MANAGEMENT OF INDUSTRIAL RELATIONS

MANAGEMENT OF INDUSTRIAL RELATIONS (MBA)

COURSE OVERVIEW

This course pack on managing industrial relations is basically

meant for students. It is concerned with the several factors and
issues that go to make up an industrial relations system. The
objective is to provide a broader outlook of the industrial
relation function. The focus has been on the developmental
aspects rather than on the more traditional control aspects of
the function. It also provides the reader with a framework for
analysis of industrial relations problems. This would enable the
reader to get a broad overview and a good feel of the several
related factors that should be considered for an understanding
of the industrial relations situation.

The students on completion of the course shall have a good

understanding of various aspects of:

1. Industrial Relations (IR) and Trade Unionism.

2. Collective Bargaining Process.
3. Grievance Redress Mechanism.
4. Industrial Conflict.
5. Workers Participation.

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 SYLLABUS
MASTER OF BUSINESS ADMINISTRATION

SPECIALIZATION: HUMAN RESOURCE MANAGEMENT

SEMESTER – III

MANAGEMENT OF INDUSTRIAL RELATIONS

Sub. Code: MBA- HR- 304 Credits-03

Total Marks: 100 Minimum Pass Marks: 40%

Internal Assessment: 40 Marks University Examination: 60 Marks

BLOCK I

Unit 1: Industrial Relations Strategy

Evolution of Industrial Relation; Industrial Relations; Relations Strategy; Future of
Industrial Relations in India.

Unit 2: Types of Unions

Historical Evolution and Aspects of Trade U696 nion in India; Approaches to Trade
Union, Types of Union, Functions of Trade unions.

Unit 3: Industrial Dispute Act

Functions of Trade Unions; National Level Federations; The Industrial,
Dispute(Central)Rules, Central ID Rules, 1957

BLOCK II

Unit 4: Trade Unions Act 1926

The Industrial, Dispute (Central) Rules; Central ID Rules, 1957; The Trade Union Act
1926

Unit 5: Wage Fixation Method

Concept of Collective Bargaining; Stages and prerequisites for collective Fixation;
Collective Bargaining as a Wage Fixation Method.

Unit 6: Collective Bargaining

Collective Bargaining as Wage Fixation Method; Types of Collective Bargaining and
Studies in Collective Bargaining; Approaches and Nature of Grievances; Causes,
Procedure and Grievance; Redress Mechanism; Case Study.
BLOCK III

Unit 7: Disciplinary Proceedings

Judicial Approaches to Discipline; Disciplinary Proceedings; Domestic Enquiry and
Award of punishment, Nature of Conflict and its Manifestations, Labor Administration
Machinery

Unit 8: Industrial Disputes Act 1947

Inter Industry Propensity for Strikes, Strike Patterns, Environmental Influence:
Arbitration, Conciliation, Adjudication, Unfair Labor Practices, Environmental Influence:
Arbitration, Conciliation, Adjudication, Unfair Labor Practices, Case Study, Industrial
Disputes Act 1947 Evolution and Nature of Participation, Prerequisites for Successful
Participation

Unit 9: Limitation of Participation

Degree of Influence and Involvement, forms of participation, and impact of participation,
Degree of influence and Involvement, forms of participation, and impact of participation,
Limitation of participation, Current trends in participation in Indian industries Case Study

SUGGESTED READINGS:

1. Dynamics of Industrial Relations in India by Mammoria C. B. Himalaya

Publishing House;
2. Personal Management by Mammoria C. B. Himalaya Publishing House;
3. Industrial Relations & Labor Laws by Srivastava S. C. Vikas Publishing House;
4. Personal Management & Industrial Relation : R. S Davar, Vikas Publishing
House;
5. Hand Book of Industrial Laws by Kapoor N. D. Publishing House Sultan Chand
& Sons;
6. Personal Management & Industrial Relation : Mittal Kumar- Anmol Publication;
7. Contemporary Industrial Relations by Ian J Beardwell; Oxford University Press
MANAGEMENT OF INDUSTRIAL RELATIONS

MANAGEMENT OF INDUSTRIAL RELATIONS (MBA)

CONTENT
Unit No. Lesson No. Topic Page No.

1 Lesson 1 Evolution of Industrial Relations 1

Lesson 2 Approches to Industrial Relations 7
Lesson 3 Industrial Relations Strategy 9
Lesson 4 Future of Industrial Relations in India 22

2 Lesson 5 Historical Evolution and Aspects of Trade Union in India 27

Lesson 6 Approches to Trade Union 37
Lesson 7 Types of Unions 41
Lesson 8 Growth of Union 45

3 Lesson 9 Functions of Trade Unions 51

Lesson 10 National Level Federations 53
Lesson 11 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 56
Lesson 12 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 61

4 Lesson 13 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 65

Lesson 14 The Trade Unions Act 1926 71
Lesson 15 The Trade Unions Act 1926 74
5 Lesson 16 Concept of Collective Bargaining 78
Lesson 17 Stages and Prerequisites For collective Bargaining 80
Lesson 18 Collective Bargaining as a Wage Fixation Method 84
Lesson 19 Collective Bargaining as a Wage Fixation Method 93

6 Lesson 20 Collective Bargaining as a Wage Fixation Method 107

Lesson 21 Types of Collective Bargaining and Studies In Collective
Bargaining 117
Lesson 22 Approaches and nature of grievances, causes, procedure
and grievance redress mechanism 120
Lesson 23 Case Study 126
7 Lesson 24 Case Study 127

Lesson 25 Judicial Approaches to Discipline 128

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 MANAGEMENT OF INDUSTRIAL RELATIONS
MANAGEMENT OF INDUSTRIAL RELATIONS (MBA)

CONTENT
Unit No. Lesson No. Topic Page No.
Lesson 26 Disciplinary Proceedings 133
Lesson 27 Domestic enquires, Charge Sheets, Conduct of enquiry and
award of punishment 136
Lesson 28 Nature of conflict and its manifestations 139
Lesson 29 labour administration machinery 143

8 Lesson 30 lnter industry propensity for strikes, strike patterns 144

Lesson 31 Envionmental influnces: arbitration, conciliation,
adjudication,unfair labour practices 148
Lesson 32 Envionmental influnces: arbitration, conciliation,
adjudication,unfair labour practices 152
Lesson 33 Case Study 157
Lesson 34 Industrial Disputes Act 1947 160
Lesson 35 Evolution and nature of participation, Prerequisites
for successful participation 162

9 Lesson 36 Degree of influnce and involvent, forms

of participation, and impact of participation 165
Lesson 37 Degree of influnce and involvent,
forms of participation, and impact of participation 167
Lesson 38 Limitation of participation 170
Lesson 39 Current trends in participation in Indian industries 172
Lesson 40 Case Study 173

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INDUSTRIAL RELATIONS STRATEGY
LESSON 1:
EVOLUTION OF INDUSTRIAL RELATIONS
Learning Objectives
After going through this lesson you will be able to comprehend
the following
• What are Industrial Relations.
• How did the Industrial Relations evolve going through a
series of stages.
• The changes brought about by Industrial Revolution and
its effects.
• How did we reach the machine age and modern factory
system.
What are Industrial Relations?
In order to understand the emergence of Industrial Relations,
it is necessary for us to study the process of evolution of
industry.
Evolution of Industrial Relations
The evolution of industry has been quite gradual. There was a
time in the history of human civilisation when there used to be
no industrial activity. During hunting stage, man lived all by
himself. He used to go out for hunting and eat whatever he
could find, even flesh, fish, fruits and roots of trees. He used
tree bark, leaves and animal skins to cover his body. But he had
no fixed residence. After this, man entered into pastoral stage
under which he started domesticating animals to have an
assured supply of milk, meat and skin. He lived near the banks
of lakes and rivers because of the availability of grass and water
for the animals. Gradually, man discovered a new use to which
land could be put. He entered the agricultural stage. He began
cultivating the land to grow food grains. Some people, who did
not have any work, offered to work in the fields of others. Such
workers were paid in kind. The exchange of services for goods
made the background for the evolution of industry.
All this is fine but the next question, which comes to our mind
is- how did the Industry finally evolve?
Well we can classify the various stages in the evolution of
industry as follows:
1. Primitive stage
2. Agrarian economy stage
3. andicrafts stage.
4. Guild system.
5. Putting out (or Domestic) system.
6. Industrial revolution.
As you might know The Machine age started after industrial
‘revolution in England which took place between 1760 A.D.
and 1820 A.D. The first three stages represent Pre-machine age.
Let us look at these stages briefly:
UNIT 1
UNIT 1
1 Primitive Stage
MANAGEMENT OF INDUSTRIAL RELATIONS
The families at this stage were self-sufficient as their needs were
limited. Hence, there was no problem of exchange of goods.
Division of labour was restricted only to the family level. This
was mainly because men devoted their time to activities like
hunting, fishing and making of weapons, and women engaged
themselves in cooking, bringing up the children, agriculture and
domestication of animals and doing other household chores.
In short, all the activities of the family were carried on either to
produce or to procure products for family consumption. In this
manner a family was able to satisfy its needs, and the question
of exchange of goods did not arise.
In the course of time, some families started keeping the
animals rather than killing them. This led to domestication of
animals. Animals were treated as a form of wealth, which could
be exchanged for other products required by the family. This
gave birth to the barter economy.
The barter economy…Yeah! The term sounds familiar
Is it something to do with exchange? or
Some form of business?
To answer the questions barter economy may be defined as the
direct exchange of one commodity for another commodity.
“The barter economy developed because of the increase in the
number of human wants and inability of a family to produce
all the things required, by it. The exchange was direct and
without the use of any common medium of exchange. Every
person used to exchange his surplus goods with the other
persons for the goods required. For instance, a farmer, who had
plenty of foodgrains but no cloth exchanged a part of his
foodgrains with the weaver who had surplus cloth and needed
foodgrains. The main difficulty of the barter system was the
lack of double coincidence of wants and a common measure of
value. Therefore, the exchange was restricted only to the goods
in which some families were surplus and other families were
deficient.
2 Agrarian Economy Stage
Well by this time things changed a little. Many tribes settled
down permanently at some place and began to sow seeds and
rear cattle on the land, which they shared in common. Agricul-
ture became the primary source of maintenance during this
stage. These tribes were self-sufficient as they produced
everything they required. The division of labour confined to the
division of work between men and women of the tribe.
Eventually with the rise of private ownership of property
inland and cattle, the tribe split up into families. Gradually,
human wants also became varied. These families were no more
self-sufficient. Moreover, some families concentrated on
occupations other than agriculture. This led to exchange of
goods for goods to satisfy needs of various families and the
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 establishment of village economy. The village became a unit of
MANAGEMENT OF INDUSTRIAL RELATIONS
economic self-sufficiency. Some families also started using hired
labour. Later on, traders came into existence that purchased the
surplus products of different families and sold them to those
requiring these products. The difference in purchase and sale
price was their profit. Emergence of traders led to specialisation
in different fields by different families. It was no longer
necessary to produce everything a family needed for self-
consumption:
3 Handicrafts Stage
This is the next stage which we are going to discuss about
under this stage, artisans living in villages produced the
products for the local population and got in exchange various
things from customers. There was hardly any machinery. The
craftsman used simple hand tools arid manual skills for
producing the goods. There was no division of labour at this
stage. Thus, the organisation of industry was quite simple. The
craftsman was responsible for assembling various raw materials,
and selling the goods produced by him.
4 Guild Stage
The ‘guild stage’ is the next stage what we are going to talk
about. Under this stage two types of guilds were initiated,
namely, Merchant Guild, and Craft Guild. A merchant guild was
an association of merchants engaged in trade in a particular
locality. The purpose of a merchant guild was to enforce equality
of opportunity for the members of the guild, to protect their
interest, to avoid competition among the members and also to
regulate the conduct of its members by prohibiting unfair
practices. A craft guild, on the other hand, was an association of
the skilled artisans engaged in the same occupation. Thus, there
were several guilds in a town. The craft guild regulated entry to
the craft, prescribed standards of workmanship and regulated
the conduct of the members. The guild system began to decline
by the end of 15th century due to the narrow attitude of the
guilds and the increasing rivalry among their members.
5 Putting out System.
At this stage, the intermediary between the producers and
consumers of goods came to play an important role. The
entrepreneur gave outwork to the artisans who worked in their
homes. The artisans still owned the means of production. The
entrepreneur came at regular intervals, collected the goods and
paid for them to the artisans. The artisans faced difficulty when
the scale of production increased and there was a need for new
tools of production. The entrepreneur started providing raw
materials and, tools to the artisans who produced goods and
received wages on piece wage basis. That is why; this stage was
called the putting out system. During the beginning of 18th
century, the entrepreneur followed the practice of employing the
artisans and getting work from them at their own premises.
The entrepreneur procured raw-materials and equipment,
assigned work to the artisans, inspected the quality of products,
and found a market for his products. In other words, he was
the owner and manager of the production system.
6 Industrial Revolution
Industrial revolution during the later part of the 18th century
and earlier part of the 19th century had a vital influence on the
2
development of industry and commerce. It changed radically
the techniques of production and had an important impact on
the life of mankind.
Industrial revolution was the result of the inventions of many
English scientists during 1760 to 1820. The need for inventions
arose because of the increase in the demand of products due to
widening of markets followed by the geographical discoveries
of the late 15th and 16th centuries. It was beyond the capacity
of the industry using labour intensive techniques to meet the
increasing demand. The inventors in England had set for
themselves the task of finding ways and means to remove the
hindrances in production faced by the producers and manufac-
turers. James Hargreaves made ‘spinning genny’ in 1764, and
Richard Arkwright introduced ‘water-frame’ in 1779. Thereafter,
many mechanical inventions came in quick succession such as
‘mule spinner’ by Crompton, and ‘power-loom’ by Cartwright.
The invention of steam engine enabled man to drive the
machines by power.
We see that the concept Industrial Relations largely emerged
during the Industrial Revolution.
Let us briefly deliberate on some aspects of Industrial Revolu-
tion which will help in our understand of the evolution of
Industrial Relations
We can sum up as:
1. There were a series of mechanical inventions by the English
scientists.
2. Production in factories started with the help of machines
run by mechanical power such as steam, oil and electricity:
Thus, setting up a factory required huge amount of capital.
This gave birth to two classes in industry, namely, capitalist
and labour.
3. Introduction of machinery led to mass scale production of
standardized goods. .
4. The modern factory system provided both direct and
indirect employment to a large number of people. The
factories generated direct employment and trading in raw
materials and factors products gave indirect employment to
traders and mercantile agents.
5. Large scale employment in factories gave birth to labour
problems, which necessitated some steps by employers to
create good human relations in factories.
Changes brought about by Industrial Revolution.
The significant changes brought about by industrial revolution
are listed below:
a. Development of engineering. Engineers were required to
design machinery for textiles, coal mining, etc. for making
and repairing steam engines, and making tools and
locomotives.
b. Revolution in iron making. The engineers, who took charge
of important task connected with the industrial change,
could succeed in their work only if iron was cast in large
quantities and was of fairly good quality.
c. Use of power driven machines. Power driven machines were
used in industry. It began with cotton spinning and
weaving and, later on, spread to wool, silk etc.
d. Rise of chemical industry. The application of power driven
machines in textile mills made it necessary to develop
bleaching, dyeing, finishing and printing processes to keep
pace with the output of textile mills.
e. Development of coal mining. Coal was needed to refine pig
iron and cast it into the form in which it was needed by the
engineers. It was also needed for generation of steam
power.
f. Development of means of transport. For regular supply of
raw materials, etc., to industry and for the distribution of
goods produced by the factories, effective transport was a
must. The development of the means of transport like
railways and steamships constitutes the most important
impact of the industrial revolution.
Above you have seen the changes brought about by the
industrial revolution so now going on a little further on the
same topic let us discuss the effects industrial revolution had on
the economic front.
Economic Effects of Industrial Revolution
Industrial revolution brought about the following economic
changes:
i. Large Scale Production. The industrial revolution made
mass production of goods possible by the use of power
driven machinery in place of hand tools.
ii. Change of form of Ownership. Large-scale production
increased the size of industrial enterprises sole
proprietorship concerns expanded into partnership firms
and further developed into joint-stock companies. The
evolution of joint stock companies was an important
outcome of the industrial revolution.
iii. Specialization. Industrialization led to a craze for
specialization in every field because of development in the
means of transport and communication. Different parts of
the country (and even different parts of the world)
specialized in producing or manufacturing different
commodities or parts. Specialization helped in reducing the
cost of production.
iv. Rise of Capitalism. Cottage system of production was
greatly replaced by the factory system. Under the factory
system capital is the crucial factor. Large-scale production
further increased the need and significance of capital. This
gave birth to capitalistic economy under which there are two
classes of people, namely, capitalists and workers. The-
workers are purely wage earners dependent for their -living
on the capitalist employers. The capitalist system also
increased the importance of money as a medium of
exchange, measure of value and store of value.
v. Trade Cycles. Large-scale production accompanied by
capitalism gave birth to trade cycles having successive
periods of inflation arid depression. During the period of
prosperity, there is high level-of employment and sustained
rise is prices. But during depression, there is large-scale
unemployment decrease in demand and so on. Many weak
firms are eliminated during the depression period.
vi. Standard of Living. Industrial revolution had a positive
MANAGEMENT OF INDUSTRIAL RELATIONS
impact on the standard of living of the people. Factories
produced goods of better quality and at cheaper rates for
the consumption of the people. This improved their
standard of living.
Social and Politica1 Effects of Industrial Revolution
Industrial revolution not only affected the economy but also
created certain social and political implications, which in turn
created the need for organization of workers and later paved the
way for trade unionism. Here let us discuss a few social and
political effects of industrial revolution :
i. Urbanization. Industrial revolution led to the
concentration of population in towns because factories and
other establishments were located in the towns. This gave
birth to the housing problem. Even now, lakhs of workers
continue to live in slum areas in the industrial towns.
ii. Rise of Individualism. People from the villages came to
the towns to find employment. Their close ties with the
village, land and family were broken. The industrial
revolution created conditions under which workers aimed at
material progress by working in the factories. This led to the
disintegration of joint family life.
iii. Awareness of Rights. The industrial revolution gave birth
to two classes, namely capitalists and workers. There was
economic inequality between the rich and the poor. Slowly
and slowly class-consciousness came in the minds of
workers and they organized themselves in the form of
unions to fight for their economic, social and political
rights.
iv. Poor Working Conditions. The workers were paid lower
wages and they had to work under poor working
conditions. There was no one to convince the factory
owners about the need of good working conditions so
long as trade unions did not protest. This was an
obstruction in increasing the productivity of the workers.
v. Political Awareness. Industrial revolution increased the
incomes and standard of living of the people. The earning
people started spending more and more on the education
of their children. Press also progressed a lot to air the
grievances of the working class. These factors created
political consciousness among the people. The workers
demanded the right to form unions and to participate in
the management of the industrial undertakings.
After seeing the changes brought about by the industrial
revolution let us now try to examine how did we reach the
Machine Age And Modern Factory System
The industrial revolution took place in England and later on
spread to other countries of the world. Since the industrial
revolution, many changes have taken place in the industrial
system. The present age is an era of large-scale production.
Many big factories have come into existence and they employ a
large number of workers. They cater to the needs of the people
not only in one country but also in many countries of the
world. Thus, machine age has facilitated expansion of interna-
tional trade and growth of multi-national corporations.
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 During the last 40 years or so, tremendous and rapid develop-
MANAGEMENT OF INDUSTRIAL RELATIONS
ment of science and technology has taken place. That is why, the
present era is known as ‘atomic age’, ‘space age’ and ‘electronic
age’. Some people also call this era as the phase of second
industrial revolution. In the present machine age, different
countries of the world are closely inter-related by very fast
means of transport and communication.
Features of Machine Age
The main features of the present age, popularly known as
machine age, are as follows:
i. Large Scale Production. Modem factories carryon large scale
production to meet the demands of large number of
people. Production is carried on in anticipation of demand.
ii. Mechanization. The developments in the fields of science
and technology have increased the degree of mechanization
in the modern factory system. The efficiency of the factories
has increased many times because of new innovations.
iii. Automation. In many advanced countries like the U.S.A.
and the U.K., automation has been introduced in the
production system. By automation we mean installation of
one set of machines to run another set of machines. For
instance, there is automation in oil refineries, chemical
industrial units and food processing units. A small number
of operators sitting in the control room control the entire
operation.
iv. Management Information System. Introduction of
management information system with the help of electronic
computers is another highlight of modem machine age.
The computers have vast memories. They can store huge
amount of information and make available the required
information within seconds. They help in taking managerial
decisions at the proper time.
v. Specialization. There is greater specialization and division of
labour. Many industrial units specialize in the manufacture
of a small number of components or parts of different
products. Division of labour has facilitated the workers to
concentrate on limited operations.
vi. Standardization. Standardization brings about uniformity
of quality and size, and facilitates large-scale production.
Nowadays, many organizations... whether production or
services based, are trying to get themselves standardized as
per International Standards called ISO certifications. Thus,
overall quality consciousness has increased in industry.
vii.Growth of Industrial Areas. Concentration of industries in
certain regions of the country has given rise to the growth
of industrial areas which offer special advantages in regard
to raw materials, power, access to market, financing,
transporting, etc.
viii.Expansion of International Trade. Mass production,
standardization of products, and improved means of
transport and communication have increased the volume of
international trade among different countries.
ix. Research and Development. Big industrial enterprises have
established separate departments for research and
development and they spend a considerable portion of their
4
earnings for innovating new products and ideas. Research
and development activities have the effect of decreasing cost,
increasing quality and consumer satisfaction and raising the
standard of living of the people.
x. Competition. There is cutthroat competition among the
producers of goods in all capitalist economies. Economic
relations between different persons are based on contract
rather than on custom and tradition.
Now we can conclude that industrial revolution gave plants and
machinery, which brought about factory system. Entrepreneurs
established factories and employed a large number of workers
to work in their factories. This gave rise to two classes, namely,
capitalist and workers and the term ‘industrial relations’ was
coined to create and maintain cordial relations between these
two classes for the growth of industry. This was the real
beginning of industrialization.
As a result of industrial revolution, capital became a critical
factor of production. With the technological advancements, the
use of out-workers (people working at their homes with their
own tools and machines) declined and employment in factories
rose up tremendously. The owner of the factory provided raw
materials, tools and machines and other means of production
in the factory premises and the workers offered their labour in
return of wages. This led to the emergence of two distinct
classes on the industrial scene, namely, the capitalist class and the
working class. The capitalist class became more powerful as it
provided the most important input of production i.e., capital
in the initial stages of industrialization the workers were largely
untrained, uneducated and unorganized ; hence didn’t receive a
fair deal at the hands of employers.
In the early stages of industrialization, the trends, which
dominated the scene, were:
i. Loss of freedom. Unlike working in their homes, where
the workers had freedom in carrying out work the way they
liked it, in factories they were forced to work under strict
discipline. They had little say in matters of working
conditions, rest interval, holidays, wages etc. They also lost
their freedom of movement during working hours.
ii. Unhygienic working conditions. The work environment
in the factories was extremely unhygienic and unhealthy.
Also it was largely in sanitary badly lit and ill ventilated; little
attention was paid to the health and safety of workers.
iii. Employment of children. Partly due to economic necessity
and partly due to pressure of employers, the workers were
forced to put their children to employment. There was no
difference in the hours of work and other working
conditions’ of both the child and the adult workers. The
incidents of the shameless exploitation of child workers by
the employers were not uncommon.
Since the workers were unorganized and had no bargaining
power, the Governments in many countries intervened through
various1aws to check the exploitation of workers and to
safeguard their health and welfare. Predominance of mass
illiteracy among the workers also stood in way of rise of trade
unionism. But gradually, with the initiative of social and
political workers, trade unions were formed to protect the
economic, social and psychological interest of the, workers. The
factors, which necessitated the growth of trade unions areas,
follow:
i. Commanding position of the capitalist or employer;
ii. Employment of large number of workers in factories;
iii. Introduction of division of labour;
iv. Growth of a new class of technical and, professional
employees;
v. Migration of labour from rural areas to urban areas;
vi. Rise of materialism;
vii.Monotony and boredom in jobs increase in accidents, etc.;
viii.Employment of children in factories;
ix. Payment of lower wages;
x. Unhygienic working conditions in factories;
xi. Lack of welfare measures for workers etc
Now the things were becoming complicated and complex. To
meet the above challenges, several management thinkers and
practitioners contributed to the thought on human relations in
industry. The contribution of Robert Owen, Charles Babbage
and Daniel C. McCallum is worth mentioning here. Thus, we
are now going to talk about the role of management thinkers in
regard to the human relations in industry.
Role Of Management Thinkers
Robert Owen. Robert Owen was an outstanding pioneer of
management thought. He started a factory at Manchester of
textile machinery and in 1800; he became the managing director
of Chorlton Twist Company. He carried out experiments in the
group of textile mills he managed during the period 1800 and
1828 and introduced many social reforms. He also began
cooperative movement in 1828 in Rochdale, England.
Robert Owen has been referred to as the father of personnel
management. Throughout his life, he worked for building up of
a spirit of co-operation between the workers and the manage-
ment. He believed and practiced the idea that workers should be
treated as human beings. He, made provision for reduced
working hours, housing facilities, education of workers and
their children, and a system of discipline combined with justice
in the factories being managed by him. He also took active part
in the introduction of British Factory Act; 1819.He was greatly
admired for giving human treatment to the workers. He
preached that personnel management pays dividends to the
employers and is an essential part of every manager’s job.
Charles Babbage. Charles Babbage was a leading British
mathematician at Cambridge University from 1828-1839. He
invented a mechanical calculator in 1822. He advocated work
measurement, cost determination, and wage incentives in
factories. He is best remembered as the inventor of the
‘analytical engine’, which was the for-runner of the modern
computer. In 1832,’Babbage published his famous book “On
the Economy of Machinery and Manufacturers.” He stressed
the importance of division of physical and mental labours,
suggested the ides of profit sharing, and began observing and
timing work. His vision was that of improving efficiency
MANAGEMENT OF INDUSTRIAL RELATIONS
through the application of scientific techniques .
Daniel C. McCallim. Daniel C. McCallum tried to find
solutions to managerial inefficiencies, which were plaguing the
railroads at that time. His approach to run the railroad, was one
of system, commonsense, reports and control. He insisted job
descriptions, made promotions on the basis of merit and
insisted that those in charge of specific operations were both
responsible and accountable for their successes and failures.
Growth of’Trade Unionism
During the early period of industrialization, workers faced
several problems in the factories. They got lower wages and
worked under poor working conditions. So they organized
themselves into trade unions to secure better wages and better
conditions of work. The basic philosophy underlying trade
unionism was through strength and collective support, the
employers could be forced to listen to the workers and redress
their grievances. The weapons used included strikes, slowdowns,
walkouts, picketing, boycotts and sabotage. Sometimes, even
physical force was used. Trade unionism influenced the
personnel management in such fields of activity as the adoption
of employee grievance handling systems, the acceptance of
arbitration as means of resolving conflict of rights , disciplinary
practices, the expansion of employee benefit programmes, the
liberalization of holiday and vacation time clear definition of
job duties, job rights through seniority and the installation of
rational and defensible wage structures.
Because of influence of trade unions, several employers in the
U.S.A. appointed Welfare Secretaries and also launched schemes
for workers’ participation. They adopted paternalistic attitude
towards the workers and invested on welfare activities for the
betterment of workers. In several companies, personnel
departments were set up around 1910 to look after functions
like recruitment, training, motion study, record-keeping, welfare,
etc.
Trade unionism in India developed quite slowly as compared to
the western nations. The main reason for the delayed start of
the labour movement is the difference in her economic set up
from those of the United Kingdom and the U.S.A. Though the
foreign trading companies helped in the spread of trade and
commerce in the country during the eighteenth and the first
half of the nineteenth centuries, they were also instrumental in
destroying indigenous industries. They were more interested in
selling goods obtained from their own country and not in
setting up production centres. It was only during the 19th
century, and especially during its second half, that a number of
factories were set up in Calcutta and Bombay-jute mills in
Calcutta and cotton textile mills in Bombay.
Industrial capitalism was well established in Europe during the
18th and 19th centuries, but in India modern types of indus-
tries could be set up only during the middle of the 19th century.
Indigo plantations were the first to be started in 1831 followed
by a cotton mill in Bombay in 1853, the manufacture of jute in
Calcutta in 1855, and the coalfields were connected by rail to the
port city of Calcutta. These developments paved the way for
development of industries in India.
5
 The first indication of industrial unrest and earliest work mill workers in Ahmedabad in 1918 whose leadership was
MANAGEMENT OF INDUSTRIAL RELATIONS

stoppage came to the fore in 1877 on the initiative of weavers taken over by Mahatma Gandhi who turned it into a Satyagrah.
of Empress Mills, Nagpur. Though no trade union existed, the From this was born (in 1920) the famous Textile Labour
relations between employers and workers cannot be said to be Association of Ahmedabad.
peaceful. Evidence of short-lived strikes and their frequent Enactment of the Trade Unions Act in 1926 and formation of
occurrence is found at various centres such as Bombay and the International Labour Organisation (I.L.O.) gave a fillip to
Surat. “They ended in suppression of operatives... power on the trade union movement in India. The immediate result of
one side and ignorance and mildness on the other are the basis the formation of International Labour Organization was the
on which the present relations, and the relations are quiet, rest.” birth of the All-India Trade Union Congress in 1920. With the
Lock-outs were completely non-existent. This reveals the formation of I.L.O., immediate necessity was felt for a forum
unequal strength of the bargainers at that time. The powerless for election of the workers’ representatives to that organization
workers in mild disputes were intimidated, dismissed and or, at least, of an agency that could tender suitable advice to
victimized by the employers. In 1895, probably for the first Government regarding selection of the workers’ representatives.
time, the workers struck work at the Budge Jute Mill, as a result This necessity led to the formation of the All-India Trade
of which the mills suffered a loss of Rs. 18,000. Union Congress.
The passing of the Factories Act in 1881 awakened the working The Trade Unions Act gave legal status to registered trade
class towards a concerted approach. In 1884 about 5,000 unions and conferred on them and their members a measure of
workers presented a memorandum to the Bombay Factory immunity from civil suits and criminal prosecution. The Act
Labour Commission under Shri N.M. Lokhande. In 1890, the gave legal status to unions and enhanced their position in the
first labour association, viz., Bombay Millhands’ Association minds of employers and the general public. This Act was an
was established. However, till 1895, workers had very little class important landmark in the history of trade union movement in
consciousness and, therefore, they lacked the power of united India. The failure of the Bombay Textile Strike of 1929 and the
action. In 189':’ was formed the Amalgamated Society of economic depression of that period brought a lull in trade
Railway Servants c: India-consisting of Anglo-Indians and union activity. But industries faced the problem of effective
domiciled Europeans employed on railways and acted more as a handling of labour-management relations. The managements
friendly society than a combination for securing concessions. In declared lock-outs to resist pressure by workers while workers
1905, another organization was formed in Calcutta under the resorted to strikes to pressurize managements for higher wage
name of the Printers’ Union. The Postal Union was formed in and better facilities. The Government also intervened in many
Bombay in 1905. These organizations formed on the lines of cases to resolve the disputes between the management and
trade unions and may be considered as the pioneer organized workers. This is how the industrial relations system consisting
labour associations in India. Thus, it may be noted that there of three actors, i.e., management, workers and government,
were no strong organizations for concerted action. evolved.
Whatever trade unions emerged, they were of a purely local
character at the level of individual mills. The conditions of
labour were severely affected by the World War I and the unions
could not do much to improve the lot of workers. -
Though quite a number of workers’ organizations did spring
up during the early years of the twentieth century, legal recogni-
tion to the movement was not forthcoming readily. The first
organization-The Amalgamated Society of Railway Servants in
India and Burma-formed in 1897 was registered under the
Companies Act. Specific legislation for registration of trade
unions was enacted only in 1926. As a matter of fact, the
pressure exerted by the trade unions movement in the United
Kingdom facilitated this legislation. However, Mr. B.P. Wadia
initiated the process through introduction of an element of
militancy in the movement in India. The Textile Workers
Unions set up by him in Madras in 1918 as an immediate
success and through a number of strikes, he was able to get a
lot of benefits for the workers. But the employers retaliated by
filing a suit for damages against Mr. Wadi a and other leaders
and obtained court injunction restraining the union leaders
from interfering with their business. This led to focusing
attention to the need for legislation for protecting trade union
activities.
On the other side of the country, a new experiment on the
labour front was carried out. A strike was launched by the textile

