Beatrice Web have defined Trade Union as a “Continuous association of wage earners for the
purpose of maintaining or improving the conditions of their working lives.”
G.D.H. Cole defines Trade Union as an association of workers in one or more occupations –an association
carried on mainly for the purpose of protecting and advancing the member’s economic interests in connection
with their daily work.

Laster defines Trade Union as an association of employees designed primarily to maintain or improve the
condition of employment of its members. According to Cunnison, Trade Union is a monopolistic combination
of wage earners who stand to the employers in a relation of dependence for the sale of their labour and even for
the. production, and that the general purpose of the association in view of that dependence is to
strengthen their power to bargain with the employers.

1.2 CHARACTERISTICS OF A TRADE UNION

Association of employees-A trade union is essentially an association of employees belonging to a particular
class of employment, profession, trade or industry. For example, there are unions for teachers, doctors, film,
artistes, weavers, mine workers and so on.Voluntary Association-An employee joins the trade union out of his
free will. A personcannot be compelled to join a union.Permanent Body-a trade union is usually a permanent
body. Members may come and go but the trade union remains.Common Interest-The member of a trade union
have certain matters of common interest-job security, better pay and working conditions and so on, which bring
them together.

Collective Action: Even when an individual employee has any grievance over certain management decisions,
the matter is sorted out by the intervention of the trade union Employees are able to initiate collective action to
solve any problem concerning any particular employee or all the employees. Rapport with the Management:
The trade union seeks to improve relations between the employees and employers. The officials of the trade
union hold talks with the members of the management concerning the problems of the employees in order to
find an amicable solution. It is thus possible for the employees to have better rapport with the management.

Need for Trade Union

Workers join trade unions to achieve certain objectives that they may not be able to achieve in their personal
capacity. Trade unions are necessary.
1. To ensure job security and right pay for the members One of the basic needs of any employee is security of
service. The main reason why an employee joins a union is to get him secured. Apart from job security and
employees need to get pay commensurate with their qualifications and skills. Trade unions strive to get both job
security and correct pay for all employees.
2. To ventilate the grievances of employees to the management:

When the employees in general or some in particular have any grievance, they may not be able to convey the
same to the management in their personal capacity. Such grievances may be brought to the knowledge of the
management through the trade union. The members of the management may be indifferent to the demands of
the individual employees but they cannot be so when it comes to union demands.

1.3 Nature and Scope of a Trade Union

The employer’s association or professional bodies were not included in any of the above definitions.
The employee’s unions are different from that of the employers or professional bodies. The employee’s unions
are primarily concerned with the terms and conditions of employment of their members. The employer’s
associations on the other hand are concerned among other things with influencing the terms of purchase of
services in favour of their members. Hence, the two should not be placed in one category. The associations of
professional members also differ fundamentally from employees unions. Professional associations include self
employed as well as the employees where as trade unions consist only of the people who are employed by
others. In India the term Trade Union refers besides employee’s organizations to employers association also.
Similarly in Britain, even the associations of professional people such as Artists Federation or Musicians
Unions are also recognized as Trade Unions. Thus trade unions are a major component of the modern industrial
relation system. A trade union of workers is an organization formed by workers to protect their interests. i.e.
improve their working conditions etc. All trade unions have objectives or goals to achieve, which are contained
in their constitution and each has its own strategy to reach those goals. Trade Unions are now considered a sub-
system which seeks to serve the specific sub-groups interest and also considers itself a part of the organization,
in terms of the latter’s viability and contribution to the growth of the community of which it is a part.

1.4 PURPOSE OF TRADE UNION

Trade Union came into being for a variety of purposes. Individual workers found it more advantageous to band
together and seek to establish their terms and conditions of employments. They realized that if they bargained as
individuals, the employer would have a better leverage, for an individual would not matter as much as a group
in terms of the running of the enterprise. A group’s contribution is much larger than an individual’s so are the
effects of its withdrawal. An individual may not be able to organize and defend his interests as well as a group
can. Therefore workers saw the advantages of organizing themselves into groups to improve their terms and
conditions of employment. Employers also found it advantageous to deal with a group or a representative of a
group rather than go through the process of dealing with each individual over a length of time. With the
changed political, social and equational environment in terms of awareness of rights the right to organize, the
right to bargain and settle terms and conditions of employment – labour or worker unions sprang up in order to
protect and further worker in acquiring a foot hold in the labour movement also provided the impetus for the
formation of labour unions.Precisely, the major objectives of trade union are the following:
1. Better wages
2. Better working conditions
3. Protection against exploitation
4. Protection against victimization
5. Provide welfare measures
6. Promote industrial peace
7. Take up Collective Bargaining
8. Look after the interest of trade

1.5 Historical Evolution of Trade Unions in India

Between 1850 and 1870, foundation of modern industry was laid. Indian working class started emerging at this
point of time. In the national economy, one could see the growth of Indian enterprises along with English ones,
growing steadily. During this period, the working and living conditions of the labour were poor and their
working hours were long. The Indian Factory Labour Commission (1908) and the Royal Commission of Labour
(1931) have rectified the fact in their reports. The working hours were longer, but the wages were low and the
general economic condition was poor in industries. Indian Factories Act (1881) was enacted to regulate the
working hours and other service conditions of the Indian textile labourers. As a result, child labour was
prohibited. This act required the formation of machinery for the inspection of factories. In 1885, the birth of the
Indian National Congress has provided the background for the emergence of Trade Union. The Trade Union
movement in India can be divided into three phases. The first phase falls between 1850 and 1900 during which
the inception of trade unions took place. Guided by educated philanthropists and social workers the growth of
the trade union movement was slow in this phase. In all industrial cities many strikes took place in the two
decades following 1880 due to the prevailing poor working conditions and long hours of work. Small
associations came out in Bombay and Calcutta. The second phase falls between 1900 and 1947. This phase was
characterized by the development of organized trade unions and political movements of the working class. It
also witnessed the emergence of militant trade unionism. Organised trade unionism was prepared during 1900-
1915. End of Ist World War, and the Russian Revolution of 1917 gave a new turn to the Indian Trade Union
movement and led to organized efforts on the part of workers to form Trade Unions. It was estimated that in
1920 there were 125 unions, with a total membership of 2, 50,000. In 1920, the first national trade union
organization was established. Many of the leaders of the organization were leaders of the national movement
(Monappa, 1937)

The third phase began with the emergence of independence India. The government sought the cooperation of
the unions for planned economic development. The working class movement was also politicized along the
lines of the political parties. Indian National Trade Union Congress is the Trade Union arm of the Community
part of India. Subsequently, the socialists left to set up another national worker federation, the Hind Mazdoor
Sabha. The center of Indian Trade Unions organized in 1970, has close links with the Community Party of India
– Marxist. Besides workers, white collar employees, supervisors and managers are also organized by the trade
union. For example, in the banking, insurance, petroleum industries and Aviation the Trade Union exist.
Craft and General Union Developed Western Societies have the unions like the one just cited. In these places
the industrial way of life has had a longer history. A craft union is built around a certain specialized skill, which
has necessitated a special type of training. Craft unions are open to members of a certain trade/skill, like Air
India’s navigator’s union. Alternatively, a general union is open to all members irrespective of their skills
cutting across trades/skills and includes unskilled, semi and skilled workers. Union Shop When the union acts
as supplier of labour, once an employee is employed then he has to join the union. Here the union makes
employment conditional on union membership.

Check Off
The check-off system is a practice where the management collects an employee’s union dues, as a wage
deduction and gives a lump sum amount to the union. This is a facility that ensures totality of collection of
union dues with no excuse for employees to a resist from paying for one reason or the other as it could happen
in a voluntary system. Such a facility is provided only to a recognized union. Distinction Between Workers
Based on the level and status of the employee for membership of the unions a distinction is being made. All
shop floor workers are termed blue collar workers and all clerical or office staff, who does not work on the shop
floor, are termed white collar workers. White collar workers are different from the blue collar workers on socio
economic background, education, manner of speech, social customs and ideology. They are being paid monthly
and enjoy longer holidays and various privileges as compared to blue collar workers. Nature of work clearly and
significantly differentiates one from the other. In recent times white-collar unionism is expanding. Through the
methods of agitation and litigation, white collar workers achieve the goals like better pay scales, more fringe
benefits, internal promotion etc. A large membership, sound finance and internal leadership are a few strong
points. Trade union leaders started influencing vital channels of productive and strategic functions. Economic
and social decisions affecting workers are taken by the government in consultation with the leaders of the trade
union movement. The workers are turning to be militant since they realized that by exerting pressure on
employers through union power their ends will be met sooner.

Trade Union Growth

In India the trade union remains as adhoc bodies or strike committees but as features of the industrial society.
The various factors like political, economic historical and industrial have all helped the unions to get a legal
status and represent the workers. However, the unions are handmaids of political parties. They joined with one
or the other political parties as more adjuncts of the parties, instead of partnership based on equality and
independence as in England. The Trade union rivalries also have become chapter in free India. Most of the
viable unions are split into new unions having sympathies with political parties have permeated unions
operating in different levels. But they have been able influence public policy, labour and industrial legislation.
They have played an important role in involving suitable machinery for joint consultation in negotiate various
issues between labour and management. Comparing other countries India has large number of trade unions for a
single country. In India, thought there are more than 52000 registered trade union sin the country, only17% of
them are submitting returns and whose activities are on the record. Further, the density of the trade unions in
India is as low as 9.1% as against 81%in Sweden, 54% in Norway, 39% in U.K,32% in Germany, 30% in
Canada. the Indian trade union movement also suffers from problems like small size, poor finance, outside
leadership, dormination by political parties, intense inter union, ect. Due to new political and economic trends
these problems are further multiplying at a rapid pace. Inspite of these problems trade unions have brought
about some economic, political, and social changes for the better conditions of workers. Economically, they
have improved the relative lot of the workers. Politically, they have produced a mighty secular, anticapitalist,
anti-imperialist, egalitarian and socialistic force in the country. Socially, they have emerged as a unique force of
national integration.

Union Leadership

One of the most crucial factors in this sphere is the leadership that is provided. The leadership provides the
direction and goals for a particular union. The leader’s task is to make the union effective, by improving the
terms and conditions of employment of the worker and also by being concerned with the viability of the
enterprise. The trade union organization based as it is, in many cases on individuals or the national federations
and their ideologies, has not been able to evolve a professional cadre of leadership at the grass roots to the
desired extent. In fact, quite often, a single union executive leader is responsible for running a large number of
unions. “A survey of trade union leadership in Bombay in 1960 showed that one leader was president of 17
unions and secretary of two more. Another was an office bearer of 20 unions.* R.J.Mehta is President of the
Free Trade Unions which control more than 14 unions.* This brings us to a consideration of the next issue, i.e.
outside leadership vs. internal leadership. In fact, the Trade Union Act of 1926 makes a provision for this and
allows for 10% of the leadership to be from outside the sphere of the organization.* An outside leader is one
who is not a full time employee of the organization, whereas the internal leader is such a person. Many lawyers
and politicians have been union leaders in the early part of their careers. The former President V.V.Giri was one
such example, so were former Central Ministers like G.L.Nanda and Khadilkar. There are advantages and
disadvantages either in terms of policy or in terms of implementation of administrative action, especially if he
belongs to or has linkages with the ruling party. On the other hand his involvement with the plant level
problems is much less as he is not on the shop floor to understand the intricate issues applicable to a particular
plant. Not being an employee of the enterprise or an insider, he lacks the required depth of understanding of
local issues and specifics. The outsider is a professional who has many units under his wing all of which
demand his time, including the larger function of liaison. The insider would not only have greater knowledge of
the enterprise specifies but also have more time for sustained work, being concerned as he is with just one
enterprise. Also, external issues and ideologies are not unnecessarily inducted, which could happen when
outside leaders are in control for whom ideology may be more important than getting the best deal under the
circumstances.

Bibliography

· R.D.Aggarwal (Ed.), Dynamics of Labour Relations in India: A Book of Readings,

Tata McGraw-Hill, Bombay-Delhi, 1972, pp.58-82.
· India Today, op.cit.
· B.R.Sheth, Indian Labour Laws: A supervisor Should Know, New Delhi, All-India
Management Association, 1978.

The leadership role in a trade union has a variety of demands placed on it. Not only does it require a certain
amount of technical knowledge of the nature of business of the particular organizations, but also a sympathetic
understanding of the workers, their attitudes and their problems. A certain amount of commitment and empathy
for a cause, even in uncertain conditions, is necessary. Till now the attraction for persons entering this
occupation has been the possibility of a political career in the future. However, there have been some plant
unions which have been run very professionally and have at the same time been concerned with the viability of
the firm or the enterprise as well as the good of the workers. The erstwhile Simpson Workers Union under the
stewardship of Gurumurthy was an example, and TLA is an example of an industry level federation.Trade
Union Finances If an organization is to grow, survive and meet the needs of its rank and file members in terms
of attaining their objectives etc. It needs money. For a variety of reasons, the finances of May trade unions have
not been very bountiful. It must be noted that to every general statement, there are a number of exceptions and
so is the case with some financially strong unions. Funds are needed for attracting and retaining competent staff
for, however idealistic the cause, people do need to survive. It is only with competent staff that some of the
objectives like research, comparative data generation, company studies, presenting demands and resolving
workers problems can be achieved. Again, funds are necessary for political lobbying; for sending union
representatives to the local bodies, state and central legislatures. If inertia sets in, an organization will wither
away or the rank and file will shift to a more active and useful organization. Funds therefore are needed to
pursue activities, which will in turn benefit the members who will then contribute, not only financially but also
in terms of their services and sustain their membership. Activities resulting in something worthwhile will arouse
the enthusiasm of the members and make them concerned for the allocation and proper utilization of scarce
resources. The divisive nature of Indian trade unionism has also led to the dissipation of funds amongst a large
number of organizations, with the result that there are many small unions without much financial backing and
without much staff to do any substantial work. The generation of funds has been wholly inadequate. In some
cases, subscriptions are not collected promptly or are paid by members only when they have a problem. In the
former case, it is overlooked by the trade union management for fear of losing membership. On the other hand,
there are according to some trader union executives, shrewd members who do not mind paying subscription to
more than one union in order to protect their interest in times of need.One other mechanism employed
nowadays besides the usual collection is the special levy at the time of distribution of bonus. Some national
federations and independent unions often generate some reserves to pay at the time of strike as strike fund or to
employ research staff to keep abreast with current trends, but this is not the case with all unions.