6

LESSON 2:
APPROCHES TO INDUSTRIAL RELATIONS
Learning Objectives
After going through this lesson you will be able to comprehend
the following.
• Theories and models of conflict for better understanding
of the entire relationship of labour and management.
• Differentiate between approaches of Industrial Relations
After having discussed at length the ‘evolution of industrial
relations’ let us now enhance our knowledge and know more
about the IR primarily starting with the ‘approaches to indus-
trial relations.’
Approaches To Industrial Relations
Theories/Models of Industrial Conflict.
The bases for conflict in industry are no diffident from those in
any other area of human endeavor. Most of social and psycho-
logical, economic and political factors underly every conflict
situation. Thus, a broader framework of industrial conflict is
the complex of influences of socio-economic and political
factors. Means of conflict management or resolution must
incorporate considerations of these dynamics. Some of the
theories/models of conflict are presented below for a better
understanding of the entire relationship of labour and
management.
1 Classical Approach (Marxist Model)
Karl Marx considered industrial conflict as a part of the broader
social conflict between classes and used it to explain the
fundamental historical process of change and-development
inhuman society. He was concerned with certain macro eco-
nomic processes and deep-rooted inequalities in society as a-
whole, and not with specific industries or firms. Marx divided
the society into two classes: (i) capitalists, who own the means of
production, and (ii) proletariat, who own nothing but their own
labour power. These classes are antagonistic groups. Antago-
nism and conflict are o f the very essence of Marx’s conception
of class. The reasons for this fundamental antagonism lie in the
capitalist mode of production.
The main drawback of the capitalist mode of production is the
exploitation inherent in the system of wage labour. Wage
labour implies that labour is-a commodity which is bought and
sold like any other. Labour is bought at the cheapest price
possible and put to work on means of production owned by
the capitalist. The work_r is paid a wage which is barely
sufficient for his subsistence. This gap is the surplus value
which the capitalist appropriates. This appropriation of the
surplus by the capitalist employer is not lessened rather
increases, for the actual distribution of additional increments of
revenue is determined by the power situation. Workers with no
power may get nothing. There is no automatic distribution
based on a sense of equity. And, thus, the exploitation of the
worker by the capitalist increases.
MANAGEMENT OF INDUSTRIAL RELATIONS
Wage labour is, alienated because of exploitation by the
capitalists. Alienation of a worker arises from the fact that he
does not own the too1s with which he produces. Whatever is
produced from the contribution of his labour is not exclusive
creation (because of division of labour), it arises from the
appropriation of the surplus; finally, it arises from himself
because his labour is no longer a form of self-expression or an
end itself, but a mere means to an end-the end being the wage
which is necessary in order to survive.
2 Human Relations or Neo-Classical Approach
This approach has its origin in the Hawthorne experiments
conducted by Elton Mayo, Roethilsberger, Whitehead, Whyte
and Homans, etc. According to this theory, conflict is an
aberration and not the natural state of human society. This
aberration occurs when tendency of the industrial society is to
treat worker as an isolated individual, and deprive him of all
control over his environment. This loss of mooring and
control is a major source of conflict.
The core of human relations theory consists in the importance-
attributed to the small informal social groups as a source of
human satisfaction. This satisfaction results from better human
relations through the encouragement in creating informal social
groups and better communic’1ition by providing not only
downward communication but upward communication also.
The key to sound industrial relations lies in achieving better
human relations in the organisation. The major criticism of this
theory is that it treats the factory as if it were a self-contained
and isolated social system. The sources of conflict lie as much
outside the factory as within it, and the argument that all these
strains can bee handled by the management through better
human relations within the factory is not convincing. .
Neo human religionists like Maslow, Herzberg and McGregor
felt that workers look for satisfaction of their needs from their
employment. The motivators include both economic and non-
economic rewards like appreciation of performance, knowledge
of results, competition, etc:
3 Pluralistic Approach
The pluralistic theory is based on the premise that the enterprise
contains people with a variety of interests, aims and aspirations;
therefore, it is a coalition of different interests. Arthur Ross
argued that we should view an organization as a “plural society
containing many related but separate interests and objectives
which must be maintained in some kind of equilibrium.”
Given such views, conflict is not abnormal but quite natural.
The capitalist is no longer a ruthless exploiter. He is willing to
sit down and discuss terms with those who protest. Thus,
protest has become institutionalized and has lost its bite. Given
the nature and distribution of power in industry and society,
both labour and management restrain each other to exercise the
exclusives of power. Rather, together they construct and
7
 maintain rules and institutions for the regulation of conflict. .
MANAGEMENT OF INDUSTRIAL RELATIONS
Conflict cannot be wished away in this system. Arbitration,
mediation and adjudication emerge as the major regulators of
conflict, and strike becomes a weapon of last resort.
Pluralism does not imply the inevitability of compromise and
consensus in all situations. Fox argues that the aim of plural-
ism is to combine social stability with adaptability and
freedom-this involves the assumption that on most occasions,
conflict will be resolved by collective bargaining-the major
institutional apparatus of the pluralist.
4 Social Action Approach
The social action model has its origins in Weberian sociology.
Under this model, the actors own definitions of the situations
in which they are engaged and these are taken as an initial basis
for the explanation of their social behaviour and relationships.
This model points but the reciprocal nature of the relationship
between social structure and behaviour. Social structure limits
social action. Thus, a worker’s ability to take strike action or an
entrepreneur’s ability to invest may be limited by his personal
and by more general economic conditions, and this will help to
determine the environment for similar decisions in future.
One of the most important features of the social action models
is the attitude it adopts towards social theory. The social action
approach suggests that general explanations of social action are
not possible simply because of the nature of the subject of
social sciences-men do not react to the stimuli in the same way
as matter in the natural sciences. The social action approach has
been contrasted with the systems approach while the systems
approach regards behaviour as a reflection of the characteristics
of a social system containing a series of impersonal processes
which are external to actors and constrain them, the social action
approach stresses the way in which man influences the social
structure and makes society.
5 Systems Approach
The systems approach views the industrial relations system as a
sub-system of the society or the total social system. The society
is seen as providing certain external influences and constraints
but not as completely dominating industrial relations. An
industrial relations system at any particular time is regarded as
comprising of certain actors, certain context and ideology which
bind the industrial relations system together through a body of
rules created to govern the actors at the place of work and work
community. The creation of rules is the central aim of the
industrial relations system and
Dunlop isolates three groups of actors-Workers, Management
and the Government-who take part in the rule-making process.
Thus,
R= f(a,i,b)
Where R = Industrial relations system
a = actors
i = ideology
b = body of rules
FIG. 1
(Chhabra T.N Pg.54 )
8
Since the problem of industrial relations is multifaceted as
shown in the Figure above, the first step will be to diagnose a
situation in terms of the prevailing circumstance in the organi-
zation and then to adopt a strategy of effecting changes at
crucial points. Conflict in industry cannot be completely wiped
out, it can only be contained with reasonable limits.
6 Gandhian Trusteeship Approach
Gandhiji’s views on industrial relations are based on his
fundamental principles of truth and non-violence and non-
possession. Out of these principles evolved the concept of
trusteeship on which his philosophy of industrial relations
rests. This philosophy presumes the peaceful co-existence of
capital and labour, which calls for the resolution of conflict by
non-violent, non-co-operation (i.e., Satyagraha), which actually
amounts to peaceful strikes in ordinary parlance. Gandhiji
accepted the workers’ right to strike, but cautioned that this
right is to be exercised in a just cause, and in a peaceful and non-
violent manner; and it should be resorted to only after
employers fail to respond to their moral appeals.
The principle of trusteeship propagates that the capitalist order
can be transformed into an egalitarian one. It does not recog-
nize the right to property except to the extent permitted by
society for its own welfare; the individual does not have any
right to hold or use wealth in disregard of the interests of
society; and the character of production is to be determined by
social necessity rather than by personal whims or greed. The
capitalist is expected to hold industry in trust for the commu-
nity; and the workers should be treated as co-trustees with the
capitalist employer.
The trusteeship theory implies that there is no room for conflict
of interests between the capitalist and the workers. Though
wealth legally belongs to its owners, virtually it belongs to the
society. If capitalists fail to pay minimum living wages to
workers, workers should appeal to their conscience. If this does
not work, they should resort to non-violent non-co-operation.
As a pre-condition to this, two things are expected from
workers: One is an awakening and other is the unity among
them. By awakening among workers, Gandhiji meant develop-
ing and nurturing faith in their moral strength and their
awareness of its existence which means that the workers should
realize the fact that without their co-operation, capitalists cannot
work and when the workers resort to non-co-operation, their
exploitation by capital would stop.
For putting the Gandhian concept of trusteeship into practice,
the following guidelines should be followed:
a. The workers should seek redressal of reasonable demands
only through collective action.
b. The workers should avoid strikes as far as possible in
industries of essential services.
c. The strikes should be resorted to only as a last resort after
all other legitimate measures have failed.
d. As far as possible, workers should take recourse to
voluntary arbitration where efforts at direct settlement have
not succeeded.
e. If they have to organize a strike, trade unions should seek
authority from workers to do so, remain peaceful and use
non violent methods.

LESSON 3:
INDUSTRIAL RELATIONS STRATEGY
Learning Objectives
After going through this lesson you will be able to comprehend
the following.
• Different strategies related to industrial relations
• Disputes and how to settle it.
Industrial Relations Strategy
State intervention in the settlement of industrial disputes
started with the Trade Disputes Act, 1929. The Act vested
Government with powers which could be used whenever it
considered fit to intervene in industrial disputes. It provided
for only ad hoc conciliation boards and courts of enquiry. The
amending Act of 1938' authorized the Central and Provincial
Governments to appoint conciliation officers for mediating in
or promoting the settlement of disputes. The Act, however,
was not used extensively, as the Government policy at that time
continued to be one of laissez faire and selective intervention at
the most. Where Government intervened, the procedure
consisted of appointing an authority which would investigate
into the dispute and make suggestions to the parties for
settlement or allow the public to react on its merits on the basis
of an independent assessment.
Provincial Legislation
While this was the position in the country as a whole, a more
purposeful intervention in industrial disputes was attempted in
one of the industrially advanced Provinces—the Bombay
Presidency. The Bombay Trade Disputes (Conciliation) Act,
19342, introduced for the first time a standing machinery to
enable the State to promote industrial peace. A permanent cadre
of conciliators was envisaged for settling matters which fell
within their jurisdiction. The scope of the Act was limited to
selected industries. The experience of the working of the Act,
though in a limited sphere, led to the enactment of the
Bombay Industrial Disputes Act, 1938 (BID Act). The impor-
tant features of this new Act were the provisions for (a)
compulsory recognition of unions by the employer, (b) giving
the right to workers to get their case represented either through
a representative union, or where no representative union in the
industry/centre or in the unit existed through elected represen-
tatives of workers or through the Government Labour Officer,
(c) certification of standing orders which would define with
sufficient precision the conditions of employment and make
them known to workmen, (d) the setting up of an Industrial
Court, with original as well as appellate jurisdiction, to which
parties could go for arbitration in case their attempts to settle
matters between themselves or through conciliation did not
bear fruit, and (e) prohibition of strike/lock-out under certain
conditions. This law was made applicable only to some
industries in the Province.
Shortly thereafter, the Government of India promulgated the
Defence of India Rules to meet the exigencies created by the
MANAGEMENT OF INDUSTRIAL RELATIONS
Second World War. Rule 81 A gave powers to the appropriate
Governments to intervene in industrial disputes, appoint
industrial tribunals, and enforce the award of the tribunals on
both sides. The BID Act was amended during the war years to
provide for compulsory adjudication in unresolved disputes.
The BID Act was replaced by a more comprehensive legislation,
viz., the Bombay Industrial Relations Act, 1946 (BIR Act), but
with the basic structure of the BID Act unchanged. At about
the same time, the Government of India placed on the statute
book the Industrial Employment (Standing Orders) Act, 1946,
which provided for the framing and certification of Standing
Orders covering various aspects of service conditions including
the classification of employees, procedures for disciplinary
actions and the like. In a way, this piece of legislation filled a
void that existed in the Central industrial relations legislation.
The Industrial Disputes Act, 1947
The emergency war legislation (Rule 81A of the Defence of
India Rules) was kept in operation pending the enactment of
the Industrial Disputes Act, 1947 (the ID Act), which replaced
the Trade Disputes Act, 1929, from April 1, 1947, With
subsequent amendments, the I.D. Act still continues to be the
main instrument for Government’s intervention in labour
disputes.
The I.D. Act provides for settlement of industrial disputes
through conciliation and adjudication. The Act empowers the
appropriate Government to appoint conciliation officers and/or
constitute Boards of Conciliation to mediate in, and promote
settlement of, industrial disputes. It also empowers the
appropriate Government to refer disputes for adjudication by
an industrial tribunal. The Act makes a distinction between
disputes arising in public utility services and those in other
industries and provides for compulsory conciliation and
adjudication to resolve the former. Besides, the appropriate
Government could constitute a Court of Enquiry to enquire
into matters pertaining to an industrial dispute. Restrictions are
placed on strike/lock-out in public utility services, and
during the pendency of conciliation and adjudication proceed-
ings. The procedures and machinery provided under the I.D.
Act have been modified from time to time in the light of the
actual working of these provisions, the decisions of the
judiciary and the influence of the bipartite and tripartite
agreements.
The period 1947-50 witnessed some important developments
having a hearing on industrial relations, apart from a basic
change in the attitudes of employers and workers. The Central
Government was made the appropriate Government for
disputes in Banking and Insurance, as these industries extended
over more than one State/Province. The Trade Unions Act,
1926 was amended to provide for compulsory recognition of
unions.1 The Labour Appellate Tribunal was set up. The work
9
 of the tripartite bodies associated with the Labour Ministry
MANAGEMENT OF INDUSTRIAL RELATIONS
started expanding. Comprehensive legislation was drawn up in
the form of a bill for putting industrial relations on a sounder
footing.
Plan Policies
The First Plan stressed the need for industrial peace for
economic progress. While it wanted the State to arm itself with
powers for intervention in labour disputes, the endeavour had
to be to encourage mutual settlement, collective bargaining and
voluntary arbitration to the utmost extent, and thereby to
reduce to the minimum, occasions for its intervention in
industrial disputes and exercise of the special powers2. The
Indian Labour Conference which met as these recommenda-
tions were formulated, favoured the retention of powers by
Government to refer matters to industrial tribunals rather than
sole reliance on collective bargaining. The I.D Act was amended
in 1953 to provide for compensation in case of lay-off and
retrenchment. The working of the Labour Appellate Tribunal
(LAT) came up for criticism in tripartite meetings and a decision
was taken in pursuance of the strong feelings expressed in these
meetings, particularly by the labour representatives, that the
LAT should be abolished.
The Second Plan envisaged a marked shift in the industrial
relations policy consequent on the acceptance of the socialist
pattern of society as the goal of planning. It emphasized
mutual negotiations as the effective mode of settling disputes.
Among the other recommendations in the Plan were demarca-
tion of functions between works committees and unions, and
increased association of labour with management. The I.D. Act
was amended in 1956. The LAT was abolished through this
amendment and a three-tier system of original tribunals—viz.,
labour courts, industrial tribunals and national tribunals—was
brought in force. While the labour court would deal with certain
matters regarding the propriety and legality of an order passed
by the employer under the standing orders, and discharge and
dismissal of workmen including reinstatement, the industrial
tribunal adjudicates on matters like wages, allowances, hours of
work, leave and holidays and other conditions of service. The
national tribunal, to which matters similar to those adjudicated
upon by a tribunal are referred, is appointed by the Central
Government to decide disputes which involve questions of
national importance and those which affect industrial establish-
ments situated in more than one State.
The 15th Session of the Indian Labour Conference took note
of these developments and the Second Plan recommendations
and sought to evolve steps for their implementation. The Code
of Discipline3 was drawn up and arrangements were made to
educate workers through a scheme accepted by the tripartite.
Complaints about non-implementation of agreements,
settlements and awards were in the meanwhile disturbing the
industrial scene. On the administrative side, provision was
made to examine such complaints and place the conclusions
thereof before a tripartite Evaluation and Implementation
Committee. The foundations were thus laid for a policy of
giving to the parties themselves a greater share in ensuring
better enforcement of agreements, settlements and awards.
10
The Third Plan did not suggest any major change in policy. It
emphasized the economic and social aspects of industrial peace
and elaborated the concept that workers and management were
partners in a joint endeavour to achieve common ends. The
voluntary arrangements agreed to in the Second Plan were
strengthened by the Industrial Truce Resolution, 1962, adopted
in the wake of the Chinese aggression. The I.D. Act was
amended in 1965 with a view to giving an individual worker the
right to raise a dispute connected with his discharge, dismissal,
retrenchment or termination of service, even if the cause of the
individual workman was not espoused by any union or group
of workmen.
To sum up, the existing arrangements for the prevention and
settlement of industrial disputes consist of (a) statutory
procedures and (b) voluntary arrangements. The former are
covered by the Industrial Disputes Act, 1947 and certain similar
State enactments. In essential details, the machinery provided
for under the various enactments consists of works/joint
committee, conciliation, voluntary arbitration, and adjudication
by tribunals or industrial courts. Voluntary arrangements
provide inter alia for recognition of unions, where no statutory
provisions for it exist, the framing of a grievance procedure,
reference of disputes to voluntary arbitration, setting
up of joint management councils, implementation of agree-
ments, settlements and awards and the setting up of
industry-wise wage boards.
Industrial Relations Machinery
As has been mentioned, the present machinery for the settle-
ment of industrial disputes comprises: (i) conciliation, (ii)
arbitration and (iii) adjudication machinery—tribunals, indus-
trial courts, etc. We propose to discuss in what follows the
salient features of some of these existing arrangements for the
settlement of industrial disputes and assess their working
during the last twenty years with a view to evolving recommen-
dations for the future. The topics we have chosen for discussion
are (i) collective agreements; (ii) conciliation; (iii) voluntary
arbitration; and (iv) adjudication. The relative merits and
demerits of adjudication and collective bargaining as also issues
connected with the right, to strike/lockout form part of the
discussion.
Collective Agreement
Except for the industrial relations legislation in some States
where arrangements for recognition of unions exist, there is no
statutory recognition of unions for the country as a whole.
Neither are there provisions which require employers and
workers to bargain in ‘good faith’. It is, therefore, no surprise
that collective agreements have not made much headway in the
country so far. Nonetheless, there have been more of such
agreements than is popularly believed.
Some historical factors have also come in the way of collective
agreements having a greater share in maintaining industrial
harmony. The Whitley Commission found that the only
attempt made to set up machinery for regulating the relations
between a group of employers and their work-people was at
Ahmedabad. Though the assessment of the Whitley Commis-
sion was made soon after the Trade Unions Act, 1926 was
enforced, the situation did not change significantly in the period
1931 to 1947. Since Independence, however, trade unions have
been growing and agreements with employers have become
more common. The changing attitude of employers and the
emergence of a new generation of employers and workers have
also helped. Legal measures, in spite of their limitations, have
lent as much support to collective agreements as joint consulta-
tions in bipartite and tripartite meetings at the national and
industry levels. Even so, a sample study made by the Employ-
ers’ Federation of India for the years 1956-1960 reveals that the
number of disputes settled by collective agreements during the
period in question varied between 32 per cent and 49 per cent in
the units studied.
Broadly, the agreements have been of three types: (i) agreements
which have been drawn up after direct negotiations between the
parties and are purely voluntary in character for purpose of their
implementation; (ii) agreements which combine the elements
of voluntariness and compulsion i.e., those negotiated by the
parties but registered before a conciliator as settlements; and (iii)
agreements which acquire legal status because of successful
discussion between the parties when the matters in dispute
were under reference to industrial tribunals/courts and could be
considered sub judice, the agreements reached being recorded by
the tribunals/courts as consent awards.
Most of the collective agreements have been at the plant level,
though in important textile centres like Bombay and
Ahmedabad, industry level agreements have been common.
These have a legal sanction under the State 322 Acts and have to
be distinguished from others where no statutory sanction
prevails. Such agreements are also to be found in the plantation
industry in the South and in Assam, and in the coal industry.
Apart from these, in new industries like chemicals, petroleum,
oil refining and distribution, aluminium, manufacture of
electrical and other equipment, and automobile repairing,
arrangements for settlement of disputes through voluntary
agreements have become common in recent years. In ports and
docks, collective agreements have been the rule at individual
centres. On certain matters affecting all ports, all-India agree-
ments have been reached. In the banking industry, after a series
of awards, the employers and unions are in recent years coming
closer to reach collective agreements. In the Life Insurance
Corporation of India, except for the employers’ decision to
introduce automation which has upset industrial harmony in
some centres, there has been a fair measure of discussion across
the table by the parties for settling differences. On the whole,
the record of reaching collective agreements has not been
unsatisfactory, though its extension to a wider area is certainly
desirable.
Conciliation
The aim of conciliation under the I.D. Act and under similar
State Acts is to bring about a settlement in disputes through
third party intervention. The conciliation machinery can take
note of a dispute or apprehended dispute either on its own or
when approached by either party. Under the I.D. Act, concilia-
tion is compulsory in all disputes in public utility services and
optional in other industrial establishments. Over the years, the
optional provisions appear to be acquiring compulsory status in
non-public utilities also. With a view to expediting conciliation
MANAGEMENT OF INDUSTRIAL RELATIONS
proceedings, time-limits have been prescribed—14 days in the
case of conciliation officers and two months in the case of a
board of conciliation. A settlement arrived at in the course of
conciliation is binding for such period as may be agreed upon
between the parties or for a period of six months and will
continue to be binding until revoked by either party. The Act
prohibits a strike/lockout during the pendency of conciliation
proceedings before a Board and for seven days after the
conclusion of such proceedings. While the conciliation officer is
given the powers of a civil court under the Code of Civil
Procedure, 1908 only for the purposes of compelling the
production of documents, a Conciliation Board, like a Labour
Court or an Industrial Tribunal, is in addition given the powers
of a civil court to enforce attendance of persons, examine them
on oath and call witnesses.
The performance of the conciliation machinery as indicated by
statistics does not appear to be unsatisfactory. During the years
1959—66, out of the total disputes handled by the Central
Industrial Relations Machinery each year, the percentage of
settlements has varied between 57 and 83. The remaining
disputes, it is reported, were settled mutually, referred to
voluntary arbitration or arbitration under the I.D. Act or to
adjudication, or were not pursued by the parties. While such has
been the performance of the Central Industrial Relations
Machinery, the success achieved in the States seems to be varied.
In some it is impressive; in others disappointing. During the
period 1965—67, the percentage of settlements reached in Bihar
ranged from 51.0 to 86.0; in Orissa from 27.5 to 35.8 and in
Assam from 65.5 to 92.3. In U.P., Punjab and Delhi, in the year
1966, the percentage of disputes settled during conciliation was
60, whereas in Rajasthan it was 40. In the southern region,
conciliation is reported to be more successful in Kerala, where
the percentage of disputes settled ranged around 80.1 Though
statistics are not available for Maharashtra and Gujarat, the
opinion evidence in these States shows that the machinery on
the whole has given a fair measure of satisfaction. It suggests
that in many cases the success attributed to conciliation is due
merely to the legal requirement to register the agreement. Also, a
section of employers’ and workers’ organisations feels that
many settlements reached in conciliation are over minor issues.
As against this mixed reaction to the working of the concilia-
tion machinery, both employers and workers have expressed
dissatisfaction over certain specific aspects of its functioning,
such as the delays involved, the casual attitude of one or the
other party to the procedure and lack of adequate background in
the officer himself for understanding major issues.
Delays in conciliation are attributed partly to excessive work load
on officers and partly to procedural defects. The evidence shows
that delays occur in conciliation often for reasons which are
beyond the control of the officer. Initially the parties supply
scanty information and adjournments are sought to collect
additional information. On occasions, proceedings are ad-
journed at the instance of one or the other party or even both,
to enable them to settle the matter. Since conciliation involves a
good deal of persuasion and is a process of give and take
helped by a third party, such adjournments become inevitable
11
 and have to be allowed. There are several cases, however, where
MANAGEMENT OF INDUSTRIAL RELATIONS
a party seeks adjournment and the other acquiesces in it
informally. And this causes some difficulty in sticking to the
time-limit set for conciliation. While on the basis of the
statistical information we have, it is difficult to establish the
extent of such delays, it would be unfair to criticize the machin-
ery on this account.
We feel, however, that the attitude of the panics to conciliation
is extremely important for the success or failure of the officers’
efforts. Conciliation is looked upon very often by the parties as
merely a hurdle to be crossed for reaching the next stage. There
is, therefore, a casualness about it in the parties and a habitual
display of such casualness conditions the conciliator also into
that attitude. The representatives sent by the parties to appear
before him are generally officers who do not have the power to
take decisions or make commitments; they merely carry the
suggestions to the concerned authorities on either side. This
dampens the spirit of a conciliator. We have been told by
employers’ and workers’ organizations alike that the conciliation
machinery is weakened because of its falling into this type of
disuse in recent years. Such disuse has hindered the officers in
acquiring a breadth of interest and depth of understanding in
the disputes before them.
Reverting to the other aspect of delays in conciliation, it is
difficult to devise a yardstick for measuring the work-load of an
officer and to prescribe work norms for him. Work norms
suggested to the Commission, such as 25 disputes of a general
nature and 50 individual disputes to be completed in a month
as proposed by one Stale, and 300 to 400 disputes per annum
as suggested by one of our Working Groups, if applied to the
number of cases dealt with at present in conciliation, would in
fact mean increasing the strength of the personnel manifold;
and this may not be a practicable proposition.
Among the other suggestions for improving the effectiveness
of conciliation officers are: (i) prescribing proper qualifications
for a conciliation officer and improving his quality by proper
selection and training; (ii) enhancing his status appropriately for
dealing with persons who appear before him; (iii) giving
additional powers to the conciliator; and (iv) keeping him above
political interference. While (i) is a general point which runs
throughout the administration, (ii) is a matter for a body like
the Pay Commission the appointment of which we have
recommended for Central Government employees.1 No direct
evidence of the effect of (iii) and (iv) on the officers’ efficiency is
available and yet it would be prudent to recognize opinion
evidence in this regard and give satisfaction to parties on these
points.
We are in favour of a more basic rearrangement of conciliation
work which will bring about a qualitative change in the set-up.
We recommend that the conciliation machinery, in order to be
free from other influences—and we reiterate that such influences
have not been proved before us—should be part of the
Industrial Relations Commission which we are recommending.
This will introduce important structural, functional and
procedural changes in the working of the machinery as it exists
today. The independent character of the ‘Commission will
inspire greater confidence in the conciliation officers. This will
12
also, in due course, improve the attitude of the parties towards
the working of the conciliation machinery. We expect the parties
will be more willing to extend their co-operation to the
conciliation machinery as now proposed and working indepen-
dently of the :nor-mal labour administration. Apart from this
basic change in the set-up of the conciliation machinery, there is
need for certain other measures to enable the officers of the
machinery to function effectively. Among these are (i) proper
selection of personnel, (ii) adequate pre-job training and (iii)
periodic in-service training through refresher courses, seminars
and conferences and for most of these, there is a good measure
of support in the evidence.
Voluntary Arbitration
Voluntary arbitration as a method of resolving industrial
conflicts came into prominence with the advocacy by Mahatma
Gandhi of its application to the settlement of disputes in the
textile industry in Ahmedabad. The BID Act and the BIR Act
recognised voluntary arbitration along with the machinery set
up by the State for composing differences between employers
and workers. The policies recommended in the Plans specifically
mention voluntary arbitration. The I.D. Act was amended to
make a provision (Section 10-A) for joint reference of industrial
disputes to voluntary arbitration. But apart from the statutory
arrangement for recourse to voluntary arbitration, considerable
emphasis is placed on this mode of setting disputes in official
pronouncements.
In spite of all these Governmental efforts, resistance to the idea
continues. The Code of Discipline (1958) reiterated the faith of
parties in voluntary arbitration and enjoined on employers and
workers to resort to it on failure of other methods of resolving
differences. In view of the continued reluctance of the parties,
more particularly of the employers, the matter came up for
discussion at various tripartite forums; but barring stray efforts,
the situation of indifference to the idea continued throughout
the period 1951—61. The Indian Labour Conference in August,
1962 reiterated the need for a wider acceptance of voluntary
arbitration. But, as” against the emphasis in the Third Plan
which considered that voluntary arbitration should be the
normal practice in preference to recourse to adjudication, the
Conference felt “whenever conciliation fails arbitration will be
the next normal step except in cases where the employer feels
that for some reasons1 he would prefer adjudication”. A
proviso, similar to the one which nullified in effect the opera-
tion of the need-based minimum2, was added to this
resolution of the Conference also in the following words:
The reasons for refusal to agree to arbitration must be fully
explained by the parties concerned in each case and the matter
brought up for consideration by the implementation machinery
concerned.”
the Industrial Truce Resolution, November 1962, while re-
emphasizing voluntary arbitration, specified certain items which
were amenable to this way of settling disputes. These were
complaints pertaining to dismissal, discharge, victimization and
retrenchment of individual workmen not settled mutually.
To make voluntary arbitration more acceptable to the parties
and to coordinate efforts for its promotion Government has
recently set up a National Arbitration Promotion Board
(NAPB) with a tripartite composition. The Board will review
the position, examine the factors inhibiting wider acceptance of
this procedure and suggest measures to make it more popular.
The NAPB is also to evolve principles, norms and procedure
for the guidance of arbitrators and the parties. It would look
into the causes of delay and expedite arbitration proceedings,
wherever necessary, and also specify from time to time the type
of disputes which would normally be settled by arbitration in
the light of tripartite decisions. While we wish that the NAPB
will achieve its objectives, we are constrained to observe that
voluntary arbitration has not taken root in spite of the influen-
tial advocacy for it in different policy making forums. Factors
which have contributed to the slow progress of arbitration, as
mentioned in the evidence before us, inter alia, are: (i) easy
availability of adjudication in case of failure of negotiations; (ii)
dearth of suitable arbitrators who command the confidence of
both parties; (iii) absence of recognized unions which could
bind the workers to common agreements; (iv) legal obstacles;
(v) the fact that in law no appeal was competent against an
arbitrator’s award; (vi) absence of a simplified procedure to be
followed in voluntary arbitration; and (vii) cost to the parties,
particularly workers.
With little progress made in collective bargaining, which pre-
supposes the existence of a recognized union representing all
the employees and a responsive employer, who together build
up over a period an attitude of mutual trust and an acceptance
of bona fides on the two sides, it is perhaps not a matter for
surprise that voluntary arbitration has so far had little success in
India. We feel that with the growth of collective bargaining and
the general acceptance of recognition of representative unions
and improved management attitudes, the ground will be
cleared, at least to some extent, for wider acceptance of volun-
tary arbitration. The National Arbitration Promotion Board
may then have a better chance of success in the task of promot-
ing the idea. The NAPB should pay special attention to
preparing and building up suitable panels of arbitrators.
Adjudication
The ultimate legal remedy for the settlement of an unresolved
dispute is its reference to adjudication by the appropriate
Government. The Industrial Disputes Act, 1947, currently
empowers the appropriate Government to constitute a labour
court, industrial tribunal or national tribunal to adjudicate in a
dispute. Association of assessors with a tribunal is permissible
for expert advice.
Matters to be referred to a labour court under the I.D. Act are
broadly: the propriety and legality of an order of the employer,
application and interpretation of the Standing Orders, the
legality or otherwise of a strike or a lock-out, and discharge/
dismissal including reinstatement, as listed in the Second
Schedule to the Act. Labour courts set up under State legislation
also deal with similar issues. Legal practitioners are permitted to
appear before the labour courts or tribunals with the consent of
the other party and with the permission of the court/tribunal.
In the latter case, according to experience so far, the consent has
become a mere formality. Unlike the BIR Act, the I.D. Act does
not provide for appeal against an order of the labour court. In
certain respects, a labour court/industrial tribunal has the power
MANAGEMENT OF INDUSTRIAL RELATIONS
of a civil court under the Code of Civil Procedure, 1908.
Any matter listed in the Second or Third Schedule of the I.D.
Act can be referred to an industrial tribunal/national tribunal,
the authority for constituting the latter being the Central
Government. The Industrial Court under State legislation has,
apart from adjudication functions, the power to entertain
appeals against the decisions of the Registrar/ Labour Com-
missioner/Labour Court/Wage Board constituted under the
respective Acts.
It cannot be denied that during the last twenty years the
adjudication machinery has exercised considerable influence on
several aspects of conditions of work and labour-management
relations. Adjudication has been one of the instruments for
improvement of wages and working conditions and for
securing allowances for maintaining real wages, for standardiza-
tion of wages, bonus and introducing uniformity in benefits
and amenities. It has also helped to avert many work stoppages
by providing an acceptable alternative to direct action and to
protect and promote the interests of the weaker sections of the
working class, who were not well organized or were unable to
bargain on an equal footing with the employer. As against these
advantages, certain procedural detects and indeed fundamental
criticism have been brought to our notice. On the procedural
plane we were told that adjudication is dilatory, expensive, and
even discriminatory as the power of reference vests with the
appropriate Government. Most of the analysis which has been
made in detail with reference to conciliation applies to adjudica-
tion as well. On fundamentals, the objections are that the
system of adjudication has failed to achieve industrial peace,
that it has inhibited the growth of unions and has prevented
voluntary settlement of industrial disputes and growth of
collective bargaining. We are of the view that while there are
certain procedural deficiencies in the present system which need
to be remedied, there is some substance also in each of the
fundamental objections mentioned above against the system.
At the same time. we cannot help feeling that the disadvantages
are overstated. Adjudication was not conceived to prevent all
work stoppages; the fact that Government may not refer a
dispute to adjudication means that it should be settled, it need
be, by direct action. Trade unions have certainly been growing
during the period the adjudication system has been in vogue,
and where conditions were favourable, voluntary settlement of
disputes and collective agreements have been adopted in the last
twenty years.
The moot point is whether adjudication inhibits collective
bargaining and is antithetical to it. It certainly represents the
availability of a third party to settle disputes. But the system, as
it has been applicable in our country, did not exclude bipartite
agreements. The parties have not been eligible to have such
third party intervention directly and hence it could not inculcate
in all cases a tendency to avoid mutual agreements. The
infrequency of mutual negotiations cannot therefore be all
accounted for by the system of adjudication as it has developed.
In fact, a major handicap has been the absence of a recognized
bargaining agent. But these issues cannot be decided on the
basis of empiricism, as we have no means of ascertaining what
13
 would have happened in the absence of adjudication. We have,
MANAGEMENT OF INDUSTRIAL RELATIONS
therefore, to analyze its efficacy on a broader plane and in terms
of its alternative viz., collective bargaining.
The place of collective bargaining as a method of settlement of
industrial disputes has been debated in India since long, almost
since the days of the Whitley Commission. The best justifica-
tion for collective bargaining is that it is a system based on
bipartite agreements, and as such, superior to any arrangement
involving third party intervention in matters which essentially
concern employers and workers. This is recognized even in our
system in principle, but in practice, there seems to be a prefer-
ence for adjudication.
The evidence appears to favour the increasing adoption of
collective bargaining to settle disputes, and a gradual replace-
ment of adjudication. The desire for a shift to collective
bargaining has, however, been tempered by a concern in some
quarters for avoidance of work-stoppages and of unwarranted
disturbances in industrial peace; and in others, by the organiza-
tional weakness of labour which cannot yet meet the
requirements of effective collective bargaining. There is thus a
general preference for collective bargaining with a built-in
provision for arbitration in the event of failure of collective
bargaining. The idea of leaving a certain area of disputes i.e.,
public utility services and cases where national interests are
involved—where adjudication should be permitted enjoys a
large measure of support. The majority view appears to favour
the introduction of collective bargaining subject to the above
safeguards, in the organized sector, while retaining third party
intervention in sectors mentioned earlier and where workers are
not organized and conditions of work and wages have yet to
reach a satisfactory level.
The advocates of collective bargaining argue that the present
system, although giving lip sympathy to collective bargaining,
has only perpetuated adjudication; that adjudication, which was
expected to be a temporary measure till such time as labour
came of age and could bargain with employers on an equal
footing has failed to fulfill the expectations; and that it has, by
the very logic of its functioning, inhibited the growth of trade
unions and made them litigious. The only way, it is argued, is a
wholesale rejection of reliance on a third party for settlement of
disputes and acceptance of collective bargaining with all its
implications, including the right to strike/lockout. In suggest-
ing this, it is conceded that collective bargaining in the initial
stages may give rise to industrial strife and work-stoppages on a
somewhat larger scale than at present, but there is confidence
that this is bound to be a temporary phase and the situation
will stabilize after an initial period of uncertainty.
Equally strong arguments have been urged in favour of
continuing adjudication. It is staled that while adjudication has
its defects, it has by and large succeeded in bringing about some
measure of industrial peace in the country; that industrial
relations would have been worse, and work-stoppages longer
and indeed, what is more important, conditions of work
would have been less attractive than what they are today, if
things had been left to be settled by collective bargaining. Those
who argue on these lines feel that the best course in the present
situation is to carry on with the existing procedures, trying at the
14
same lime to remove the obvious defects in the system through
suitable improvements/modifications to make it more
acceptable. Four specific points made in this connection are: (i)
the circumstances which necessitated the provision of compul-
sory adjudication when the industrial disputes law was enacted
in 1947, still continue; (ii) the parties, particularly unions, are
still unprepared and incapable, because of organizational and
other weaknesses, to shoulder full responsibilities of collective
bargaining; (iii) immediate withdrawal of State intervention
through adjudication will lead to chaos in the industrial field,
which the country can ill afford; and (iv) there is always the third
party to the dispute, viz., the community; and the State, as
representing the community, must have the right to intervene
and compel the parties to submit to the decision of an
adjudicator. For reasons stated in an earlier paragraph, empirical
data can be no guide to settle this controversy.
The arguments in favour of either system cannot be settled on
a theoretical plane nor on the basis of foreign experience. With
reference to the latter, it could be said that the system adopted
in any country will depend on a complex of circumstances
which cannot be easily classified. The figures (Table below) of
man days lost due to work stoppages per 1,000 persons
employed in mining, manufacturing, construction and trans-
port industries for two five-year periods, in three countries
which have a political democracy functioning and also a similar
system for settlement of industrial disputes, seem to point to
the same fact.
TABLE: Man days lost due to Work-stoppages per 1,000
Persons Employed
The variations are, indeed, striking. For Australia, comparable
figures for the two periods are 406 and 350 respectively. One
cannot on this basis accept collective bargaining, because the
Swedish data are more favourable than the Australian; nor can
one accept adjudication, because Australia makes ;a better
showing than the U.S.A.
Country 1955—59 1960—64(1) (2) (3)Sweden 21 6United
Kingdom 346 242 U.S.A. 1366 722
In finding a way out, we recognize that adjudication as it has
developed in India has tended to prolong disputes; allegations
of political pressures, though often without foundation, have
been there. Discretion, though used by the appropriate
Government in a fair manner, may appear to the workers/
employers affected to have been unfairly used. On the other
hand, collective bargaining as it has developed in the West may
not be quite suitable for India; it cannot appropriately co-exist
with the concept of a planned economy where certain specified
production targets have to be fulfilled. Though we are not
convinced that collective bargaining is antithetical to consumer
interests even in a sheltered market, we envisage that in a
democratic system pressure on Government to intervene or not
to intervene in a dispute may be powerful. It may hardly be able
to resist such pressures and the best way to meet them will be
to evolve a regulatory procedure in which the State can be seen
in the public eye to absolve itself of possible charges of political
intervention. The requirements of national policy make it
imperative that State regulation will have to coexist with
collective bargaining. At the same time, there are dangers in
maintaining status quo. There is a case for shift in emphasis and
this shift will have to be in the direction of an increasingly
greater scope for, and reliance on, collective bargaining. But, any
sudden change replacing adjudication by a system of collective
bargaining would neither be called for nor practicable. The
process has to be gradual. A beginning has to be made in the
move towards collective bargaining by declaring that it will
acquire primacy in the procedure for settling industrial disputes.
It follows that conditions have to be created for the success of
this proposed change-over. An important pre-requisite of it is
the grant of union recognition. We have to evolve satisfactory
arrangements for- union recognition by statute as also to create
conditions in which such arrangements have a chance to succeed.
Apart from this, we have to indicate the place which strike/lock-
out will have in the scheme we propose. Collective bargaining
cannot exist without the right to strike/lock-out. We discuss
these two aspects but in the reverse order.
Strike/Lock-out
Conceptually, the right to strike/lockout is recognized in all
democratic societies; reasonable restraint on the use of this right
is also recognized. The degree of freedom granted for its
exercise varies according to the social, economic and political
variants in the system. For safeguarding public interest, the
resort to strike/lockout and, in some cases, the duration of
either are subject to rules and regulations either voluntarily
agreed to by the par-tics or statutorily imposed. This has been
the criterion underlying the earlier legislation for regulating
industrial relations in the country. In our current context, the
connected issues have to be viewed against the requirements of
a planned economy.
Under the Industrial Disputes Act, 1947, a distinction is made
between a strike/ lock-out in public utilities and in other
employments. Industries such as Railways, Posts and Tele-
graphs, those which supply power, light or water and any
system of public conservancy or sanitation are defined as public
utility services under the Act, and in respect of certain others
enumerated in the First Schedule to the I.D. Act, the appropri-
ate Government is given the discretion to declare them as public
utility services. The Industrial Disputes Act, 1947, makes a
strike (or lock-out) in the public utility service illegal if it takes
place (i) without giving to the employer a notice of strike within
six weeks before striking; (ii) within fourteen days of giving
such notice; (iii) before the expiry of the date of strike specified
in any strike notice, and (iv) during pendency of conciliation
proceedings—and seven days after the conclusion of such
proceedings. In industries in general, a strike or lock-out is
prohibited during the pendency of conciliation, arbitration or
adjudication proceedings. Besides, the appropriate Government
is empowered to issue an order prohibiting the continuance of
any strike or lockout in respect of any dispute when a reference
is made to a Court/Board/Tribunal.
These provisions by themselves do not seem to have succeeded
in curtailing work-stoppages;’ indeed they were not meant to
prevent all stoppages. Annexure I gives data on work-stoppages
due to industrial disputes since 1946. Labour has also devised
new forms of agitation such as go-slow work-to-rule etc which
fall beyond the purview of statutory provisions relating to
strikes. A suggestion has been made to us to circumscribe all
MANAGEMENT OF INDUSTRIAL RELATIONS
such forms of agitation by suitably widening the definition of
strikes. We do not consider that legal restrictions alone will be
of any help in reducing strikes or containing the new forms of
labour protest. Unless the Government is prepared to take
effective action against illegal strikes, and Government may not
find it expedient to do so in several cases, a mere classification
of concerted action on the part of workers/employers as illegal
will only bring the law into disrepute. If, on the other hand,
Government is to enforce penalties for an illegal strike/lock-out,
it is necessary to make the definition as simple as possible. New
forms of labour protests should be treated as misconduct
punishable under the service rules or under the standing orders.
We would like to refer here to a form of industrial unrest,
namely, ‘gherao’ which came to be increasingly resorted to in
one part of the country in recent years. Our Study Group on
Industrial Relations (Eastern Region) which examined this
problem came to a majority conclusion, one member dissent-
ing, that ‘gheraos’, apart from their adverse effects on industry
and economy of the country, strike at the very root of trade
unionism. We endorse this view and deprecate resort to gheraos
which invariably tend to inflict physical duress on the person(s)
affected and endanger not only industrial harmony but also
create problems of law and order. If such means are to be
adopted by labour for realization of its claims, trade unions
may come into disrepute. It is the duty of all union leaders
therefore to condemn this form of labour protest as harmful to
the interests of the working class itself. Gheraos cannot be
treated as a form of industrial protest since they involve physical
coercion rather than economic pressure. In the long run, they
may affect national interest.
The general view regarding strike/ lock-out as revealed in the
evidence before us is that the right to direct action should be
allowed following the failure of all the procedures available for
settlement of disputes, except in the case of specified indus-
tries/services wherein a stoppage of work may endanger public
interest or affect the nation’s economy or threaten the security
of the State. Even those who are opposed to any State interfer-
ence in industrial disputes concede this point.
The democratic ideals of the State prevent it from abridging
individual freedom, hut its socialist objectives justify the
Government’s regulation of such freedom to harmonize it in a
reasonable measure with the interests of the society. What
seems called for, therefore, is a reconciliation of these two
points of view, While we are not in favour of a ban on the right
to strike/lock-out, we are also not in favour of an unrestricted
right to direct action. In our view the right to strike is a
democratic right which cannot be taken away from the working
class in a constitutional set-up like ours. Even from the practical
point of view, we will not favour such a step. Taking away the
right of the workers to strike, may only force the discontent to
go underground and lead to other forms of protest which may
be equally injurious to good labour-management relations. At
the same time, there are certain essential industries/services
wherein a cessation of work may cause harm to the community,
the economy or the security of the nation itself and as such,
even this right may justifiably be abridged or restricted, pro-
15
 vided, of course, a specific procedure is laid down for remedies
MANAGEMENT OF INDUSTRIAL RELATIONS
and redressal of grievances. Therefore, in such industries, the
right to strike may be curtailed but with the simultaneous
provision of an effective alternative like arbitration or adjudica-
tion to settle disputes. We do not wish to enumerate the
industries/services that should be classified as ‘essential’; the
listing of ‘essential’ industries should be left to the Parliament
to decide.
It has been brought to our notice that there are instances
wherein the leadership of a union has called for a strike without
consulting the membership and sometimes even when
members were known to be against the strike. No statistical
evidence is available to show how widespread this situation is.
It can be remedied only by providing for a compulsory strike
ballot before a call for direct action is given. One cannot also be
certain that once a dispute has gone on to the stage of a strike
notice, the leadership will not be in a position to influence the
bulk of their members to vote in favour of it. We are inclined
to think that our situation in regard to the effects that flow
from cessation of work and consequent losses, direct and
indirect, warrants the imposition of certain restrictions on
recognized unions before launching a strike. We, therefore,
suggest that every strike should be preceded by a strike ballot,
open to all members of the union concerned and that the strike
decision must be supported by 2/3rd of members present and
voting. The notice of strike should contain a clause to show
that such ballot has been taken and the requirement, about the
needed majority has been satisfied.
In this connection, we would attach importance to the issue of
a prior notice of strike/lock-out. At present, the law provides
for such a notice in case of public utility services only. We would
recommend its extension to all industries/services.
The present provisions in the I.D. Act about other restrictions
on strike/lock-out and their regulation seem to meet the
situation subject to some modifications that may be called for
in the light of our other recommendations.
Recognition of Unions
We attach considerable importance to the matter of recognition
of unions. Industrial democracy implies that the majority
union should have the right to sole representation i.e., the right
to speak and act for all workers and to enter into agreements
with the employer. That the need for a provision for union
recognition has been realized is evident from the provision in
the BID Act and its successor the BIR Act and certain other
State Acts (Madhya Pradesh and Rajasthan), the amendment
incorporated (but not enforced) in the Trade Unions Act, and
the Code of Discipline.
Since we will have occasion to refer to the scheme of recognition
outlined in the BIR Act later, we propose to mention it in some
detail. The BIR Act, 1916 provides for the classification of
registered trade unions as (i) Representative Unions (having a
membership of not less than 15 per cent employees in any
industry in a local area); (ii) Qualified Unions (5 per cent
membership in any industry in a local area); and (iii) Primary
Unions (15 per cent of employees in an undertaking). Among
the unions in a ‘local area’, the order in which the unions will
get representation will be the same as indicated above. Unions
16
in each category enjoy certain privileges, as indeed they have
obligations. The Act further stipulates that in case no union has
the recognised status, workers can either elect their own
representatives or allow the Government Labour Officer to
speak on their behalf to the employer. Legislation in Madhya
Pradesh and Rajasthan has corresponding provisions for
recognition. In Bihar, a tripartite committee decides how
recognition should be granted to a union.
The need for a provision for recognition of unions was stressed
in the Second Plan.1 Because of the desire to go slow on
legislation, recognition was provided for on a voluntary basis in
the Code of Discipline. According to the criteria in the Code, a
union claiming recognition should have been functioning at
least for a period of one year as a registered union and should
have the specified membership. In case more than one union is
functioning in an establishment, the membership of all eligible
unions is verified by the Chief Labour Commissioner (Central)
if the establishment falls under the Central sphere, or the State
Implementation Officer/the State Labour Commissioner in
other cases, in accordance with the procedure evolved at the
tripartite Standing Labour Committee. Once a union is
recognized under the Code, it is entitled to enjoy this status for
at least two years from the date of recognition. A union which
does not observe the Code can be de-recognized.
We have thus, over the last ten years, the experience of securing
recognition for a union both on a statutory and on a voluntary
basis. It shows that the former has distinct advantages. On this
point there is a fair measure of support in the evidence before
us. It would be desirable to make union recognition compul-
sory under a Central law, in all undertakings employing 100 or
more workers, or where the capital invested is above a stipulated
size. A trade union seeking recognition as a bargaining agent
from an individual employer should have a membership of at
least 30 per cent of the workers in the establishment. If it is for
an industry in a local area, the minimum membership should
be 25 per cent. Where more unions than one contend for
recognition, the union having a larger following should be
recognized.
Serious differences exist, however, on the manner in which the
following of a union is to be determined: whether it should be
by (a) verification of the fee-paying membership of the unions,
or (b) election by secret ballot. The issue has long been debated
in Central and State Legislatures, tripartite forums and public
platforms, but without reaching unanimity. In the evidence
before us, we find support in every interest—Governments,
employers, workers and independent observers— to one or the
other procedure evenly balanced. Advocates of one method or
the other did not seem to recognize the ‘whip’ of their central
organizations. That is also the reason why the issue has acquired
more importance.
Those in favour of verification of membership base their
preference on the premise that (i) it is the support of fee paying,
stable membership of a registered trade union that alone
should entitle it to the representative status, and (ii) a regular
check by a competent authority can satisfactorily determine
whether or not the membership claims are genuine. Regular
paying membership ensures financial viability of a union and
enables it to discharge effectively its other responsibilities. They
concede that membership could be open to inflation and even
manipulation, but contend that the remedy should be to
introduce a greater measure of vigilance in verification arrange-
ments, if necessary by entrusting them to an independent
authority They oppose secret ballot on the ground that it would
introduce topical political issues about which a union may not
be directly concerned as a union and create an election atmo-
sphere, with some leaders making promises which they will
never fulfill. Workers in our country, according to this view, are
not yet used to making a rational choice of what is good and
creative when confronted with demagogic slogans and rousing
of emotional sentiments which can be whipped up over any
industrial or non-industrial issue. Moreover, regular payment
of union dues, on which verification relies, is itself an open
vote of workers in favour of a union which submits to
verification. Supporters of this line of thought question the
appropriate-ness of the analogy of political choice through
adult franchise, because there can be no ‘Government and
opposition’ in the running of industry. Also secret ballot, in
this view, will give a severe blow to the trade union movement
itself. In the absence of any qualification prescribed for eligible
voters, there can be no incentive for workers to join a union.
The supporters of secret ballot, on the other hand, base their
case primarily on the ground that it is the most democratic way
of expressing a choice. Membership verification as a basis for
selection of the representative union is considered unsatisfac-
tory as it is at best an indirect method. When membership
records and accounts of subscriptions received are often in an
unsatisfactory state, and there are admittedly many questionable
ways of boosting membership claims, the task of verification,
according to this view, becomes complex. There is the added
disadvantage of delay built into the procedure itself. Sampling
method. however, effective in other aspects of human activity,
should not be used in the sensitive area of union recognition.
Processes similar to those used in choosing the Government of
a country are well recognized by workers; the basis of represen-
tation in industrial democracy need be no different from that of
any other institution. In this view, the Indian worker is now
grown up to know what is good for him and to make a rational
choice. If he can be discerning in the choice of political leaders, it
would not be right to deny him the responsibility of choosing
representatives who will give him economic satisfaction. The
fear of wild promises and rousing of passions swaying the
worker can be exaggerated. Such false promises cannot be
expected to win ballots all the time.
The Council of Indian Employers has suggested an alternative
which provides for verification as also election by secret ballot in
certain circumstances. According to this proposal, the member-
ship of the contending unions has to be verified by the
concerned authority and the majority union which should have
at least 30 per cent membership is to be given recognition. In
case, however, two or more unions have 30 per cent or more
membership, and the difference between the membership of
any two of them is less than 10 per cent, a secret ballot of all
workers in the establishment should be arranged to determine
the most representative union.
But whether it is verification or secret ballot, the trend of the
MANAGEMENT OF INDUSTRIAL RELATIONS
evidence is unmistakably in favour of an independent authority
to deal with various matters relating to recognition. Such an
authority alone would be able to inspire confidence among the
unions/parties and eliminate suspicions of favoritisms in this
vital area. Although State Governments, public sector employ-
ers and some others have suggested the continuation of the
present arrangement, viz., verification through government
machinery, they do not seem to object to the setting up of an
independent agency for this purpose. Several study groups
including the Study Group on Labor Legislation and the
Industrial Relations Study Groups and a number of employers
and trade union organizations have expressed a strong prefer-
ence for the setting up of an independent authority to deal with
these matters. As regards the basis for recognition, however, the
Eastern and Western Region (Industrial Relations) Study
Groups have favored secret ballot by all workers while the
Southern Region Group has favored verification of member-
ship. The Northern Region Study Group and the Study Group
on Labor Legislation did not express themselves in favor of
cither, but left the choice of method to the authority concerned.
Several Industry Study Groups have shown preference for secret
ballot.
Much of the opposition to membership verification today is
the outcome of fears of manipulation and interference by the
administrative authority fears which are not always unfounded.
It is reasonable to expect that verification will become more
acceptable, if entrusted to an independent quasi-judicial
authority Similarly, election by secret ballot may find favour with
those who now oppose it, when an independent authority
conducts it, strictly according to accepted regulations. The best
course, therefore, seems to be to leave the choice of method, in
any particular case, to the discretion of an independent author-
ity. We suggest that this task should be entrusted to the
Industrial Relations Commission(s) proposed by us. The
Commission will have the power to decide the representative
character of unions either by examination of membership
records, or if it considers necessary, by holding an election
through secret: ballot open to all employees.1 We are confident
that this proposal would be welcomed by all parties. the
Commission would deal with the recognition work in its
various aspects: (i) determining the level of recognition—-
whether plant industry, center-cum-industry—-to decide the
majority union, (ii) certifying the majority union as the recog-
nized union for collective bargaining, (iii) generally dealing with
other related matters. The union thus recognized will retain its
status for a period of two years and also thereafter till its status
is effectively challenged.
Rights of Recognized and Other Unions
A union recognized as the representative union under any
procedure, should be statutorily given, besides the right of sole
representation of the workers in any collective bargaining,
certain exclusive rights and facilities to enable it to effectively
discharge its functions. Among these are the rights:
i. To raise issues and enter into collective agreements with
employers on general questions concerning the terms of
employment and conditions of service of workers in an
17
 establishment or, in the case of a representative union, in an
MANAGEMENT OF INDUSTRIAL RELATIONS
industry in a local area;
ii. To collect membership fees/subscriptions payable by
members to the union within the premises of the
undertaking; or demand check-off facility;
iii. To put up or cause to be put up a notice board on the
premises of the undertaking in which its members are
employed, and affix or cause to be affixed thereon, notices
relating to meeting’s, statements of accounts of its income
and expenditure and other announcements which are not
abusive, indecent, inflammatory or subversive of discipline;
iv. To hold discussions with the representatives of employees
who are the members of the union at a suitable place or
places within the premises of office/factory/ establishment
as mutually agreed upon;
v. To meet and discuss with an employer or any person
appointed by him for the purpose, the grievances of its
members employed in the undertaking;
vi. To inspect, by prior arrangement, in an undertaking, any
place where any member of the union is employed;
vii.To” nominate its representatives on the grievance committee
constituted under the grievance procedure in an
establishment;
viii.To nominate its representatives on statutory or non-
statutory bipartite committees, e.g.. works committees,
production committees, welfare committees, canteen
committees, and house allotment committees. On most of
these points there is a fair measure of unanimity in the
evidence before us.
We consider that industries, in which workers are organized on
an industry/area basis and in which collective bargaining has
developed at the industry/area level, should maintain and
encourage this practice of recognizing unions at the industry/
area level. Such recognition may give rise to certain problems in
regard to the circumstances in which it should be granted and in
regard to the rights and functions of plant-wise unions vis-avis
the industry/area unions, particularly when the majority union
at the plant level has no affiliation with the recognized industry
/area union. It has been brought to our notice that employers
of units in which the industry level recognized union has no
following, find themselves in a difficult situation when
confronted by the demands of the plant union, which they
cannot ignore. This situation can only be set right by a proper
demarcation of the rights and functions of the industry/area
recognized unions and plant-wise unions, and by ensuring that
recognition at the industry/area level is conferred subject to
certain well defined conditions. We consider that industry-wise
recognition is desirable, wherever possible. We are, therefore,
not in favour of recognition being granted to plant unions in
an area/industry wherein a union has been recognized for an
industry/area as a whole.
We now come to the related question of the rights to be given
to the minority (unrecognized) unions. The view taken by the
Indian Labour Conference in 1964 was that minority unions
should enjoy the light to represent individual grievances relating
to discharge, dismissal and other conditions of service of their
18
members. It was argued by some that. the grant of this right
might to a certain extent, reduce the strength of the majority
union. When the majority union is recognized as the sole
bargaining agent on behalf of all the employees in the under-
taking, the question of some employees being represented by a
minority union should not arise in so far as general demands/
issues are concerned. However, in regard to certain matters of
individual rights and grievances and their representation, the
opinion has been in favour of giving some rights, though of a
very limited nature, to the minority unions. We recommend
that the minority unions should be allowed only the right to
represent the cases of dismissal and discharge of their members
before the labour court .
Our Approach
While we discuss the arrangements for the settlement of
industrial disputes when they arise, we must emphasize that
real industrial harmony is possible only when conditions are
created for avoidance/prevention of disputes. While no
procedure, however carefully worked out, can entirely eliminate
industrial disputes and conflict, frequent discussions between
the employer and the representatives of workers will be of
considerable assistance in reducing the areas of conflict. The
system of industrial relations as it has developed since Indepen-
dence has kept avoidance of conflict/disputes as one of its two
basic objectives, the other being expeditious settlement of
disputes when they do arise. The role of Government in
pursuit of the former objective cannot be gainsaid. Emphasis
has been laid on the creation of the necessary atmosphere for
the development of labour management cooperation through
the adoption of a suitable institutional frame-work for joint
consultation, redress of grievances and the like. It is perhaps
true that these procedures which will be discussed in the next
chapter in detail were not as effective as expected and this
objective could only be partly realized. This is due as much to
the absence of certain important factors, such as the existence of
a united trade union movement and the provision for recogni-
tion of unions as to the emphasis laid on compulsory
adjudication for the settlement of disputes. Whatever be the
nature or causes of disputes, most of them can be amicably
settled, given the goodwill and desire to come to a settlement
on the part of the employers and the employees. It is in this
context that we emphasize the adoption of procedures which
will promote effective bipartite consultations and collective
bargaining between the parties.
Industrial Relations Commission
We have referred earlier to certain weaknesses in the working of
the existing industrial relations machinery viz., the delays
involved, the expenditure, the largely ad hoc nature of the
machinery, and the discretion vested in the Government in the
matter of reference of disputes. There have also been allega-
tions of political pressures and interference While many of the
allegations may not be true, we cannot be oblivious to the fact
that in some cases the decisions of Government. though fair,
have not appeared to be so to the aggrieved parties. And this
aspect cannot be entirely ignored in training our recommenda-
tions. The evidence before us is strongly in support of
reforming the industrial relations machinery, so as to make it
more effective and more acceptable. What is called for, therefore,
is a formal arrangement which is independent in character,
expeditious in its functioning and which is equipped to build
up the necessary expertise. We consider that it would not be
enough to secure some of these improvements through
suitable modifications in the existing machinery . A more basic
change is called lor, and this can be ensured only through the
replacement of the present ad hoc machinery, by permanent
machinery, which will be entirely independent of the adminis-
tration. We. therefore, recommend the setting up of an
Industrial Relations Commission (IRC) at the national and
State levels, for settling interest disputes, broadly covering
matters listed in the Third Schedule to the I.D. Act.1
The IRC would combine in itself both the conciliation and
adjudication functions. We believe that there is a definite
advantage in having the conciliation machinery working within
the IRC, since both will be concerned with ‘interest’ disputes
though at different stages. An interchange of knowledge,
information and expertise can thus be ensured. We have also
recommended in an earlier section that all matters concerning
recognition of a union as a representative union for purposes
of collective bargaining should be entrusted to an independent
authority. We consider that it would he advantageous to entrust
this function also to the proposed IRC. It would obviate the
need for creating another independent body. In addition to the
IRC, we also suggest the setting up of Labour Courts which
would be entrusted with the judicial functions of interpretation
and enforcement of all labour laws, awards and agreements.
The set up of the proposed machinery will broadly be on the
following lines:
A The Industrial Relations Commission (IRC):
i. There should be a National Industrial Relations
Commission appointed by the Central Government for
industries for which that Government is the appropriate
authority. The National IRG would deal with such disputes
which involve questions of national importance or which
are likely to affect or interest establishments situated in
more than one State, i.e., disputes which are at present dealt
with by National Tribunals.
ii. There should be an Industrial Relations Commission in
each State for settlement of disputes for which the State
Government is the appropriate authority;
iii. The National/State IRC will have three main functions: (a)
adjudication in industrial disputes, (b) conciliation and (c)
certification of unions as representative unions.
iv. The strength of the National/State Commission should be
decided taking into account the possible load on it and the
need for expeditious disposal of cases; its membership
should not exceed seven.
v. The Commission should be constituted with a person
having prescribed judicial qualifications and experience as its
President and equal number of judicial and non-judicial
members; the non-judicial members need not have
qualifications to hold judicial posts, but should be
otherwise eminent in the field of industry, labour or
management;
vi. Judicial Members of the National Indus ~ trial Relations
MANAGEMENT OF INDUSTRIAL RELATIONS
Commission, including its President, should be appointed
from among persons who are eligible for appointment as
Judges of a High Court;
vii.The terms and conditions of service and the age of
superannuation of the judicial members of the National/
State IRC should be similar to those of the judges of the
High Courts.
viii.The President of the National Industrial Relations
Commission will be appointed by the Union Government
in consultation with a committee consisting of the Chief
Justice of India, the Chairman of the Union Public Service
Commission (UPSC) and the senior most Chief Justice in
the High Court
ix. The other members of the National Industrial Relations
Commission will be appointed by the Union Government
in consultation with the Chief Justice of India, the
Chairman of the U.P.S.C and the President of the National
Industrial Relations Commission;
x. In regard to the State Industrial Relations Commission, the
President of a State IRC will be appointed by the State
Government in consultation with the Chief Justice of
India, the Chief Justice of the State and the Chairman of
the State Public Service Commission;
xi. The other members (of a State Industrial Relations
Commission will he appointed by the State Government in
consultation with the Chief Justice of the State High Court,
the Chairman of the State Public Service Commission and
the President of the State Industrial Relations
Commission;
xii. The Conciliation Wing of the Commission will consist of
conciliation officers with the prescribed qualifications and
status. In the cadre of conciliators, there will be persons
with or without judicial qualifications. Those who have
judicial qualification would be eligible for appointment as
judicial members of the Commission after they acquire the
necessary experience and expertise. Others could aspire for
membership in the nonjudicial wing;
xiii. The Commission may provide arbitrators from amongst,
its members/officers, in case parties agree to avail of such
services;
xiv. The Commission may permit its members to serve as
Chairmen of the Central/ Stale Wage Boards/Committees
if chosen by the Government. for such appointment
xv. The functions relating to certification of unions as
representative unions will vest with a separate wing of the
National State IRC. The National IRC may, where it
considers necessary, get the following of the contending
unions determined by the State IRCs.
The procedure for the settlement of disputes would be as
follows:
i. After negotiations have failed and before notice of strike /
lock-out is served, the parties may agree to voluntary
arbitration and the Commission will help the parties in
choosing an arbitrator mutually acceptable to them.
19
 ii. After negotiations have failed and notice of strike/lock-out
MANAGEMENT OF INDUSTRIAL RELATIONS
has been served, cither party may approach the Commission
for naming a conciliator within the Coin-mission to help
them in arriving at a settlement during the period covered
by the said notice.
iii. In essential industries/services, when collective bargaining
fails and when the parties to the dispute do not agree to
arbitration, either party shall notify the IRC, with a copy to
the appropriate Government, of the failure of such
negotiations, whereupon the IRC shall adjudicate upon the
dispute and its award shall be final and binding upon the
parties.
iv. 1 In the case of “Others” (non-essential industries/
’services), following the failure of negotiations and refusal
by the parties to avail of voluntary arbitration, the IRC, after
the receipt of notice of direct action (but during the notice
period), may offer to the parties its good offices for
settlement. After the expiry of the notice period, if no
settlement is reached, the parties with be free to resort to
direct action. If direct action continues for 50 days. It will be
incumbent on the IRC to intervene and arrange for
settlement of the dispute.’
v. 1 When a strike or lock-out commences, the appropriate
Government may move the Commission to call for the
termination of the strike/lock-out on tile ground that its
continuance may affect the security of the State, national
economy or public order, and if after hearing the
Government and the parties concerned the Commission is
so satisfied, it may for reasons to be recorded call on the
parties to terminate the strike/lock-out and file their
statements before it. Thereupon the Commission shall
adjudi-cate on the dispute.
vi. (a) If a State IRC. is seized of any dispute and it appears to
the Central Government that the decision on the said
dispute is likely to have an impact on similar industrial
undertakings in other States, it will be open to the Central
Government to move the National IRC; to take the said
dispute on its file. When such an application is made the
National IRC shall hear the parties concerned, and if it
comes to the conclusion that it is necessary to take the case
on its file. it shall call for the papers in relation to the said
dispute from the State TRC and shall proceed to deal with
and decide the dispute.
b. Similarly if a State IRC is seized of any dispute and it
appears to the National IRC that the decision on the
dispute is likely to have an impact on similar industrial
undertakings in other States, and if after hearing the parties
the National IRC comes to the conclusion that it is
necessary to take the case on its file, it will be open to the
National IRC to call for the papers in relation to the said
dispute from the State IRC and decide the dispute on
merits.
vii. When a State IRC is possessed of any dispute, and during
the hearing it comes to the conclusion that the decision on
the said dispute will have an impact on similar industrial
undertakings in other States and that it is desirable that the
dispute should be tried by the National IRC, it may, after
20
hearing the parties concerned transmit the case to the
National IRC which with thereupon try the said dispute.
viii. Where a dispute is brought before the National IRC, and
the Commission after hearing the parties comes to the
conclusion that it may be desirable or expedient that the
said dispute should be dealt with by the appropriate State
IRC it may remit the case to the said State IRC for disposal
and on receiving the record of the said dispute, the State
IRC shall proceed to deal with it.
ix. If the Commission substantially grants the demands in
support of which the strike was called and comes to the
conclusion that the said strike was justified because of the
refusal of the employer to grant the said demands, the
Commission while making its award may direct the
employer to pay the employees their wages during the strike
period.
x. In case a strike becomes necessary as a result of the changes
sought to be introduced by the employer in the terms and
conditions of employment of his employees and the
Commission comes to the conclusion that the change(s)
was/ were not justified and the strike was justified, the
employees with be entitled to wages for the period of
strike.
xi. If the demands in support of which the strike was called
are not granted by the Commission and it holds that the
strike was unjustified, wages for the period of the strike
with not be granted.
xii. If the Commission holds that demands which led to the
lock-out were justified and the lock-out was not justified,
the Commission in granting the demands may order that
the employees should be paid their wages during the period
of the lock-out.
xiii. If the Commission holds that the demands were not
justified and the lockout was justified the employees will
not he entitled to claim wages for the period of the lock-
out.
xiv. If during the pendency of the strike or thereafter, the
employer dismisses or discharges an employee because he
has taken part in such strike, it would amount to unfair
labour practice’ and on proof of such practice, the employee
will be entitled to reinstatement with back wages.
xv. All collective agreements should he registered with the IRC.
xvi. An award made by the IRC in respect of a dispute raised by
the recognised union should be binding on all workers in
the establishments) and the employer(s).
B Labour Courts
In addition to the Industrial Relations Commission, we also
suggest the setting up of standing Labour Courts which would
be entrusted with judicial functions of interpretation and
enforcement of all labour laws, awards and agreements These
courts with deal broadly with disputes relating to matters
mentioned in the Second Schedule of the ID. Act, in respect of
the industrial relations issues brought to them.
i. There will be a labour court in each State constituted of influenced our decision in making these recommendations is