1.6 FUNCTIONS OF TRADE UNIONS

Functions of Trade Unions in the USSR In the erstwhile USSR, the trade unions used to undertake (Trade
Unions Act, 1959) the following functions:
Raising of labour productivity; improvement in the quality of production, participation in the planning and
regulation of wags: improving wage rates; assisting in the fusion of technical progress; concluding collective
agreements (with managements on questions of wages and other working conditions within the limits set by the
planning authorities); participation in the settlement of industrial disputes, conclude agreements with the
employers on the manner of utilization of funds allotted for measures of social and industrial security; setting up
sanatoria and rest houses; striving for a better organization of medical assistance to the labourers and of the
protection of the health of women and children, organizing funds of mutual assistance; assisting members in
raising their ideological, political and general educational level; spreading scientific and political knowledge;
conducting broad propaganda on matters of productive techniques, set up clubs, homes, libraries, develop
artistic mass activity, promote culture, sports and tourism among the employees; help attract the women into
public, productive and social life; drafting, issuing, implementing and supervision of labour legislation;
maintenance of labour discipline, provision of housing and other welfare amenities. Prior to disintegration, the
functions of trade unions in the USSR were not only confined to production and collective bargaining only but
they also enjoyed supreme power and their functions were all-pervasive, ranging from the organization of
workers’ holidays to looking after canteens, libraries and dispensaries, and taking part in the determination of
the nature and rates of compensation for industrial accidents. The workers right to strike was either not known
or non-existent or is never resorted to the collective agreements, known as the Socialist Labour Agreement tried
aimed to “seek participation of workers in friendly collaboration, free from exploitation as a worker or an
employee, fulfilling a certain function in a given socialist undertaking.

Functions of Trade Unions in the Republic of China

In China, the functions of trade unions have been enumerated thus:
(i) To organize the workers to launch labour emulation drives, strengthen labour discipline and ensure the
fulfillment of plans.
(ii) To improve the material and cultural standards of workers’ lives and to supervise the managements with a
view to implement the various targets of the plan.
(iii) To organize political, educational and technical studies as well as cultural and sports activities.
(iv) To enroll members, collect funds and give reports about these activities.
(v) To educate the workers in the three R’s vocational efficiency and current economic and political problems.
(vi) To provide recreational facilities for the workers in the form of clubs and places of culture and by
organizing dances, theatrical performances, music, concerts, cinema shows, games, sports, and facilities for
physical education; circulating entertainment instruments and organizing libraries.
(vii) To get equal pay for equal work.
(viii) To guarantee material assistance to the workers in old age, and in case of illness or disability.
(ix) To protect women and children from exploitation.
(x) To participate in various activities which are directed towards the improvement of living conditions?
(xi) To enter into collective agreements with the management for mutually fulfilling the targets in respect of
production, wages, labour norms, labour safety, welfare, social security, workers’ participation in management,
material obligations etc.

Functions of Trade Unions in the USA

According to the first President of A.F.L. trade unions in the USA perform the following functions.

Protecting the wages of worker against capitalist exploitation; increasing wages; reducing hours of work;
securing just and human working conditions, improving the safety and sanitary conditions of the workshop;
increasing the workers’ share in the national income; introducing working rules and democratize labour
management; freeing the labourer from tyrannies, petty or otherwise, which serve to make his existence a
slavery; achieving equality of opportunity for all workers; supporting legislation which aids workers and
opposing harmful legislation; protecting and strengthening democratic institutions; aiding and promoting the
cause of peace and freedom in the world; protecting the labour movement against corruption and racketeers;
safeguarding the labour movement from communists, fascists or other totalitarians; encouraging workers to
register and vote; encouraging the sale of union-made goods through the use of the union label; and
participating in various community activities and in local government organizations, such as school boards and
city councils.Besides, they also take part in administration work; negotiation and administration of collective
agreements; provision of educational and beneficial activities and participation in community, state and national
affairs; provision of research facilities; get protective and social security legislations enacted by the state;
provide life insurance and health benefit and pension programmes, recreational facilities, co-operatives, labour
banks, credit unions, radio programmes and housing projects, etc. In the USA, trade unions been working as
protective organizations. They have conferred immense benefits on society as a whole by strengthening
democratic processes and seeking economic stability.The methods which the trade unions deploy to achieve
their goals include collective bargaining with the employers and influencing the state machinery through
political activities to enact favourable labour laws. The strikes have been their major instrument.

Functions of Trade Unions in the USA

The British TUC Report Post-War Reconstruction distinguished three mainsets of objectives namely:
(i) Maintaining and improving wages, hours and conditions of work, and also what wages can buy; and
increasing the size of the real national income and the share of it which should accrue to the working people.
(ii) Providing and improving opportunities for the advancement of the workers to obtain “full employment” is
an aim which trade unions have always pursued:
(iii) Extending the influence of the working class over the policy and purposes of industry and arranging for
their participation in management Flandes and Cleggre have laid down the main objective of a trade union as
under:
(i) Defining or improving the wages and conditions of work;
(ii) Raising the status of the worker as a citizen of industry and of society; and
(iii) Extending the area of social control of the nation’s economic life and participating in that control; Prof.
Laski has said the trade unions to-day are pluralist in character and pragmatic in method; if they are not, they
are unlikely to survive the demands made upon them by so swiftly changing an environment. The trade unions
in Britain not only defend or improve the wages and conditions of labour but also raise the status of workers,
both in industry and society. They extend the area of social control of the nation’s economic life and participate
in that control. John Price observes: ‘In England, trade unions have provided cash benefits for themselves and
have worked for the development of social services by the state, recognizing that the needs of the individual are,
to a large extent, the responsibility of the whole community. Trade unions are helpful in creating such
conditions of work and service and wage payment that, on the one hand, they avoid inequalities between the
different sections of the community, and on the other hand, provide opportunities for the progressive raising of
the standard of living of large numbers of people. They also provide for the development of the human
personality in its manifold aspects by arranging for educational programmes.

Functions of Trade Unions in the India:

As per the Indian Trade Union Act, 1926, the primary function of a trade union is to protect and promote the
interests of the workers and the conditions of their employment. They can also have other objectives, which are
not inconsistent with this primary purpose or opposed to any law. In India, trade unions generally undertake the
following functions:
(i) To achieve higher wages and better working and living conditions for the members.
(ii) To acquire control over running of the industry by workers.
(iii) To minimize the helplessness of the individual workers by making them stand-upunitedly and increasing
their resistance power through collective bargaining;protecting the members against victimization and injustice
by employers.
(iv) To raise the status of the workers as partners in industry and citizens of society bydemanding an increasing
share for them in the management of industrial enterprises.
(v) To generate self-confidence among the workers.
(vi) To encourage sincerity and discipline among workers.
(vii) To take up welfare measures for improving the morale of the workers.

The National Commission on Labour has underscored certain basic functions to which trade unions have to pay
greater attentions such as:
(i) To secure fair wages for workers.
(ii) To safeguard the security of tenure and improve conditions of service.
(iii) To enlarge opportunities for promotion and training.
(iv) To improve working and living conditions.
(v) To provide for educational, cultural and recreational facilities.
(vi) To cooperate and facilitate technological advancement by broadening the understand.
(vii) To promote identity of interests of the workers with their industry.
(viii) To offer responsive cooperation in improving levels of production and productivity, discipline and high
standards of quality.
(ix) To promote individual and collective welfare.

Besides these basic functions of trade unions, the Commission enjoined the following responsibilities upon the
unions:
(i) Promotion of national integration.
(ii) Generally, influencing the socio-economic policies of the community through the active participation in
their formulation at various levels.
(iii) Instilling in their members a sense of responsibility to industry and the community.
The First Five Year Plan while spelling out the role of trade unions emphasized that they should:
(a) Present plans to workers so as to create enthusiasm among them for the plans.
(b) Exercise the utmost restraint in regard to work stoppage.
(c) Formulate wage demands which are attuned to the requirements of economic development and are in
keeping with considerations of social justice.
(d) Assume greater responsibility for the success of the productive effort.

1.7 Structure of Trade Unions in India

In India, the structure of trade union consists of three levels: plant/shop or local, the state and the centre. It is
generally from the central level that the ideology of the important central federations of labour in India
percolates down to the state and local levels. Every national or central federation of labour in India has state
branches, state committees or state councils, from where its organization works down to the local level. There
are two types of organizations to which the trade unions in India are affiliated:
(i) National Federations, and
(ii) The Federations of Unions

Here a brief discussion of this trade union form is given.

1. The National Federations have all the trade unions in a given industry as their affiliated members. Every trade
union, irrespective of the industry to which it belongs, can join a general national federation. Such federations
are the apex of trade union policies a national character. The central union organizations are national federations
of labour based on different political ideologies. Because of their political leanings, the affiliated trade unions in
the field of labour relations follow either a militant policy or a policy of cooperation with the employers and the
government, or a policy of continuous strife and litigation. The trade union leadership to these national
organizations is generally provided by the politicians. Such leaders are found leading a dozen or more unions in
a particular state.These unions may be in the petroleum industry, the transport industry, electricity supply
undertakings or craft unions, such as the rickshaw pullers’ union or taxi drivers’ union. Some of the trade union
leaders and MPs and MLAs, corporators of city corporations and members of important committees dealing
with the labour policy of the country. The national/central federations are empowered to decide the question of
jurisdiction of the various local and national unions. A majority of these federations allow their affiliates to
bargain independently with their respective employers. The federations only act as coordinating authorities for
different unions under their control. They also select delegates to represent workmen in international
conferences organized by the International Labour Organisation or the International Confederation of Free
Trade Unions. The all-India federation of trade unions has a regular structure.
For example:

The INTUC consists of a central organization, affiliated unions, industrial federation, regional branches and
councils functioning under the direct control or supervision of the central organization, the assembly of
delegates, the general council and the working committees.

The INTUC functions through its affiliated unions, delegates, assembly, general council (including office-
bearers), the working committees of the general council and the Pradesh bodies.

The UTUC consists of the general body (.delegates’ assembly) general council, and the working committee of
general council.

The Hind Mazdoor Sabha (HMS) works through the general council, the working committee and affiliated
organization.

2. Federations of Unions: These are combinations of various unions for the purpose of gaining strength and
solidarity. They can resort to concerted action, when the need for such action arises, without losing their
individuality. Such federations may be local, regional, state, national and international. There are a few
organizations which are local in character, such as the Bharatiya Kamgar Sena, the Labour Progressive
Federation, Chennai, the National Front of Indian Trade Unions and the Co-ordinating Committee of Free Trade
Unions. Many Unions are affiliated to one or the other type of the following central organizations of workers:
(1) The Indian National Trade Union Congress
(2) The All-India Trade Union Congress
(3) The Hind Mazdoor Sabha
(4) The United Trade Union Congress
(5) The Centre of India Trade Unions
(6) Bharatiya Mazdoor Sangh
(7) The National Front of India Trade Unions
(8) The United Trade Union Congress (LS)
(9) The National Federation of Independent Trade Unions
(10) The Trade Union Co-ordination Committee
(11) Indian Confederation of Labour
(12) Hind Mazdoor Kisan Panchayat
(13) National Labour Organization

Besides the affiliated unions and their federations, there are a large number of associations and federations
which have not joined any one of the central workers’ organizations. Some of these are:
(1) The All India Bank Employees’ Association;
(2) The All India Bank Employees’ Federation;
(3) The All India Insurance Employees’ Association;
(4) The All India Defence Employees’ Federation;
(5) The All India Railway men’s Federation;
(6) The National Federation of Posts and Telegraphs Employees;
(7) The National Federation of Indian Railway men;
(8) All India Pvt. Employees Federation;
(9) All India Electricity Employees Federation;
(10) All India Port and Dock Workers Federation;
(11) All India Defence Workers Federation;
(12) All India Chemical and Pharmaceutical Employees Federation.

In Great Britain, the British Trade Union Congress and in the USA, the American Federation of Labour and the
Congress of Industrial Organisation (AFL.CIO) are the national organization of trade unions. At the
international level, the World Federation of Trade Unions (W.F.T.U.) and the International Confederation of
Free Trade Unions (I.C.F.T.U.) are two important organizations.

Questions
1. Define Trade Unions? Why do workers organize into Unions?
2. Trace the Historical Evolution of Trade Union movement in India?
3. What are the aims and objectives of Trade Unions?
4. Explain the Structures and types of Trade Unions in India?
5. What are the functions of Trade Union?
6. Explain the Need and Scope of Trade Union?

II. TRADE UNION LEGISLATION

2.1 THE TRADE UNIONS ACT, 1926

Introduction
The origin of the passing of Trade Union Act in India was the historic Buckingham Mills Case of 1920 in which
the Madras High Court granted an interim injunction against the Strike Committee of Madras Labour Union
forbidding them to induce certain workers to break their contract of employment by refusing to return to work.
Trade Union leaders found that they were liable to prosecution and imprisonment for bonafide union activities
and it was felt that some legislation for the protection of trade unionism was necessary. In March, 1921,
Mr.N.M.Joshi, the then General Secretary of the all India Trade Union Congress successfully moved a
resolution in the Central Legislative Assembly that Government should introduce legislation for registration and
protection of trade unions. But opposition from employers toadoption of such measure was so great that it was
only in 1926 that Trade Union Act was passed.

Object of the Act

The object of passing the Act was to make necessary provisions in regard to the registration of Trade Unions
and to define the law relating to registered Trade Unions. The Royal Commission on Labour in India observed
that the object is to give trade unions the necessary protection from civil suits and criminal laws relating to
conspiracy in order to enable them to carry on their legitimate activities. The Act extends to the whole of India
including the state of Jammu and Kashmir. It came into force on the first day of June, 1927.

Trade Dispute
A trade dispute means any dispute:
(a) between employers and workmen
(b) between workmen and workmen
(c) between employers and employers
Any such dispute as mentioned to be a Trade Dispute must also be associated with –
(a) the employment
(b) non-employment
(c) the terms of employment
(d) the conditions of labour of any person

The definition of Trade Dispute in this Act is almost similar to the definition of Industrial Dispute given in the
Industrial Disputes Act, 1947. In Trade Dispute, it is necessary that there must be a demand from one party and
refusal to accept those demands by other party. There can be real and substantial between parties to such
dispute.