MANAGEMENT OF INDUSTRIAL RELATIONS

judicial members only. The strength and location of such that the setting up of the Industrial Relations Commission
courts will be decided by the appropriate Government; with two wings will, in the long run, make negotiations
ii. Members of the labour court will be appointed by between the parties more earnest and serious and thus intro-
Government on the recommendations of the High Court. duce a new era of successful collective bargaining: We recognise
Generally, the Government should be able to choose from a that in the initial stages of the working of this scheme, mutual
panel given by the High Court in the order in which the negotiations may not always succeed; but we hope that where
names are recommended; this happens, sustained effort by the Commission’s conciliation
wing will materially assist the parties in reaching satisfactory
iii. Labour courts will deal with disputes relating to rights and
solutions to their problems amicably. If this process continues
obligations, interpretation and implementation of awards
for some time, the number of industrial disputes which will go
of either the National or State IRC and claims arising out
before the Comission for its adjudication will gradually decrease
of rights and obligations under the relevant provisions of
and that is the end which we have in mind. We have made these
laws or agreements, as well as disputes in regard to unfair
several recommendations in I the confident hope that the end
labour practices and the like.
would be achieved if the scheme which we have recommended
iv. Labour courts will thus be the courts where all disputes is accepted by the Government. These recommendations
specified in clause (iii) will be tried and their decisions constitute one integral scheme and, for their success, must be
implemented. Proceedings instituted by parties asking for given effect to as a whole.
the enforcement of rights falling under the aforesaid
categories will be entertained by labour courts which will act Notes -
in their execution jurisdiction in that behalf. Appropriate
powers enabling them to execute such claims should be
conferred on them
v. Appeals over the decisions of the labour court in certain
clearly defined matters, may lie with the High Court within
whose area/jurisdiction the court is located;
Unfair Labour Practices
Provision of legal protection to unions is a corollary to the
promotion of healthy industrial relations and recognition of
unions as the sole representatives of workers. It is, therefore,
important to write into the law provisions to prohibit and
penalise unfair labour practices, on the part of both the
employer and the recognised union. An attempt was made to
define these practices both in the Trade Unions (Amendment)
Act, 1947 (not enforced) and in the industrial Relations Bill,
1950. The Code of Discipline (1958) contained a reference to
unfair labour practices to be avoided by unions and manage-
ments. In February, 1968, the Government of Maharashtra set
up a Committee on Unfair Labour Practices’ to define activities
which should be treated as unfair labour practices on the part of
employers and workers and their organisations and to suggest
action to be taken. In its unanimous report presented to the
Maharashtra Government in July, 1969, the Committee listed
various arts of omission and commission which constitute
unfair labour practices. The lists are at Annexure II. These could
form a suitable basis for the enumeration of unfair labour
practices.
We recommend that the law should enumerate various unfair
labour practices on the part of employers and on the part of
workers’ unions; and provide for suitable penalties for commit-
ting such practices. Complaints relating to unfair labour practices
will be dealt with by the labour courts. They shall have the
power to impose suitable punishments/penalties which may
extend to de-recognition in case of unions and heavy fine in
case of an employer found guilty of such practices.
Having made these recommendations, we think it is necessary
to emphasise the fact that the main consideration which has

21
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 4:
FUTURE OF INDUSTRIAL RELATIONS IN INDIA
Learning Objectives
After going through this chapter you will be able to compre-
hend the following:
• The current industrial scenario in India
• How the industrial scenario and the industrial worker are
going to influence the economy in the days to come.
We link industrial relations with industrial development and
complexity of the work organisation. The earliest and simplest
organisations had little industrial relations in the sense that we
understand it today. But as organisations grew in complexity,
size and number, industrial relations emerged. In this relation
let us now look into the ‘future of industrial relations in India.’
Future of Industrial Relations in India
The future of industrial relations in India can be reviewed from
reports of the commissions constituted by the government for
this purpose. From these, certain issues are emerging which are
posing challenges to the three ‘actors’ in the system.
I. The first is the issue of strengthening collective bargaining
by trying to determine a sole bargaining agent for
negotiations. The State of Maharashtra has already passed a
law for the creation of a sole bargaining agency in every unit
and industry. Collective bargaining is advocated where the
parties involved have a fuller understanding. This will help
to arrive at a speedier settlement of disputes, between
themselves.
2. The second issue relates to the gaps that are occurring as a
result of the variations that occur in Central and State
legislation as far as labour matters are concerned. In India,
labour falls under the Concurrent List though NCL has
made a recommendation for forming a common labour
code which is yet to be adopted. Adoption of this
recommendation will go a long way in solving some of the
problems that India’s legislation process is facing.
3. Another issue is that of workers’ participation in
management. India has already experienced the working of
many forms of worker-participation schemes but none of
them seems to have made any headway. The reasons for the
failure of these schemes need to be probed into.
The three ‘actors’ in the system need to take into account the
effect of their actions on the consumers and society in general,
owing to the growing inter-linkages between industry and its
environment. They have to evaluate and decide on the appropri-
ate alternatives in terms of the ‘strategy’ they are going to adopt
in managing the personnel and industrial relations func-tions.
The environment is fast changing and the pressures from
various groups involved are starting to get more vocal and
intense. The strategy chosen for the attainment of the goals will
22
have to depend on the objectives, values, structures available
and the environment in which they have to operate.
We sum up with a Quotation:
Its strategic importance extends beyond the limited frontiers of
union-manage-ment relationship and overlaps with the future
prospects for Indian democracy on one hand, and the basic
concepts and assumptions of economic develop-ment on the
other. The set of strategic choices must be made in the midst
of economic and political difficulties that the country is
undergoing.
In relation to the future of industrial relations in India let us
first get to know our Indian industrial worker.
The Indian Industrial Worker
There can be no study of industrial relations without an
analysis of indus-trial workers, who are the prime-movers of
commerce and industry. Most recent studies point to the new
industrial worker being more ‘adjusted’ to his work environ-
ment than his predecessors. However, the simmering
dis-content among labour which now and again manifests itself
in strikes and other forms of labour unrests, proves that the
new industrial worker is still in a state of flux. He is not fully
aware of his problems, his aspirations are his vague, and he is
unsure of his identity. The aim of this lesson will be to
characterise, from available data, the new industrial worker-the
varying influences on his life and, in turn, his own commitment
to industry.
Owing to the increasing mechanisation of industry today, the
recruits to in-dustry have to possess the appropriate skill and
qualification necessary for the job, unlike their counterparts in
the past.
In spite of the government’s commitment to rural develop-
ment, the lot of the average farmer is still decidedly poor. As a
result, many of them have migrated to urban centres in search
of work. These constitute the ‘surplus’ work force “who are
permanent and semi-permanent urban settlers with no
nostalgic attachment to the romantic surroundings of the
Indian village. “ Studies of census reports indicate that between
1961 and 1971, on an average, more than 2 million farmers were
moving out of their villages every year.
To say that the new industrial worker has a ‘traditional bias’
which is responsible for his maladjustment, if any, is not true
because of the fact that the majority of the work force, in any
case, have an urban background, while the ‘surplus’ work force
constituting the migrants from rural areas are not inclined to
leave their present jobs in the factories-nor is the ‘full hierarchy’
of the traditional caste structure evident in the factory. In fact,
Slotkin concluded that the rural workers migrated because of
the inadequacy of their ‘traditional culture’. Systematic studies
of the Indian labour force have shown that factories attract
labour from all levels of traditional society (Morris, 1960;
Lambert and Vaid, 1968; Sheth, 1968; and Sharma, 1974).
The new industrial worker’s educational background and
aspirations are much higher than those of his predecessors. A
study of industrial workers by Vaid revealed that 78% of them
wished to increase their incomes. As has been already pointed
out, a rural background does not inhibit them from entering
industry. In fact, once they do, they prefer to stay on and
improve their prospects. But is this an indication of the
worker’s commit-ment to his work or is it, as some researchers
indicate, actually an interest in matters such as wages, housing,
security and advancement in work rather than the fulfilment of
their needs, e.g. ‘ego satisfaction’ or ‘self-actualisa-tion’? Sheth
feels that by imparting theories of ego satisfaction and self--
actualisation and putting forward schemes to hum anise
working conditions, one may only be substituting “devices for
the satisfaction of the actual needs”.
True, the worker may not be aware of self-actualisation, and
ego-satisfac-tion may not be of primary importance to him, but
a study by Holmstrom indicates he is definitely moving
towards the “concept of equality and free-dom of choice in his
work behaviour.” A recent study by Sharma’ states that for the
workers in the organized sector, the nature of work forms one
of the determinants of job-satisfaction. It is natural that a
worker would prefer human working conditions. As it is, “the
sheer alienation and drudgery of the worker’s machine-
dominated work at the factory is what makes his life dull,
unrewarding and poor in a sense in which a school teacher’s is
not. Within the confines of an individual work situation over
which he has no control the worker will always be disoriented.
After all, in the present social structure, workers are in the final
analysis ‘wage slaves’. Yet he is willing to work hard and accept
the monotony of routine if it enables him to earn more and
make his life outside the factory better. Herein lies the problem.
Industrial skilI alone is not of the greatest impor-tance-a
committed labour force demands adjustment in both the
working and social environment.
The idea of the industrial man in terms of committed labour
force has to be reconceptualised in the context of the uneven
development of the whole process of our industrialisation.
Mere wilIingness to work cannot boost the morale of a worker,
unless he has the kind of socially accepted position required for
the industrial way of life. The Indian worker is deprived of
such a position (Sengupta) particularly in the areas of small in-
dustrial activities.
The number of mandays lost due to industrial disputes in
India during 1980 and 1981 is as follows: 1980-21,925,026; and
1981-25,503,6541. What are the reasons for the high rates of
absenteeism and the increasing number of mandays lost? If the
worker is committed to his job, why does he stay away? Why is
the labour force like a nuclear dump waiting for a match to set it
aflame?
Absenteeism has always been a major problem in the Indian
industry. An official of Bharat Cooking Coal Ltd’s planning
department points out that often as much as 40% of the
labour force stays away from work. Myers is of the view that
absenteeism is encouraged owing to the lenient policies of the
management. Sickness and social or religious reasons are the
MANAGEMENT OF INDUSTRIAL RELATIONS
usual excuses given for being absent. A study by Pais of the
cotton textile industry in Bombay on absenteeism shows that
there are a large number of badli force in these industries, and
this factor contributes to the high rate of absenteeism in the
industry. Bhatia and Valecha in their study on absentee-ism in a
large manufacturing plant conclude that chronic absentees have
greater indebtedness and are found more among those in the
higher age bracket having longer length of service, and in the
unskilIed and semiskilled work force. Managements are
generally quite helpless, especially with the increasing militancy
of trade unions who use minor issues to prove their bargaining
power. The new industrial workers are more “articulate,
confident and capable” and aware of their rights. The factory
system initiates changes in the attitudes and values of its work
force making them more “cosmopolitan, anticasteist, secular
and radical in their outIook”. The worker is also aware of his
high level of productivity and his tremendous power to cripple
industry.
As discussed earlier, workers today have greater aspirations than
those in the past. Earlier, the mobility among workers was poor
and their aspirations undoubtedly low. The present trend of
competitiveness could be because of greater skills and education
among workers. In an Indian enterprise workers are motivated
by the expectation of higher wages once they acquire more skills.
Vaid et al. found that superior technology contributes to better
work adjustment. Lambert also found that the level of,
aspiration of workers varied from factory to factory but it was
the highest in the most technically advanced factory. This new
class of labour with higher aspirations and greater awareness of
job security and wages is to be found in the most modern and
technically advanced industries that demand greater skills.
However, even earlier studies indicate that wages always played
an impor-tant part in a worker’s choice of job. Vaid reports in
his study that the workers’ current jobs gave them a better
income than any of the previous jobs and 45% of the total job
changes are due to the search for ‘higher wages’. Lambert and
Desai’s studies also indicate similar findings.
The rise of this new working class (though it does not domi-
nate yet it greatly influences the industrial labour force) has also
necessitated changes in the method of operation of trade
unions, some of which are not even affiliated to national union
federations, and yet are most ‘active and militant’. Ketkar feels
that “the reason for the disproportionately high influence
within which it works are the critical industries in the manufac-
turing sector as a whole. ... The new working class is not only
the wage leader in the sense that it sets the trends for higher
wages but also influences other workers in industry and even
white-collar workers in their methods of struggle, styles of
trade unionism, social habits, language, etc. In a definite sense it
constitutes the opinion maker within the working class as a
whole.” The workers’ awakening to trade unions is a fairly
recent phenomenon since older studies reported the workers’
general disinterest in trade union activities. Ashraf, in his study
of workers at Kanpur, found socio-political consciousness and
trade union affiliation to be interdependent. With the emer-
gence of the new worker who is confident and aware, trade
unions have come to play an important role. The trade union is
23
 considered a protector in general terms. Thankappan feels that resort to settle his grievances and he usually supports it in a
MANAGEMENT OF INDUSTRIAL RELATIONS

“some of the most important events in trade unionism during crisis, sometimes in spite of his personal misgivings.
the last 5-8 years whether they are strikes or solidarity struggles
Profile of the New Worker
in support of other workers’ struggles, are directly related to the
The picture of today’s industrial workers emerging from most
initiatives taken by the new working class”. But are these strikes
accounts is in contrast to the one depicting the workers of the
warranted? With such strict government regulations, is the
1940s and 50s. This change is basically because of the growth of
worker truly underpaid? In spite of the fact that workers’ wages
industry, demanding more technological and industrial skilIs.
have increased, there has been an ‘erosion’ of wages owing to
This in turn means, the workers inducted into this kind of
the sharp increase in the consumer price index. The working
establishment would have a higher level of education as
class is aware of this and attributes “the stagnation or erosion
compared to those in the more traditional industries, say
of its standard of living directly to its increased exploitation at
textiles. These ‘new workers’ tend to be second or even third-
the hands of the employers. That is one of the reasons for the
generation workers, unlike the half-peasants who found it
militancy of even the better paid workers”, opines Thankappan.
difficult to overcome their parochial attitudes and chauvinism.
Is the trade union movement in India efficient enough to They realise their indispensability and bargaining power and are
handle the problems of workers? Most of the larger trade ready to move on and improve their educational qualifications
unions have definite political affiliations, and act or react to better themselves. Most often these new workers have jobs
according to political trends, the workers being mere pawns in in the critical industries and hence will not allow themselves to
the game. But the new worker seems determined not to be be exploited. Even though the trade union movement has not
used as a crutch by political activists. This is not always the case. proved wholly effective, without clear programmes or organiza-
With their new found power, trade union leaders often seek to tion, workers today are no longer docile, inarticulate and
put pressure on managements with no legalistic base to their diffident. They are definitely a class to contend with, who will
demands, aided as they are, often, by political clout. To add to intensify their efforts in the future and whose attitudes and
the already complex scene, there is the pressure of inter-union aspirations are of utmost importance to industrial peace.
rivalry with each union claiming sole bargaining rights. Some-
The new workers are definitely committed to the industrial way
times, to divide the workers and thus weaken them, rival
of life even if some are prone to look back with nostalgia and
unions are patronised by the management. The credibility of
reminisce about the clean environment of the villages. There
the trade union move-ment in Kanpur rated rather low, in the
seems an imminent need for the government, through
eyes of the working population, during the strike at Swadeshi
legislation and for managements, through discussions, to
Cotton Mills where “the trade union leader-ship proved to be
seriously consider issues that concern workers and work out an
ineffective in organizing the workers’ struggle for securing the
amenable solution. Most accounts of their daily life indicate the
very basic demand of the workers, for their very wage”.
poor quality of their living conditions, which seem to have a
Legitimate claims become mixed up with demonstrations,
greater impact indirectly on them as individuals than the
arson and looting and in this melee the workers’ demands are
drudgery of their jobs. There is definitely the need to improve
often forgotten, making the whole thing seem badly conceived
workers’ living conditions and provide basic amenities in order
and illegal. Mehta, himself a trade union leader, puts it suc-
to make their lives more meaningful. Mere revision of wages
cinctly when he says, “even with so much inter-union rivalry
and bonuses will not help to raise his standard of living or
there are hardly any ideological differences. It is more a scramble
improve his commit-ment, but rather drive him to the bottle or
for power.” If effective leadership is not forthcoming among
the gambling den in an attempt to escape his immediate social
trade unions in the future, the already prominent trend of
environment.
independent plant-based unions, which generally involve a large
number of workers, is sure to dominate the indus-trial The new worker is not an individual to be taken for granted.
relations scene. Workers unable to press their demands by legitimate means are
finding recourse in militant action and are being attracted to
In its March-April issue, 1979, Business India reported that
leaders with militant ideals. The key to the industrial relations
independent plant-based unions have been so successful in
scene in the country rests in the hands of the workers, and their
influencing other workers that the decline or stagnation of once
well-being and commitment is crucial to the progress of
powerful unions ,such as the CPI led AITUC and the Socialist
modern India. Mansara is not a typical example of the new
led HMP and HMS in the major industrial areas is directly
industrial worker. However, it is workers like him who form a
related to their influence. Ketkar, labour correspondent of the
majority of the indus-trial work force-greatly influenced by the
Economic Times, feels that labour is moving away from
new industrial workers who though in a minority, dominate the
politically motivated groups and “has begun to constitute itself
general trend of industrial practices.
as a new estate in society not under the tutelage of another class
or political party but on its own initiative”. This is primarily To Wana Mansara, a 55-year-old unskilled labourer working in a
because of the lack of effective leadership and corruption in factory in North Bombay, modern industrial life has given
trade union politics. Tulpule, however, feels that there is “ample precious little satisfaction. Mansara scarcely fits the image of the
leadership material” in the generation that has come into modern industrial worker. One look at his thin emaciated
industry in the last 15 years. Only if trade unions can prove their frame, soiled clothes and troubled eyes, convinces one that life
mettle will they last out the next generation though they have so far has had little to offer him.
ample scope as the worker really considers his union the last

24
“There is really nothing I can say about my daily routine,”
Mansara says cynically. Mansara lives in a small 20' x 10' room in
one of the foulest slums in the eastern suburbs along with his
family of nine. His working hours are 7.15 a.m. to 3.45 p.m.
Mansara has to be up before 6 o’clock and stand in a long queue
at the municipal tap for water although there are enough people
in his family who can perform that hour-long chore--his wife,
his 24-year-old daughter, his son-in-law, his 22-year-old son,
daughter-in-law, another son, age 14, and another daughter. All
of them and Mansara’s young grandson live in the hut. As
soon as he gets dressed, Mansara sets out on foot for the
factory without any breakfast but with a lunch dabba in his hand.
He cannot afford to buy his lunch in the factory canteen
although it is subsidised. Mansara’s monthly wage works out to
less than Rs 600 which barely ensures the hand-to-mouth
existence of the entire family. In the factory where he has been a
daily wage (bigari) worker for 23 years, his job is to load and
unload trucks with finished goods and raw materials and carry
out sundry errands.
Boring and Bad
“My job is boring and bad. I’m glad to get off at 3.45 p.m.”
says Mansara. “Then I go home and that is all. What else is
there to do? Think about the stink in the slum? Well, it’s there.
The quarrels over the municipal tap, traffic in illicit liquor, the
floods and the slush in the monsoons, the leaking hut and all
that? Well. . . that is life.”
Mansara feels that his brothers whom he left 24 years ago in
Nasik district to till a few acres of dry land, are leading a
“relatively better life”. But Mansara could not live in the village
because the land was not enough to sustain the family. So he
came to Bombay in search of a livelihood and found a job at
the factory. Ever since then Mansara has lived in the hut which
he had built himself. “Today I have to pay Rs. 40 to the muni-
cipal authority as rent for the land I occupy. Why should I have
to pay this rent? It’s absurd. The bloody municipal authorities
have no right to ask me for rent. . . The whole thing is so
unjust.”
Mansara’s bitterness and grievances are not confined to the
municipal authorities. As a scheduled caste turned Budhist, and
a worker, Mansara feels he has had to suffer in-justice all his life.
“People in my situation tend to, lose all hope in life, to give up,
to become, tame, submissive and fatalistic. Many of them take
to gambling and alcohol. But fortunately I’m free of such
addictions and stilI have some control over myself. I can still
fight.”
In fact, Mansara is a militant trade unionist and was the victim
of an assault in January by members of a rival trade union.
Mansara, inarticulate and incoherent when speaking about his
family and his house, suddenly comes to life while talking
about his union and removes the head cloth he dons like a
number of his fellow workers, to show a long raw scar on his
forehead.
“See this?” he asks with visible anger on his face. “This is the
price I have had to pay for supporting Datta Samant and for
being with his association of Engineering Workers. Employers
and the government loathe those unions which really are for the
workers. They only want unions they can pocket. They try to
break up the honest unions. That’s why there is violence. I was
MANAGEMENT OF INDUSTRIAL RELATIONS
attacked because I refused to become a member of a rival union
which is a stooge of the bosses was stabbed three times by a
rogue and the doctor had to put 18 stitches. My son, who also
worked in the factory was removed just because he supported
Dr. Samant”, says Mansara in a Marathi which retains the
flavour of a rural accent even after 24 years of exposure to urban
life.
Menacing Tool
But what is so special about Dr. Datta Samant? Why does
Mansara believe that Samant is an honest unionist? Mansara is
somewhat offended that his leader’s integrity is challenged. His
nostrils flare up. There is almost a menacing look in his eyes.
But then, he controls himself and explains: “Look, I have been
in the Godrej factory since 1956. Do you know what the annual
increment in my daily wage scale was then?-12 paise. Dr. Samant
came to our factory in 1972 and the annual increment became 40
paise.”
“Before Dr. Samant, the union was led by several people. But
we never know what agreement was signed by our union and
when. We knew it only when the workers read it on the notice
board. Not so with Dr. Samant. Long before making any
agreement with the owners, Dr. Samant tells us in a meeting
what he is going to do. He never goes alone to the owner to
make an agreement. We know he is honest. We know he is not
a chamcha of the management.”
Mansara is also bitter about the management’s attitude towards
militant workers. “If you are in favour of the management, you
get all the facilities. If you fight for or assert your rights, then
God help you. Don’t you think I want to live in a better place?
But I can’t because I can’t afford it. And I would never get the
company’s quarters because I support Dr. Samant . . .”
Mansara has many complaints against the management. He
recalls: “When I joined the factory in, 1956, the company was
producing 26 refrigerators a day. I remember because I used to
load them on to trucks. Today the company manufac-tures 222
refrigerators daily and sells them at much higher prices. And yet
our living conditions have not changed though apparently our
earnings have increased. Even this increase is not at all propor-
tionate to the increased production of the fac-tory. Why should
not I gain anything when the factory has expanded so much?”
“Really, what we need is leaders like Dr. Samant who can give us
justice”, Man-sara ruminates. “Management or the government
on their own wi1l never give any-thing to workers.”
Does it mean that good leaders are all that is needed? “Look, all
leaders are not like Dr. Samant. . . Owners and big people like
those in the government are angry with him not because he
instigates violence-in fact, he does not, big people do vio-lence
to break him-because he cannot be bought or corrupted, . . .
because he does not become their chamcha. . . So we need leaders
like him... and of course we must have our own organized
strength. Without a militant organization We’ll get nowhere.
“As long as there is injustice in society, we’ll have to remain
organized and vigi-lant to fight it, whether it is economic,
political or social injustice”, says Mansara. In Mansara’s view
while there is a great deal of social injustice in India, based on
25
 caste differences, he has not experienced it since he left his
MANAGEMENT OF INDUSTRIAL RELATIONS

village, even though he is a neo--Buddhist. “I am never made

to feel that I belong to an inferior caste. All workers who work
shoulder to shoulder with me live in the same way as I do, treat
me as a comrade, a mate never thinking of caste. . . . But there
are castes amongst workers. Two castes: the chamchas, scaps,
blacklegs, who are a minority, and the rest who are in the majo-
rity. The first lot belongs to the upper caste and get many special
favours and advanta-ges. The people like me, the majority,
belong to the lower caste and life’s rough for us. But I’m happy
here. I would rather remain here.”
Notes -

26

LESSON 5:
HISTORICAL EVOLUTION & ASPECTS OF TRADE UNION IN INDIA
Learning Objectives
After reading this lesson you will be able to understand the
following.
• The need for trade Union and its effect in the Industrial
India since its evolution.
Trade unions. How are unions born? What do they do? To get
all these answers and yet to learn many more attributes about
the trade unions let us first look into as to how the trade
unions evolved.
Historical Evolution and Aspects of Trade
unions in India
After discussing much about industrialization the trade union
movement can be said to be an offshoot of industrialisation.
The growth of modern industrial organisations involving use
of modern technology and employment of large number of
the workers has been followed by growth in trade unions
throughout the world. This phenomenon has not only been
observed in advanced countries of the world, but is also being
witnessed in developing economies. “The emergence of trade
unionism is spontaneous and inherent in the growth of
capitalism. The origin of trade unionism lies in the Industrial
Revolution which disrupted the older way of life and created a
new society forged by the shop, the factory, the mine and the
industry.” Trade unionism has become a vigorous force not
only in advanced economies like U.K. and U.S.A. but also in
developing economies like India.
What Is a Trade Union?
Dale Yoder has defined a trade union as continuing, long-term
association of employees formed and maintained for the
specific purpose of advancing and protecting the interests of
members in their working relationships. A trade, union is a
continuous association of workers, which is formed with the
purpose of protecting the interests of workers. To quote Webb
and Webb, “A trade union is continuous association of wage
earners for the purpose of maintaining or improving the
conditions of their working live” According to Flippo, “A
labour union or trade union is an organisation of workers.
formed to promote, protect, and improve, through collective
action, the social ,economic, and political interests of its
members”.
From an analysis of the above definitions, the following
features of trade union emerge:
i. It is an organisation formed by employees or workers.
ii. It is formed on a continuous basis. It is a permanent body
and not a casual or temporary one.
iii. It is formed to protect and promote all kinds of interests-
economic, political and social-of its members. The
dominant interest with which a union is concerned is,
however, economic.
MANAGEMENT OF INDUSTRIAL RELATIONS
Unit 2
iv. It includes federations of trade unions also.
v. It achieves its objectives through collective action and group
effort.
Thus, a trade union is generally referred to as an organisation of
workers. It is a voluntary, democratic and continuing
organisation of workers to protect their socio-economic
interests. However, under law, the term ‘trade union’ includes
both the associations of workers and those of employers. Sec.
2(h) of the Trade Unions Act, 1926 has defined union as “any
combination, whether temporary or permanent, formed
primarily for the purpose of regulating the’ relations between
the workmen and employers, or between workmen and
workmen, or between employers and employers, or for
imposing restrictive conditions on the conduct of any trade or
business, and includes any federation of two or more trade
unions.” This definition is very exhaustive as it includes
associations of both workers and employers and the federa-
tions of their associations. But in this book we will use the
term ‘trade union’ in a narrow sense to mean the associations
of workmen and their federations.
Why do we need Trade Unions?
Trade unions are essentially organisations for the protection and
promotion of the interests of their members in particular and
workers in general. The primary functions of trade unions are
to protect the workers against the excesses committed by
employers and to satisfy the needs of the workers. To be
specific, however, the trade unions generally pursue the
following broad objectives:
1. Steady employment. Steady employment is something,
which the employer by himself may not be able to
guarantee to the workers. His ability to provide it is limited
by the state of the marl et, which in large part is beyond his
control. Achievement of this aspiration may thus involve
workers in political action, through their unions, for the
maintenance of full employment. Thus, this objective
stands for enough jobs with good pay.
2. Rationalisation of personnel policies. The economic
security of an employee is determined not only by the level
of wages and duration of his employment, but also by the
management’s personnel policies in its selection of
employees for layoff, retirement, transfer and promotion,
the assignment of employees to jobs, and in the
disciplining of employees. If the decisions of this type are
the result of subjective evaluation and capriciousness, there
is no security for the workers. If such decisions are,
however, governed by statutory rules and rational policies,
there is greater assurance of fair treatment and equal justice.
3. Voice in decisions affecting workers. The workers may
successfully pressurise for higher wages. He may achieve a
satisfactory rationalization of personnel policies. But if the
27
 vital decisions as to the scale and schedule of production,
MANAGEMENT OF INDUSTRIAL RELATIONS
introduction of labour saving devices, the closing or
relocation of plant etc. remain outside the effective influence
of workers, there is no real security for them. Each worker
wants to know if the new machinery would reduce him
from a skilled operative to a machine attendant or a
member of custodial force. He wants to know what his
chances are for continued attachment to the company. What
is “the success of the company” to him if in transferring
the plant from Delhi to Ghaziabad he is laid off? The
intervention of the union in such decisions of
management is the only way by which the worker is able to
achieve any degree of control over the affairs that concern
him.
4. Recognition and participation. Another objective that
unions seek to achieve is winning recognition for the fact
that they are equal partners with management in the task of
production. This equality is something more than the
equality at bargaining table. It is an intellectual quality. That
is, the intellectual faculties of workers are no inferior to
those of management.
5. Gaining legislative enactments. To provide legal
sanctions to its demands, the unions attempt to get these
framed in the form of Acts so that they become permanent
features of the contract between the employers and the
workers. For this purpose, unions may take recourse of
political action in terms of supporting any political party or
forming their own political party.
6. Miscellaneous services. Modern trade unions also engage
in providing educational, medical, recreational and other
facilities for the development and welfare of their members
and their families, if they have sufficient funds at their
disposal.
Social Responsibilities of a Trade Union
Trade unions are a part of society and so they must keep the
well-being and progress of the community constantly before
them in the midst of their endeavors to help the working class.
Unions have a stake in the success of national plans for
economic development, since these are formulated and
implemented as much for maximizing_ production as for
distributing the product in equitable manner. Unions have to
adapt themselves to changing social needs and rise above
divisive forces of caste, religion and language. It is only thus
that they can progressively become instruments for constructive
purposes; in this context, some important social responsibilities
of trade unions appear to be in the field of:
i. Promotion of national integration;
ii. Generally influencing the socio-economic policies of the
community through active participation in their
formulation at various levels and
iii. Instilling in their members a sense of responsibility
towards industry and the community.
Aspects and Importance of Trade Unions
In the modem industrial society trade unions are a force in
them. No managers of working organisations can ignore “the
influence of trade unions on the behavior of their work force
28
and on the environment of management. As Yoder wrote “
Existence of strong trade unions is a precondition for industrial
peace-and stability of the industrial economy. Decisions taken
through the process of collective bargaining and negotiation
between the employers and trade unions are bound to be
respected by both employers and workers. By insisting upon
payment of standard rates of wages for their members, trade
unions ensure efficient functioning of the industrial units. By
organising fraternal functions, they improve the efficiency of
workers. Effective trade unions are helpful in avoiding inarticu-
late unrest of workers involving extensive absenteeism,
frequent job changes, fighting; wandering from one plant or
locality to another.
Trade unions can play an important role in the planned
economic development of a nation. They can help in the
accelerated pace of economic development in many ways, more
important of which are as under:
1. By helping in the recruitment and selection of workers.
2. By inculcating discipline among the work-force.
3. By enabling settlement of industrial disputes in a rational
rather than erratic and chaotic manner.
4. By helping social adjustments. Workers. have to adjust
themselves with the new working conditions, the new rules
and the new orders. Workers coming from the traditional
society (agricultural economy) to the modern society
(industrial economic) left to themselves may become
personally disorganized, unsatisfied, and frustrated. Trade
unions help them in such adjustment.
5. By creating a committed industrial work force.
Criticism of Trade Unions
Particularly the employers have subjected trade unions to severe
criticism. At times, they even resist the formation strong trade
unions because of the following reasons:
i. Increased Potential for Strikes. Trade union leaders serve
the threat of strike to the management quite frequently to
get their demands accepted. When a trade union fails to get
its demand accepted by the management through collective
bargaining and negotiations, it may adopt militant methods
including a strike blockade or work stoppage. Thus, the
potentiality for strikes is more in an unionised firm.
ii. Narrow Perspective. Lack of education makes the workers
narrow-minded, and prevents them from taking long-term
views. Thus, anything, which does not result in an
immediate reward, becomes unattractive to them. This
attitude is responsible for many strikes and lockouts in
industrial concerns.
iii. Resistance to Change. Trade unions do _ not welcome
rationalisation and improved methods of production for
the fear that some of the workers will be put out of work.
They often show resistance to introduction to changes in
work methods, procedures and working conditions.
iv. Fear of Increased Costs. All efforts of a trade union to
gain concessions from management in the form of higher
pay, better working conditions, better retirement benefits,
etc. for its members imply higher costs to management.
 Obviously higher costs, if not accompanied by increases in
employees’ productivity, are not desirable for the
organisation as it will not be able to face competition in the
market in the long-run.
v. Social Costs. When labour unions strike on flimsy
grounds, incalculable losses occur to producers, community
and the nation. Strikes are harmful to the workers also as
they have to suffer loss of wages and other benefits.
vi. Lack of Employee Commitment. In an unionised firm,
the employees loyalty is often shifted from the organisation
to the union. This can result in reduced employee
commitment, lower morale, resistance to change, and
sublimation of the organisations goals to those of the
trade union.
vii.Artificial Scarcity of Labour. It is alleged that the labour
unions may create artificial scarcity of labour by demanding
that only union members should be employed. In such a
situation, an employer may prefer not to fill the vacancies
because of fear of trouble by the union. AF, a result,
employment gets restricted among ‘the most widely
accepted general policies of trade unions, the following are
worth-noting:
1. To bargain collectively and to expand and increase the scope
of the collective bargaining system.
2. To maintain and expand the security and survival capacity
o f unions and their ability to withstand attacks, and to
back up demands with solidarity
3. To gain and maintain exclusive control of labour supplies
in particular labour markets as a means of enforcing
union demands for what are regarded as appropriate
working conditions.
4. To improve the economic status and welfare of union
members, increasing their earnings and relative share in
national income and their influence, both in employment
and in the larger societies in which they are members.
5. To develop and improve the union’s programs, practices,
and techniques to be used in conflict and defence of the
organisation and in expanding its power. .
6. To represent member in the area of political action,
identifying candidates and office holders who are friendly or
unfriendly, lobbying and securing political concessions for
unions and their members.
7. To maintain a strong organisation, democratically
controlled, but with enough internal discipline to
implement such policies as have been described above.
8. To facilitate irnproved member understanding of union
policies and programmes and’ increase skills and
competence on the part of union officers by appropriate
educational programs.
These major policies lead unions into a complex. assortment of
programmes and detailed , practices-from preparing- negotiat-
ing strategies to designing pressure tactics and to developing
cooperative programmes with management.
Impact of a Union on Management
The existence of a union affects not only the overall organiza-
MANAGEMENT OF INDUSTRIAL RELATIONS
tion, but also the management in many ways. For the personnel
manager, the existence of a union means that all personnel
decisions shall be subject to union’s checks and controls. Apart
from a union’s effect on policy making, there are several other
areas, which are affected by the existence of unions. These are
summarized below:
1. Union policy affects the structure of labour employed.
Though this factor is related to management decision, yet it
also affects the overall organization.
2. The existence of a union does affect the level of wages and
the terms of their employment. A union may not tolerate
unjust attitude of management with regards to payments
of increments, overtime, promotion, paid vocations, leave,
holidays, insurance plans, pension plans, medical
reimbursement, etc.
3. A union’s existence may affect the prices of the products
manufactured by the rganisation.
4. A union’s policy in an organisation affects the position of
individual workers in the organisation. Generally it has a
positive effect on the workers. -
5. It also affects industrial relations and industrial peace.
6. A union might also try to have control over scarce job
opportunities. Generally, unions take the stand that a fixed
proportion of new jobs should be given to the blood
relation of the existing employees of the organization .
The mere presence of the union restricts management’s
freedom of action in many areas. In dealing with labour
unions, it is important for the -management to recognise that
improved union-management relations play a vital role in the
success of an organization
Causes of Emergence of Trade Union Movement
The trade unionism in one country is not comparable to that in
another country because of varying approaches, roles and
functions assumed by it from time to time. For instance,
Tannenbaum observed, “Machine is the cause and the labour
movement is the result.” Hoxie observed, “Trade union
appears as a group interpretation as the social situation in which
workers find themselves, and as a remedial programme in the
form of aims, policies and methods.” Perlman came to the
conclusion that “Trade unionism arises from the job-conscious-
ness and scarcity of job opportunities.” According to Marx,
“Trade unions owe their origin to class struggle between the
capitalist employers and their workers. To get more and more
profits, the employers exploit the workers, who because of their
common interest to get more wages, unite in trade unions and
then resist the employers,
Aspects of Trade Unions in India
Trade unions are a major component of the modern industrial
relations system. A trade union of workers is an organization
formed by workers to protect their interests, 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.
29
 Trade unions are now considered a sub-system, which seeks to
MANAGEMENT OF INDUSTRIAL RELATIONS
serve the specific sub-group’s interest (i.e. the workers’) and also
considers itself a part of the organization, in terms of the
latter’s viability and contribution to the growth of the commu-
nity of which it is a part. Therefore, there are trade unions of
blue-collar workers, white-collar employees and also employers.
Trade unions 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
employment. They realised that if they bar-gained as individu-
als, 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. Since a group’s contribution is much larger
than an in-dividual’s, so are the effects of its withdrawal. Also,
an individual may not be able to organize and defend his
interests as well as a group can. There-fore, 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 repre-sentative 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 educational 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 interests. Additionally, the influence of political
parties interested in acquiring a foothold in the labour move-
ment also provided the impetus for the formation of labour
unions.
In India, the foundation of modern industry was laid between
1850 and 1870. This was also the period of emergence of the
Indian working class. Indian enterprises started growing side by
side with the British ones in all spheres of the national
economy. During this period of the growth of Indian capitalist
enterprises, the working and living conditions of the labour
were poor and their working hours were long. This was testified
by commissions like the Indian Factory Labour Commission
(1908) and the Royal Commission of Labour (1931). In
addition to the long working hours, their wages were low and
the general economic condition was poor in industries. In order
to regulate the working hours and other service conditions of
the Indian textile labourers, the Indian Factories Act was
enacted in 1881. As a result, employment of child labour was
prohibited. This Act required the formation of a machinery for
the inspection of factories. Another factor, which provided the
background for the Indian trade union movement, was the
birth of the Indian National Congress in 1885. The trade union
movement in India can be divided into three phases. The first
phase falls between 1850 and 1900 during which 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. During this period workers possessed
no trade union in the true sense of the term.
As a result of the prevailing poor working conditions and long
hours of work, many strikes took place in the two decades
following 18803 in all industrial cities. These strikes taught
workers to understand the power of united action even though
30
they had no unions. Small associations came up in Bombay (e.g.
the Bombay Mill-hands Association) and in Calcutta.
The second phase of the Indian trade union movement falls
between 1900 and 1947. This phase was characterised by the
development of orga-nized trade unions and political move-
ments of the working class. It also witnessed the emergence of
militant trade unionism. The period 1900 to 1915 was the
preparatory phase for organized trade union movement. Later
the First World War (1914-1918) 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 esti-mated that in 1920 there were 125 unions,
with a total membership of 250,000. In 1920, the first national
trade union organization (the All India Trade Union Congress)
was established. Many of the leaders of this organization were
leaders of the national movement.
The third phase began with the emergence of independent
India (in 1947), and the. Government sought the cooperation
of the unions for planned economic development.
The working class movement was also politicised along the
lines of the political parties. For instance, Indian National Trade
Union Congress is the trade union arm of the Congress Party.
The All India Trade Union Congress is the trade union arm of
the Communist Party of India and sub-sequently the socialists
left to set up another national worker federation, the Hind
Mazdoor Sabha. The Centre of Indian Trade Unions organized
in 1970, has close links with the Communist Party of India-
Marxist (CPI-M). Besides workers, white-collar employees,
supervisors and mana-gers are also organized by the trade
unions, as for example in the banking, insurance and petroleum
industries.
Why Unions Lack Cohesion and Power
The large number of federations and plant level unions to
some extent detract from cohesion and unity of trade unions.
It can be argued that it is of advantage to have big and powerful
unions for they can behave like respon-sible and high level
agencies in the development of our economic systems. Large
unions would also be in a better position to prospect and
further the workers’ interests.
The strength of trade unions both in the UK and the USA has
been traced to powerful national and international unions. The
role of the cen-tral organizations of labour such as the Ameri-
can Federation of Labour--Congress of IndustriaI
Organisations (AFL-CIO) in the USA and the Trade Union
Congress (TUC) in the UK has been seen as one of largely
securing the enactment of legislation and enhancing the legal
status of trade unions and of influencing public opinion in
favour of organized labour. As national unions, their strength
in terms of number and finance makes them strong and viable,
and this enables them to wield considerable amount of power
and influence in industrial relations at the national level. These
federations also guide the policy formulation of the affiliated
unions, taking into account the national perspective, and thus
act as a restraining influence. The kind of linkage that the plant
level local has with its apex body in the US is not the same that
its counterparts in India have with their national level federa-
tions. Indian trade unions are characterised by a three-tier
structure, the national, the state and the unit level where while any 7 workmen to band together and form a union. What

MANAGEMENT OF INDUSTRIAL RELATIONS

the policy flows from the top downwards, the state level units would be the repercussions?
are generally more influential. The inter-relationship and • Changed method of reporting for the year.
meshing between the two has somehow not evolved into a fine
~Estimated.
knit network, with the parts being greater than the whole in
quite a few instances. Owing to paucity of funds and dearth of (P) Provisional.
experienced trade union leaders these state committees tend to (E) Estimated, repeated the previous year figures in respect of
become mere co-ordination bodies for independent unions those states for which information was not recorded.
instead of being in themselves powerful bodies haying Sources: 1. Pocket Book of Labour Statistics, Labour Bureau,
democratic control. The existing pattern of trade union Ministry of Labour, Government of India, 1976, p. 122.
structure has created organizational problems at all levels. The
2. Indian Labour Statistics, Labour Bureau, Ministry of Labour,
problem originates at the lowest level i.e. plant unions, which
Government of India, 1975, p. 167.
are so small in size that they cannot pay their dues regularly to
the state committees. Moreover, in the existing set-up owing to 3. Digest of Labour Statistics, Labour Bureau, Ministry of
the dearth of union organisers the same functionaries work at Labour, Govern-ment of India, 1961, p. 112. 4. Indian
the local as well as the state level. Labour Year Book 1979, Labour Bureau, Ministry of
Labour, Govern-ment of India: 1982, p. 74, Table 4.1.
Growth of Trade Unions
With the changed political atmosphere in the country and the Recognition of a Union
spreading of ideas about democracy socialism, the right to a There are two issues of concern here: The first is the issue of
living wage, leveling of inequalities, the building of a welfare recognition of a union per se, especially in a non-unionised
state and similar thoughts, there is no doubt that a steadily situation. The first question that arises is: Which union is one
increasing number of workers, particularly in the large metro- to recognise, or should more than one union be recognised?
politan centres, have begun to realise that a trade union Related to this is the problem of verification, the pro-cess by
organization is very essential for the protection and advance- which the contending unions’ claim to membership is cross-
ment of the working classes and their interests. However, this checked, to enable one to seek representative status.
realization alone cannot account for the vast expansion that has The two issues are related to: (i) the need to recognise a union;
taken place in the movement (Table ). The more important and (ii) the process to be employed for verification when a
factors that have led to this development are the creation of union stakes its claim, either in a new union situation or in
new central organizations, the growth of political parties at the multi-union situations. This problem arises because at the
national and regional levels, the encouraging labour policies of moment there is no uniform legislation available in all the states
the government after independence and the propagation of the and union territories with regard to the recognition issue. There
philosophy of trade unionism. have been attempts time and again at restructuring and
Certainly, one of the effects of this mushroom growth has streamlining the system but nothing has been effected so far. It
been the pro-blems at the plant level, especially in situations is only in states where the Bombay Industrial Relations Act is in
where more than one union exists. What is the manager to do force, e.g. Gujarat and Maharashtra, that there are elaborate
in such a situation? The law provides, as was noted above, for provisions regarding recognition. The Act classifies trade unions
into three categories:
TABLE Membership of Workers' Trade Unions 1. Representative union,
Number of Number of Membership Average 2. Qualified union,
unions of unions 3. Primary union,
Year registered membership
submitting submitting The basis of this classification is the
percentage of membership that a union has
unions returns returns per union
at the industry level (e.g. chemical industry)
1951-52 4,505 2,509 19,88,120 792 or at the lowest level, the primary union.
1956-57 8,478 4,370 23,73,000 543 The representative union should be able to
1961-62 11 ,416 6,954 39,60,000 569 muster 15% of the total number of
1969* 18,460 8,254 48,66,000 589 employees, employed in anyone industry in
1970* 20,282 7,692 48,50,000 631 a contiguous area. The qualified union
should have 5% of the employees in an
1971* 22.121 8,909 54,31,000 610
industry enrolled as members and finally the
1972* 23,882~ 8,011 52,77,000 659 primary union should have 15% or more
1973* 25,208~ 7,472 52,81,000 707 employees enrolled in a unit or a plant.
1974* 25,776 5,662 41,97,000 741 Therefore it is apparent that there is a scaling
1975* 24,554~ 56,211 41,29,000 734 down of numbers in terms of the status
accorded. The idea is to provide some basis
1976 (P) 28,910 (E) 8,589 (54.4) - 686
1977 (P) 29,390 (E) 8,286 (55.8) - 660

31
 to assess the relative strength of a union seeking recognition.
MANAGEMENT OF INDUSTRIAL RELATIONS
The Verification Process Under the Code of Discipline
In a situation where a union puts forth a claim to be recognised
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
recognised union has com-pleted 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 wiII 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 judgement.
The verification officer scrutinises the documents in the presence
of the union(s) submitting the above data. If both the unions
have claimed any member 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 objec-tions, 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.
Rights and Responsibilities of Registered Unions
While the main clauses of the Trade Union Act of 1926,
concern the forma-tion of unions, certain other features are also
worth noting. Registration, which means ‘formal recognition of
a representative body, also entails certain preconditions. 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
32
its income and expen-diture 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, Ievy subscription fees,
publish periodicals, etc. More important, a registered union can
claim protection from being prosecuted for legitimate trade
union activities. This protection is under Section 120B, subsec-
tion 2 of the Indian Penal Code.
The issue that arises, therefore, is the distinction between a
recognised 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 recogni-
tion of a majority bargaining union of the workers still remains
a cumber-some process.
Multiplicity of Unions
This plethora of onions, as Table 3.5 indicates, has led to
problems at the plant level. In India, many of the unions are
general unions. In this environ-ment, a combination of factors
seems to operate-the first being the demo-cratic principle of any
seven members being able to form arid 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 move-ment, 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
rationalisation, automation or terms and conditions of
employment cause 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 industrialisation, which has meant the
stepping up of the rate of capital formation, has been a strain
on the living standards of workers. This has been coupled with
another side effect, i.e. job insecurity--a problem that workers
usually face in the initial stages of industrialisation. The growth
of unions in such cases has generally been to protect the interest
of the working class. The process of industrialisation itself
makes for increase in the rate of unionisation. 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 transi-
tion 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 pro-blems of inter-union rivalry.
Another factor was the political linkage with unionisation.
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 distribu-
tion of power and decision-making is linked with the political
process, the interrelationship 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 vital stake in the political process and the decisions that
wiII 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 a 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. Politicians turned union
executives have therefore filled the gap.
Detrimental Effect of Multiple Unionism
The large number 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
MANAGEMENT OF INDUSTRIAL RELATIONS
plant-oriented and thus outside the management’s control.
Multiple unionism also leads to multiple enrolment 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 produc-tion. 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
channelise 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 dis-
cussed later.
However, it must be noted that in spite of the foregoing there
are many organizations where multiple unions exist and the
management does effect-ively negotiate, and conclude agree-
ments. 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.
Union Leadership
One of the most crucial factors in this sphere is the leadership
that is pro-vided. 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 con-cerned 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 leader-ship 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 pf 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
33
 employee of the organization, whereas the internal leader is organization. Funds there-fore are needed to pursue activities,
MANAGEMENT OF INDUSTRIAL RELATIONS

such a person. Many lawyers and politicians have been union which will in turn benefit the members who will then contrib-
leaders in the early part of their careers. The former President V. ute, not only financially but also in terms of their services and
V. Giri was one such example, so were former Central ministers sustain their membership. Activities resulting in something
like G. L. Nanda and Khadilkar. There are advant-ages and worthwhile will arouse the enthusiasm of the members and
disadvantages in both the systems. The ‘outsider’ leader has make them concerned for the allocation and proper utilisation
knowledge of industrial practices in comparable organizations of scarce resources. The divisive nature of Indian trade union-
and therefore has more experience when he comes to the ism bas also led to the dissipation of funds amongst a large
negotiating table to bargain. If he is a politician or a person number of organizations, with the result that there are many
with strong political links then he may be able to get some small unions without much financial backing and without
advantages either in terms of policy or in terms of implemen- much staff to do any substantial work. The generation of
tation of administrative action, especially if he belongs to or has funds has been wholly inadequate. In some cases, subscriptions
linkages with the ruling party. On the other hand his involve- are not collected promptly or are paid by members only when
ment with the plant level problems is much less as he is not on they have a problem. In the former case, the trade union
the shop floor to understand the intricate issues applicable to a management for fear of losing membership overlooks it. On
particular plant. Not being an employee of the enterprise or an the other hand, there are according to some trade union
insider, he lacks the required depth of understand-ing of local executives, shrewd members who do not mind paying sub-
issues and specifics. The outsider is a professional who has scription to more than one union in order to protect their
many units under his wing all of which demand his time, interest in times of need.
including the larger function of liaison. The insider would not One other mechanism employed nowadays besides the usual
only have greater know-ledge of the enterprise specifics but also collection is the special levy at the time of distribution of
have more time for sustained work, being concerned as he is bonus. Some national federa-tions and independent unions
with just one enterprise. Also, external issues and ideologies are often generate some reserves to pay at the time of strike as
not unnecessarily inducted, which could happen when outside strike fund or to employ research staff to keep abreast with
leaders are in control for whom ideology may be more im- current trends, but this is not the case with all unions. Table
portant than getting the best deal under the circumstances. TABLE
below givesIncome and Expenditure of Workers Unions
the financial position of trade unions.
No. of unions Average income-
The leadership role in a trade union has a variety of demands Expenditure
Income per annum per
placed on it. Not only does it require a certain amount of Year submitting
(in lakhs) (in lakhs) trade union in
technical knowledge of the nature of business of the particular
returns rupees
organization, but also a sympathetic understanding of the
1951-52 2509 50.84 45.32 2026.32
workers, their attitudes and their problems. A certain amount
1956-57 4390 80.17 71.81 1826.19
of commitment and empathy for a cause, even in uncertain
1961-62 6954 171.13 151.34 2460.89
condi-tions, is necessary. Till now the attraction for persons 1969 8254 340.71 299.98 4127.82
entering this occu-pation has been the possibility of a political 1970 7692 395.83 331.00 5145.99
career in the future. However, there have been some plant 1971 8909 426.91 408.55 4791.89
unions, which have been run very professionally and have at the 1972 8011 461.97 402.87 5766.69
same time been concerned with the viability of the firm or the 1973 7472 491.37 416.67 6576.15
enterprise as well as the good of the workers. The erstwhile 1974 5662 499.35 449.34 8819.32
Simpson Workers Union under the stewardship of 1975*(P) 9690 715.08 628.55 N.A.
Gurumurthy was an example, and TLA is an example of an 1976*(P) 8719 646.90 579.13 N.A.
industry level federation. . 1976**(P) 8177 711.75 611.54 N.A.

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 many
trade unions have not been very bountiful. It must be noted
that to every general statement, there are a number of excep-
tions 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 lobby-ing; 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
• Excludes J&K and West Bengal.
• Excludes J&K, Kerala, Nagaland, Rajasthan and West
Bengal.
• Incomplete. Assam, Bihar, H.P., J&K, Kerala, M.P.,
Rajasthan, and West Bengal are excluded.
(P) Provisional.
Source: Indian Labour Year Book, Labour Bureau, Ministry of
Labour, Government of India, Simla, 1979, p. 58, Table
4.04.
Many researchers have written about the woeful lack of funds
among trade unions resulting in poor organization, and hence
the inability to cope with problems. Also, it is felt that there are
not enough field workers or union officials to cope with the

34
problems of workers and to protect their interests, especially at
the time of wage negotiations.
There are, however, some notable exceptions especially in-terms
of finan-ces. The Simpson Workers Union under the steward-
ship of Gurumurthy was an organization which built up
substantial financial reserves besides ventur-ing into a variety of
pioneering worker welfare activities when Gurumurthy and his
colleagues resigned from the stewardship of the Simpson
Workers Union after 22 years he distributed a sum of Rs. 16
lakhs among the 15,000 members of the union as ‘Union
Gratuity’.
Two factors with regard to union finances are especially worth
noting. First, craft unions, which are usually smaller in number
and composed of skilled workers, whose average earnings are
high, are usually better funded because of higher contributions.
Therefore, they are able to provide better service to their
members. On the other hand, the bigger unions with less
contribution from their members (but the quantum of money
is made up by the larger numbers) are able to organize more
services, in terms of depart-ments etc. in their organizations.
Often, the large size itself provides the necessary momentum.
The range of services and organizations provides an attractive
impetus for the merger of smaller unions with the larger ones.
Ancillary Functions of Trade Unions
Besides their main function, which basically consists of
organizing workers and improving their terms and conditions
of employment, many trade unions provide a variety of
services to their members and sometimes to the commu-nity
of which they are a part. These ancillary functions can be catego-
rised into four groups: (i) communication; (ii) welfare activities;
(iii) educa-tional activities; and (iv) research.
Communication
Many large unions publish a newsletter of a magazine. Their
main aim is to clarify the union’s policy or stand on certain
principal issues and also to pass on information about the
union and its activities. Much could be done to improve the
contents and quality of such publications. There is a need to
professionalise such publications by hiring specialised persons
to handle the activity. If necessary, these publications could also
be sold to generate addi-tional revenue to augment union
finances. However, the main function remains that of commu-
nication so that the rank and file are aware of the activities of
the union.
Welfare Activities
Many unions provide a number of welfare activities to improve
the quality of the workers’ lives. Included in this sphere are the
provision of housing, cooperative societies and in the case of
TLA (Ahmedabad) it has ventured into the area of organizing
working or self-employed women and has even started a
banking activity for this purpose. This separate organization is
called the Self Employed Women’s Association (SEWA). Some
unions also offer training in craft activity, especially for women,
who can then supplement their husbands’ income with a
cottage industry type of activity, such as sewing.
Education
Education helps create awareness on the part of the workers in
MANAGEMENT OF INDUSTRIAL RELATIONS
the environ-ment around them. Many workers cannot afford
formal education or given the system as it exists, they are unable
to utilise it to their advantage. While the government too has
worker education schemes, the trade unions in some cases have
cooperated and added their own contributions to tailor it to the
specific requirements of the workers. Such educational schemes
are meant to enhance the worker’s knowledge of his work
environment and to inform him fully about the issues that
concern him, particularly with reference to his rights and
responsibilities, procedures and systems that exist in the work
place for redressal of grievances, worker participation schemes
and so on.
Research
This is an activity, which is gaining significance only in recent
years. Yet it is important for many reasons. The union negotia-
tors need updated infor-mation systematically collected and
analysed at the bargaining table, where the terms and conditions
of employment of their rank and file are negotiated. They need
to back up their wage claims with knowledge of the industry,
productivity, and comparative industry practices. Therefore the
emphasis is much less on academic research and more on the
practical problems, especially those issues concerning the day-to-
day affairs of the union and its activities and union
management relations. Some of the research activities are: (i)
collection and analysis of wage data including fringe and
pension benefits through surveys of comparative practices. This
could also include data on working conditions and welfare
activities; (ii) preparation of background notes and position
papers for union officials; (iii) preparation of background notes
etc. for court cases; (iv) collection and analysis of macro data
relating to the economy, industry, sectors etc; (v) maintaining
contacts with other unions, research bodies and universities;
and (vi) to examine the current organization structure, proce-
dures etc. with a view to understanding its relevance to the
current situation.
This function could be carried out at the headquarters of the
union or the central office but involvement of local officials to
gather data on local practices etc. would be useful.
Wage Policy of Unions
It is often remarked that the only wage policy of unions is their
demand for more and more economic benefits. Of course,
unions do seek more for their members, and wage increases are
unquestionably the most common goal in negotiations.
Nevertheless, such a. generalization can be misleading; union
policy is much more complex.
As a part of the general policy to improve the living conditions
of workers, unions endorse a policy proposing rising real wages
and living scales so that wage rates and earnings advance more
rapidly than costs.of living. They may propose to relate wages
to productivity and hence to ensure employee participation in
the increased profits. They seek to protect labour’s share of
income, to see that rents, interest, and proprietary and manage-
rial shares are not increased at the expense of workers. They may
even propose that a larger overall share of income distributed to
workers, on the ground that such a changed distribution is
35
 necessary to maintain purchasing power of workers, prevent
MANAGEMENT OF INDUSTRIAL RELATIONS

stagnation, and assure continued growth in the economy.

In some cases, union policy has been concerned with an
employer’s ability to pay. In others, policy has proposed to
ignore this consideration. Union policy has sometimes argued-
as”, for example, in the requirement of minimum wages-that
the economy will be better off without employers who are so
inefficient, that they cannot afford to pay. In the advanced
countries, most union officials and probably a majority of
members are keenly aware of the realities of competitive
business and favour a policy that protests the goose that lays
the golden egg. They seek to avoid wage rates that are likely to
have adverse effects on member’s employment. They under-
stand the economic facts of life and recognise elasticities in
demands for labour.
Notes -

36

MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 6: CHAPTER 2: INDUSTRIAL RELATIONS AND
APPROCHES TO TRADE UNION
Learning Objectives
After going through this chapter you will be able to compre-
hend the following.
• The relevance of the different theories of trade union
Approaches to Trade Unionism
Trade unionism is the child of industrialization, which caught
momentum after industrial revolution in England during the
mid nineteenth century. The evolution of the trade unions has
been interpreted in different ways by different authorities. Their
views are expressed in the form of ideologies, approaches,
theories, etc. The purpose of such approaches and theories has
been to explain the basic motivating factors behind union
growth and bargaining policies. Unions engage in a wide variety
of functions, ranging from organization of workers to
maintaining and protecting their rights.
John T. Dunlop has been of the view that a useful theory of
trade unionism must provide answers to the following
questions:
i. What factors lead to the organization of a union?
ii. What conditions are favorable to bring a union into
existence?
iii. What different patterns of growth and development in
different industries and different geographical areas are
found in the unions?
iv. What are the ultimate goals of the unions? How will these
affect the political, economic and social structure of the
country in the long run? To these, Arthur D. Butler added
two more questions, namely:
v. How do unions decide which goals to seek through
collective bargaining? When a union knows it cannot win
everything at a particular bargaining session, how does it
decide whether to fight harder for wage increases or
for a better grievance procedure?
vi. How do unions decide which techniques to use in
accomplishing their goals? What determines whether
unions will select economic or political methods?
The questions are inter-dependent and the answer to one will
determine answer to others. To answer these questions, the
following theories of labour movement might prove useful:
1. Marxian class struggle theory.
2. Webbs’ theory of industrial democracy.
3. Cole’s theory of industrial unionism.
4. Hoxie’s theory of business union.
5. Tannenbaum’s anti-technology theory.
6. Common’s pragmatic approach.
7. Perlman’s theory of scarcity consciousness.
8. Kerr and Associates’ protest theory.
UNIT I
TRADE UNIONISIM
9. Mahatma Ghandhi’s Sarvodaya theory.
MANAGEMENT OF INDUSTRIAL RELATIONS
The Marxian Theory
Karl Marx was the founder of “Scientific Socialism” popularly
known as Communism. In the eyes of Marx, the organised
labour movement is an intermediate step in the class struggle,
the fight for power by the proletarian class (workers) to
overthrow the capitalist class (bourgeois). Karl Marx traced the
origin of trade unionism to the growth of industrial capitalism.
And in his views, trade unions represent a prime instrument of
class struggle between proletarian workers and capitalists. To
Karl Marx, the trade union is an “organising centre.” Without
organisation, workers compete with each other for available
employment. Trade unions developed out of the attempts of
the workers to do away with this competition for the purpose
of obtaining at least such contractual-conditions as would raise
them above the status of bare slaves. The labour organisation
provides the locus of the working class towards a change in the
structure of the society, and it was to be the center , for
organising the working class for its political emancipation.
According to Marx, with the emergence of trade union move-
ment, the decay of capitalism would be inevitable.
Trade unions are essentially political institutions, a means of
consolidating the workers’ position on a parity with, and
eventually superior to, that of any other member of the
community. The motives which drive workers into joining trade
unions are economic insecurity, political exploitation and social
degradation. The labour movement is a collective movement on
an international scale in which the interests of the workers are
identical and always in opposition to those of their masters.
Webbs’ Theory of Industrial Democracy
Webbs’ theory is the classic statement of the assumptions,
purposes and methods of labour organisation. The husband-
wife team of Sidney Webb and Beatrice Webb were dominant
leaders of the labour party in Great Britain during 1920s and
1930s. According to Webbs, trade unionism is an extension of
democracy from the political sphere to that of industry and to
overcome the dangers of managerial dictatorship. This function
of representing and protecting the working class is not just a
temporary-obligation, arising from the current state of modem
industrial development, nor does it lead eventually to the all
embracing ‘dictatorship of the proletariat of Marx and Engles.
They rejected emphatically the “classless society”. Webbs as
“fabian socialists” saw a different outcome in the evolution of
political form. In their analysis of the causes of trade Union-
ism, the Webbs’ placed major emphasis upon the adverse
effects of competition. In the “Higgling” market the ruthless
struggle for commercial and industrial survival based on
comparative prices, with its long chain of pressures extending
from the consumer through the retailer to the wholesaler to the
manufacture, is to be found the explanation of the workers
37
 misery. Trade unions perform greatest service in the capitalist ,
MANAGEMENT OF INDUSTRIAL RELATIONS
free enterprise society by lifting from the individual employee
the heavy pressure of competition over wage rates, hours and
conditions of work. Webbs talked of the class struggles as “the
long drawn-out battle of interests between capitalist employers
and manual working wage earners.
In order to improve their members economic status, the
unions seek to require each firm to pay at least a minimum rate
of wages and to provide minimum working conditions, in
terms of hours, sanitation, safety, etc. Further, to Webbs, trade
unionism may extend democracy to the industrial sphere. It
may equalize the bargaining power of labour and capital.18
Hence, it would be possible to establish uniform rules, which
they called as common rules, in respect of wages, working
hours and working conditions, etc.
According to Webbs, trade union movement is not an instru-
ment of revolution to overthrow the capitalistic order. In fact,
they saw the solution of class conflict in equality of bargaining
power and collective negotiation. They did not think it necessary
to accomplish complete overthrow and liquidation of business
class. It was merely to eliminate industrial autocracy and replace
it with industrial democracy.
To improve the economic status of the working class and to
infuse industrial democracy, Webbs advocated the methods of
mutual insurance, collective bargaining and legal enactment.
According to them, the special function of the’ trade union is
the democratic administration of the industry.
Cole’s Theory of Industrial Unionism and Control of
Industry
Cole’s views of the proper function of organised labour and its
role in the world of the future were clearly stated in “The World
of Labour.” published in 1913. As a socialist, he visualized that
in future-the goal of labour as something more than the
Webbs’ representation of the interests of workers and some-
thing less than the Marxian dictatorship of the proletariat. It
was the “control of the industry” by the true producers, the
workers, in partnership with the State. The theory of producer
control, which Cole endorsed with some qualification, was the
“syndicatist” dogma of ownership and means of production.
The principle of union development necessary to this end’ ’tis
industrial unionism, of which he has been one of the leading
propounder.
Like Webbs, Cole had no doubt about the assumption that
(trade Unionism exists to carry on the class struggle. He said
“the class struggle is preached not on the ground that it is
desirable, but on the ground that it is monstrous.
and irrefutable fact.” The class struggle is established in our
social institutions, and it is only by means of the class struggle
that we can escape from it. This in turn implies great power,
which can be attained only through universal membership of
the labour class in trade Unions and improved Organisation.
Cole gave the intermediate and ultimate stages of the class
struggle and remarked, “the control of industry may be the
future destiny of the trade unions, the direct control of the
whole national life is most emphatically not for them.
38
Hoxie’s theory of Business Union
Robert F. Hoxie explained the origin of trade unionism in
terms of group psychology. According to him, workers who are
similarly situated economically and socially, closely associated
and not too divergent in temperament and training will tend to
develop a common interpretation’ of their social situation and a
common solution of their problems ofliving.23 This means
that to understand the nature of trade unionism one has to
take into account not only environmental conditions but also
temperamental characteristics of the workers concerned. Thus,
differences in group psychology cause different types of unions
to appear.
Hoxie’s greatest contribution to the theory of unionism was to
classify labour organisation according to their functional
operations and to identify the principal types to be more
common. The main types of trade. unions according to Hoxie
were five, Business, Uplift, Revolutionary, Predatory and
Dependent. A fundamental type is the result of a “common
interpretation of the social situation” which produces agree-
ment among the group as to the problem forcing its members
and the kind of remedial programmes, which will solve it. To
Hoxie, trade unionism was a pragmatic, shifting grass-roots
movement. He rejected implicitly the assignment of a fixed
basic “Cause, economic or political or historical, as the explana-
tion of workers’ combination. This amounted to a denial of
the class struggle theory of Marx or Cole and brought him close
to Common’s environmental adaptation theory without the
latter’s underlying class commitment.The five types of unions
described’ by Hoxie are as follows:
1. Business Unions. Also known as ‘Bread and Butter
unions’, These unions are trade conscious rather than class
conscious. They accept the existing economic system and
aim at bringing about improvement in the wages and
working conditions of their members. Collective bargaining
is the usual method followed by these unions with heavy
reliance on strike as a weapon.
2. Friendly or Uplift Unions. Such unions are essentially
idealistic in viewpoint. They may be trade, class or society
conscious. These aspire to elevate the moral, intellectual and
social life of the workers. To realise this aim, these unions
advocate use of political methods such, as setting up of
cooperative enterprises, profit sharing, mutual insurance,
etc. They are law abiding and employ the methods of
collective bargaining for securing benefits for the workers.
3. Revolutionary Unions. Such unions are extremely radical
both in view point and in action. They are distinctly class
conscious rather than trade conscious. They reject private
ownership of productive resources and the wages system.
Their weapons are either political action or direct action in
the form of strikes, boycotts, sabotage and violence.
Collective bargaining is also used in so far as the main aim is
not overlooked. Their aim is to overthrow the capitalistic
system and install socialistic system.
4. Predatory Unions. Unions of this kind do not subscribe
to any ideology. Such unions are characterized by their
 ruthless pursuit of immediate ends. Their methods include
collective bargaining, secret bribery and violence.
5. Dependent Unions. A dependent union is parasitic in
nature relying upon the support of the employers or other
labour groups. Unions of this type appear in two forms-
company union and union label union. The former
depends entirely on the employer for its support and does
not really represent the interest of the workers in so far as it
is not opposed to the interest of the management. The
second type depends upon the union label being imprinted
on the products made by the union members.
Hoxie predicted that with the rise of union power, collective
bargaining would develop into a form of industrial democracy
and bring an end to the profit system.
Tannenbaum’s Anti-Technology Theory
The machine is the centre of gravity in present-day industrial
community-what land did for the noble in the days of feudal-
ism and what the competitive market and free bank connections
do for the merchant, the factory does for the workers.,,24 It is
the dominance of machine that gave rise to trade unionism.
Frank Tannebaum, a Professor of History of Columbia
University, U.S.A., saw the emergence of trade union move-
ment as labour’s reaction to the dominance of the machine in
modern industrial society. The industrial revolution destroyed
the older way of life and left the individual industrial worker to
the mercy of the employer “who became the catalytic agent that
crystalised the workers into a self-conscious group. The workers
became completely dependent upon the machine and the
employer degraded them and made them insecure. The trade
union movement aims at control over the machine so as to
overcome insecurity. Thus, according to Tannenbaum, the
emergence of unionism is spontaneous and inherent in the
growth of capitalism. It reflects the urge of the human beings
to have control over machine. Tannenbaum saw the labour
movement ultimately displacing the capitalistic system by
industrial democracy.
Common’s Pragmatic Approach
Common advanced a theory of labour. movement based on a
set of basic premises which are mostly environmental factors.
That is why, his theory is also called “environmental theory of
labour movement.” The basic premises of his theory were
Marxian, although the conclusions, being those of careful
observer and a restrained reporter, would hardly have satisfied
the German revolutionary philosopher.
Common regarded the labour movement in America as delayed
and thwarted by a number of factors, the first of which was free
land. Ranking next as a major influence upon. the labour
movement of the nineteenth century was the tremendous
expansion of markets, the third factor is effect of the new
competition upon labour movement, which were much like as
described by the Webbs. It is the function of manufacturer-
employer to drive hard wage earners to their first conscious
combination with others of their class in trade unions and away
from the-guild like associations of earlier days. The fourth
important influence of great importance has been immigration,
with its influx of races, nationalities and languages, thrown
together in a single competitive era and cycles of property and
MANAGEMENT OF INDUSTRIAL RELATIONS
depression, which Common found to have a positive correla-
tion with the rise and fall of union activity. The outcome of
Common’s theory of labour unionism is non-revolutionary
and implies non-acceptance of capitalism which fell considerably
short of even the Webbs’ expectations of political evolution.
Perlman’s Theory of Scarcity Consciousness
Selig Perlman (1888-1959) was the inheritor of Common’s
intellectual leadership in labour economics at Winconsin School.
Perlman wrote extensively on the labour: movement, being the
author of “A History of Trade Unionism in United States”
(1922)-and “A Theory of the Labour Movement” (1928)
among others. According to Perlman, unionism developed
because of the workers’ scarcity consciousness, which arose in
the minds of the workers because of the fact that their eco-
nomic position cannot improve beyond that which is barely
sufficient to cover minimum essential of an ordinary standard
of living. Out of this scarcity consciousness grew a job-
conscious unionism, a unionism “which controls the job
opportunities. The union establishes certain job rights which it
then rations among the members through regulations applying
to overtime, seniority, etc.
Kerr and Associates’ Protest Theory
Kerr, Dunlop, Harbison and Myers observed that labour
protest is inherent in industrialisation. Organised from of
protest, according to them, is labour organisation. The-nature
and role of such organisation depend upon the
industrialisation process, the industrializing elite and the specific
culture and environment of a country. These authors used the
more general term “labour organisation” in place of trade
union. One of the universal responses of labour force to
industrialisation is protest against it, because “industrialisation
makes a universal demand; it requires a-basic change in relation-
ship between man and his work and inevitably also between
man and his cultural setting, and the new recruit to the indus-
trial labour force resents the imposed discipline.” The worker
often finds his work distasteful and his compensation never
commensurate with his contribution. The type of labour
organisation that develops in a country is related to the type of
industrializing elite; there are certain universals, and the
diversities which can be explained in terms of strategies of
industrializing elites and cultures and environments;
Mahatma Gandhi’s Sariodya Theory
According to Mahatma Gandhi, unions are not anti-capitalistic
organizations. They are in the least degree political. Their main
aim is to increase their internal strength to work conscientiously
and to take from the employers no more than that what is
“rightfully due to the workers.
Mahatma Gandhi’s philosophy is’ based upon the “Sarvodaya”
principles of Truth, Non-violence and Trusteeship, in which
class harmony prevails. He considered trade unions as essentially
reformist organisations and economic institutions, which must
be organised the basis that capital and labour are not antagonis-
tic but ate supplementary to each other. He observed: “My ideal
is that capital and labour should supplement and help each
other. They should be a great family living in unity and
harmony; capital not only looking to the material welfare of the
39
 laborers but their moral welfare also-capitalists being trustees of Thus, it would be evident that Gandhlji insisted that strikes
MANAGEMENT OF INDUSTRIAL RELATIONS