Trade Union
The term trade union can be expressed both in an ordinary sense and in broad sense. In ordinary sense it is a
combination of workmen and in a broader sense it includes combination of employers and federation of two or
more such combinations. The trade union means:
Any combination whether temporary or permanent formed for the purpose of regarding relations between –
(a) workmen and employers
(b) workmen and workmen
(c) employers and employers
The above combinations put restrictions on the conduct of any trade or business but certain agreements given
below have been excluded from the scope of the term trade union.
(a) Agreement between partners in a business
(b) Agreement in consideration of the sale of the goodwill of a business or of instruction in any profession, trade
or handicraft. Similarly an association whose main object was to acquire patent right was held not to be a
trade union. Similarly federation of teachers cannot be referred as association of trade union for teachers not
being in the employment of industry. Trade union should send an application for registration to the Registrar
and shall be accompanied by the following:
- Name and addresses of members making the application.
- The name of the Trade Union and address of its head office
- The titles, names, ages, addresses and office bearers of the Trade Union
- General statement of the assets and liabilities of the Trade Union, if the union is in existence for over one year.
The Trade Union can be registered only under the Trade Unions Act, 1926 and the registration of the Trade
Unions under any other Act such as the following shall be void:
- The Societies Registration Act, 1860
- The Cooperative Societies Act, 1912
- The Companies Act, 1956
The registration of Trade Union is not legally necessary but it brings certain advantages which are:
- It becomes a corporate body by name - It can enter into a contract
- It attains a legal entity
- It can sue and be sued in its registered name
The registrar can cancel or withdraw the registration and can exercise power on Trade Unions for the following
issues where:
- Certificate of registration has been obtained by f\fraud or mistake
- Trade Union has ceased to exist
- Trade Union has violated any provision of this Act
- The primary objects of the Union are no longer statutory objects

The Trade Union can request the registrar to cancel their registration after the approval of the general meeting
of Trade Unions or majority of members of Trade Union. The Registrar must give atleast two months notice in
writing giving the grounds on which he proposes to cancel the certificate of registration. Registration confers on
the Trade Unions certain rights and privileges which are as follows:
1. Body corporate
2. Separate fund to political purposes
3. Immunity from criminal conspiracy
4. Immunity from civil suit
5. Enforceability of agreements
6. Right to amalgamate
7. Right to inspect books of Trade Union

2.2 REGISTRATION OF TRADE UNIONS

Appointment of Registrars (Section 3)

As regards registration of a trade union, the Act empowers the appropriate Government to appoint a person to
be the Registrar of Trade Union for each state. The appropriate Government may appoint as many additional
and deputy registrars trade unions as it thinks fit. They shall work under the superintendence and direction of
the Registrar. The appropriate Government shall specify and define the local limits within which any additional
and Deputy Registrar shall exercise and discharge his powers and functions.

Mode of Registration
A Trade Union can be registered only under the Trade Union Act., 1926. The Societies Registration Act, 1860,
the Co-operative Societies Act, 1012, and the Companies Act, 1956, shall not apply to any registered Trade
Union, and the registration of a Trade Union under any such Act shall be void (Section 14) Any seven or more
members of a Trade Union may apply for registration of the Trade Union.All the members applying for
registration must subscribe their names to the rules of the Trade Union and also comply with the provisions of
the Act relating to registration.

Application for Registration (Section 5)

Every application for registration of a Trade Union shall be made to Registrar. It shall be accompanied by a
copy of the rules containing matters as given in Section 6. It also containsa statement of the following
particulars.
(a) the names, occupations and addresses of members making the application
(b) the name of the Trade Union and the address of its head office; and
(c) the titles, names, ages, addresses and occupations of the office-bearers of the

Trade Union
Where a Trade Union has been in existence for more than one year before its registration, a general statement of
the assets and liabilities of the Trade Union in the prescribed form must be submitted along with the application.
Rules of Trade Union – To provide the following (Section 6)
(a) Name of the Trade Union
(b) Objects
(c) Purposes for which the general funds shall be applicable
(d) Maintenance of a list of its members – facilities for its inspection
(e) Admission of the number of honorary or temporary members
(f) Payment of subscription – not less than 25 paise per month per member
(g) Conditions under which members can enjoy the benefits and under which fines may be imposed on them
(h) Manner in which rules may be amended
(i) Manner of appointment and removal of the members
(j) Safe custody of the funds, an annual audit, facilities for inspective of the accounts
(k) Manner in which Trade Union may be dissolved

Registration (Section 7)

The Registrar will register the Trade Union, if he is satisfied that the trade union has complied with all the
requirements of this Act in regard to registration. The Registrar shall register; the Trade Union by making
necessary entries in the register, to be maintained in such form as may be prescribed. The particulars relating to
the Trade Union contained in the statement accompanying the application for registration shall be entered in the
register. Where the Registrar takes no action on an application for more than three months, writ under
Article 226 can be issued commanding the Registrar to deal with the application.

Certificate of Registration (Section 9)

The Registrar, on registering a Trade Union, shall issue a certificate of registration which shall be conclusive
evidence that the Trade Union has been duly registered under the Act. It is obligatory on the part of the
Registrar to register a Trade Union provided the provisions of the Act are complied with. He is not entitled to
question whether the Union is lawful or unlawful.

Advantages of Registration
Although it is not legally necessary for a Union to be registered, registration does provide it with certain
advantages. Some of the advantages gained by registration as given in Section13 are as under:
1. A Trade Union becomes a body corporate by name under which it is registered and it a legal entity distinct
from its members of which it is composed.
2. It gives perpetual succession and common seal.
3. It can acquire and hold both movable and immovable property.
4. It can enter into a contract.
5. It can sue and be sued in its registered name.
Cancellation of Registration (Section 10)
Power to withdraw or cancel registration of a Trade Union is given to the Registrar. The Registrar can exercise
the power in the following case, namely:
1. On the application of the Trade Union for such a course
2. Where the certificate of registration has been obtained by fraud or mistake
3. Where the Trade Union ceased to exist
4. Where the Trade Union has willfully and after notice from the Registrar allowed any rule to continue in force
which is inconsistent with the provision of this Act
5. Where the Trade Union has willfully and after notice from the registrar violated any provisions of this Act
6. Where the primary objects of the Union are no longer statutory objects Where the Union desires to have its
certificate of registration withdrawn or cancelled, the Registrar on receiving much application, must, before
granting the application satisfy himself that the withdrawal or cancellation was approved by a general meeting
of the Trade Union or if it was not so approved, it had the approval of the majority of the members of the Trade
Union. The Registrar is not competent to cancel registration of a Trade Union without giving requisite notice
and giving an opportunity to the Trade Union to show cause against the proposed action. The Registrar must be
given not less than two months, previous notice in writing giving the grounds on which it is proposed to
withdraw or cancel the certificate of registration. No such notice is required where such application is made by
the Trade Unionitself.

Appeal (Section 11)

Section 11 of the Act gives a limited right of appeal from the decisions of the Registrar. Any person who is
aggrieved by the refusal of the Registrar to register a Trade Union or the withdrawal or cancellation of
certificate of registration is given the right of appeal. The appeal must be within 60 days of the date of which
Registrar passed the order against which appeal is made. Trade Union can be restrained by injection from
applying its funds for an unauthorized object or for an unlawful purpose, because such expenditure shall be ultra
virus the Act. Thus it would be illegal it devote Union funds in support of any illegal strike or lock out.
Rights and Privileges Registration confers on the Trade Union certain rights and privileges. Similarly some
rights are granted to the member of a registered Trade Union both collectively and individually.
These are as under:

Body Corporate (Section 13)

Every registered Trade Union is a body corporate by the name under which it is registered. A registered Trade
Union is an artificial person in the eyes of law capable of enjoying rights like a natural person. It has a perpetual
succession and a common seal. It has the right to acquire and hold both movable and immovable property. It
can enter into a contract and can sue and be sued in its registered name.

The Objects on which General Funds may be spent (Section 15)

(a) Salaries, allowances and expenses to office bearers
(b) Expenses for administration and audit of the accounts of funds of the union
(c) Towards Prosecution or defence of any legal proceeding to which the union or its member is a party
(d) The conduct of trade disputes on behalf of the union or its members
(e) Compensation for the members at the time of dispute.

2.3 Penalties and Procedure

Under Sections 31 to 33 the Registrar of Trade Unions is empowered to impose penalty on the trade union for
default in submitting returns or for supply of false information or statements.
(i) Failure to submit returns (Section 31):
(a) failure to give notice which is required to be given by a registered trade union;
(b) failure to send any return, required to be sent by a registered trade union; or
(c) failure to send any documents, required to be sent by a registered trade union. Every office-bearer or other
member of the executive committee is bound to give such information, or send statements or documents as
required under the provision of the Act, and if this is not done, they are punishable with fine which may extend
toRs.Twenty-five. In the case of a continuing default, an additional fine extending to Rs.Twenty-five may be
imposed for each week after the first week during which the default continues. But in no case the total fine shall
exceed rupees five hundred. The following information or statements are required to be submitted by the
registered trade union:
(i) Notice of change in the address of the head office of the trade union;
(ii) Notice of change of the name on amalgamation of the unions;
(iii) Notice of change in the officers of the trade union;
(iv) Copies of the corrected rules ;
(v) Copy of every alteration made in the rules;
(vi) Notice of dissolution of the trade union; and
(vii) Annual returns for he period ending March 31.

Any person who willfully makes, or causes to make, any false entry in, or any omission from the general
statement, or the copy of the rules or the copy of altered rules, which are required to be submitted to the
Registrar in the case of a registered trade union, shall be punishable with fine which may extend to Rs. 500
(Section 31).
Any person who contravenes any of the orders of the Registrar for verification of the membership of a
registered trade union (under Section 28A) shall be punishable with fine which may extend to five hundred
rupees (Section 31).

(ii) Supplying False Information about Trade Unions (Section 32):

The Act also lays down that where any person with intent to deceive gives:
(a) To any member of a registered trade union, or
(b) To any person including or applying to become a member of such trade union, or
(c) Any alteration as are for the time being in force, shall be punishable with fine which may extent to Rs.200.
Similarly, any person who with intent to deceive gives a copy of any rules of an unregistered trade union to any
person, on the pretence that such rules are the rules of a registered trade union, shall be punishable with fine
which may extend to Rs.200.
(iii) Cognizance of Offence (Section 33): Any offence under this Act cannot be tried by a court inferior to that
of Metropolitan Magistrate or a Judicial Magistrate First Class. Further, no court shall take cognizance of any
offence unless complaint thereof has been made by both or with the previous sanction of the Registrar of by the
person to whom the copy was given, within six months of the date on which the offence is alleged to have been
committed.

Individual employees, if not required to become members in good standing in the union, may refuse to follow
contract provision. Other employees, although benefiting from union activities, may also refuse to support the
union. These “free riders” can create dissatisfaction among union members, who may also likewise refuse to
continue their support to union activities. For these reasons, unions often propose some system of union
security, of which all employees are required to be or to become and to remain union members.
The Union Security covers:
(a) Sole or Exclusive Bargaining Agent: Under this type of security, the union is accepted as a bargaining agent
for all employees (members and non-members) in the unit.
(b) Preferential Union Shop: Under this, additional recognition is granted to a union by agreement that
management shall give the first chance to union members in recruitment.

2.4 Unionization in the Indian Context

Trade union law and political parties and their strategy are relevant for the process of unionization in the Indian
context. The Trade Union Act 1926 states, “Any seven or more members of a trade union may be subscribing
their names to the rules of the trade union and by otherwise complying with the provisions of this act with
respect to registration, apply for registration of the trade union under this act. This has resulted in a large
number of registered and unregistered trade unions. Another factor is that the major political parties have a
federation at the apex or national level to which unions at the plant and state level are affiliated. The
organization pattern of a trade union federation is usually three-tired. Units exist at the plant or shop, state and
the national level.

National Level Federation

Historically, four major federations have been in existence and have established a national net
work of federal unions. They are:
1. The All India Trade Union Congress (AITUC)
2. India National Trade Union Congress (INTUC)
3. United Trade Union Congress (UTUC)
4. Hind Mazdoor Sabha (HMS)
Of the four, the penultimate one, UTUC, has to a certain extent merged with theCenter of Indian Trade Union
(CITU)
Other than the above,
1. National Labour Organisation (NLO)
2. Bhartiya Mazdoor Sangh (BMS) and
3. Hind Mazdoor Panchayat (HMP)
are a few having stronger regional affiliations than a national coverage.

2.5 INDUSTRY LEVEL UNIONS

Textile Labour Association

Ahmedabad is an example of the industry level union. TLA has diversified into an unorganized sector.
However, its strength and major contribution has been in the textile industry.

Local Level Unions

Many Indian Unions are not affiliated to an industry level federation and in many cases may not have any
affiliation to the national federation. They are thus independent local unions centered on a particular plant or a
multi plant organization. Irrespective of occupational groups all are admitted to this union. The numbers may
vary among the small, medium and large ones. In specific situations, the assistance or guidance of the larger
federations or other large unions in related industries are sought.

2.6 RECOGNITION OF A UNION

There are two issues of concern here:

The first is the issue of recognition of a union peruse, especially in a non-unionised situation. The first question
that arises is: Which union is one to recognize, or should more than one union be recognized? Related to this is
the problem of verification, the process by which the contending unions’ claim to membership is cross-checked,
to enable one to seek representative status.