the welfare of the labouring classes under them.
Gandhiji felt that trade unions should not only undertake the
functions concerned with improving the economic conditions
of workers, but must also try to raise their moral and intellec-
tual standards and should bring about an all round
development through internal efforts. They should also
undertake programmes for teaching supplementary occupations
to their members so that uncertainty of employment during
strike period may be reduced to the minimum. -
Regarding the aims and objectives of trade unionism, Gandhiji
observed, “Trade unionism is not anti-capitalist. The idea is to
take from capital labour’s due share and no more, and this, not
by paralyzing capital but by reform among labourers from
within and by their own self-consciousness; not again through
the cleverness of non-labour leaders, but by educating labour to
evolve its own leadership and its own-self-restraint, self-existing
organisation. Its direct aim is not ill the least degree political. Its
aim is internal reform and evolution of internal strength. The
indirect result of this evolution when, and if, it even becomes
complete, will naturally be tremendously political.
It should be noted that Gandhiji was never against strikes as
such. He had himself led some strikes in Ahmedabad and
declared that strike was an “inherent right of the working men.
for the purpose of securing justice, but strike must be consid-
ered a crime immediately the capitalists accept the principle of
arbitration.
Strikes could Succeed if the following conditions are
fulfilled:
a. The cause of strike must be just and only for redressal of
genuine grievances that strikes ‘should be organised.
b. Workers should go on strike only after the capitalists have
failed to respond to moral appeals and only as a last resort
after exhausting all other means of persuading the
capitalists to concede to their just demands.
should be undertaken only after adopting the legitimate means
of settling disputes. These means in his views were (a) the
moral appeals to the conscience of the employers to concede to
their just demands and (b) when moral appeals failed, resort to
voluntary arbitration. Gandhiji would not like the parties to
declare strike or lockout without first trying to refer the dispute
to an umpire who would give a decision on the dispute, which
would be binding on the parties. Broadly speaking, the origin
and growth of trade unionism is the result of the increased
complexities of economic structure. Industrial Revolution
made it all the more essential to organize workers to protect
their economic rights and secure better working environment.
Thus, trade unionism is the child of industrialization born out
of the stresses and strains of Industrial Revolution.
Individual workers have little bargaining power arising due to
various factors such as their dependence on employers for their
livelihood, lack of reserve funds and the Perishability of the
labour. But when they unite, their bargaining power is strength-
ened, and these handicaps are reduced. Trade unions are an
important indication of social unrest and social progress-which
are the result of large-scale industrialization. Further, some
non-economic factors too have influenced the growth of trade
unionism in any country. As Pigou has observed, “The
conditions necessary for the growth of organized action among
the workers are the differentiation of separate wage earning
class, some stability of status within that class and some power
of intercommunication among members;” Common national-
ity and language, uniformity in the work performed by
considerable members, improvement of education, and
political activities also influence the growth of trade unions. The
role of State in giving support to the trade union movement
can’t be undermined. In most of the countries, the govern-
ments have passed laws for the registration of trade unions and
to grant immunity to the trade union leaders against criminal
proceedings in the course of their genuine trade union activities.

c. Strike should be resorted to after a ‘fair notice’ being given

to the employers.
d. There should be practical unanimity among the strikers.
e. Strikes should be peaceful and non-violent, i.e., the workers
should refrain from assaulting or abusing capitalists or their
agents and also avoid violence against the non-strikers.
Gandhiji as violence considers even damaging capitalists’
property.
Gandhiji did not favour unions taking part in political activities
for two reasons. First, because the workers were not enlight-
ened, and second, because the political parties exploit the
workers for their own ends. Regarding sympathetic strikes, he
advocated that such strikes should be organised in sympathy of
workers who were seeking, for a just cause after exhausting all
other means of settling disputes and there following the non-
violent path. He, however, disapproved strikes organised by
workers doing essential services. He conceded that “One had
every right to lay down conditions of service (but) the laying
down of conditions is not an absolute right. Even if such an
absolute right would be permitted, it might not be proper to
use it under certain circumstances.”

40

LESSON 7:
TYPES OF UNIONS
Learning Objectives
After going through this lesson you will be able to analyze the
following:
• Characteristics of different Unions and their applicability in
the Indian industries.
Now that we have closely examined the approaches of the trade
unions and have understood the concept of trade unions we
move on to the different types of trade unions.
Types Of Union
To begin with we will first discuss Craft and General Unions.
This type of union is more prevalent in developed western
societies, where 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
therefore open, to members of a certain trade/ skill, like Air
India’s navigator’s union. On the other hand, a general union is
open to all members irrespective of their skills cutting across
trades/ skills and could include unskilled, semi-skilled, and
skilled workers.
Closed Shop/Union Shop
In such situations the union makes employment conditional
on union membership, one variation being that employment is
routed through the union, where it acts as a labour supplier
and, in another, once employed, an employee is required to join
the union.
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 desist from paying for one reason or the other, as
it could happen in a voluntary system. Such a facility is provided
only to a recognised union.
Blue-Collar and White-Collar Workers
A distinction is made on the basis of the level and status of the
employee for membership of the unions. All shop floor
workers (part of the produc-tion system who operate machines
and related systems) are termed blue--collar workers, and all
clerical or office staff, who do not work on the shop floor are
termed white-collar workers.
White-collar workers or non-manual workers form a distinct
social group characterised by divergent socioeconomic back-
grounds, levels of education, manner of speech, social customs
and ideology. They are paid on a monthly basis unlike their
blue-collar colleagues, enjoy longer holidays and different
privileges as compared to the blue-collar workers. But the most
important feature is their nature of work.
The white-collar worker is usually involved in a desk job or
providing services over the counter. They are generally better
MANAGEMENT OF INDUSTRIAL RELATIONS
educated and working at jobs, which involve utilisation of their
mental capabilities to a greater extent. The members of these
groups usually seem more inclined towards management than
blue-collar workers.
At one time because of their professional skills and social
standing they were better paid, and had better terms and
conditions of employment, including more perquisites and
fringe benefits. However, of late, blue-collar workers, especially
the highly skilled categories, who are in greater demand, have
higher wage incomes and perhaps better union protection and
job security. This is not only because of the efforts made by the
unions but also because of the socialist orientation of the
government, which has been manifested, in its labour legisla-
tion.
The white-collar workers are concentrated in the fields of
commerce, transport, storage and communication. The workers
engaged in different occupations that fall under this category are
professional, administrative, executive and managerial workers,
clerical and related workers, sales staff, farm managers, technical,
supervisory and other workers engaged in trans-port and
communication services or in sports and recreation facilities,
artists, musicians.
Regardless of the group’s position in the organization structure
of an industry, they are linked with their employers by being
associated with that part of the productive process where
authority is exercised and decisions are taken.
It has been found that white-collar unionism is expanding.
These wor-kers have begun to fight for better pay scales, more
fringe benefits, internal promotions, etc. following the method
of agitation and litigation. Their strong points are a large
membership, sound finance, internal leadership.
Today, trade unions wield a lot of power. The trade union
leaders play an important role so much so that they “influence
vital channels of pro-ductive and strategic functions. Economic
and social decisions affecting working class people are taken by
the Government in consultation with the leaders of the trade
union movement.” For instance, the trade union leaders
participate in the meetings of the Indian Labour Conference,
con-sultative bodies, wage boards, etc.
Another recent development as far as white-collar unions are
concerned is the militancy among workers. They realise that by
exerting pressure on employers through union power their
demands will be met sooner.
Table White-Collar Workers
Sample of occupational groups
Numbers
Professional, technical and related workers
4,083,300
Administrative and managerial personnel 670,300
41
 Clerical and related workers Source: Indian Labour Statistics, Labour Bureau, Ministry of
MANAGEMENT OF INDUSTRIAL RELATIONS

5,231,600 Labour, Government of India, Simla, 1976, pp. 169-181.

Sales workers
1,620,400
Service workers
3,614,500
Farm sectors, supervisors and workers
1,958,600
Production, transport and communication
11,990,300
Workers not classifiable by occupation
1,290,500
Source: International Labour Office, Year Book of Labour
Statistics, Geneva, 1977, p. 222.
In the post-Second World War period, there has been a
tremendous increase in the number of white-collar workers in
India moving to the growth of industries, increase in the
number of banks, insurance com-panies, commercial offices
and increase in the number of government and semi-govern-
ment offices. According to the 1951 census the number of
per-sons engaged in non-manual operations was 23 million out
of a total working population of 139 million. In 1961, out of
188 million workers 28 million were white-collar workers.
According to the 1971 census the population of India was 540
million of which the total working population was 180 million,
Some of the important trade unions of white-collar employees
are the All India Bank Employees Union, the All India Defence
Employees Federation, the National Federation of P&T
Workers, the Confederation of Central Government Employees
and the Indian. Federation of Working Journalists. All white-
collar unions are independent in that they are not affiliated to
any central trade union organization. Their leadership is largely
endogenous.
Agricultural Labour
Agricultural labourers are those whose main source of income
is farm wage employment. According to the agricultural labour
enquiries, an agricultu-ral labourer is one who is employed not
only in crop production but also hired in employment in other
agricultural occupations such as dairy farming, horticulture,
raising of livestock, bees, poultry, etc.
Agricultural labour consists of two such categories (Chart)
namely (i) landless agricultural labour; and (ii) small cultivators,
whose main source of income, due to their small holdings, is
wage employment. Landless labour is again divided into: (i)
permanent labour attached to a cultivating house-hold; and (ii)
casual labour. Casual labour in turn consists of three groups:
cultivators, share croppers and households.
Chart
AGRICULTURAL LABOUR

(32.92%), white-collar workers being 31 million. Table above

gives the occupational distribution of white-collar workers. Landless agricul-
Small
White-Collar Unions tural labour cultivators
In India unionization among white-collar workers began as (Those who mainly work on
early as 1897 and in 1897, the National Union of Railway men their own
of India and Burma was formed. However, unionization farms but who also work as
among the workers did not have any signi-ficant growth before wage
the Second World War. Since 1947, the growth of unionization Permanent Casual earners in agricultural and related

among white-collar workers has been due to inflation, the labourers labourers activities. This is more so

realization of effectiveness of collective bargaining, etc. with marg-

inal cultivators. Because
Of the 31 million white-collar workers, 1.1 million are union- their land
ized and there are 1,448 trade unions of white-collar workers resources are not capable of
(Table). provi-
TABLE Membership of registered trade unions in certain Culti- Share- House- ding then income
industry groups in India. throughout the
vators croppers holds year so they take up wage
Number of Membership
emplo yment during the
unions sub- in lakhs lean season.)
mitting returns (for 1971)
It has been found that agricultural labour forms some of the
Commerce 593 most dep-rived and underprivileged segments of Indian
2.23
society. Some of the difficulties are that:
Transport, Storage,
1. Their wages are low,
Communication 147 2. They perform difficult tasks,
6.10
3. They are faced with irregular employment,
Services 708
226 4. They lack social security,
5. They do not have assets of great value,
Total 1448
10.59 6. Their working and living conditions are poor,

42
7. They are illiterate and thus exploited by the employers, an employer’s spokesman and de it has also ventured into

MANAGEMENT OF INDUSTRIAL RELATIONS

8. They borrow funds from their employers to support the welfare-oriented activities for the workers like the Family and
family which leads to their becoming bonded labour. Health and Dairy Development Project in the Nilgiris.
Though the wages of casual labourers are better than the other Table below gives the break up of the total population and the
groups, their job prospects are uncertain because they do not get working population in the several categories. The table below
work throughout the year. gives a break up of the various occupational categories of the
working population.
According to the Rural Labour Enquiry (1963-65), the wage
employment of the agricultural labourer is 247 days a year. Table: Classification of India’s Population and Workers in
Because of this low span employment the casual labourers face Organized Industry
acute hardship. 1. Labour Force Structure 1960-1980 (in percentage):
Their poor income is obvious by the fact that a large percentage Agriculture Industry
of them fall below the poverty line-82% of the marginal Services
farmers in Orissa, 79% in Madhya Pradesh, 75% in Uttar
1960-1980 1961-1980
Pradesh, 69% in Maharashtra and Tamil Nadu, 68% in
1960-1980
Rajasthan and Mysore, and 66% in Gujarat are living below the
poverty line. About 50-60% of agricultural labour fall into this 74.0 62.2 11.3 17.2 14.7
category. 20.6
Faced with these problems they need improvement in two India
directions. One hand, wages and working conditions need to be 2. Population of India (in millions):
improved and on the other, there is the necessity of finding job 1981 1971
opportunities and obtaining benefits to which they are entitled. 1961
Thus there is a need for organizing agricultural labour to
Population 685 548
safeguard their interests.
439
In this regard it is felt that there is a strong case for the union-
Workers (main) 223 180
ization of, agricultural labour, but progress in this direction is
189
not very satisfying. According to the 1971 census, agricultural
labourers numbered 47.49 million, the membership of their Main workers as % to
unions submitting returns was 93,000 which show poorly total population 33.4% 32.92%
organized agricultural labour is some of the constraints 43%
that come in the way of organizing this group are that they are 3. Employment in Organized Sector (in millions):
scattered, often dependent on their landlords, their lack of Cent. Govt. State Govt. Quasi Govt. Total Pvt. Sector G.Total
cohesiveness because of their diverse cultures and the illiteracy
among them. 1980 3.18 5.48 4.34 15.08 7.23
22.31
As such, formation of trade unions by the unorganized and
illiterate agricultural labour could lead to class conflict. Hence it 1981 3.20 5.75 4.55 15.48 7.40
is proposed that in order to solve these problems rural labour 22.88
cooperatives be organized instead of trade unions, whose 1982 3.25 5.85 4.81 15.95 7.55
objectives could be to bring the agricultural labourer the fold of 23.49
some organization similar to trade unions. This would have in Sources: 1. ILO World Labour Report, Geneva, 1984, p. 5.
advantages. Local leaders who know the problems of the 2. Statistical Outline of India, 1984.
labourer and could therefore provide the necessary leadership as
Tata Services Ltd., Bombay, p. 30, 132.
well would run their co-operatives. Efforts have been made in
this direction in Kerala and Gujrat. Note: In the 1981 Census, ‘Main Workers’ were defined as
those who were engaged in any economically productive activity
In India, a distinction is made between agricultural labour and
for a minimum 183 days during the year preceding the date of
plantation labour. The latter have been within the pale of
enumeration.
special legislation and have organized trade unions, which
protect and further their interests through collective bargaining. Table: Economic Classification of Main Workers, 1981*
Some of the plantations are those of tea, coffee, rubber and Total main % distribution Workers
cardamom and they are generally considered an industry. They (in million)
have been well deve-loped and organized since colonial times. Cultivators 92.5 Cultivators 41.6
The United Planters Association south India (UPASI) located at
Agricultural labourers 55.5 Agricultural labourers 24.9
Coonoor is an example of an industry--level employers
organization, which among other things negotiates industry- Livestock,forestry, etc 5.0 Livestock,forestry, etc 2.2
wise -agreements with trade unions covering plantations in the Mining and quarrying 1.3 Mining and quarrying 0.6
southern states of Karnataka, Kerala and Tamil Nadu. Besides Household industry 7.7 Household industry 3.5
settling the terms and conditions of employment and acting as

43
 Other industry 17.4 Other industry 7.8
MANAGEMENT OF INDUSTRIAL RELATIONS

Construction 3.6 Construction 1.6

Trade and commerce 13.9 Trade and commerce 6.3
Transport, commn, etc. 6.1 Transport, commn. etc. 2.7
Other services 19.5 Other services 8.8
Total 222.5 Total 100
• Based on 5% sample data of the 1981 Census & excludes
Assam statistical out line of India 11984 Total Securities ltd.
Bombay.
This data will provide a useful background to understanding
the process and extent of unionisation, which is discussed
subsequently.
Notes -

44
 MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 8:
GROWTH OF UNION

Learning Objectives At times, an employee joins a union under group pressure;

After going through this lesson you will be able to compre-
hend:
• Of how the trade unionism spread in India and why.
Growth Of Unions
Why do Workers Join Unions?
Workers or employees join trade unions for a variety of reasons
though they may not be conscious of their motive of joining
unions. These are as follows:
i. Economic benefit. Every employee wants to increase his
income and to have better working conditions. But the
individual employee has very little bargaining power in
comparison with that of his employer. If he joins the
union, the union will take care of his economic interests
because the union has great bargaining power to get its
demands accepted by the management.
if he does not, he often has a very difficult time at work. On
the other hand, those who are members of a union feel that
they gain respect in the eyes of their fellow workers. They
can also discuss their problems with the trade union leaders.
viii. Background factors. Historical background factors also playa
part in the disposition of employees to join a union. For
those who have been raised in a working class
neighborhood where one’s father and indeed all the
working members in the community belong to the union
acceptance of the union as a normal part of the
employment life seems natural.
You ca refer the following information related to the V.V. Giri
National Labour Institute research center for many of the
related issues. See the following:
Notes -

ii. Platform for self-expression. The desire for self-expression

is a fundamental human drive for most people. The union
provides a mechanism through which employees can make
their voice heard by the top management. Union serves as a
via media of communication between the employees and
the top management.
iii. Check on arbitrary actions of management. The employees
may join the unions to ensure a just and fair dealing by
management on the basis of a predetermined policy, and
through collective strength restrain the management from
taking any action which may be irrational, illogical,
discriminatory or contrary to their general interests.
iv. Security. The employees may join the unions because of
their belief that it is an effective way to secure adequate
protection from various types of Hazards and income. In
security such as accident injury, illness, unemployment, etc.
For example, trade unions ensure compensation to the
injured workers under the Workmen’s Compensation Act
and secure retirement benefits for the workers and compel
the management to undertake welfare services for the
benefit of the workers.
v. Employer-employee relations. Another reason of
employees joining some union may be the broader
realisation on their part that unions fulfill the important
need for adequate machinery for proper maintenance of
employer-employee or labour-management relations.
vi. Sense of participation. The employees can. Participate in
management of matters affecting their interests only if they
join trade unions. They can influence the decisions, which
are taken as. a result of collective bargaining between the
union and the management.
vii. Sense of belongingness. Many employees join a union
because their fellow workers are the member of the union.

45
MANAGEMENT OF INDUSTRIAL RELATIONS

NLI Research Studies Series is the most important medium for disseminating the outputs of the research projects
undertaken by the Institute. They are circulated to all the leading National and International institutions/organisations
dealing with labour studies. The publication serves as as a means to obtain the feedback on the research being undertaken
by the Institute from renowned scholars and practitioners.
Recent Publications under NLI Research Studies Series

No. : 033/2002
Title : Labour Contracts and Work Agreements in Tea Plantations of Assam

Author : Kalyan Das

Introduction:

The study compares the profile of workers in the large tea estates vis-a-vis that of their counterparts in the small-scale
plantations. Based on the interactions with workers in four plantation estates and fourteen small tea gardens, the paper
analyses the labour recruiting mechanisms, socio-economic backgrounds, work history profiles and the evolution of various
enactments and agreements in the plantation sector. Further, the study assesses the working and living conditions, health and
sanitation aspects, wages and employment benefits and the degree of mobilisation of workers in the plantations.

The efficacies of the provisions in the Plantation Labour Act, 1951 and Assam Plantation Labour Rules of 1956 are also
examined in the study. It is observed that the provisions of Plantation Labour Act, 1951 and the bilateral agreements
between workers representative and employers association have ensured well-being to the workers in the estate sector.
However, this is not so in the case of unorganised small-scale plantations sector. Thus, it is concluded that there is an urgent
required need to extend social and economic security to the workers of the emerging small-holding plantations in Assam

No. : 034/2002
Title : Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil
Nadu
Author : Babu P. Remesh
Introduction:

The essay by Babu P. Remesh titled “ Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil
Nadu” is based on the author’s experience of coordinating an action-research project in Tamil Nadu. The study forms the
part of an integrated project of the National Labour Institute of Organising Rural Labour of Effective Participation in
Development, which was carried out in four states viz., Uttar Pradesh, Madhya Pradesh, Rajasthan and Tamil Nadu.
The essay by Babu P. Remesh titled “ Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil
Nadu” is based on the author’s experience of coordinating an action-research project in Tamil Nadu. The study forms the
part of an integrated project of the National Labour Institute of Organising Rural Labour of Effective Participation in
Development, which was carried out in four states viz., Uttar Pradesh, Madhya Pradesh, Rajasthan and Tamil Nadu.

The methodology of the project is based on holding Rural Labour Camps, a unique approach of participatory action-
research and worker conscientisation that has been designed and refined at the Institute , over the past few decades. The
essence of the method is to develop self-action for sustainable development, which inter alia aims at capacity building
among rural workers through: (a) awareness generation on relevant socio-economic and legal issues; and (b) leadership
development via organization building.

Apart from discussing the learning from the Kancheepuram experience, the paper provides a detailed account of the
temporal changes in the organinsing tactic of Rural Labour Camps. The process of holding camps as well as the attitudinal
/behavioural transformation of the campers are also discussed at length. Most importantly, the author has made an earnest
attempt to critically analyse the outcome of the project, to suggest possible measures for strengthening the contemporary
strategy.

46
 MANAGEMENT OF INDUSTRIAL RELATIONS
No. : 035/2002
Title : Child Labour in Chrompet Leather Manufacturing Units of Tamil Nadu
Author : J. Jeyaranjan
Introduction:

The study, Child Labour in Leather Manufacturing Units, is a collaborative effort of the National Resource Centre on
Child Labour at the V.V. Giri National labour Institute, NOIDA and the Institute of Development alternatives, Chennai.
This is one of the series of studies conducted on child Labour in Hazardous industries.
The findings of the study show that there is no gender selectivity in child labour. Adults earn wages that are only
marginally higher than what the children earn. Irrespective of the experience, skill and family size and requirements the wage
payment system remains insensitive and relatively inelastic. Children contribute 20 to 40 per cent of the family income. The
labour in the leather industry is defined by the caste location. While market forces predominantly govern all other aspects of
the industry, the labour is drawn exclusively from the most downtrodden section of the Tamil Society. As heads of 60 per
cent of the households are engaged in leather work, the study establishes the incidence of child labour in leather flaying as
an intergenerational phenomenon.

No. : 036/2002
Title : Trade Unionism in South Indian Film Industry
Author : S. Theodore Baskaran
Introduction:

The essay, Trade Unionism in South Indian Film Industry, forms a part of the research activities carried out by Shri
Theodore Baskaran at the Roja Muthia Research Library, Chennai for the Integrated Labour History Research Programme
of the V.V. Giri National Labour Institute. This project primarily aimed at indexing, documenting and preserving the source
material relating to the trade union movement in South Indian Film Industry, to enrich the regional collections acquired in
the Archives of Indian Labour. The Roja Muthia Research Library was identified as the appropriate organisation to entrust
this unique assignment, as it is the world's largest collection of Tamil film magazines and due to its established reputation in
conservation of sources on social and cultural history.
Trade union activities in film industry of south India have been slow and spasmodic. However, the events connected with
labour activities were reported in the magazines and the discourse on the subject was reflected in the trade journals and film
magazines. Theodore Baskaran's essay effectively utilises these source materials, to portray the growth of trade union
movement and related activities in south India. The study warrants scholarly attention not only due to the fact that the trade
union movement in film industry in South India is a rather unattended area, but also because of the simple but scholarly
narration and analysis adopted by the author.

No. : 037/2002
Title : Migration, Social Networking and Employment: A Study of Domestic
Workers in Delhi
Author : Neetha N.
Introduction:

Domestic service is a major and growing informal sector activity in the urban centres. The conditions of work in
domestic service are deplorable with long working hours, low pay and absence of job security. Women from certain
areas or regions with specific socio economic backgrounds are found concentrated in this informal sector occupation.
This has been seen as an outcome of the transformations in class relations and developments of new styles and patterns
of living. Of late, the demand for domestic workers has increased, with the changed life styles of the middle class. On
the supply side, employment in domestic service appears to be the only promising option for many of the disadvantaged
groups or sections that are faced with limited opportunities. Notwithstanding the growing importance of the occupation
in the urban informal sector in India, no comprehensive data is available on the magnitude and pattern of domestic
work, migration aspects, recruiting systems, working conditions and so on. The essay by Neetha, Migration, Social
Networking and Employment: A Study of Domestic Workers in Delhi, fulfills this long felt requirement.

47
MANAGEMENT OF INDUSTRIAL RELATIONS

The essay, through a detailed micro-empirical study of a few worker-settlements and placement organisations provides
a detailed understanding on the work arrangements and employment aspects of domestic service in Delhi. The essay also
invites rethinking on the conventional migration theories. It is argued that female migrants are powerful agents in
building and maintaining social and personal structures pertaining to migration and in the survival of the family in the
city. Further, it is established that social networking is the mechanism through which domestics (re)construct and
maintain cultural and social identities, which are otherwise lost in the urban living.

No. : 038/2002
Title : Study of Child Labour in the Zardosi and Hathari Units of Varansi

Author : J. John & Ruma Ghosh

Introduction:

In India, millions of children enter the labour market at an early age as part of the family’s subsistence strategies.
Although the Child Labour (Prohibition and Regulation) Act, 1986 bans the working of children in some listed
occupations and processes, yet there are several studies which indicate the incidence of child labour in the prohibited
occupations and processes. Besides, studies have also indicated that there are many hazardous occupations and processes
which are still not included under the CLPR Act due to lack of any comprehensive data. The present study therefore
focuses on one such industry – the zardosi and hathari (embroidery) industry of Varanasi, in which although a large
number of children are involved at a very early age, yet no comprehensive data is available on the magnitude and pattern
of working.

The present essay, through a detailed micro-empirical study of the worker settlements provides an understanding of the
structure and functioning of this industry and delineates the factors that perpetuate child labour. The study looks into the
demand as well as the supply side factors and argues that the organisation of production through subcontracting and
home based production lies central to the existence of child labour in this industry. The study reveals that the strong
kinship and neighborhood networks in which the industry operates, makes it doubly easy for the entry of children at an
early age.
• List of Other Publications under NLI Research Studies Series

No.
001/2000 Labour Market Institutions in Globalized Economy: Some
Issues in the Indian Context
— C.S.K. Singh
002/2000 Dynamics of Labour Market in Kerala
— S.K. Sasikumar & S. Raju
003/2000 Women and Labour Market: A Macro Economic Study
— Neetha N.
004/2000 Mode of Payment of Minimum Wages in Bihar
— Navin Chandra & Nikhil Raj
005/2000 Payment of Minimum Wages in Kind and Perceptions
Regarding the Mode of Payment
— S.S. Suryanarayanan & Rajan K.E. Varghese
006/2000 Minimum Wages and Mode of Payment:
The Case of Punjab
— Ruma Ghosh
007/2000 Rural Wages: On Developing an Analytical Framework
— Babu P. Remesh
008/2000 Employment in Food Processing Industries
— S.S. Suryanarayanan & B.V.L.N. Rao
009/2000 Determinants of Rural Wages: An Inquiry Across Occupations

48
009/2000 Determinants of Rural Wages: An Inquiry Across Occupations

MANAGEMENT OF INDUSTRIAL RELATIONS

— Babu P. Remesh, J. Jeyaranjan & A.C.K. Nambiar
010/2000 Adverse Sex Ratio and Labour Market Participation of
Women: Trends, Patterns and
Linkages
— Neetha N.
011/2000 Children of Carpet Looms: A Study of Home-based
Productions of Carpet in Uttar Pradesh
— Nikhil Raj and Ravi Srivastava
012/2000 Child Labour in Slate Industry of Markapur in the Wake of
Legislation
— K. Suman Chandra, R. Vidyasagar and Y. Gangi Reddy
013/2000 Child Labour in Moradabad Home-Based Industries in the
wake of Legislation
— Ashish Ghosh, Helen R. Sekar
014/2000 Child Labour in Bulandshahar District of Uttar Pradesh
— Tapan Kumar Pachal
015/2001 Outline of a History of Labour
in Traditional Small-Scale Industry in India
— Tirthankar Roy
016/2001 Gender and Class: Women in Indian Industry, 1920-1990
— Samita Sen
017/2001 The Politics of the Labour Movement: An Essay on
Differential Aspirations
— Dilip Simeon
018/2001 Child Labour in Home Based Lock Industries of Aligarh
— Helen R. Sekar, Noor Mohammad
019/2001 Child Labour in Diamond Industry of Surat
— Kiran Desai, Nikhil Raj
020/2001 Gender and Technology: Impact of Flexible Organisation and
Production on Female
Labour in the Tiruppur Knitwear Industry
— Neetha N.
021/2001 Organisational Structure, Labour Relations and Employment in
Kancheepuram Silk
Weaving
— Babu P. Remesh
022/2001 International Labour Migration from Independent India
— S.K. Sasikumar
023/2001 Cine Workers Welfare Fund in India
— M.M. Rehman
024/2001 Child Labour In Knitwear Industry of Tiruppur
— J. Jayaranjan
025/2001 Child Labour in the Home Based Gem Polishing Industry of
Jaipur
— Kanchan Mathur, Ruma Ghosh
026/2001 Unorganised Workers of Delhi and the Seven Day Strike of
1988
— Indrani Mazumdar
027/2001 Death of an Industrial City: Testimonies of Life Around
Bombay Textile Strike of 1982
— Hemant Babu

49
 — Hemant Babu
MANAGEMENT OF INDUSTRIAL RELATIONS

028/2001 Child Labour in the Home Based Match Industries of Sivakasi

— R. Vidyasagar, Girija Kumarababu
029/2001 Migration in the North Eastern Region during 1901-1991 and
Emerging
Environmental Considerations: A Case Study
Deforestation of Assam
— Pushpam Kumar and Suresh Agarwal
030/2001 Women Weavers of Saulkuchi The Silk Town of Assam
— OKD Institute
031/2002 Cash and in-kind Modes of Wages Payment in
Maharashtra
__ C. S. K. Singh
032/2002 Child Labour in the Knife Industry of Rampur
__ Ashish Ghosh & Helen R. Sekar

50

LESSON 9:
FUNCTIONS OF TRADE UNIONS
Learning Objectives
After going through this lesson you will be able to comprehend
• Of how the trade unions in India functions
To attain the objectives, the trade unions generally perform the
following functions:
i. Collective bargaining with the management to settle terms
and conditions of employment
ii. Advise the management on personnel policies and practices.
iii. Taking up the individual and collective grievances of the
workers with the management
iv. Work for achieving better say of workers in the
management of affairs of the enterprise which influence the
lives of the workers directly.
v. Organising demonstrations, strikes, etc. to press the
demands of the workers.
vi. Education of workers and their children,
vii. Welfare and recreational activities for their members.
viii. Representing of worker in various national and
international forums. .
ix. Securing legislative protection for the workers from the
Government.
The functions performed by the trade unions may be broadly
classified into three categories, viz., (i) militant functions, (ii)
fraternal functions, and (iii) political functions. .
Militant Functions. The chief purpose of the trade unions is
to secure better conditions of work and employment. The
unions also endeavor to secure some share in productivity gains
and a greater share in the management or even control of
industry. When the unions fail to accomplish these ends by the
method-of collective bargaining and negotiations, they adopt
imitational methods and put up a fight with the management
in the form of strike, boycott, gherao; etc. - a situation that
often turns into fierce antagonism.
Faternal Functions. A trade union is a fraternal association or
a mutual-benefit organisation supporting the members out of
their own funds during the period of work-stoppage due to a
strike or lockout. It also provides financial assistance to the
members during the period when they are unfit for work
because of illness or employment injury or when they are
temporarily unemployed.
Political Functions. Many trade unions seek to improve the
political status of the union, the leader, and the union mem-
bers. They contest political elections and try to acquire political
power. In many countries, some strong labour parties have
grown up e.g., in the United Kingdom, many times, labour
party has been in power. In India, such activities of trade
unions are not important, though sometimes they have been
successful in influencing the labour policy of the government.
MANAGEMENT OF INDUSTRIAL RELATIONS
UNIT 3
Methods Of -trade Unions
In order to achieve their goals; trade unions may adopt any or a
combination of the following methods:
1. Method of Mutual Insurance.
2. Method of Collective Bargaining.
3. Method of Legal Enactment/Political Action.
4. Method of Direct Action.
Let us now briefly look into these methods so as to know what
these methods really speak of.
1 Mutual Insurance
When we talk about ‘mutual’ it relates that this method
consists mainly of welfare activities, conducted by trade unions
for their members. Activities like medical aid, educational loans,
recreational activities, cooperative societies, credit facilities,
sickness aid, etc. come in the form of mutual insurance or
mutual aid. These amenities and aids are provided out of the
funds that its members contribute in the shape of membership
subscriptions and donations, etc. Thus, the effectiveness of this
method is directly dependent upon the income of trade unions.
The Indian trade unions have lagged far behind their counter-
parts in U:K. and U.S.A. in taking recourse to mutual insurance
primarily because of their poor financial position.
2 Collective Bargaining
Another prevalent method used by trade unions for improving
the economic and social conditions of their members is
collective bargaining. This is essentially a bi-partite method
under which trade union as a representative organisation of
workers bargains with the employers over the various issues
such as terms and conditions of employment, wages, bonus;
hours of work, working conditions, welfare facilities, etc. and
enter into agreement, called collective agreement, with the
employer.
Since individual worker is a weak bargainer, the method of
collective bargaining is preferred. Bargaining may be made at the
local level (i.e., a factory or a plant), at the regional level or at the
industry or national level.
The process of collective bargaining is bi-partite, that is,
between employers/management and the trade unions. It
should be free of external agencies as government. However,
for various reasons, the bargaining power of the union is weak,
which they have secured by statute and bargaining is often done
in courts. For this reason, we have in India judicially controlled
bargaining rather than free bi-partite collective bargaining. There
are certain prerequisites of free collective bargaining. Which
include mutual recognition and the will to bargain and come to
settlement. Since unions are weak and there is no uniform law
for the recognition of a representative union, collective bargain-
ing has not made much headway in India.
51
 3 Legal Enactment/Political Action
MANAGEMENT OF INDUSTRIAL RELATIONS

Under this method, trade unions engage in political action for

securing working and living conditions for the workers.
Exerting pressure for getting progressive labour laws passed by
the legislature and to get them enforced properly does this. For
getting protective and pro-labour legislation passed by the
legislatures, the unions send competent representatives of the
workers to the Legislative Assembly and the Parliament.
Unlike mutual insurance and collective bargaining, which are
designed to benefit only the trade union members or employ-
ees of a particular plant, region or industry, political action is
intended to benefit the working class in general.
4 Direct Action
When the trade unions fail to achieve their goals by the
methods described above, they resort to direct action. It is
manifested in several forms like strikes, gheraos, bandhs, etc.
Since this method is harmful to all concerned in terms of loss
of production, - loss of wages, scarcity or non-availability of
goods, etc every effort should be made to avoid the use of this
weapon in the armory of trade unions. What is required is
cooperation and not conflict.
Under the diversity of objectives and methods of trade unions,
which ones can be said to be “legitimate and which others,
‘illegitimate’? There is no objective standard by which- one can
judge the legitimate functions and methods of trade union in
general. Trade unionism is essentially a pragmatic movement,
which constantly reshapes its organisation structure, reformu-
lates its policies and objectives and reexamines and evaluates its
methods, keeping all the time in its view the welfare of the
working class as its goal.
Notes -

52

LESSON 10:
NATIONAL LEVEL FEDERATIONS
Learning Objectives
After going through this chapter you will be able to compre-
hend the following:
• Where lies the place of national level federation in the
context of Indian Trade Unionism
Unionisation: Law and Environment
Two factors are relevant to the process of unionisation in India.
They relate to trade union law and to political parties and their
labour strategy.The Trade Union Act, 1926, states as follows:
Any seven or more members of a trade union may, by subscrib-
ing 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 registra-tion of the trade union
under this Act.
Undoubtedly, this provision in labour legislation has contrib-
uted to the formation of many unions as the data on the
number of registered trade unions shows. Needless to add,
there are many more unregistered trade unions.
Another factor to be taken note of is that the major political
parties such as the Congress, Communist, the CPI and the
Socialist each has a federa-tion 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-tiered. Units exist at the plant or shop, state and the
national level. We shall now examine the three levels in some
detail.
National Level Federations
Historically, four major federations have been in existence and
have estab-lished a national network of federated unions. They
are the All India Trade Union Congress (AITUC), Indian
National Trade Union Congress (INTUC), United Trade Union
Congress (UTUC), and Hind Mazdoor Sabha (HMS). The
UTUC has to a certain extent merged with the Centre of Indian
Trade Unions (CITU) and therefore we shall examine the CITU
Federation.
All India Trade Union Congress (AITUC)
This national federation was established in 1921. Ideologically it
is linked with the communist philosophy and therefore
espouses a more radical approach, as compared to some of the
other federations, in attaining the workers’ interests and goals.
In 1979 it had a total of 1,307,471 members.
Organizational Structure
The organizational set up is as follows: (i) The affiliated unions
(unit/local level); (ii) provincial bodies (state level); (iii) the
general council including office bearers (which incorporates the
working committee of the general council); and (iv) the
delegates to the general or special session.
MANAGEMENT OF INDUSTRIAL RELATIONS
The general council consists of the president, seven vice-
presidents, a general secretary, a treasurer and not more than five
secretaries and mem-bers elected by the AITUC on the basis of
the total affiliated membership of unions in each state, roughly
at the rate of one representative for every 5000 members.
The working committee consists of all office bearers of the
AITUC as ex-officio members and 35 elected by the general
council by a system of cumu-lative voting.
The general session of the AITUC meets once in two years, the
general council meets once a year, and the working committee at
least twice a year. The General Secretary and his administrative
staff at the national and state levels carry out the day-to-day
operation and implementation.
Objectives
The major objectives of AITUC are:
• To establish a socialist state in India and the nationalisation
of the means of production, distribution and exchange as
far as possible.
• To improve the economic and social conditions of the
working class, by securing better terms and conditions of
employment.
• To safeguard and promote the workers’ right to free speech,
freedom of association and assembly and the right to strike.
Methods
For the furtherance of these objectives the means to be adopted
by AITUC are to be legitimate, peaceful, and democratic, viz.
legislation, education, propagation, mass meeting, negotiations,
demonstrations, and as a last resort the staging of a strike.
Membership and Finance
The source of funds is: (i) an annual contribution of Rs.15 for
unions with 500 members and less; (ii) affiliation fees at the rate
of 5 paise per member with a minimum of Rs.20 for unions
with a membership above 500; (iii) a delegate fee of Rs.12 per
delegate; and (iv) any other levy which may be fixed by a two-
thirds majority of the General Council. The levy is fixed at the
rate of Rs.5 per 1000 members.
Indian National Trade Union Congress (INTUC)
This union was organized in 1947 with active support and
encouragement from Congress leaders. It wanted to bring
about a peaceful and non-violent solution to industrial
disputes.
It has a total membership of 2,388,451 which makes it the
largest national federation.
Organizational Structure (See Chart )
The basic pattern of organization in the INTUC is the industry
level federation. In other words, units are grouped together for
the purpose of negotiating the terms and conditions of
employment, such as wage rates hours of work and other
53
 related fringe benefits and working conditions at the industry
MANAGEMENT OF INDUSTRIAL RELATIONS
level which are to be implemented at the lower level. This
method enables a perspective being taken for the entire industry,
rather than a piecemeal approach unitwise. The regional
branches and the councils provide the support services. The
apex body, which is representative of the federation, takes an
overall point of view, regarding the broader issues, such as
environment, legislation and governmental policies, and gives
directions to the regional branches.
Chart Organizational Structure of INTUC
• INTUC
General Council
Working Committee and Other
Committees
Assembly of Delegates
State Level
Regional Branches and Council
Industry Level Federation
Unit Level
Objectives
It seeks to establish a society in which there is an opportunity
for the development of individuals and the eradication of anti-
social concentration of power in any form and therefore to
nationalise industry. The main objectives are:
• To ensure full employment.
• To secure greater participation of workers in the
management of enter-prises.
• To secure complete organization of all categories of workers
including agricultural labour. -To organize workers on an
industry-wise basis.
• To improve the conditions at work and to provide various
social security measures.
• To develop among the workers a sense of responsibility
towards industry and the community.
Methods
The means to be adopted for the furtherance of these objectives
are to be peaceful through due process of law and negotiations.
Membership and Finance
Any organization of workers accepting the constitution of the
INTUC and with a subscription rate of not less than 25 paise
per month is entitled to affiliation with the INTUC provided it
is not affiliated with any rival organization or any of its
executive committee members are not members of a rival
union. All the unions affiliated to INTUC and belonging to the
same industry are required to join the corresponding industrial
federation, e.g. the Indian National Textile Workers Federation,
the National Federation of Indian Railwaymen, etc.
Every affiliated organization is required to pay the Congress an
annual affiliation fee at the rate of 10 paise per member on its
rolls subject to a minimum of Rs.15.
54
Hind Mazdoor Sabha (HMS)
This national federation came into being in 1948. It had an
affiliated membership of 852,558 in 1979. This federation
espouses the socialist philosophy and has linkages with socialist
parties. However, there has been a division within the socialist
ranks with the emergence of the Hind Mazdoor Panchayat,
another federation with socialist leanings.
Organizational Structure
The general council is composed of the president, not more
than five vice presidents, a general secretary, not more than two
secretaries, a treasurer and other members representing various
industrial sections. The office bearers are elected at the annual
convention.
Objectives
The main aims of the Hind Mazdoor Sabha are:
• To promote the economic, political and social interests of
the workers and to improve their terms and conditions of
employment.
• To form a federation of unions from the same industry or
occupation at the national level.
• To promote the formation of co-operative societies and to
foster workers’ education.
Methods
The method employed shall be legitimate, peaceful and
democratic.
Membership and Finance
The membership of HMS is open to all bonafide trade unions,
including federations of trade unions. The general council of
the Sabha has authority to accept or reject any application.
The collection of funds of HMS is carried out through: (i)
affiliation fees of 5 paise per member per annum subject to a
minimum of Rs. 20; (ii) a delegate fee of Rs. 3 per delegate; and
(iii) any other levy that may be fixed by the general council.
Centre of Indian Trade Unions (ClTU)
This is a national federation which was established in 1971 as a
result of the split in the AITUC which was a sequel to the split
in the CPI a new centre, the Centre of Indian Trade Unions
(CITU) emerged owing to its allegiance to the CPI(M). In 1979
it had 817,805 members.
Objectives
It is animated by the goal of organizing workers to further their
interests in economic, social and political matters.
Organizational Structure
The organizational set-up is as follows: (i) central committee
(national level, general council, including office bearers); (ii) a
state committee (state level); and (iii) affiliated unions (unit
level) (the Primary unions).
The General Council consists of the president, four vice-
presidents, the general secretary, not more than four secretaries,
and the treasurer. Mem-bers are elected by CITU on the basis of
the total affiliated membership of unions in each state, at the
rate of one delegate for every 500 members. The general council
of CITU meets once in two years, and the state committee at
least twice a year. The general secretary and his staff at the state whole. Hence all the textile mills who are members of the Mill-

MANAGEMENT OF INDUSTRIAL RELATIONS

level carry out the day-to-day operations and administra-tion. owners Association and workers who are a part of TLA are
governed by this agreement. By and large, the majority of both
Methods
the categories are covered by these agreements.
To further its objectives the methods to be adopted by CITU
are legislation, demonstrations, agitations and intensification of Local Units
the class struggle. Many Indian unions are not affiliated to an industry level
Membership and Finance federation and in many cases may not have any affiliation to the
Any union can be affiliated to CITU by paying a subscription national federation. They are thus independent local unions
(affiliation fee) of 20 paise per year per member (minimum of centred around a particular plant or a multi-plant organization.
Rs. 40 per union if it is small). Each union applies to the state These plant firm-wise unions embrace all employees of a plant/
committee, which after scrutinising recommends its acceptance unit irrespective of occupational groups. They vary in numerical
to the central committee. strength from small units to medium and large ones. In some
cases, in times of crisis, they do seek the assistance or guidance
The funds of CITU are derived from: (i) the affiliation fees of of the larger federations or other large unions in related
20 paise per member per year to a minimum of Rs. 40; (ii) the industries. At times many union functionaries may have
delegate fee of Rs. 5 per delegate; (iii) any other levy that may be political loyalties but no union affiliation to a natio-nal labour
fixed by the general council. federation. Such political loyalties may be to a particular regio-nal
Other National Trade Unions party or to a certain ideology. Typically, the union has a presi-
Besides these three federations at the national level, there are dent, a secretary, a treasurer and some committee members.
others like the United Trade Union Congress (UTUC), the Membership is on the basis of employment and payment of
National Labour Organization (NLO), the Bhartiya Mazdoor dues. At certain times of the year extraordinary collections are
Sangh (BMS), and the Hind Mazdoor Panchayat (HMP)-an off- made, as at the time of disbursement of bonus. These unions
shoot of the Socialist Party. Some of these have stronger are more concerned with specific issues regarding the workers
regional affiliations than a national coverage. and their terms and conditions of employment in a particular
organization.
Industry Level Unions
We will now examine the pattern of an industry level union-the Notes -
Textile Labour Association, Ahmedabad (TLA). Though TLA
has diversified into an unorganized sector, its strength and
major contribution has been in the textile industry.
The Textile Labour Association was formally launched in 1920
and is substantially influenced by Gandhian philosophy in its
trade union activities. It started as a craft union, with the
warpers informally negotiating a wage increase. Subsequently it
grew into a confederation of several craft unions (occupational
groupings functioning under the aegis of TLA). With the pas-
sage of time, the craft unions, and the confederations have all
merged into one single entity: The organizational structure
reveals the pyramidal type of organization with a federation or
the joint representative board of the vari-ous occupations being
formed on the basis of member strength. The Textile Labour
Association has a shop steward system, where the union
functionary on the shop floor takes an active role with regard to
the rights and interests of the worker. There is also a com-
plaints cell where grievances of workers vis-a-vis their job roles
are recorded and followed up. Moreover, there is another cell
which takes up employee claims and problems with regard to
the operation of the ESI scheme. Many welfare activities are
conducted including the setting up of a special cell for women.
Of late it has ventured into organizing the workers in backward
rural areas in what is termed the unorganized sector. Their
approach is non-violent, i.e. peaceful strategies are adopted to
further their objectives. Consequently the textile industry in
Ahmedabad has an industry level union. Similarly the mill-
owners also bave an industry association to represent them in
all matters concerning nego-tiations with TLA. These two
organizations mutually agree to the terms and conditions of
employment, including welfare, leave, etc. for the indus-try as a

55
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 11:
THE INDIUSTRIAL DISPUTE (CENTRAL)
RULES, CENTRAL ID RULES, 1957
Learning Objective:
The study of this lesson will help you identify:
• Of how different industrial disputes can be settled with the
help of the Central Govt. rules.
You know this lesson is fully with the Acts. You can pick up
these Acts on the basis of the given chapters as is shown below:
Chapter: Preliminary
Section 1: Title and Application
1. These rules may be called the Industrial Disputes (Central)
Rules, 1957.
2. They extend to Union territories in relation to all industrial
disputes and to the States in relation only to an industrial
dispute concerning-
a. Any industry carried on by or under the authority of the
Central Government or by a railway company; or
b. A banking or an insurance company, a mine, an oilfield, or a
major port;or
c. Any such controlled industry as may be specified under
Section 2(a)(i) of the Act by the Central Government:
Chapter: Preliminary
Section 2: Interpretation
In these rules, unless there is anything repugnant in the subject
or context-
a. ‘’Act’’ means the Industrial Disputes Act, 1947 (14 of
1947);
b. “Chairman” means the chairman of a Board or Court or, if
the Court consists of one person only, such person;
c. ‘’committee’’ means a Works Committee constituted under
sub-section (1) of section 3 of the Act;
d. ‘’form’’ means a form in the Schedule to these rules;
e. ‘’section’’ means a section of the Act;
f. In relation to an industrial dispute in a Union territory, for
which the appropriate Government is the Central
Government, reference to the Central Government or the
Government of India shall be construed as a reference to
the Administrator of the territory, and reference to the
Chief Labour Commissioner (Central), Regional Labour
Commissioner (Central), Assistant Labour Commissioner
(Central) shall be construed as reference to the appropriate
authority, appointed in that behalf by the Administrator of
the territory;
g. With reference to clause (g) of section 2, it is hereby
prescribed that-
i. In relation to an industry, not being an industry referred to
in sub-clause (ii), carried on by or under the authority of a
Department of the Central or a State Government, the
56
officer in charge of the industrial establishment shall be the
‘employer’ in respect of that establishment; and
ii. In relation to an industry concerning railways, carried on by
it under the authority of a Department of the Central
Government,-
a. In the case of establishments of a Zonal Railway, the
General Manager of that Railway shall be the ‘employer’ in
respect of regular railway servants other than casual labour;
b. In the case of an establishment independent of a Zonal
Railway, the officer in charge of the establishment shall be
the ‘employer’ in respect of regular railway servants other
than casual labour; and
c. The District Officer in charge or the Divisional Personnel
Officer or the Personnel Officer shall be the ‘employer’ in
respect of casual labour employed on a Zonal Railway or
any other railway establishment independent of a Zonal
Railway.
Chapter: Procedure for Reference of
Industrial Disputes to Boards of
Conciliation etc
Section 3: Application
An application under sub-section (2) of section 10 for the
reference of an industrial dispute to a Board, Court, Labour
Court, Tribunal or National Tribunal shall be made in Form A
and shall be delivered personally or forwarded by registered post
to the Secretary to the Government of India in the Ministry of
Labour and Employment (in triplicate), the Chief Labour
Commissioner (Central), New Delhi, and the Regional Labour
Commissioner (Central), and the Assistant Labour Commis-
sioner (Central) concerned. The application shall be
accompanied by a statement setting forth-
a. The parties to the dispute;
b. The specific matters in disputes;
c. The total number of workmen employed in the
undertaking affected;
d. An estimate of the number of workmen affected or likely
to be affected by the dispute; and
e. The efforts made by the parties themselves to adjust the
dispute.
Chapter: Procedure for Reference of
Industrial Disputes to Boards of
Conciliation etc
Section 4: Attestation of Application
The application and the statement accompanying it shall be
signed-
a. In the case of an employer by the employer himself, or
when the employer is an incorporated company or other
 body corporate, by the agent, manager or other principal
officer of the Corporation;
b. In the case of workmen, either by the President and
Secretary of trade union of the workmen, or by five
representatives of the workmen duly authorised in this
behalf at a meeting of the workmen held for the purpose;
c. In the case of an individual workman, by the workman
himself or by any officer of the trade union of which he is a
member or by another workman in the same establishment
duly authorised by him in this behalf: Provided that such
workman is not a member of a different trade union.
Chapter: Procedure for Reference of
Industrial Disputes to Boards of
Conciliation etc
Section 5: Notification of appointment of Board,
court, Labour Court, Tribunal or National Tribunal
The appointment of a Board, Court, Labour Court, tribunal or
National Tribunal together with the names of person constitut-
ing the Board, Court, Labour Court, Tribunal or National
Tribunal shall be notified in the Official Gazette.
Chapter: Procedure for Reference of
Industrial Disputes to Boards of
Conciliation etc
Section 6: Notice to Parties to Nominate
Representatives
1. If the Central Government proposes to appoint a Board, it
shall send a notice in form B to the parties requiring them
to nominate within a reasonable time persons to represent
them on the Board.
2. The notice to the employer shall be sent to the employer
personally, or if the employer is an incorporated company
or a body corporate, to the agent, manager or other principal
officer of such company or body.
3. The notice to the workmen shall be sent-
a. In the case of workmen who are members of a trade union,
to the president or Secretary of the trade union; and
b. In the case of workmen who are not members of a trade
union, to any one of the five representatives of the
workmen who have attested the application made under
rule 3; and in this case a copy of the notice shall also be sent
to the employer who small display copies thereof on notice
boards in a conspicuous manner at the main entrance to the
premises of the establishment.
Chapter: Arbitration Agreement
Section 7: Arbitration Agreement
An arbitration agreement for the reference of an industrial
dispute to an arbitrator or arbitrators shall be made in form C
and shall be delivered personally or forwarded by registered post
to the Secretary to the Government of India in the Ministry of
Labour (in triplicate), the Chief Labour Commissioner
(Central), New Delhi, and the Regional Labour Commissioner
(Central) and the Assistant Labour Commissioner (Central)
concerned. The agreement shall be accompanied by the consent,
in writing, of the arbitrator or arbitrators.
Chapter: Arbitration Agreement
MANAGEMENT OF INDUSTRIAL RELATIONS
Section 8: Attestation of the Arbitration Agreement
The arbitration agreement shall be signed-
a. In the case of an employer, by the employer himself, or
when the employer is an incorporated company or other
body corporate by the agent, manager, or other principal
officer of the Corporation;
b. In the case of workmen,by any officer of a trade union of
the workmen or by five representatives of the workmen
duly authorised in this behalf at a meeting of the workmen
held for the purpose;
c. In the case of an individual workman, by the workman
himself or by any officer of a trade union of which he is
member or by another workman in the same establishment
duly authorised by him in this behalf:
Provided that such workman is not a member of a different
trade union.
Explanation - In this rule “officer” means any of the following
officers, namely-
a. The President;
b. The Vice-President;
c. The Secretary (including the General Secretary);
d. A Joint Secretary;
e. Any other officer of the trade union authorised in this
behalf by the President and Secretary of the Union.
Chapter: Arbitration Agreement
Section 8-A: Notification Regarding Arbitration
Agreement by Majority of each Party.
Where an industrial dispute has been referred to arbitration and
the Central Government is satisfied that the persons making
the reference represent the majority of each party, it shall publish
a notification in this behalf in the Official Gazette for the
information of the employers and workmen who are not
parties to the arbitration agreement but are concerned in the
dispute.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 9: Conciliation Proceedings in Public utility
Service
1. The Conciliation Officer, on receipt of a notice of a strike or
lockout given under rule 71 or rule 72, shall forthwith
arrange to interview both the employer and the workmen
concerned with the dispute at such places and at such times
as he may deem fit and shall endeavour to bring about a
settlement of the dispute in question.
2. Where the Conciliation Officer receives no notice of a strike
or lockout under rule 71 or rule 72 but he considers it
necessary to intervene in the dispute he may give formal
intimation in writing to the parties concerned declaring his
intention to commence conciliation proceedings with effect
from such date as may be specified therein.
57
 Chapter: Powers, Procedures and Duties
MANAGEMENT OF INDUSTRIAL RELATIONS
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 10: Conciliation Proceedings in Non-public
utility Service
Where the Conciliation Officer receives any information about
an existing or apprehended industrial dispute which does not
relate to public utility service and he considers it necessary to
intervene in the dispute, he shall give formal intimation in
writing to the parties concerned declaring his intention to
commence conciliation proceedings with effect from such date
as may be specified therein.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 10-A: Parties to Submit Statements
The employer or the party representing workmen or in the case
of individual workman, the workman himself involved in an
industrial dispute shall forward a statement setting forth the
specific matters in dispute to the Conciliation Officer concerned
whenever his intervention in the dispute is required.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 10-B: Proceeding before the Labour Court,
Tribunal or National Tribunal.
1. While referring an industrial dispute for adjudication to a
Labour Court, Tribunal or National Tribunal, the Central
Government shall direct the party raising the dispute to file
a statement of claim complete with relevant documents, list
of reliance and witnesses with the Labour Court, Tribunal
or National Tribunal within fifteen days of the receipt of
the order of reference and also forward a copy of such
statement to each one of the opposite parties involved in
the dispute.
2. The Labour Court, Tribunal or National Tribunal after
ascertaining that copies of statement of claim are furnished
to the other side by party raising the dispute shall fix the fist
hearing on a date not beyond one month from the date of
receipt of the order of reference and the opposite party or
parties shall file their written statement together with
documents, list of reliance and witnesses within a period of
15 days from the date of first hearing and simultaneously
forward a copy thereof to the other party.
3. Where the Labour Court, Tribunal or National Tribunal, as
the case may be, finds that the party raising the dispute
though directed did not forward the copy of the statement
of claim to the opposite party or parties, it shall give
direction to the concerned party to furnish the copy of the
statement to the opposite party or parties and for the said
purpose or for any other sufficient cause, extend the time-
limit for filing the statement under sub-rule (1) or written
statement under sub-rule (2) by an additional period of 15
days.
58
4. The party raising a dispute may submit a rejoinder if it
chooses to do so, to the written statement(s) by the
appropriate party or parties within a period of fifteen days
from the filing of written statement by the latter.
5. The Labour Court,Tribunal or National Tribunal, as the case
may be, shall fix a date for evidence within one month from
the date of receipt of the statements, documents, list of
witnesses, etc., which shall be ordinarily within sixty days of
the date on which the dispute was referred for adjudication.
6. Evidence shall be recorded either in Court or on affidavit
but in the case of affidavit the opposite party shall have the
right to cross-examine each of the deponents filing the
affidavit. As the oral examination of each witness proceeds,
the Labour Court, Tribunal or National Tribunal shall make
a memorandum of the substance of what is being
deposed. While recording the evidence the Labour Court,
Tribunal or National Tribunal shall follow the procedure
laid down in rule 5 of order XVIII of the First Schedule to
the Code of Civil Procedure,1908.
7. On completion of evidence either arguments shall be heard
immediately or a date shall be fixed for arguments/oral
hearing which shall not be beyond a period of fifteen days
from the close of evidence.
8. The Labour Court, Tribunal or National Tribunal, as the
case may be, shall not ordinarily grant an adjournment for a
period exceeding a week at a time but in any case not more
than three adjournment in all at the instance of the parties
to the dispute:
Provided that the Labour Court, Tribunal or National Tribunal,
as the case may be, may for reasons to be recorded in writing,
grant an adjournment exceeding a week at a time but in any case
not more than three adjournments at the instance of any one
of the parties to the dispute.
9. In case any party defaults or fails to appear at any stage the
Labour Court, Tribunal or National Tribunal, as the case
may be, may proceed with the reference ex parte and decide
the reference/application in the absence of the defaulting
party:
Provided that the Labour Court, Tribunal or National
Tribunal, as the case may be, may on the application of
either party filed before the submission of the award revoke
the order that the case shall proceed ex parte, if it is satisfied
that the absence of the party was on justifiable grounds.
10. The Labour Court, Tribunal or National Tribunal, as the
case may be, shall submit its ward to the Central
Government within one month from the date of oral
hearing/arguments or within the period mentioned in the
order of reference whichever is earlier.
11. In respect of reference under section 2A, the Labour Court,
Tribunal or National Tribunal, as the case may be, shall
ordinarily submit its awards within a period of three
months:
Provided that the Labour Court, Tribunal or National Tribunal
may, as and when necessary, extend the period of three months
and shall record its reasons in writing to extend the time for
submission of the award for another specified period.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 11: Omitted
The Conciliation Officer may hold a meeting of the representa-
tives of both parties jointly or of each party separately.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 12: Omitted
The Conciliation Officer shall conduct the proceedings expedi-
tiously and in such manner as he may deem fit.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 13: Place and Time of hearing
Subject to the provisions contained in rule 10A and 10B, the
sittings of a Board, Court, Labour Court, Tribunal or National
Tribunal or of an Arbitrator shall be held at such times and
places as the Chairman or the Presiding Officer or the Arbitra-
tor, as the case may be, may fix and the Chairman, Presiding
Officer or Arbitrator, as the case may be, shall inform the parties
of the same in such manner as he thinks fit.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 14: Quorum for Boards and Courts
The quorum necessary to constitute a sitting of a Board or
Court shall be as follows:
i. In the case of a Board-Quorum
Where the number of members is 3 2
Where the number of members is 5 3
ii. In the case of a Court-
Where the number of members is not more than 2 1
Where the numbers of members is more than 2 but less than 5 2
Where the number of members is 5 or more 3
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 15: Evidence
A Board, Court, Labour Court, Tribunal or National Tribunal
or a arbitrator may accept, admit or call for evidence at any stage
of the proceedings before it/him and in such manner as it/he
may think fit.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 16: Administration of Oath
Any member of a Board or Court or Presiding Officer of a
Labour Court, Tribunal or National Tribunal or an Arbitrator
may administer an oath.
Chapter: Powers, Procedures and Duties
MANAGEMENT OF INDUSTRIAL RELATIONS
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 17: Summons
A summons issued by a Board, Court, Labour Court, Tribunal
or National Tribunal shall be in form D and may require any
person to produce before it any books, papers or other
documents and things in the possession of or under the
control of such person in any way relating to the matter under
investigation or adjudication by the Board, Court, Labour
Court, Tribunal or National Tribunal which the Board, Court,
Labour Court, Tribunal or National Tribunal thinks necessary
for the purposes of such investigation or adjudication.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 18: Service of Summons or Notice
Subject to the provisions contained in rule 20, any notice,
summons, process or order issued by a Board, Court, Labour
Court, Tribunal, National Tribunal or an arbitrator empowered
to issue such notice, summons, process or order, may be served
either personally or by registered post and in the event of
refusal by the party concerned to accept the said notice, sum-
mons, process or order, the same shall be sent again under
certificate of posting.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 19: Description of Parties in Certain Cases
Where in any proceeding before a Board, Court, Labour Court,
Tribunal or National Tribunal or an Arbitrator, there are
numerous persons arrayed on any side, such persons shall be
described as follows-
1. All such persons as are members of any trade union or
association shall be described by the name of such trade
union or association; and
2. All such persons as are not members of any trade union or
association shall be described in such manner as the Board,
Court, Labour Court, Tribunal, National Tribunal or
Arbitrator, as the case may be, may determine.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 20: Manner of Service in the Case of
Numerous Persons as Parties to a Dispute.
1. Where there are numerous persons as parties to any
proceeding before a Board, Court, Labour Court, Tribunal
or National Tribunal or an arbitrator and such persons are
members of any trade union or association, the service of
notice on the Secretary, or where there is no Secretary, on the
principal officer, of the trade union or association shall be
deemed to be service on such persons.
2. Where there are numerous persons as parties to any
proceeding before a Board, Court, Labour Court, Tribunal
59
 or National Tribunal or an arbitrator and such persons are same powers as are vested in a civil court under the Code of
MANAGEMENT OF INDUSTRIAL RELATIONS