The two issues are related to:

(i) the need to recognize a union; and
(ii) the process to be employed for verification when a union stakes its claim, either in a new union situation or
in multi-union situations. This problem arises because at the moment there is no uniform legislation available in
all the states and union territories with regard to the recognition issue. There have been attempts time and again
at restructuring and streamlining the system but nothing has been affected so far. It is only in states where the
Bombay Industrial Relations Act is in force, e.g. Gujarat and Maharashtra, that there are elaborate provisions
regarding recognition. The Act classifies trade unions into three categories:
1. Representative union
2. Qualified union,
3. Primary union
The basis of this classification is the percentage of membership that a union has at the industry level ( Chemical
industry) or at the lowest level, the primary union. The representative union should be able to muster 15% of the
total number of employees, employed in any one industry in a contiguous area. The qualified union should have
5% of the employees in an industry enrolled as members and finally the primary union should have 15% or
more employees enrolled in a unit or a plant. Therefore it is apparent that there is a scaling down of numbers in
terms of the status accorded. The idea is to provide some basis to assess the relative strength of a union seeking
recognition. The Verification Process under the Code of Discipline In a situation where a union puts forth a
claim to be recognized under the Code of Discipline the Labour Department satisfies itself about the union’s
representation. The department would collect the following:

1. Particulars of existing unions in the plant, registration number and date of registration, whether the existing
recognized union has completed a two-year period, whether any of the unions has completed a two-year period,
whether any of the unions committed a breach of the Code of Discipline as established by an enquiry of the
implementation machinery. Within 10 days the aspirant unions and other existing unions will have to produce
documentary evidence to the verification officer in respect of the list of members who have paid subscriptions
for three months out of the preceding six months.
2. Membership and subscription.
3. Money receipt counterfoils.
4. Books of accounts.
5. Bank account books (statements)
6. A copy of the constitution of the union. If there are two unions then both need to furnish the required data.
However, if the unions abstain from providing data, the verification officer after giving 10 days notice, will go
ahead with the verification process and come to a judgment. The verification officer scrutinizes the documents
in the presence of the union(s) submitting the above data. If any member has been claimed by both the unions
then an explanation is called for. The muster roll of the firm will also be checked to ensure that the names tally
in terms of employment and union membership. After this process of checking and rechecking, the unions
concerned can themselves go through the verified list of members and notify their objections, if any. Only
specific objections will be considered. The objections will then have to be verified. In order to establish this, a
systematic sample of employees will be selected for personal interrogation. The proportion of interviews varies
from a figure as high as 29% or a minimum of 100 when the number of names objected to is 500 to 2% or 250
when the number is above 5000 or more. The verification officer will then submit his report to the government
as well as to the management of the firm. This verification process is according to the Code of Discipline.
However, since the code is not a statute, his findings have to be accepted in good faith by both the management
and unions during their bilateral talks. Many agreements incorporate the acceptance of such voluntary codes.

2.7 Rights and Responsibilities of Registered Unions

While the main clauses of the Trade Union Act of 1926, concern the formation of unions, certain other features
are also worth noting. Registration, which means formal recognition of a representative body, also entails
certain pre-conditions. A registered union must allow membership to anyone over 15 years of age and have 50%
of the office bearers from within the industry. It must keep its books of account in order and send its income and
expenditure statements to the registrar of trade unions on or before 31st March. The union can spend its funds
on salaries of office bearers, prosecution, defence, etc. for protecting its trade union rights, to provide
compensation to members, levy subscription fees, publish periodicals, etc. More important, a registered union
can claim protection from beingprosecuted for legitimate trade union activities. This protection is under Section
120 B, subsection 2 of the Indian Penal Code. The issue that arises, therefore, is the distinction between a
recognized union under the Code of Discipline and a registered union under the Trade Union Act of 1926. The
former is a voluntary act and may well concern a representative union, while the latter may not always cover a
representative union, especially in multi-union situations where there are many small unions or two or three
factions. In the absence of any statute, the recognition of a majority bargaining union of the workers still
remains a cumbersome process.
Questions
1. Define Trade Union under Trade Union Act 1926.
2. What is the Registration Procedure of Trade Union and Explain?
3. Explain the Recognition of Trade Union?
4. What is Rights and Responsibilities of Trade Union?
5. Explain Penalties and Procedures under Trade Union Act?

III. MULTIPLICITY OF TRADE UNIONS

3.1 Multiplicity of Trade Union

In India, many of the unions are general unions. In this environment, a combination of factors seems to operate
– the first being the democratic principle of any seven members being able to form and register a union. In a
democracy, even a minority is given an opportunity to organize and further its interests. The Trade Union Act of
1926 also gives sanction to this principle of seven members forming a union. Secondly, given the large number
of trade union federations at the national and regional level, which are vying with each other for increased
membership there is bound to be disunity among the workers. There is no single federation to which all the
other federations belong. The trade union leaders, some of whom are outsiders while others have come up from
within the trade union movement, have different approaches to the problems at hand and hence there may, and
does come a parting of ways on many occasions. In multi-union situations at the plant level, the problem of
inter-union rivalry frequently poses a managerial problem. Disagreement among unions to technological
change, rationalization, automation or terms and conditions of employment causes work stoppage. Sometimes
one union agrees while the other does not, for a variety of reasons. These rifts are also due to the rivalry among
leaders, or to differences in strategy to be adopted or to differences in ideology. A clash of personalities and
egos also plays its part. One of the effects of industrialization, which has meant the stepping up of the rate of
capital formation, has been a strain on the lying standards of workers. This has been coupled with another side
effect. i.e. hob insecurity – a problem that workers usually face in the initial stages of industrialization. The
growth of unions in such cases has generally been to protect the interest of the working class. The process of
industrialization itself makes for increase in the rate of unionization. In India this process has not followed the
pattern that existed in the developed countries. The merchant-craftsman’s stage of capitalism was bypassed and
we had instead an abrupt transition from the agricultural pattern of production to the factory pattern of
production. In the process the emphasis on craftsmen and their skills got de-emphasised. This, when coupled
with the low level of skill formation, not only meant a greater number of unskilled industrial workers, but, also
as a consequence, led to the growth of several general industrial unions and hence the problems of inter-union
rivalry. Another factor was the political linkage with unionization. Unions through their collective action are
organizations concerned with the interest of a particular class. Hence they are also concerned with the
distribution of power. Since distribution of power and decision-making is linked with the political process, the
inter-relationship between politics and unionism is part of this process which is perpetual. Both political parties
and unions have a vested interest in each other as the effect of their actions and strength is of interest to each
other. Unions have a vita stake in the political process and the decisions that will change or restructure the
balance of power within their society. The growth of the four major national federations can be traced directly
to the growth of the major political parties which have different ideologies and approaches to the distribution of
power and the role of labour in society. The ideological links between these federations and the political parties
are, therefore, responsible for cleavages in the union movement. Another phenomenon has been the role of the
‘outside leaders’ in the union. This is partly due to the low level of education of the workers, their lack of
opportunities to gain experience and therefore their dependence on small elite of educated and influential
people. All these factors have led to the domination of the trade union positions by ‘outside’ leaders. The
technical demands in terms of understanding the voluminous and all-embracing legislation are formidable and a
legalistic approach seems to be all-pervading. Therefore familiarity with the various pieces of legislation does
play a part in getting things done. The social distance between the manager and the worker has also played its
part. In a tradition-bound society which gives due deference to authority, the distance between the manager and
the worker has been substantial. The gap has therefore been filled by politicians turned union executives.

3.2 Detrimental Effect of Multiple Unionism

The large 0number of national federations at the macro level means that the ‘unit’ level concept has been
considerably de-emphasised. It leads to the diffusion of union power at the top and therefore damages the
political leverage of labour. It also leads to inefficient efforts to change or introduce new legislation in order to
improve the lot of workers, which could have been possible if there was one cohesive body at the macro level.
Similarly at the micro or plant level the unions have an ‘extra-plant’ orientation of the unions which is inherent
in their political groupings. This restricts their ability to judge a plant issue on its own merits without adding an
‘extra’ (political) dimension to it. The different unions are unable to come together to submit a common charter
of demands as their differing ideologies make it impossible to take a united stand, with each individual union
seeking to gain more leverage for itself from the particular situation. Managements also find it difficult to
respond to these union demands as they are not plant-oriented and thus outside the management’s control.
Multiple unionisms also lead to multiple enrolments in unions and non-subscribing members, causing delay or
failure to get recognition. This restrains a union’s bargaining power during a period of prolonged strife while
the unions are squabbling among themselves for dominance, the workers are deprived of their wages and the
plant suffers a loss of production. One can say that the effect of multiple unions has by and large been
detrimental to the objectives of the trade union movement. Again, at the plant level, multiple unionism
qualitatively weakens the movement resulting in the formation of small-sized unions without effective
organization, a precarious financial position and an inability to achieve significant benefits or rights to the
members through their own efforts. Collective bargaining is not possible and there is greater dependence on
government machinery in labour-management relations. This constant power struggle and jostling for the
position of being the major trade union results not only in propaganda amongst fellow workers to gain support
for a particular union but at times in violence and disharmony.The primary role of a union is to protect the
workers and to channalise their efforts into more rational directions so that the viability of the plant is also
enhanced. The effect of having multiple trade unions both at the macro-and-micro-levels serves only to weaken
the workers’ power base while at the same time negatively affecting the viability of the plant. A variety of
remedies have been suggested, which will be discussed later. However, it must be noted that in spite of the
foregoing there are many organizations where multiple unions exist and the management does effectively
negotiate, and conclude agreements. In many plants, workers are unionized – on a craft basis – their special
skills or training bonding them together. Multi-unionism is more a problem where general unions
exist, for whom all categories can be organized in one general union

Questions for Assignemnts

1. What is multiplicity of Trade Union?
2. What are the effects on multiplicity of Trade Union?

Collective Bargaining.

Concept:
The ILO Workers Manual defines collective bargaining as:
Negotiation about working conditions and terms of employment between an employer, a group of employers or
one or more employers’ organizations, on the one hand, and one or more representative workers’ organizations
on the other with a view to reaching agreement.
The process is collective because issues relating to terms and conditions of employment are solved by
representatives of employees and employers in groups rather than as individuals. The term bargaining refers to
evolving an agreement using methods of negotiations, discussions, exchange of facts and ideas, rather than
confrontation.
Collective Bargaining is that arrangement whereby the wages components of remuneration and
conditions of employment of workman are settled through a bargain between the employer and the workmen
collectively whether represented through a bargain between the employer and the workmen collectively whether
represented through their union or by some of them on behalf of all them. Thus,
Collective bargaining means bargaining between an employer or group of employers and a bonafide labour
union. Collective bargaining implies community of interest. Its meaning and form continue changing and this
fluidity makes it difficult to define or comprehend in precise terms.

Ludwin Teller has defined collective bargaining “as an agreement between a single employer or an association
of employers on the one hand and labour Union on the other hand which regulates the terms and conditions of
employment.”

The Encyclopedia Britannica defines “that collective bargaining is a negotiation between an employer or group
of employers and a group of working people to reach an agreement on working conditions.”
Collective Bagraining is the technique that has been adopted by unions and managements to reconcile
their conflicting interests.
It is called collective because the employees, as a group, select representatives to meet and discuss differences
with the employer. Collective bargaining plays a significant role in improving labour-management relations and
in ensuring industrial harmony.
The negotiations for collective bargaining require joint sessions of the representatives of labour and
management. These help in creating better understanding between labour and management. Through
discussions and interactions, each party learns more about the other, and misunderstandings are often removed.
The phase collective bargaining is said to have been coined by Sydney and Beatrice Webb of Great
Britain which is said to be the “home of collective bargaining.” The idea of collective bargaining emerged as a
result of industrial conflict and the growth of trade union movement, and was first given currency in United
States by Samuel Gompers.
In India, the first collective bargaining agreement was concluded in 1920 at the instance of Mahatma
Gandhi to regulate labour-management relations between a group of employers and their workers in the textile
industry in Ahmedabad.

Definitions of collective Bargaining:

According to Encyclopaedia of social Sciences, “collective bargaining is a process of discussion and negotiation
between two parties, one or both of whom is a group of persons acting in concert. The resulting bargain is an
understanding as to the terms and conditions under which a continuing service is to be performed. More
specifically, collective bargaining is a procedure by which employers and a group of employees agree upon the
conditions of work.”
Cox defines collective bargaining as, “the resolution of industrial problems between the representatives of
employers and the freely designated representatives of employees acting collectively with a minimum of
government dictation.”

Origin

The concept of collective bargaining is the off shoot of Trade Union activity. It is a historical fact that before
the advent of collective bargaining era in the labour market, labour was at a great disadvantage in obtaining
reasonable terms contract of service from his employer. With the emergence of Unions in the country the
collective bargaining became a rule and the employer found necessary and convenient to deal with the
representatives of workers, instead individual workmen, not only for the making or modification of the
contracts but also in taking disciplinary actions against one or more workmen earlier history of collective
bargaining shows that it was met with opposition from employers due to the fear of encroachment upon
prerogative of management and the inability of management to bear the long range costs. But with the growth
of Unionism and consciousness of the work class the trade agreements on collective basis have become a rule
rather the exception.

Features of Collective Bargaining:

(i) It is group action as opposed to individual action and is initiated through the
representatives of workers. On the management side are its delegated at the bargaining table; on
the side of the workers is their union, which may represent the local plant, the industry
membership or nation-wide membership.

(ii) It is flexible and mobile, and not fixed or static. It has fluidity and ample scope for a
compromise, for a mutual give-and-take before the final agreement is reached or the final
settlement is arrived at. Bakke an Kerr observe: “Essentially, a successful collective bargaining
is an exercise in graceful retreat-retreat without seening to retreat. The parties normally ask for
more or offer less than they ultimately accept or give. The ‘take-it-or-leave-it’ proposition is not
viewed as being within the rules of the game. One of the most damaging criticisms is that a party
is adamant in holding to its original position. Before retreating with as much elegance as
circumstances permit, each party seeks to withdraw as little as possible. This involves
ascertaining the maximum concessions of the opposing negotiator without disclosing one’s own
ultimate concession. In this sense, all negotiations are exploratory until the agreement is
consummated.

(iii) It is a two-party process. It is a mutual give-and –take rather that a take-it-or-leave-it

method of arriving at the settlement of a dispute. As two parties are involved in it. In this
connection, Clark Kerr observes: “Collective bargaining can work only with the acceptance by
labour and management of their appropriate responsibilities. It can succeed only when both
labour and management want it to succeed.”

(iv) It is a continuous process. It provides a mechanism for continuing and organized

relationships between management and trade unions. “The heart of collective bargaining is the
process for a continuing joint consideration and adjustment of plant problems.” It does not end
with negotiation, but as, Glen Gardiner puts it, “it begins and ends with the writing of a contract,
and actually, it is only the beginning of collective bargaining. It goes on 365 days of a year…
The most important part of collective bargaining…is the bargaining that goes on from day to
day under the rules established by labour agreements.”

(v) It is dynamic and not static. Because it is a relatively new concept, and is growing,
expanding, and changing. In the past, it used to be emotional, turbulent and sentimental; but now
it is scientific, factual and systematic. Its coverage and style have changed. In this connection, J.
M. Clark observes: “Collective bargaining has become, with surprising swiftness, one of the
greatest forces in our society. In anything like its present scale and power, it is a new thing. It is a
process which transforms pleading into negotiation,.which permits employees’ dignity as they
participate in the formulation of their terms and conditions of employment …which embraces the
democratic ideal and applies it correctly and effectively at the place of work.”
 (vi) It is industrial democracy at work. Industrial democracy is the government of labour
with the consent of the governed-the workers. The principle of arbitrary unilateralism has given
way to that of self-government in industry. Collective bargaining is not a mere signing of an
agreement granting seniority, vacations and wage increases. It is not a mere sitting around a
table, discussing grievances. Basically, it is democratic: it is a joint formulation of company
policy on all matters which directly affect the workers in a plant. It is self-government in action.
It is the projection of a management policy which gives the workers the right to be heard. It is the
establishment of factory law based on common interest.

(vii) Collective bargaining is not a competitive process but is essentially a complementary

process. Each party needs something that the other party has, namely, labour can make a greater
productive effort and management has the capacity to pay for that effort and to organize and
guide it for achieving its objectives. The behavioural scientists have made a distinction between
“ distributive bargaining” and “integrative bargaining.” The former is the process of dividing the
‘cake’ which represents the whole produced by the joint efforts of management and labour. In
this proves, if one party wins something, the other party, to continue the metaphor of the cake,
has a relatively smaller size of it. So it is a “win-lose” relationship. In other words, distributive
bargaining deals with issues or an issue in which the two or more parties have conflicting or
adversary interests. Integrative bargaining on the other hand, is a process by which both parties
can win, each contributing something for the benefit of the other party. Such a process develops
common objectives, better understanding of each other’s needs and capabilities, a better respect
for each other, and a greater involvement in, or commitment to, the well-being and growth of the
enterprise as a whole.

(viii) It is an art, an advanced form of human relations. To substantiate this, one need only witness
the bluffing, the oratory dramatics and coyness mixed in an inexplicable fashion which may
characterize a bargaining session.

Ref: Dynamics of Industrial Relations- Memoria

Functions of Collective Bargaining:

The main functions of collective bargaining are:

(i) To fix the prices of labour services

(ii) To establish a system of workers’ rights in industry which may be termed as democratization of
industrial relations systems.
(iii) To set up a machinery for the representation of employees in decisions affecting their individual and
group interests.

Significance of Collective Bargaining:

The real significance of collective bargaining according to Richard A. Lester is “that it enables parties with
different outlooks and compulsions to reach agreement on a variety of issues to which the market mechanism
fails to supply satisfactorily solutions.”

1. Institutional Importance
 Collective bargaining has come to be reckoned as an important institution in almost all the
industrialized democratic societies that have recognized and allowed freedom of association no matter
even if it may vary in its application in different countries and even between different industries in the
same country.

2. Manpower Economic Role:

According to Dale Yoder “Collective bargaining plays an important role in manpower allocation,
utilization and conservation.” In a sense it is through collective bargaining that the parties decide as to
how much workforce is needed and what shall be the policies regarding these matters. The management
has the prerogative to decide regarding employment but practically speaking it cannot do the same in
isolation anymore.

3. Towards Promoting Industrial Peace:

Collective bargaining is considered as the first available method of resolving and for settlement of any
industrial conflict. So to say that collective bargaining is a meeting ground for better mutual
understanding, for compromise or reconciliation of divergent interests. Thereby, the management gets
to know better the problems and aspirations of workers and workers become aware and appreci the
economic and technical problems involved in industrial management. On these basis collective
bargaining has been adjudged as a very useful and unparalled instrument for promoting industrial peace
by resolving conflicting economic interests of management and labour.

4. A Great Social Intervention:

Kornhanser and his other associates, the editors of the publications, “Industrial conflict,” have hailed
“Collective Bargaining as the great social invention that has institutionalized industrial conflict.”
Other social advantages that can be ascribed to collective bargaining are, that it provides a sort of
“self-government”, thereby fosters and promotes democratic principles which come ot play and create
an atmosphere of independence and responsibility.

5. Restrains Management’s Unilateral Actions:

Collective bargaining have been traditionally concerned, with the regulation and settlement of wages
and other employment conditions of the employees and in the maintenance of healthy induatrial
relations between management and workmen. It essentially keeps a check and reducers the nilateral
actions and victimization. Thus, it limits employer’s freedom of action.

Collective Bargaining In India- Extent and Scope

Collective Bargaining in India has made little progress, reasons being, the multiplicity of unions with different
political affiliations and existence of inter-union rivalry. The managements feel hesitant to negotiate and enter
into any sort of agreement with a particular union having only partial membership where there is always a risk
involved particular union having only partial membership where there is always a risk involved of non-abiding
by the terms of agreement by some workers who are not members of union and a party to the agreement. Some
managements’ attitude towards non-recognitions of the unions and lack of bargaining spirit in them has also
stood in the way of collective bargaining. In some cases, unions being weak, they lack bargaining power.
Another very important reason responsible for hampering the development of collective bargaining in India is
Government intervention. No doubt the Government has encouraged collective bargaining between the
employers and the unions, but it is not free. Strings of adjudication and compulsory arbitration are attached to
it in case negotiations fail. There are government standing orders which stand in the way in case of many items
subject to bargaining. Though these standing orders prescribe only the minimum, the items can be exceeded by
the union, provided the union is strong and has a good hold on bargaining power.
In spite of all these handicaps standing in the way of collective bargaining this institution has come to
stay as a good media for the settlement of issues between the management and the workers in India.

Collective Bargaining: Coverage and Issues

With the acceptance of principle of collective bargaining both by the union and the management, this is applied
in finding a solution to issues not only pertaining to wages, hours of employment, dearness allowance, bonus,
security of service and other terms and conditions of employment but this has further applications and defines a
wide range of working conditions including seniority, promotions, transfers, lay-offs, vacations, overtime rule,
handling of grievances, apprenticeship, probations, no-strike, no-lockout conditions, etc. As a result of mutual
discussions, the parties may agree evolving any job evaluation system which may facilitate and ensure fixing
of a fair wages’ rates for different categories of workers in the plant or industry on the basis of actual work
performed by them.
In India, agreements under collective bargaining between managements and unions have dealt with
issues like wages, employment conditions, mutual security, close association of employees and management,
productivity, working conditions, job description, job classifications, retirement age, pensions, provident fund
and gratuity, incentive schemes, bonus, construction of quarters, service benefits and amenities schemes, leave,
medical benefits, sickpay, promotions, transfers, grievance procedure, workers’ committees, discipline, ect.

Prerequisites for Successful Collective Bargaining

For proper development and successful functioning of collective bargaining, there are some
fundamental prerequisites which may be grouped for easy understanding under the following
heads:

1. Environmental Factors

Sincere cooperation and healthy relations between employers and employees provide a good
setting for any move on collective bargaining and for determining the same. A study into the
environmental factors such as the size of the undertaking, magnitude of their production, nature
of the jobs and job satisfaction, labour costs, location and industrial climate, the period the
plant or industry has been running, the number of years the trade union-the bargaining agent has
been functioning, their status, prestige they hold, presence of rival unions, if any existed, the
growing development and future prospects of the industrial undertaking, expanding markets and
anticipated increased demands for their products will help determine nature of relationship
between management and union and thereby proper atmosphere for initiating collective
bargaining proceedings.

2. Climatic Situations.

While preparing for negotiations, management should be well aware of the prevailing climatic
situations, which are key to effective bargaining. Personal characteristics and attitudes of the
unions, the policy and trends towards various bargaining issues, working of their internal
policies, are matters with which the management should be well conversant. Grievance
meetings greatly help sorting out fundamental issues, render best opportunity to the
management to know the attitudes and policies of the union. Maintenance of regular two-way
communications between the management and the unions is highly desirable for judging the
climatic situations. This will considerably assist in the creation of an amicable bargaining
atmosphere.

3. Psychological Considerations

Coordination and cooperation between the management and the workers plays a vital role in the
whole system of collective bargaining. For the maintenance of this the “Human” factor in
industry is so essential. This fosters goodwill and sincerity between the employers and
employees and leads to mutual respect and willing cooperation on the part of the workers. This
goes a long way in creating a congenial and harmonious atmosphere and building cordial
relations between the management and workers. All this helps in preparing good ground and
facilitates the promotion of collective bargaining on sounder footing.

Procedures

Fundamental Constituents of collective bargaining system

Any collective bargaining system fundamentally involves:

i) Issues commonly called charter of demands by the union, which form the basis for
collective bargaining.
ii) The machinery or procedures adopted for settling these issues.
iii) The agreement which specifies the terms of settlement.
iv) Interpretations of the various clauses and terms embodying the agreement.

Negotiations of contracts better termed as “collective agreements” by the trade unions

with the employers has come to be recognized as a very important and essential
function of the unions in the betterment of interests of their members.

The various processes as involved in the negotiations, application and enforceability

of these agreements are negotiated on behalf of the workers as a group with the
employers by the unions and each member of the group is a party to the terms of
agreement as negotiated.

Collective bargaining, thus, establishes a contractual relationship between the

workers, union officials and management, embodying rights and obligations binding
on all parities to the agreement-the workers, union officials and management officials.

Bargaining Procedure:
There is variance in bargaining procedure followed by different countries. In Britain those industries and
services which have formed joint industrial councils have more or less a uniform procedure for collective
bargaining. In case of many industries, it is provided in the agreement itself the procedure to be followed in
collective bargaining.

Factors influencing the Bargaining Procedure:

Factors that influence the bargaining procedure are; general economic conditions as well as the situation of a
particular employer; his attitude towards the union and collective bargaining; the strength of the union and the
ability of the union to negotiate; and the desires and determination of union members.

Objectives of Labour Agreement

Before preparations for collective bargaining start, it is but essential that both parties, the employers and the
employees, represented through a union, must sit together and consider the establishment of aims and
objectives of the labour agreement which generally are:

i) To consider and establish the norms of rules and regulations governing the day-to-day relationships
between the employer and the employees, which include conditions of employment, wages, hours of
work, grievance procedure etc.
ii) To establish a grievance handling procedure, considered as a boon for the management to win over
employees; promote the establishment of such machinery within the company which may ensure
maintenance of harmonious relations over specified period of time.
iii) To classify and specify the rights and obligations of the employers, the union and the employees. These
will serve as broad guidelines for the contents to be included in the labour agreement.

Preparations for collective bargaining

Before the negotiations for an agreement start, it is absolutely essential that issues be sorted out and clearly
ascertained. At the same time it is also necessary that the parties must be in possession of all facts, relevant
details, statistics and data pertinent to the negotiations. Besides company and union official records, other
possible sources for gathering information are reports on the finding of the research projects by Research
Organizations, Trade Associations, Labour Research Organizations, Colleges and University Institutions,
Government Agencies, Information Services, Periodicals, Bibliographies etc.
It is very essential that the management should fully acquaint itself with the overall position of the union
with whom they are going in negotiations and agreement in the matter of their leadership, their structure, set-up,
policy, methods of negotiations and general style of performance. It should also try to understand union’s
viewpoints about the company, its management. It is important to ascertain, as far as possible, aspirations of the
union members, their values and priorities. In nutshell, the management should endeavour to put together the
entire case of the union and prepare n advance a comprehensive answer to it.

Prior to the start of actual negotiations, time and venue for negotiation meetings as mutually acceptable
are to be fixed up.

Bargaining Structure

While negotiating the agreement there are some basic rules to be observed. They are: a) Timings of
negotiations; (b) Selection of negotiators- the bargaining agents; (c) Agenda for discussions; (d) Various stages
through which negotiations have to pass through; and (e) Ratification of the agreement
a) Timings of negotiations: In the United States, union agreement s run for a specified period, may be two
or three years. During the post-war period tendency in the United States has been to have long term
agreements which according to labour economists, have increasingly benefited the over-all economy. In
Britain there is no such specified period. Negotiations may be opened by either party at any time. In
India period of agreements varies from three to six years and in some cases agreements for less duration
have also been concluded. In some cases it is usually provided for automatic increments. Of late general
tendency in India is for long term agreements which are proving beneficial in the stabilization of
management-labour relations.
b) Selection of negotiators-the bargaining agents: It is an oft-repeated principle that has always impressed
upon that in collective bargaining negotiations should be held by competent bargaining agents on both
sides across the bargaining table. Both the parties, Viz the workers’ representatives, i.e., the union
officials and the management officials, should be very responsible persons having authority and strong
bargaining powers so far as union officials are concerned and those of management representatives, such
officials, who wield authority and can make concessions and take decisions.

While selecting negotiators it is also very important that they should be well conversant and familiar
with the environments and existing conditions prevalent experts in their respective lines in the team of
negotiators. The less number of negotiators on each side, better it would be for carrying on the
negotiations, as otherwise, this will make the discussions unduly prolonged.

Certain qualifications, as are generally attributed to a negotiator selected for carrying on negotiations,
are: believer in the principle of good faith, having abundance of understanding power, one who can rely
on facts without consideration of personalities, who can command fairness and justice, a man imbibed
with patience, with honesty and sincerity of purpose, a man with a firm stand and not that of an
oscillating type, a man with concentration.

Who should be the Chairman for conducting negotiation proceedings? In the early stages, union
representative, may not, as is generally the case, like to chair the proceedings. It would, therefore be in
the fitness of things if management’s representative from the negotiating team may be requested to
accept the chairmanship with the start proceedings. It is very much desired that the Chairman, whether
from the management or union team, should conduct the proceedings in a dispassionate manner.

c) Agenda and various Stages in Negotiations: Agenda for discussions and various stages through which
negotiations have to pass through, for a better understanding of the subject are taken up together.
Depending on various factor, the course of negotiations is liable to differ in individual cases.
However, generally accepted course is: First, the Union officials come forth and present their
initial demands. These demands, as is usually the case, number too high. This part of the
bargaining tactics the union employ, so that in the course of bargaining even if these demands
are modified they will get at least what they actually want. Moreover, these excessive demands
serve as a show-off of the union strength. Obviously, this creates a wide gap between the
positions of the two parties. The Union officials would not budge an inch and would not like to
withdraw any of their demands whereas management officials consider their demands frivolous
and too high to be conceded to.

Then comes the second stage of the negotiations. It is the stage for probing and discussions.
Discussions take place in a very frank manner and in an informal atmosphere and with an open
mind. It may take even weeks before parties to come closer and appreciate each other’s
viewpoint. This ultimately leads to the narrowing down of gap and both the parties are so clse to
each other and are seized of issues to be included and dealt with in the agreement.
d) Ratification of the Agreement: Now the parties reach the final stage of negotiations when ratification of
the agreement as arrived at is to be done by the company and union members. There are certain
advantages in requiring rank and file approval of the trade agreement which essentially governs the
workers. It may, however, be understood that the local agreement is also most universally subject to the
approval of the national union.
In the case of regional and national negotiations, it is more common for the inion to allow
conferees the power to conclude agreements.

The degree of authority held by the management bargaining committee varies considerably
among companies. Employer’s associations face the same problem of ratification that confronts
labour unions. In some associations agreements become binding upon individual members only
when they sign them. The association has no power to compel a member’s acceptance. Many
associations delegate complete authority to their negotiating committees.

Enforcement of Collective Bargaining Agreement

This needs to be emphasized here that the collective bargaining does not come to a close with the signing of
the agreement. For the agreement to be purposeful and effective, it is essential that it must be very
judiciously interpreted to respond to a particular industrial relation situation.
It is highly imperative that both the management and union officials sincerely work and see that the
terms of agreement are fully abided by both the parties, rights and obligations carried out sincerely during
the terms of the agreement in the same true spirit as it was entered into and ward off any untoward situation
that may arise.

Make-up of a Labour Agreement

In the foregoing pages we have studied that as a result of the collective bargaining; labour agreement is
drawn up between the official representatives of the company officials of the union representing the
workers. Generally broad contents of agreement are:

1. Recognition of the union: Recognition of the union by the management is one of the principle clauses in
the labour management.
2. Wages: The wages clause provides any increases over basic wage rates for job evaluation and
classification, any incentives and fringe benefits.
3. Working times: Working time clause, besides setting forth the employees’ hours of work, also lays
down, overtime, holiday and vacation provisions.
4. Conditions of employment: Conditions of employment clause in the agreement is a wide and important
clause dealing with the working conditions, employment standards, health and safety of workers,
apprenticeship provisions and other benefits schemes for employees.
5. Management rights: In keeping with the spirit of collective bargaining it becomes necessary that
management’s rights of freedom and privileges so long enjoyed by them with modifications, if any, as
mutually agreed upon be clearly defined. While embodying this, the management’s rights clause further
provides for management prerogatives in the matters of issuing and enforcing rules, regulations and
other disciplinary measures against the defaulting employees they may be entitled to take. In this clause
are further provided the matters relating to promotion, demotion of the employee.
6. Seniority: The seniority clause in the agreement lays down the determining factors to be considered for
the seniority of the employees. Since this clause affects the job security of the employees and is a major
factor in keeping harmonious relations between the company and its employees, so it is important.
 7. Day-to-day relationships: Day-to-day relationship clause is the cementing force in the collective
bargaining agreement as the actual operation of the agreement hinges on this. This prescribes the
grievance handling procedure, popularly called the “Grievance procedure” and any restrictions on
strikes and lockouts.

Forms of Collective Bargaining:

(i) It may be a single plant bargaining, that is, bargaining may be between management and a singly trade
union.
(ii) It may be a multiple plant bargaining, that is, bargaining may be between all the trade unions of
workers in the same industry through their federal organizations, and the employers’ federation. This is
possible both at the local and regional levels and is generally resorted to in the textile industry.
(iii) It may be a multiple employer bargaining, that is, bargaining between all the trade unions of workers in
the same industry through their federal organizations, and the employers’ federation. This is possible
both at the local and regional levels and is generally resorted to in the textile industry.

In India, collective bargaining has been classified under four categories:

These are:

(i) Agreements which are negotiated by officers during the course of conciliation proceedings and
are called settlements under the Industrial Disputes Act.
(ii) Agreements which are concluded by the parties themselves without reference to a Board of
Conciliation and are signed by them. Copies of such agreements, however, are sent to
appropriate governments and to conciliation officers.
(iii) Agreements which are concluded by the parties on a voluntary basis when disputes are sub
judice and which are later submitted to industrial tribunals, labour courts or labour arbitrators
for incorporation into the documents as parts of awards. These are known as consent awards.
(iv) Agreements which are drawn up after direct negotiation between labour and management and
are purely voluntary in character. These depend for their enforcement on moral force and on the
goodwill and cooperation of the parties.

Types of Bargaining

There are four types of bargaining:

1) Conjunctive/ Distrubutive Bargaining: The parties try to maximize their respective gains. They try to settle
economic issues such as wages, benefits, bonus, etc., through a zero-sum game ( mu gain is your loss and
you gain is my loss). Union negotiate for maximum wages. Management wants to yield as little as
possible-while getting things done through workers.
2) Coopetative bargarning: When companies are hit by recession, they cannot offer the kind of wages and
benefits demanded by workers. At the same time they cannot survive without the latter’s support. Both
parties realize the importance of surviving in such difficult times and are willing to negotiate the terms of
employment in a flexible way. Labour may accept a cut in wages in return for job security and higher
wages when things improve. Management agrees to modernize and bring in new technology and invest in
marketing efforts in a phased manner. In India, companies like TELCO, Ashok Leyland resorted to
cooperative bargaining in recent times with a view to survive the recessionary trends in the automobile
sector.
3) Productive Bargaining: In this method, workers’ wages and benefits are linked to productivity. A standard
productivity index is finalized through negotiations initially. Workers do not have to perform at
 exceptionally high levels to beat the index. If they are able to exceed the standard productivity norms
workers will get substantial benefits. Management gains control over workplace relations and is able to
tighten the norms still further in future negotiations. Without such productivity bargaining agreements,
workers may not realize the importance of raising productivity for organizational survival and growth.
Backed up by powerful unions, they may fail to read the danger signals from the market and respond
quickly.
4) Composite Bargaining: It is alleged by workers that productivity bargaining agreements have increased
their workload. Rationalization, introduction of high technology, and tight productivity norms have made
the life of a worker somewhat uneasy. All these steps have started hitting the unions and workers below the
belt. As an answer to such problems, labour has come to favour composite bargaining. In this method,
labour bargains for wages as usual but goes a step further demanding equity in matters relating to work
norms, employment levels, manning standards, environmental hazards, sub-contracting clauses, etc.
When unions negotiate manning standards they ensure the workload of workers does not increase, this
helps to maintain the status quo as far as employment level is concerned. By negotiating sub-contracting
clauses, unions prevent management from farming out business to ancillaries. If permitted, such an action
may result in lower employment in some other plant diluting the bargaining powers of unions substantially.
Workers are no longer interested in monetary aspects to the exclusion of woks related matters. There is no
doubt that wages, bonus and other monetary aspects continue to occupy the centre stage in bargaining
sessions. But there is a definite shift towards composite bargaining. Without such a proactive stand,
workers may not be able to withstand the forces of liberalization, automation, farming out business to
outsiders and survive. Through composite bargaining unions are able to prevent the dilution of their powers
and ensure justice to workers by putting certain limits on the freedom of employers. For the employer this
is a lesser evil when compared to strikes and lockouts.

The Process of Collective bargaining:

The Following steps are involved in the collective bargaining:

Identification of the problem: The nature of the problem influences whole process. Whether the problem is
very important that is to be discussed immediately or it can be postponed for some other convenient time,
whether the problem is a minor one so that it can be solved with the other party’s acceptance on its
presentation and does not need to involve long process of collective bargaining process etc. It also
influences selection of representatives, their size, period of negotiations and period of agreement that is
reached ultimately. As such it is important for both the parties to be clear about the problem before entering
into the negotiations.

Collection of data: Both labour and management initially spend considerable time collecting relevant data
relating grievances, disciplinary actions, transfers and promotions, lay-offs, overtime, former agreements
covering wages, benefits, working conditions, and current economic forecasts, cost of living trends, wage
rates in a region across various occupations, competitive terms offered by rivals in the field ect.

Selection of negotiators: The success of collective bargaining depends on the skills and knowledge of the
negotiators. Considerable time should, therefore, be devoted to the selection of negotiators with requisite
qualifications. Generally speaking, effective negotiators should have a working knowledge of trade unions
principles, operations, economics, psychology and labour laws. They should be good judges of human
nature and be able to get along with people easily. They must know when to listen, when to speak, when to
stand their ground, when to concede, when to horse-trade, and when to make counter proposals. Timing is
important. Effective speaking and debating skills are essential.

Climate of negotiations: Both parties must decide an appropriate time and set a proper climate for initial
negotiations. At this stage the parties must determine whether the tone of the negotiations is going to be
one of mutual trust with ‘nothing up our sleeves’, one of suspicion with lot of distortion and
misrepresentation, or one of hostility with a lot of name calling and accusations.

Bargaining strategy and tactics: The strategy is the plan and the policies that will be pursued at important to
spell out the strategy and tactics in black and white, broadly covering the following aspects:

- Likely union proposals and management responses to them.

- A listing of management demands, limits of concessions and anticipated union responses.
- Development of a database to support proposals advanced by management and to counteract union
demands.
- A contingency operating plan if things do not move on track.

Generally each side tries to find how far the other side is willing to go in terms of concessions,
and the minimum levels each is willing to accept. “Take it or leave it” kind of extreme positions
would spoil the show and hence parties would avoid taking such a rigid and inflexible stand
initially. Successful negotiations, after all, are contingent upon each side remaining flexible.
Each party should be willing to concede up to a certain extent depending on one’s own
compulsions and pressures, with a view to win over the other party. This is popularly known as
“bargaining zone” which is the area bounded by the limits within which the union and employees
are willing to concede. If neither party is willing to concede a little bit, negotiations reach a
deadlock or impasse, which can eventually result in a strike on the part of the union or a lockout
on the part of management.

- Formalizing the agreement: When a solution comes through what is popularly known as ‘good faith
bargaining’ a formal document must be prepared expressing everything in a simple, clear and concise
form. After this, both parties must sign the agreement and abide by its terms and conditions during the
entire term of the contract.

- Enforcing the agreement: Collective bargaining does not come to an end with the signing of the
agreement. For the agreement to be meaningful and effective, both parties must adhere to the conditions
agreed upon and implement everything scrupulously.

Problems in Collective Bargaining:

 I. Due to the dominance of outsiders in trade unionism in the country, there is multiplicity of unions
which are weak and unstable, and do not represent majority of the employees. Moreover, there are inter-
union rivalries, which further hinder the process of collective bargaining between the labour and the
management.
 II. Since most of the trade unions are having political affiliations, they continue to be dominated by
politicians, who use the unions and their members to meet their political ends.

 III. There is a lack of definite procedure to determine which union is to be recognized to serve as a
bargaining agent on behalf of the workers

 IV. In India, the law provides an easy access to adjudication. Under the Industrial Disputes Act, the
parties to the dispute may request the Government to refer the matter to adjudication and the
Government will constitute the adjudication machinery, i.e., labour court or industrial tribunal. Thus, the
faith in the collective bargaining process is discouraged.
  V. There has been very close association between the trade unions and political parties. As a result, trade
union movement has leaned towards political orientations rather than collective bargaining.

Source: http://www.authorstream.com

UNIT IV

Industrial Democracy:

Industrial democracy is a system, where the employee and employer feel that they are working together a
common cause, hand in hand, pulling together their weight, for the development of industry and progress of
society. In an atmosphere of industrial democracy, liberty is integrated with additional personal responsibility.
Industrial democracy is the outcome of comradeship and co-partnership in industry; comradeship in industry is
otherwise known as good labour relations or human relations.

Co-partnership means something more than participation in the financial rewards of the industry.
Employees and employers are partners in a joint enterprise. Co-partnership is industry will promote industrial
relations of the highest order. It relates to wages and conditions of employment. It denotes a sense of identity
between the workers and the institution they serve. It provides for the employees to have a share in the profit
either as bonus or as a share in the ownership of capital and a say in the administration. Good industrial
relations provide the necessary background for good labour relations. Industrial relations and human relations
are definitely two, but interlinked indispensible factors in industry. They are the two perquisites for industrial
democracy.

The term industrial co-partnership is applied to schemes which enable the workers to acquire on
especially favorable terms, shares or other capital of the business employing them.

Democratic Approach:

The greatest asset of an industry is its human resources. But quite often it is least used in the right
manner. In a developing country like India which aims at the welfare of the community as a whole, our system
of production, more than ever, needs the ability, initiative and co-operation of every employee. The only way to
achieve this is by workers. Workers must feel that they are an integral part of the operations of the organization
to which they are attached and that their contribution to the productive process is appreciated. The democratic
approach within industry is essential in making the workers feel that they are not merely recipients, but active
participants.

The extension of democracy in industry can take many forms such as joint consultation, collective
bargaining, fair wage and welfare measures.

Objectives of Industrial Democracy:

Collective discipline, co-operation and higher productivity are the objectives of industrial democracy.

To perform its real function of serving the community most efficiently, industry must adopt the
democratic methods in its relations with the worked.
 Democratic methods in industry provide opportunity to the workers for bringing to light the injustice
and grievances, their problems and causes for conflicts.

There can be no trust and no confidence between management and workers where there is not an open
policy and a real partnership in industry.

Under democratic atmosphere, there will be group discipline, group responsibility and higher output,
much more than under authoritarianism. Democratic participation by all ranks in industry is not obviously an
easy objective to achieve.

To get the best out of a worker, the treatment meted out to him should be such that it appeals to the best
in him. To look after the well-being includes wages, working conditions and employee services. A happy
worker is an asset to the employer. This can be achieved by making the workers active participants in the
administration of the affairs of the organization to which they belong.

There are four major partners mostly interested in an industrial organization, namely those who provide
the money which enables the industry to function those who work in the firm, those who use the products and
the government.

It must be the aim of the management to co-ordinate all the above four partners in industry effectively
through democratic methods.

Democratic Methods

Comradeship and co-partnership in industry can be brought about to a very large extent by joint
consultations. Trade unions and works committees are the two democratic agencies for joint consultation.

Labour legislation provides for the formation of trade unions, works committees, canteen committees
and other joint consultative machinery in industry. There are industries with elected representatives of the
employees on their Board of Directors. In certain other industries, there are production committees, welfare
committees, safety committees, suggestion schemes committees, etc, which assist the management in the day-
to-day operations and administrative matters of concern.

Meaning of Joint Consultation:

Joint consultation is an internal arrangement within an establishment for enabling the opinions and
views of the employees to be made known to the management.

Joint consultation is a basic element in the social application of industrial democracy. It can be defined
as a symbol of partnership and equality of status, two important characteristics of industrial democracy.

Objects of Joint consultation

1. To provide channels for a regular exchange of views between all those engaged in industry.
2. To provide a means of consultation before managerial decisions are taken; and
3. To promote wider interest among the employees and foster assumption of greater responsibilities.

Joint consultation is designed to stimulate interest and draw out the best contribution the every employee
can make to the common effort.

Workers must have the feeling that they are not mere wage earners, but they are part and parcel
of the industrial system and that they are a important in stature and status as the management,.

For workers to give their best, it is necessary that they should be kept informed and consulted
before actions are taken. “ Proper discussions before decision” is the foundation of joint consultations.

Prior consultation with workers at all levels is a valuable step towards food labour relations and
industrial peace.

Effects of Joint Consultation:

Joint consultation helps in establishing mutual understanding and respect between management and
workers in an atmosphere of joint responsibility.

Given the will and proper understanding on the part of the employees, and their unions, there is
no doubt that we can create a sense of participation among the workers and make industrial democracy a
real success.

Joint consultative machinery is a corollary of co-operation. Unless workers are taken into
confidence by the management, it is futile to talk about co-operation. There can be no partnership
without co-operation; there can be no co-operation without confidence and there can be no real
confidence without joint consultation.

Progressive participation of workers in the administration of welfare funds create conditions

conducive to industrial peace much sooner that an arbitrary dispensation of such funds at the sole
discretion of the employer.

In an atmosphere of joint consultation, there is no place for the word “they”, meaning the
managed or “we” meaning the management. It should be “we” and “us”.

Positive joint consultation stimulates interest, promotes understanding and provides

opportunities.

Joint consultation is a per-requisite for satisfactory working of wage incentive scheme. It is

essential that the operatives who are to work under the scheme should understand its nature and purpose
and be consulted at all stages in its application.

How to Promote Joint Consultation:

The foundation of successful joint consultation is willingness on the part the management to treat their
employees as an intelligent and responsible force in the undertaking and on the part of the workers to
accept the responsibility of contributing to the solution of common problems which arise from time to
time.

Successful joint consultation implies willingness on the part of the management to treat its
employees collectively as an integral and reasonable force in the establishment.
 Management should consult the employees on matters which affect them, viz. changes in the
organization, methods and products etc. No real Co-operation is possible without effective participation.
Changes must be made carefully, because it is the psychology of workers to view every change with
suspicion. Complete confidence in the management can be developed and established only gradually.
Provide the workers with good environment and an equitable and humane regime in industry, and they
will respond in a generous and genuinely co-operative manner.

In a well managed establishment, joint consultation is continuous process of direct and

immediate individual contacts between managers and supervisors and between supervisors and workers
at all levels throughout the structure of the organization.

Both management and workers must sincerely believe that the successful running of an
enterprise will be assisted by both parties sitting round a table to discuss matters of mutual interest. If
there is a fear on the part of the management that its authority will be lessened by such discussions, or a
refusal on the part, of the employees to accept responsibility, joint consultation will fail.

Joint consultation should be the point at which the ordinary worker meets the management to
discuss and advice on their policies in his own right and on a footing of equality.

Joint consultation will be accepted as a symbol of genuine partnership, if it receives

wholehearted support from the management with due account taken of joint discussions and no holding
back of vital informations.

There should be no loss of wages for the time spent on consultation whether inside the factory or
outside. Decision taken must be followed up and implemented. Unfulfilled promises destroy confidence.

Joint consultative machinery is not for use at times of crisis only. Consultation should not wait
until disputes arise. Success of joint consultation depends on pulling together successfully. In any
scheme of joint consultation, it is vitally important not to press for and not to expect quick and easily
measurable results.

Fear is the greatest deterrent to effective joint consultation. Fear will disappear only if the
concept of equality is accepted.

Joint Consultation through Trade Unions

Right to form associations or unions is a privilege conferred by the constitution on the workers. Hence
workers can form their trade unions to protect their rights and privileges.

Trade unions are autonomous associations with a large status. They have come to stay as an integral part
of industrial democracy and play an important advisory role in the framing of industrial policy.

Industries can settle and enforce fair terms and conditions of employment only if the employers and
workers in the industry are adequately organized.

Workers need a lot of training on trade union activities. A well organized union with proper leadership
can render great service to the workers through joint consultation. Wage structure and conditions of service are
matters to be dealt with at union-management level.

Joint Consultation through works committees:

The most effective joint consultative machinery in industry is the Works Committee. Industrial Disputes Act
provides for the functioning of works committees in industry. But the results so far, have been disappointing.
Works Committees are often looked upon as rivals to the trade unions by the union leaders and as a necessary
evil by the employers.

A works committee is only a medium of consultation and conciliation. It is only an advisory body even
though there is no harm in the management delegating certain executive functions to the works committee on
matters relating to accident prevention and welfare activities.

Works committees can normally consider matters relating to working conditions, accident prevention,
employee services, education, discipline, efficiency, grievance procedure, etc. Such consultations will serve as
an incentive to higher productivity. There have been instances when the Works committee interfered with the
wage structure and other matters which are usually dealt with on union-management level only. Such things
happen only for want of the right type of information as regards functions and duties of a Works Committee.

Works committees can also consider matters relating to higher productivity and advise the management
on maximum use of existing machinery, improvements in methods of production, elimination of defective work
and waste, efficient use of material supplies, proper use of safety precautions and devices.

A works committee should compose of representatives of the management, foreman and supervisors,
office staff and workers according to departments or sections.

As far as possible, the works committee’s decision on matters relating to the workers should be made
known to them through bulletin boards, loudspeaker announcements, house magazines, etc. How to make the
general body of the workers interested in the proceedings of the works committee is a vital question calling for
serious considerations on the part of the management. One method of tackling this problem is that consultation
should take place as near the shop as possible, by a series of co- ordinate committees. A good system of
communication is necessary.

Employers have certain obligations in the matter of effective working o f works committees. They must
abstain from any act likely to hinder the working of the committee. They must facilitate the performance of the
committee’s work. They must allow the committee members time necessary for the performance of their
functions. They must make available to the committee all necessary sources of information. They must consult
the committee on all matters affecting the workers. Finally they must carry out all decisions taken jointly at
Works Committee meetings.

Joint Consultation through Representative Committees

The Works committee functions on the industry level. There can be a production council, welfare
committee, safety committee, canteen committee and such other sub-committees of the works committee in
which case the Works committee can co-ordinate and co-relate the activities of such sub-committees and advise

the management on matters referred to them or coming under the purview of their responsibilities.

Such committees can also function on shop or factory level, independent of the Works committee.

There can also be policy committees consisting of representatives of Board of Directors, shareholders
and employees.
Worker’s Participation in Management:

The technique of the workers’ participation in management has been regarded as a powerful behavioural tool
for managing the industrial relations system. This widely debated concept has evolved from the purely
ideological and imaginative plank to an organizational reality. But the form and connotation of the term varies
with the socio-economic goals of a particular country.

For management it is joint consultation prior to decision-making. The management experts and executives look
upon it as “a tool for improving the overall performance of an enterprise.” For them, it means that workers are
given an opportunity to take part in those decisions which affect their wages, their working conditions, there
very jobs, and this participation paves the way to harmonious industrial relations which are conducive to
increasing productivity and efficiency. For laborers, it is just like co-decision or co-determination. The trade
unions view the concept as “the harbinger of a new order of social relationship and a new set of power
equations within organizations. This does not mean that they are concerned with improving organizational
performance; but in terms of relative importance and priorities, they hold the view that the functioning of
economic activity is, by its very nature, social. The objective is to gain control over the decision-making process
within an enterprise.

The concept of worker’s participation in management crystallizes the concept of industrial democracy,
and indicates an attempt on the part of an employer to build his employees into a team which works towards the
realization of a common objective.

In the words of Davis, “it is a mental and emotional involvement of a person in a group situation which
encourages him to contribute to goals and share responsibilities with them.”

Workers’ control Joint Management Joint Consultation

Work Placer Consultation Management Supremacy

In this continuum, workers’ control represents one extreme which suggests concentration of all powers in
workers, and management supremacy represents the other extreme, which implies a zealous defense of
managerial prerogatives.

Sometimes participation is regarded as basically the same thing as Taylor’s “scientific management”, the aim of
which is to secure the maximum prosperity of employers and the employed. However, the approach is
somewhat different, for “scientific management” lays emphasis on the technical aspect of work, whereas the
“participation” lays primary emphasis on the human element and rests on the assumption that a worker is more
than a pair of hands. He is a human resource. The worker’s technical knowhow and an ingenuity, properly
utilized, may make, more significant contribution to the effectiveness and economic welfare of an organization
than any improvement in his physical effort alone, although that is not unimportant. When operationalized, the
term workers’ participation implies “a formal method of providing an opportunity for every member of the
organization to contribute his brain and ingenuity as well as his physical efforts to the improvement of
organizational effectiveness” as well as enhancing his own economic welfare.

Kenneth Walker says: “Workers’ participation in management is a resounding phrase, bridging the past
and the future. It echoes the millennial vision of the nineteenth century thinkers while heralding the evolution of
the new forms of industrial organization under twentieth century pressures. The word ‘workers’ ‘participation’
is plentifully supplied with ideas, institutions and opinion.” He adds that “there are two basic ideas in the
concept of workers’ participation in management: that there are two groups of people in an undertaking
(managers and workers) and managerial functions are essentially those concerned with planning, organizing,
motivating and controlling, in contrast with ‘doing’ or ‘operating’ work. A self-motivated person carries on the
managerial as well as the operative functions of his one-man enterprise; he is both his own manager and
operative.

The essence of labour participation in management lies in the firm belief and confidence in the
individual in his capacity of growth and learning, in his ability to contribute significantly with his hands, head
as well as his heart, and this implies discarding the narrow conventional outlook of antagonism of interests and
substituting in its place a community of purpose and extending co-operation in promoting the well-being of
labour and management in industry.

In fine it can be said that the workers’ participation as a system of communication and consultation,
either formal or informal, by which employees of an organization are kept informed about the affairs of the
undertaking and through which they express their opinion and contribute to management decisions. It is a
distribution of social power in industry so that is tends to be shared among all who are engaged in the work
rather than concentrated in the hands of a minority. It is industrial democracy in action based on the principles
of equity, equality and voluntarism. It fives to the employees’ representatives the right to criticize, to offer
constructive suggestions, and to become aware of various delicate issues involved in decision-making.

Evolution of Workers’ participation in management

The concept of workers’ participation was first postulated in India by Mahatma Gandhi who advocated that the
industrial wealth of the country belonged to the society. He envisaged industry as a joint enterprise of labour
and capital, in which both the owners and the workers have a share. He believed that instead of engaging in
class-war and wasting human potential, they should concentrate on the due performance of their respective
duties in terms of service to the society.

i) Although Joint Consultation as a management style was first introduced in the Indian Textile
Industry around 1910, the Tata Iron and Steel Co. Ltd at Jamsedpur was the first to set up a “works
committee” in 1919 consisting of the representatives of management and the workers for handling
various kinds of complaints and grievances. Mahatma Gandhi’s move to establish a new relationship
of mutual discussion and consultation between management and union based on mutual trust and
goodwill during the twenties was largely confined to the textile industry in Ahmedabad. It was
mutually agreed between Ahmedabad Mill Owners’ Association and Ahmedabad Workers Union
that issues will be discussed between the workers themselves and the management of the mill
concerned.
ii) The Royal Commission on Labour (1931) also attained great importance to joint committees in the
field of industrial relations. The second World war, however, gave impetus to setting up of a
tripartite Indian Labour Organization (ILO). Since its inception, this tripartite body has been
responsible in giving formal space to most of the labour enactments in India.
iii) The Industrial Disputes Act, 1947 prescribed for setting up of a “works committee” in an industrial
establishment employing 100 or more workmen with equal representation from the employer and the
workmen.
iv) In August, 1956, the Tata Iron and Steel Co. Ltd at Jamshedpur, signed a comprehensive agreement
with the Tata Workers Union ( TWU) for setting up various “joint committees” towards closer
association of employees with management.
v) The Industrial Policy Resolution of 1956 enunciated that in a “socialist democracy”, labour is a
partner in the common task of development and should participate in it with enthusiasm. The
Planning Commission also emphasized the need for increased association of labour with
management. The Government of India set up a “study group” in September, 1956, consisting of
 senior government officials and a few others who were connected with industry or the trade union
movement and had special knowledge of the subject. The “study group” visited Britain, Sweden,
France, Belgium, West Germany and the then Yugoslavia for examination of the schemes of
workers’ participation in management as practiced in those countries.
vi) As per the report of the “study group” it was agreed to introduce the scheme for Joint Management
Councils on a “voluntary” basis in those undertakings where(a)there was a strong and well
established trade union; (b) there existed a readiness on the part of the parties; (c) 500 or more
workers were working; (d) both management and workers were members of greater bodies; (e) there
was a fair record of industrial relations.
vii) To start with, the scheme was introduced in 24 undertakings—7 in the public sectors and 17 in
private sector. The scheme was sound in its concept to afford a measure of participation to the
representatives of workers in areas where they were earlier not involved. Under the scheme , they
were given (a) a right to information (b) a right to consultation and; (c) a responsibility for
administration in certain matters.

On the functions of the Joint Management Councils, the National Committee on Labour (1969) reported that
“there does not appear to be much support for the reported to be ineffective and their functioning
unsatisfactory in many cases”. All subsequent governmental efforts to install participative management in
industrial undertakings reportedly have not yielded the desired result.

It is ironical that even after so many attempts that yielded no worthwhile result, the country’s political
leaders are holding on to this “dogma” even today. In a Government sponsored on Labour Participation in
Management, held at New Delhi, during January 8-9, 1990, the problems and results of various schemes of
participation as introduced and practiced from time to time in India were reviewed.

The subject of participative management has assumed urgent attention because of the Government’s
determination to enact a legislation on the subject for which a Bill was also introduced in the Indian
Parliament in May, 1990. In a large number of “seminars” and “workshops” held all over the country since
the introduction of the provisions have been criticized as “unworkable” by all sections of people-managers,
trade union leaders and academicians. Representations from various All-India bodies of employers,
professional mangers and trade unions have been sent in this regard to the Government. It appears that, none
of the concerned parties favour the impending law on participative management. The reasons for the
opposition by the employers and mangers to any scheme of participative management are more or less
known. The trade unions in India are also up in arms against the proposed law, as it envisaged encroachment
on their right to “nominate” worker representatives to such joint forums. The proposed law envisaged
election of workers’ representatives to various joint bodies by a “secret ballot” system.

Source: Industrial Relations Monal Arora, Page:103-105

Features of Workers’ Participation in Management:

1. Workers’ participation is now a global movement. A combination of social, cultural, political,
economic and industrial pressures have created a world-wide demand for greater participation of
workers in management.
2. The concept of participation is viewed by different people differently. There are people who think
that workers’ participation is the tool for solving most labour management relations problems. People
use the term as a synonym for industrial democracy.
 3. There are other who think it is a method for uprooting the present system of ownership and
management of the economics.
4. Some persons are there who consider it as a tool of applied psychology to be used to counteract the
dehumanization of industrial work.
5. The idea of participation as an alternative to the capitalist pattern of management has emerged in
response to (a) the threats from the emerging centers of countervailing power, particularly the
organized labour, and (b) the demands of continuous production during the world wars when mangers
tried strategies to insure uninterrupted industrial activity.
6. Other factors which led to the growth for participation are the growth of public enterprises,
experiments of industrial psychology ( which proved that a person works better when he wants to
work rather than when he is forced to work), development of scientific management which
encouraged close cooperation between labour and management for increasing the productivity of the
enterprise and the positive role of the ILO for a close collaboration between employers and
employees.

Models of Workers’ Participation

1. Collective Bargaining Model: In theory collective bargaining represents a different form of
participation. Collective bargaining provides to the management and the workers the right through
collective arrangements, to lay down certain rules for the formulation and the termination of contract
of employment as well as the conditions of service in an establishment. Collective bargaining has
been used as an important method of influencing managerial decisions.
2. Works Committee Model: Works Councils are exclusive bodies of the employees. There may be one
council for the entire organization or a hierarchy of works councils from shop floor to the staff
board. Members are elected by the employees of the respective sections. They have different
functions in the management of an enterprise. Here is a basic assumption of a harmony of interests
on key issues.
3. Joint Management Councils Model: These are joint bodies comprising the representatives of the
management and employees. Their functions may range from decision making on some issues to
merely advising the management as consultative bodies. In India JMCs are commonly used forms of
workers’ participation in management. Mostly their role is advisory ad consultative, with decision
making being left to the top management.
4. Workers’ Self-Management Model: This model is characterized by a substantial degree of workers’
participation on the main decision making bodies, completed with either a system of workers’
ownership or the right to use the assets of the enterprise.

Source: Industrial Relations of Developing Economy; Dr. Biswanath Ghosh,Page:66 & 69

Pre-requisites for effective participation

The pre-requisites for the success of any scheme of participative management are the following:

Firstly, there should be a strong, democratic and representative unionism for the success of participative
management.

Secondly, there should be mutually-agreed and clearly-formulated objectives for participation to succeed.
Thirdly, there should be a feeling of participation at all levels.

Fourthly, there should be effective consultation of workers by the management.

Fifthly, both the management and the workers must have full faith in the soundness of the philosophy
underlying the concept of labour participation.

Sixthly, till the participative structure is fully accepted by the parties, legislative support is necessary to
ensure that rights of each other are recognized and protected.

Seventhly, Education and Training make a significant contribution to the purposeful working of
participative management.

Lastly, forums of participation, areas of participation and guidelines for implementation of decisions
should be specific and there should be prompt follow-up action and feedback.

Source: Industrial Relations emerging paradigms; B D Singh; page:178

Effects of participative Decision Making

Diargam on Page 179 B D Singh

The figure below traces the mechanisms through which participative decision-making affects employee behavior and attitudes and , in
turn organizational results. It suggests incorporation of participative management.

The participation improves both employee ability and motivation. Ability is improved primarily through communication and
information sharing, which result in more informed employees who are better able to contribute creative ideas to the success of the
enterprise. Motivation is improved in part because employees tend to set higher goals participative than management does unilaterally
and in in part because the process causes individuals to become ego involved, and committed and to exert pressure on themselves and
their co-workers to ensure that their decisions are sound and their goals are met. The act of participation can also increase employees’
sense of trust and control, which may lower their resistance to new ways of doing things. On the attitudinal side, some find that
participation meets their needs for challenge and accomplishment, causing satisfaction.

Objectives of workers participation in management

Clerks, Fatchett and Roberts have mentioned four broad objectives of workers’ participation in management in
the British context, that is (i) as a means of promoting the satisfaction and personal development of an
individual worker, (ii) on the ground that workers should have a greater say in decision making at work, (iii) as
a means of improving industrial relations (iv) as a means of increasing efficiency. Schemes of workers’
participation in management in other European countries and elsewhere make a mention of the general or
specific obh3ectives for which they have been established.

The background paper prepared by the All India Organization of Employers in a seminar of Workers’
Participation in Management held at New Delhi in October, 1987 has identified four basic and essential
objectives of Workers’ participation. These are: (i) to improve the quality of working life and job satisfaction;
(ii) to improve the efficiency and productivity of the enterprise;(iii) to improve industrial relations and thereby
promote industrial peace and harmony and;(iv) to secure full recognition of the importance of human factor in
industry. On the basis of an analysis of schemes in operation in different countries the same paper has
considered the following objectives running common to these schemes:
 i) Promotion of workers, interest in work and enterprise through reducing or removing alienations.
ii) Humanization and democratization of work process as well as management of the entrerprise.
iii) Utilization of resources, economy and quality
iv) Motivation of workers and promotion of works committees.
v) Promotion of workers’ accountability towards organizational problems and seeking their direct
involvement in solving their problems.
vi) Shift from conventional managerial practices to modern and behavioral approach in management.
vii) Creation of better organizational quality through promotion of mutual understanding and collective
thinking and decision process
viii) Pooling of ideas and promotion of creative thinking at different or all levels.

In India, according to the Industrial Policy Resolution, 1956, the aim of the government in advocating
workers’ participation in management is “a part of its overall endeavor to create a socialist society, wherein
the sharing of a part of the managerial powers by workers is considered necessary.”

The purpose which workers’ participation in management try to achieve, in the words of the Second Five
Year Plan are.

(a) Increasing productivity for the general benefit of the enterprise, the employees and the community.
(b) Giving employees a better understanding of their role in the working of the industry and of the process
of production.
(c) Satisfying the workers’ urge for self-expression, thus leading to industrial peace, better relations and
increased co-operation.

Forms of Workers’ participation in India

In India the workers’ participation in management scheme is vogue in three

forms:

(i) The works committees (set up under Industrial Disputes Act 1947);
(ii) The joint management councils ( set up as a result of the Labour-
Management Co-operation seminar, 1958); and
(iii) The scheme for workers’ Representative on the Board of Management
( under the Management and Miscellaneous scheme, 1970) on some public
and private sector enterprises, including industrial undertakings and
nationalized banks.

Since July 1975, a two-tier participation model, namely, the shop council at
the shop level and to joint council at the enterprise level, were introduced.
 On 7th January 1977, a new scheme of workers’ participation in
management in commercial and service organizations in public sector
undertakings was launched with the setting up of unit councils. On October
1983, a comprehensive scheme for workers’ participation in public
undertakings was introduced. It was decided that workers would be allowed
to participate at the shop level, the plant level & the board level. As the
scheme of shop council and workers’ representation on the board of
directors were already functioning, greater emphasis was placed on the
setting up of unit councils.

At present the following participative forums are prevalent in India:

(A) Works Committees;

(B)Joint Management Councils;
(C)Joint councils
(D)Unit councils
(E)Plant councils
(F) Shop councils
(G) Workers’ representative on the Board of Management; and

(A) Works Committees: The Industrial Disputes Act 1947 provides for the setting up of works committees as
a scheme of workers’ participation in management, which consists of representatives of employees and
employers. The Act provides for these bodies in every undertaking employing 100 or more workmen. The aim of
setting up of these bodies is to promote measures for maintaining harmonious relations in the work place and to
sort out differences of opinion in respect of matters of common interest to employers and employees. The
Bombay Industrial Relations Act, 1946 also provides for these bodies, but under the provisions of this Act they
can be set up only in units, which have a recognised union, and they are called joint committees. The workers
directly elect their representatives where there is no union.

Functions: These works committees are consultative bodies; Their functions include discussion of conditions of work life
lighting, ventilation, temperature, sanitation, etc., amenities like water supply for drinking purposes, provision of
canteens, medical services, safe working conditions, administration of welfare funds, educational and recreational
activities, and encouragement of thrift and savings. It shall be the duty of the works committee to promote measures for
securing and preserving amity and good relations between the employers and workmen and to comment upon matters
of their common interest or concern and endeavor to reconcile any material difference of opinion in respect of such
matters.

Structure: The works committees have, as office bearers, a President, a Vice-President, a Secreatary and a Joint
Secreatary. The President is a nominee of the employer and the Vice-President is the Workers’ representative. The
tenure of these bodies is two years. The total strength of these bodies should not exceed 20. The employers
representatives have to be chosen by the employees.These committees functioned actively in some organizations like
Tata Iron and Steel Company, Indian Aluminum Works at Belur, and Hindustan Lever. In all these, the managements
have evolved joint committees independently of the statutory requirements.

(B) Joint Management Councils: The second Five year Plan recommended the setting up of joint councils of
management consisting of representatives of workers and management. The Government of India deputed a
study (1957) to study the schemes of workers’ participation in management in countries like U.K., France,
Belgium & Yugoslavia. The Indian Labour Conference (ILC) considered the report of the study group in 15 th
Session in 1957 and it made certain recommendations:

1. The workers’ participation in management schemes should be set up in selected undertakings on a

voluntary basis.
2. A sub-committee consisting of representatives of employers, workers & govt. should be set up for
considering the details of workers’ participation in management schemes would be introduced in
the first stage on an experimental basis.

Objectives: The objectives of Joint Management Councils are as follows:

(i) To increase the association of employers and employee thereby promoting cordial industrial relations
(ii) To improve the operational efficiency of the workers
(iii) To provide welfare facilities to them
(iv) To educate workers so that they are well equipped to participate in these schemes; and
(v) To satisfy the psychological needs of workers.

A tripartite sub-committee was set up as per the recommendations of Indian Labour Conference, which laid down
certain criteria for selection on enterprises where the JMCs could be introduced. They are:

(i) The unit must have 500 or more employees

(ii) It should have a fair record of industrial relations
(iii) It should have a well-organised trade union
(iv) The management and the workers should agree to establish JMCs.
(v) Employers ( in case of private sector) should be members of the leading employers’ organisation; and
(vi) Trade unions should be affiliated to one of the Central federations.

(C) Joint Councils: At every division/region/zonal/ level, or as may be considered

necessary in a particular branch of an organization/service employing 100 or more
people, there shall be a joint council. The main feature of the joint council shall be:

(i) Each organization/service shall decide the number of councils to be set up for
different types of services renedered by it in consultation with the recognised
unions- or workers as the case may be, in the manner best suited to the local
conditions
(ii) Only such persons who are actually engaged in the organization/service shall
be members of the joint council. Each organization/service may decide the
numver of members in the manner suggested un item but the membership
should not be unwidely.
 (iii) The tenure of the council shall be two years. If, however, a member is
nominated in the mid-term of council to fill a casual vacancy, the member
nominated shall continue in office for the remaining period of the council’s
tenure.
(iv) The chief executive of the organization/service or of its
divisional/regional/zonal branch, as the case may be, shall be the chairman of
the joint council. There shall be a vice-chairman who will be chosen by the
worker-members of the council.
(v) The joint council shall appoint one of its members as its Secretary who will
prepare the agenda, record the minutes of meetings and report on the
implementation of the decisions arrived at every meeting. The management
shall provide the necessary facilities within the premises of the
organization/service for the efficient discharge of his functions by the secrecy.
(vi) The joint council shall meet whenever considered necessary, but at least once
in a quarter.Every meeting shall review the action taken on the decisions of
earlier meetings for an effective follow-up action
(vii) Every decision of the joint council shall be on the basis of consensus and not
by a process of voting; it shall be binding on the management and workers
and workers and shall be implemented within one month, unless otherwise
stated in the decision.

Functions of the joint councils

The following shall be functions of the joint councils

(i) The settlement of matters which remain unresolved by unit level councils and
arranging joint meetings for resolving inter-council problems
(ii) Review of the working of the unit level council for improvement in the customer
service and evolving for the best way of handling of goods traffic, accounts, ets.
(iii) Unit level matters which have a bearing on other branches or on the enterprise
as a whole.
(iv) Development of skills of workers and adequate facilities for trading.
(v) Improvement in the general conditions of work.
(vi) Preparations of schedules of working hours and holidays
(vii) Proper recognition and appreciation of useful suggestions received from workers
through a system of rewards.
(viii) Discussion on any matter having a bearing on the improvement of performance
of the organization/service with a view to ensuring better customer service.

(D) Unit Councils: encouraged by the success in manufacturing and mining units, a
new scheme of workers’ participation in management in commercial and service
organizations in the public sector, having large-scale public dealings, was announded
on 5th January 1977. The scheme envisaged setting of unit councils in units employing
at least 100 persons. The organizations include hotels, restaurants, hospitals, air, sea,
railway and road transport services, ports and docks, ration shops, schools research
institutions, provident fund and pension organizations, municipal and milk distribution
services, trust organizations, all financial institutions, banks, insurance companies, post
and telegraph offices, Food Corpotation, state Electricity Boards, Central warehousing,
State Warehoousing Coorpotations, State Trading Corporation, Mines and Minerals
Trading Corporation, irrigation systems, tourist organizations, establishment for
public amusement and training organizations of the Central and State Governments.
Case Studies
Subject Related topics for students PPT Presentations

Sl.No Regn. No Name of the Student Topic for Presentation Date

9010624 ANSAR AHMED S.

9010628 GAYATHRI .K.P

9010636 B.A SHRUTHI

9010638 SANDESH M.C