not members of any trade union or association, the Board, Civil Procedure, 1908, when trying a suit, in respect of the
Court, Labour Court, Tribunal, National Tribunal or following matters, namely-
Arbitrator, as the case may be, shall, where personal service a. Discovery and inspection;
is not practicable, cause the service of any notice to be made
b. Granting adjournment;
by affixing the same at or near the main entrance of the
establishment concerned. c. Reception of evidence taken on affidavit; and the Board,
Court, Labour Court, Tribunal, or National Tribunal may
3. A notice served in the manner specified in sub-rule (2) shall
summon and examine any person whose evidence appears
also be considered as sufficient in the case of such workmen
to it to be material and shall be deemed to be a civil court
as cannot be ascertained and found.
within the meaning of sections 480 and 482 of the Code of
Chapter: Powers, Procedures and Duties Criminal Procedure, 1898.
of Conciliation Officers, Boards, Courts, Chapter: Powers, Procedures and Duties
Tribunals and Arbitrators of Conciliation Officers, Boards, Courts,
Section 21: Procedure at the First Sitting Tribunals and Arbitrators
At the first sitting of a Board, Court, Labour Court, Tribunal or
Section 25: Assessors
National Tribunal, the Chairman or the Presiding Officer, as the
Where assessors are appointed to advise a Tribunal or National
case may be, shall call upon the parties in such order as he may
Tribunal under sub-section (4) of section 7-A or sub-section (4)
think fit to state their case.
of section 7-B or by the Court, Labour Court, Tribunal or
Chapter: Powers, Procedures and Duties National Tribunal under sub-section (5) of section 11, the
of Conciliation Officers, Boards, Courts, Court, Labour Court, Tribunal or National Tribunal, as the case
Tribunals and Arbitrators may be, shall, in relation to proceeding before it, obtain the
Section 22: Board, Court, Labour Court, Tribunal, advice of such assessors, but such advice shall not be binding
National Tribunal or Arbitrator may proceed ex parte on it.
If without sufficient cause being shown, any party to proceed- Notes -
ings before a Board, Court, Labour Court, Tribunal, National
Tribunal or Arbitrator fails to attend or to be represented, the
Board, Court, Labour Court, Tribunal, National Tribunal or
Arbitrator may proceed as if the party had duly attended or had
been represented.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 23: Power of entry and Inspection.
A Board, or Court, or any member thereof, or a Conciliation
Officer, a Labour Board, Court, Labour Court, Tribunal or
National Tribunal in this behalf may, for the purposes of any
conciliation, investigation, enquiry or adjudication entrusted to
the Conciliation Officer, Board, Court, Labour Court, Tribunal
or National Tribunal under the Act, at anytime between the
hours of sunrise and sunset and in the case of a person
authorised in writing by a Board, Court, Labour Court,
Tribunal or National Tribunal after he has given reasonable
notice, enter any building, factory, workshop, or other place or
premises whatsoever, and inspect the same or any work,
machinery, appliance or article therein or interrogate any person
therein in respect of anything situated therein or any matter
relevant to the subject-matter of the conciliation, investigation,
enquiry or adjudication.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 24: Power of Boards, Courts, Labour Courts,
Tribunals and National Tribunals.
In addition to the powers conferred by the Act, Boards, Courts,
Labour Courts, Tribunals and National Tribunals shall have the

60

LESSON 12:
THE INDIUSTRIAL DISPUTE (CENTRAL)RULES, CENTRAL ID RULES, 1957
Learning Objective:
The study of this lesson will help you identify:
• Of how different industrial disputes can be settled with the
help of the Central Govt. rules.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 26: Fees for copies of awards or other
documents of Labour Court, tribunal or National
Tribunal.
1. Fees for making a copy of an award or an order of a Labour
Court, Tribunal or National Tribunal or any document filed
in any proceedings before a Labour Court, Tribunal or
National Tribunal shall be charged at the rate of Re.1 per
page.
2. For certifying a copy of any such award or order or
document, a fee of Re. 1 shall be payable.
3. Copying and certifying fees shall be payable in cash in
advance.
4. Where a party applies for immediate delivery of a copy of
any such award or order or document, an additional fee
equal to one-half of the fee leviable under this rule shall be
payable.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 27: Decision by Majority
All question arising for decision at any meeting of a Board or
Court, save where the Court consists of one person, shall be
decided by a majority of the votes of the members thereof
(including the Chairman) present at the meeting. In the event
of an equality of votes the Chairman shall also have a casting
vote.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 28: Correction of Errors
A Board, Court, Labour Court, Tribunal, National Tribunal or
arbitrator may at any time correct any clerical mistake or error
arising from an accidental slip or omission in any proceedings,
report, award or decision either of its or his own motion or on
the application of any of the parties.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 29: Right of Representatives
MANAGEMENT OF INDUSTRIAL RELATIONS
The representatives of the parties appearing before a Board,
Court, Labour Court, Tribunal or National Tribunal or an
arbitrator shall have the right of examination, cross-examina-
tion and of addressing the Board, Court, Labour Court,
Tribunal or National Tribunal or arbitrator when an evidence
has been called.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 30: Proceedings before a Board, Court,
Labour Court, Tribunal or National Tribunal
The proceedings before a Board, Court, Labour Court, Tribunal
or National Tribunal shall be held in public. Provided that the
Board, Court, Labour Court, Tribunal or National Tribunal may
at any state direct that any witness shall be examined or its
proceedings shall be held in camera.
Chapter: Remuneration of Chairman and
Members of Courts Presiding Officers of
Labour Courts and Tribunals etc
Section 31: Travelling Allowance
The Chairman or a member of a Board or Court or the
Presiding Officer or an Assessor of a Labour Court, Tribunal or
National Tribunal, if a non-official, shall be entitled to draw
travelling allowance and halting allowance, for any journey
performed by him in connection with the performance of his
duties, at the rates admissible and subject to the conditions
applicable to Government servant of the first grade under the
Supplementary Rules issued by the Central Government from
time to time.
Chapter: Remuneration of Chairman and
Members of Courts Presiding Officers of
Labour Courts and Tribunals etc
Section 32: Fees
The Chairman and a member of a Board or Court, the
Presiding Officer and an Assessor of a Labour Court, Tribunal
or National Tribunal wherever he is not a salaried officer of
Government may be granted such fees as may be sanctioned by
the Central Government in each case.
Chapter: Remuneration of Chairman and
Members of Courts Presiding Officers of
Labour Courts and Tribunals etc
Section 33: Expenses of Witnesses
Every person who is summoned and duly attends or otherwise
appears as a witness before a Board, Court, Labour Court,
Tribunal or National Tribunal or an Arbitrator shall be entitled
to an allowance for expenses according to the scale for the time
being in force with respect to witnesses in civil courts in the
61
 State where the investigation, enquiry, adjudication or arbitra-
MANAGEMENT OF INDUSTRIAL RELATIONS
tion is being conducted.
Chapter: Representation of Parties
Section 34: Notice of Change
Any employer intending to effect any change in the conditions
of service applicable to any workmen in respect of any matter
specified in the Fourth Schedule to the Act shall give notice of
such intention in Form E.
Chapter: Notice of Change
Section 35: Omitted
Omitted.
Chapter: Representation of Parties
Section 36: Form of Authority under Section 36
The authority in favour of a person or persons to represent a
workman or group of workmen or an employer in any
proceeding under the Act shall be in Form F.
Chapter: Representation of Parties
Section 37: Parties bound by Acts of Representative
A party appearing by a representative shall be bound by the acts
of that representative.
Chapter: Works Committee
Section 38: Constitution
Any employer to whom an order made under sub-section (1)
of section 3 relates shall forthwith proceed to constitute a
Works Committee in the manner prescribed in this part.
Chapter: Works Committee
Section 39: Number of Members
The number of members constituting the Committee shall be
fixed so as to afford representation to the various categories,
groups and classes of workmen engaged in, and to the sections,
shops or departments of the establishment:
Provided that the total number of members shall not exceed
twenty:
Provided further that the number of representatives of the
workmen shall not be less than the number of representatives
of the employer.
Chapter: Works Committee
Section 40: Representatives of Employer
Subject to the provisions of these rules, the representatives of
the employer shall be nominated by the employer and shall as
far as possible be officials in direct touch with or associated with
the working of the establishment.
Chapter: Works Committee
Section 41: Consultation with Trade Unions
1. Where any workmen of an establishment are members of a
registered trade union, the employer shall ask the union to
inform him in writing-
a. How many of the workmen are members of the union;
and
62
b. How their membership is distributed among the sections,
shops or departments of the establishment.
2. Where an employer has reason to believe that the
information furnished to him under sub-rule (1) by any
trade union is false, he may, after informing the union, refer
the matter to the Assistant Labour Commissioner (Central)
concerned for his decision; and the Assistant Labour
Commissioner (Central), after hearing the parties, shall
decide the matter and his decision shall be final.
Chapter: Works Committee
Section 42: Groups of Workmen’s Representatives
On receipt of the information called for under rule 41, the
employer shall provide for the election of workmen’s represen-
tatives on the Committee in two groups-
1. Those to be elected by the workmen of the establishment
who are members of the registered trade union or unions,
and
2. Those to be elected by the workmen of the establishment
who are not members of the registered trade union or
unions, bearing the same proportion to each other as the
union members in the establishment bear to the non-
members:
Provided that where more than half the workmen are members
of the union or any one of the unions, no such division shall
be made:
Provided further that where a registered trade union neglects or
fails to furnish the information called for under sub-rule (1) or
rule 41 within one month of the date of the notice requiring it
to furnish such information such union shall for the purpose
of this rule be treated as if it did not exist:
Provided further that where any reference has been made by he
employer under sub-rule (2) of rule 41, the election shall be
held on receipt of the decision of the Assistant Labour
Commissioner (Central).
Chapter: Works Committee
Section 43: Electoral Constituencies
Where under rule 42 the workmen’s representatives are to be
elected in two groups, the workmen entitled to vote shall be
divided into two electoral constituencies, the one consisting of
those who are members of a registered trade union and the
other of those who are not:
Provided that the employer may, if he thinks fit,sub-divide the
electoral constituency or constituencies, as the case may be and
direct that workmen shall vote in either by groups, sections,
shops or departments.
Chapter: Works Committee
Section 44: Qualification of Candidates for Election
Any workman of not less than 19 years of age and with a
service of not less than one year in the establishment may if
nominated as provided in these rules be a candidate for election
as a representative of the workmen on the Committee:
Provided that the service qualification shall not apply to the first
election in an establishment which has been in existence for less
than a year.
Explanation: A workman who has put in a continuous service
of not less than one year in two or more establishments
belonging to the same employer shall be deemed to have
satisfied the service qualification prescribed under this rule.
Chapter: Works Committee
Section 45: Qualifications for Voters
All workmen, who are not less than 18 years of age and who
have put in not less than 6 months continuous service in the
establishment shall be entitled to vote in the election of the
representative of workmen.
Explanation: A workman who has put in a continuous service
of not less than 6 months in two or more establishments
belonging to the same employer shall be deemed to have
satisfied the service qualification prescribed under this rule.
Chapter: Works Committee
Section 46: Procedure for Election
1. The employer shall fix a date as the closing date for receiving
nominations from candidates for election as workmen’s
representatives on the Committee.
2. For holding the election, the employer shall also fix a date
which shall not be earlier than three days and later than
fifteen days after the closing date for receiving nominations.
3. The dates so fixed shall be notified at least seven days in
advance to the workmen and the registered trade union or
unions concerned. Such notice shall be affixed on the notice
board or given adequate publicity amongst the workmen.
The notice shall specify the number of seats to be elected by
the groups, sections, shops or departments and the number
to be elected by the members of the registered trade union
or unions and by the non-members.
4. A copy of such notice shall be sent to the registered trade
union or unions concerned.
Chapter: Works Committee
Section 47: Nomination of Candidates for Election
1. Every nomination shall be made on a nomination paper in
Form ‘G’ copies of which shall be supplied by the employer
to the workmen requiring them.
2. Each nomination paper shall be signed by the candidate to
whom it relates and attested by at least two other voters
belonging to the group, section, shop or department the
candidate seeking election will represent, and shall be
delivered to the employer.
Chapter: Works Committee
Section 48: Scrutiny of Nomination Papers
1. On the day following the last day fixed for filing
nomination papers, the nomination papers shall be
scrutinised by the employer in the presence of the
candidates and the attesting persons and those which are
not valid shall be rejected.
2. For the purpose of sub-rule (1), a nomination paper shall
be held to be not valid if (a) the candidate nominated is
ineligible for membership under rule 44 or (b) the
MANAGEMENT OF INDUSTRIAL RELATIONS
requirements of rule 47 have not been complied with:
Provided that where a candidate or an attesting person is unable
to be present at the time of scrutiny, he may send a duly
authorised nominee for the purpose.
Chapter: Works Committee
Section 48-A: Withdrawal of Candidates Validly
Nominated
Any candidate whose nomination for election has been accepted
may withdraw his candidature within 48 hours of the comple-
tion of scrutiny of nomination papers.
Chapter: Works Committee
Section 49: Voting in Election
1. If the number of candidates who have been validly
nominated is equal to the number of seats, the candidates
shall be forthwith declared duly elected.
2. If in any constituency the number of candidates is more
than the number of seats allotted to it, voting shall take
place on the day fixed for election.
3. The election shall be held in such manner as may be
convenient for each electoral constituency.
4. The voting shall be conducted by the employer, and if any
of the candidates belong to a union such of them as the
union may nominate shall be associated with the election.
5. Every workman entitled to vote at an electoral constituency
shall have as many votes as there are seats to be filled in the
constituency:
Provided that each voter shall be entitled to cast only one vote
in favour of any one candidate.
Chapter: Works Committee
Section 50: Arrangements for Election
The employer shall be responsible for all arrangements in
connection with the election.
Chapter: Works Committee
Section 51: Officers of the Committee
1. The Committee shall have among its office bearers a
Chairman, a Vice-Chairman, a Secretary and a Joint Secretary.
The Secretary and the Joint Secretary shall be elected every
year.
2. The Chairman shall be nominated by the employer from
amongst the employer’s representatives on the Committee
and he shall, as far as possible, be the head of
establishment.
2A. The Vice-Chairman shall be elected by the members on the
Committee representing the workers, from amongst
themselves:
Provided that in the event of equality of votes in the election of
the Vice-Chairman, the matter shall be decided by draw of a lot.
3. The Committee shall elect the Secretary and the Joint
Secretary provided that where the Secretary is elected from
amongst the representatives of the employers, the Joint
Secretary shall be elected from amongst the representatives
63
 of the workmen and vice versa:
MANAGEMENT OF INDUSTRIAL RELATIONS

Provided that the post of the Secretary or the Joint Secretary,

as the case may be, shall not be held by a representative of
the employer or the workmen for two consecutive years.
Provided that the representatives of the employer shall not
take part in the election of the secretary or joint secretary, as
the case may be, from amongst the representatives of the
workmen and only the representatives of the workmen
shall be entitled to vote in such elections.
4. In any election under sub-rule (3), in the event of equality
of votes, the matter shall be decided by a draw of lot.
Chapter: Works Committee
Section 52: Term of Office
1. The term of office of the representatives on the Committee
other than a member chosen to fill a casual vacancy shall be
two years.
2. A member chosen to fill a casual vacancy shall hold office for
the unexpired term of his predecessor.
3. A member who without obtaining leave from the
Committee, fails to attend three consecutive meetings of
the Committee shall forfeit his membership.
Chapter: Works Committee
Section 53: Vacancies
In the event of workmen’s representative ceasing to be a
member under sub-rule (3) of rule 52 or ceasing to be em-
ployed in the establishment or in the event of his ceasing to
represent the trade or vocation he was representing, or resigna-
tion or death,his successor shall be elected in accordance with the
provisions of this Part from the same category, group,section,
shop or department to which the member vacating the seat
belonged.
Chapter: Works Committee
Section 54: Power to Co-opt
The Committee shall have the right to co-opt in a consultative
capacity persons employed in the establishment having
particular or special knowledge of a matter under discussion.
Such co-opted member shall not be entitled to vote and shall be
present at meetings only for the period during which the
particular question is before the Committee.

Notes -

64

LESSON 13:
THE INDIUSTRIAL DISPUTE (CENTRAL)RULES, CENTRAL ID RULES, 1957
Learning Objective:
The study of this lesson will help you identify:
• Of how different industrial disputes can be settled with the
help of the Central Govt. rules.
Chapter: Works Committee
Section 55: Meetings
1. The Committee may meet as often as necessary but not less
often than once in three months (a quarter).
2. The Committee shall at its first meeting regulate its own
procedure.
Chapter: Works Committee
Section 56: Facilities for Meeting, etc.
1. The employer shall provide accommodation for holding
meetings of the Committee. He shall also provide all
necessary facilities to the Committee and to the members
thereof for carrying out the work of the Committee. The
Committee shall ordinarily meet during working hours of
the establishment concerned on any working day and the
representative of the workmen shall be deemed to be on
duty while attending the meeting.
2. The Secretary of the Committee may, with the prior
concurrency of the Chairman, put up notice regarding the
work of the Committee on the notice board of the
establishment.
Chapter: Works Committee
Section 56-A: Submission of returns
The employer shall submit half-yearly returns as in Form G-I in
triplicate to the Assistant Labour Commissioner (Central)
concerned not later than the 20th day of the month following
the half-year.
Chapter: Works Committee
Section 57: Dissolution of Works Committee
The Central Government, or where the power under section 3
has been delegated to any officer or authority under section 39,
such officer or authority may, after making such inquiry as it or
he may deem fit, dissolve any Works Committee at any time, by
an order in writing, if he or it is satisfied that the Committee
has not been constituted in accordance with these rules or that
not less than two-thirds of the number of representatives of
the workmen have, without any reasonable justification failed to
attend three consecutive meetings of the Committee or that the
Committee has, for any other reason, ceased to function:
Provided that where a Works Committee is dissolved under
this rule the employer may, and if so required by the Central
Government or, as the case may be, by such officer or authority,
shall take steps to re-constitute the Committee in accordance
with these rules.
MANAGEMENT OF INDUSTRIAL RELATIONS
UNIT 4
Chapter: Miscellaneous
Section 58: Memorandum of Settlement
1. A settlement arrived at in the course of conciliation
proceedings or otherwise, shall be in form H.
2. The settlement shall be signed by-
a. In the case of an employer, by the employer himself, or by
his authorised agent, or when the employer is an
incorporated company or other body corporate, by the
agent, manager or other principal officer of the corporation;
b. In the case of the workmen, by any officer of a trade union
of the workmen or by five representatives of the workmen
duly authorised in this behalf at a meeting of the workmen
held for the purpose.
c. In the case of the workman in an industrial dispute under
section 2A of the Act, by the workman concerned.
Explanation.- In this rule ‘’officer’’ means any of the following
officers, namely:-
a) The President;
b. The Vice-President;
c. The Secretary (including the General Secretary);
d. A Joint Secretary;
e. Any other officer of the trade union authorised in this
behalf by the President and Secretary of the Union.
3. Where a settlement in arrived at in the course of conciliation
proceeding the conciliation officer shall send a report
thereof to the Central Government together with a copy of
the memorandum of settlement signed by the parties to
the dispute.
4. Where a settlement is arrived at between an employer and
his workmen otherwise than in the course of conciliation
proceeding before a Board or a Conciliation Officer, the
parties to the settlement shall jointly send a copy thereof to
the Central Government, the Chief Labour Commissioner
(Central) New Delhi, and the Regional Labour
Commissioner (Central) and to the Assistant Labour
Commissioner (Central) concerned.
Chapter: Miscellaneous
Section 59: Complaints Regarding Change of
Conditions of Service etc.
1. Every complaint under section 33-A of the Act shall be
presented in triplicate in Form ‘I’ and shall be accompanied
by as many copies of the complaint as there are opposite
parties to the complaint.
2. Every complaint under sub-rule (1) shall be verified at the
foot by the workmen making it or by some other person
proved to the satisfaction of the Labour Court, Tribunal or
65
 National Tribunal to be acquainted with the facts of the
MANAGEMENT OF INDUSTRIAL RELATIONS
case.
3. The person verifying shall specify, by references to the
numbered paragraphs of the complaint, what he verifies of
his own knowledge and what he verifies upon information
received and believed to be true.
4. The verification shall be signed by the person making it and
shall state the date on which and the place at which it was
signed.
Chapter: Miscellaneous
Section 60: Application under Section 33
1. An employer intending to obtain the express permission in
writing of the Conciliation Officer, Board, Labour Court,
Tribunal or National Tribunal, as the case may be, under
sub-section (1) or sub-section (3) of section 33 shall present
an application in Form J in triplicate to such Conciliation
Officer, Board, Labour Court, Tribunal or National Tribunal
and shall file along with the application as many copies
thereof as there are opposite parties.
2. An employer seeking the approval of the Conciliation
Officer, Board, Labour Court, Tribunal or National
Tribunal, as the case may be, of any action taken by him
under clause (a) or clause (b) of sub-section (2) of section
33 shall present an application in Form K in triplicate to
such Conciliation Officer, Board, Labour Court, Tribunal or
National Tribunal and shall file along with the application as
many copies thereof as there are opposite parties.
3. Every application under sub-rule (1) or sub-rule (2) shall be
verified at the foot by the employer making it or by some
other person proved to the satisfaction of the Conciliation
Officer, Board, Labour Court, Tribunal or National Tribunal
to be acquainted with the facts of the case.
4. The person verifying shall specify by reference to the
numbered paragraphs of the application, what he verifies
of his own knowledge and what he verifies upon
information received and believed to be true.
5. The verification shall be signed by the person making it and
shall state the date on which and the place at which it was
verified.
Chapter: Miscellaneous
Section 61: Protected Workmen
1. Every registered trade union connected with an industrial
establishment, to which the Act applies, shall communicate
to the employer before the 30th April every year, the names
and addresses of such of the officers of the union who are
employed in that establishment and who, in the opinion of
the union should be recognised as ‘’protected workmen’’.
Any change in the incumbency of any such officer shall be
communicated to the employer by the union within fifteen
days of such change.
2. The employer shall, subject to section 33, sub-section (4) ,
recognise such workmen to be “protected workmen” for the
purposes of sub-section (3) of the said section and
communicate to the union, in writing, within fifteen days
66
of the receipt of the names and addresses under sub-rule
(1), the list of workmen recognised as protected workmen
for the period of twelve months from the date of such
communication.
3. Where the total number of names received by the employer
under sub-rule (1) exceeds the maximum number of
protected workmen, admissible for the establishment,
under section 33, sub-section (4), the employer shall
recognise as protected workmen only such maximum
number of workmen:
Provided that, where there is more than one registered trade
union in the establishment, the maximum number shall be so
distributed by the employer among the unions that the
numbers of recognised protected workmen in individual
unions bear roughly the same proportion to one another as the
membership figures of the union. The employer shall in that
case intimate in writing to the President or the Secretary of the
union the number of protected workmen allotted to it:
Provided further that where the number of protected workmen
allotted to a union under this sub-rule falls short of the
number of officers of the union seeking protection, the union
shall be entitled to select the officers to be recognised as
protected workmen. Such selection shall be made by the union
and communicated to the employer within five days of the
receipt of the employer’s letter.
4. When a dispute arises between an employer and any
registered trade union in any matter connected with the
recognition of ‘protected workmen’ under this rule, the
dispute shall be referred to any Regional Labour
Commissioner (Central) or the Assistant Labour
Commissioner (Central) concerned,whose decision thereon
shall be final.
Chapter: Miscellaneous
Section 62: Application for Recovery of Dues
1. Where any money is due from an employer to a workman
or a group of workmen under a settlement or an award or
under the provisions of Chapter V-A or Chapter V-B, the
workman or the group of workmen, as the case may be,
may apply in Form K-1 for the recovery of the money due:
Provided that in the case of a person authorised in writing
by the workman, or in the case of the death of the
workmen, the assignee or heir of the deceased workman,
the application shall be made in Form K-2.
2. Where any workman or a group of workmen is entitled to
receive from the employer any money or any benefit which
is capable of being computed in terms of money, the
workman or the group of the workmen, as the case may be,
may apply to the specified Labour Court in Form K-3 for
the determination of the amount due or, as the case may
be, the amount at which such benefit should be computed:
Provided that in the case of the death of a workman,
application shall be made in form K-4 by the assignee or
heir of the deceased workman.
Chapter: Miscellaneous
Section 63: Appointment of Commissioner
Where it is necessary to appoint a Commissioner under sub-
section (3) of Section 33-C of the Act, the Labour Court may
appoint a person with experience in the particular industry, trade
or business involved in the industrial dispute or a person with
experience as a judge of a civil court, or as a stipendiary magis-
trate or as a Registrar or Secretary of a Labour Court, or Tribunal
constituted under any Provincial Act or State Act or of a Labour
Court, Tribunal or National Tribunal constituted under the Act
or of the Labour Appellate Tribunal constituted under the
Industrial Disputes (Appellate Tribunal) Act, 1950.
Chapter: Miscellaneous
Section 64: Fees for the Commissioner, etc.
1. The Labour Court shall, after consultation with the parties,
estimate the probable duration of the enquiry and fix the
amount of the Commissioner’s fees and other incidental
expenses and direct the payment thereof, into the nearest
treasury, within a specified time, by such party or parties and
in such proportion as it may consider fit. The
Commissioner shall not issue until satisfactory evidence of
the deposit into the treasury of the sum fixed is filed before
the Labour Court:
Provided that the Labour Court may from time to time direct
that any further sum or sums be deposited into the treasury
within such time and by such parties as it may consider fit:
Provided further that the Labour Court may in its discretion,
extend the time for depositing the sum into the treasury.
2. The Labour Court may, at any time, for reasons to be
recorded in writing, vary the amount of the
Commissioner’s fees in consultation with the parties.
3. The Labour Court may direct that the fees shall be
disbursed to the Commissioner in such installments and
on such dates as it may consider fit.
4. The undisbursed balance, if any, of the sum deposited shall
be refunded to the party or parties who deposited the sum
in the same proportion as that in which it was deposited.
Chapter: Miscellaneous
Section 65: Time for Submission of Report
1. Every order for the issue of a Commission shall appoint a
date, allowing sufficient time, for the Commissioner to
submit his report.
2. If for any reason the Commissioner anticipates that the
date fixed for the submission of his report is likely to be
exceeded, he shall apply, before the expiry of the said date,
for extension of time setting forth grounds thereof and the
Labour Court shall take such grounds into consideration in
passing orders on the application:
Provided that the Labour Court may grant extension of time
notwithstanding that no application for such extension has
been received from the Commissioner within the prescribed
time-limit.
Chapter: Miscellaneous
Section 66: Local Investigation
In any industrial dispute in which the Labour Court deems a
local investigation to be requisite or proper for the purpose of
computing the money value of a benefit, the Labour Court may
MANAGEMENT OF INDUSTRIAL RELATIONS
issue a Commission to a person referred to in rule 63 directing
him to make such investigation and to report thereon to it.
Chapter: Miscellaneous
Section 67: Commissioner’s Report
1. The Commissioner after such local inspection as he deems
necessary and after reducing to writing the evidence taken by
him, shall return such evidence together with his report in
writing signed by him to the Labour Court.
2. The report of the Commissioner and the evidence taken by
him (but not the evidence without the report) shall be
evidence in the industrial dispute and shall form part of the
record of the proceedings in the industrial dispute; but the
Labour Court or, with the permission of the Labour Court,
any of the parties to the industrial dispute may examine the
Commissioner personally before the Labour Court
regarding any of the matters referred to him or mentioned
in his report or as to his report, or as to the manner in
which he has made the investigation.
3. Where the Labour Court is for any reason dissatisfied with
the proceedings of the Commissioner it may direct such
further enquiry to be made as it shall think fit.
Chapter: Miscellaneous
Section 68: Powers of Commissioner
Any Commissioner appointed under these rules may, unless
otherwise directed by the order of appointment-
a. Examine the parties themselves and any witnesses whom
they or any of them may produce, and any other person
whom the Commissioner thinks proper to call upon to give
evidence in the matter referred to him;
b. Call for and examine documents and other things relevant
to the subject of enquiry;
c. At any reasonable time enter upon or into any premises
mentioned in the order.
Chapter: Miscellaneous
Section 69: Summoning of Witnesses, etc.
1. The provisions of the Code of Civil Procedure, 1908 (5 of
1908) relating to the summoning, attendance, examination
of witnesses and penalties to be imposed upon witnesses,
shall apply to persons required to give evidence or to
produce documents before the Commissioner under these
Rules.
2. Every person who is summoned and appears as a witness
before the Commissioner shall be entitled to payment by
the Labour Court out of the sum deposited under rule 64,
of an allowance for expenses incurred by him in accordance
with the scale for the time being in force for payment of
such allowances to witnesses appearing in the civil courts.
Chapter: Miscellaneous
Section 70: Representation of Parties before the
Commissioner
The parties to the industrial dispute shall appear before the
Commissioner, either in person or by any other person who is
67
 competent to represent them in the proceedings before the
MANAGEMENT OF INDUSTRIAL RELATIONS
Labour Court.
Chapter: Miscellaneous
Section 70-A: Preservations of records by the
National Industrial Tribunals, Industrial Tribunals or
Labour Courts.
1. The records of the National Industrial tribunals, Industrial
Tribunals or Labour Courts specified in Column 1 of the
Table below shall be preserved, for the periods specified in
the corresponding entry in column 2 thereof after the
proceedings are finally disposed of by such National
Tribunals,Industrial Tribunals Labour Courts.
TABLE
————————————————————————
Records Number of years for
which the records shall be preserved
--------------------------------------------------------------------------------
----------------------------------------------------------------------- 1 2
i. Order and judgements of National
Industrial Tribunals,Industrial Tribunals
or Labour Courts. 10 years
ii. Exhibited documents in the above
mentioned Tribunals or Courts 10 years
iii. Other papers. 7 years
—————————————————————————
2. Notwithstanding anything contained in sub-rule (1), the
records of the National Industrial Tribunals, Industrial
Tribunals or Labour Courts, connected with writ petitions,
if any, filed in the High Courts or Supreme Court, or
connected with appeals by special leave, if any, filed in the
Supreme Court shall be preserved at least till the final
disposal of such writ petitions or appeal by special leave.
Chapter: Miscellaneous
Section 71: Notice of Strike
1. The notice of strike to be given by workmen in a public
utility service shall be in Form L.
2. On receipt of a notice of a strike under sub-rule (1), the
employer shall forthwith intimate the fact to the
Conciliation Officer having jurisdiction in the matter.
Chapter: Miscellaneous
Section 72: Notice of Lock-out
The notice of lock-out to be given by an employer carrying on a
public utility service shall be in form M. The Notice shall be
displayed conspicuously by the employer on a notice board at
the main entrance to the establishment and in the Manager’s
Office:
Provided that where a registered trade union exists, a copy of
the notice shall also be served on the Secretary of the Union.
Chapter: Miscellaneous
Section 73: Report of Lock-out or Strike
68
The notice of lock-out or strike in a public utility service to be
submitted by the employer under sub-section (3) of Section 22,
shall be in Form N.
Chapter: Miscellaneous
Section 74: Report of Notice of Strike or Lock-out
The report of notice of a strike or lock-out to be submitted by
the employer under sub-section (6) of section 22 shall be sent
by registered post or given personally to the Assistant Labour
Commissioner (Central) appointed for the local area concerned,
with copy by registered post to-
1. The Administrative Department of the Government of
India concerned,
2. The Regional Labour Commissioner (Central) for the Zone,
3. Chief Labour Commissioner (Central),
4. Ministry of Labour of the Government of India,
5. Labour Department of the State Government concerned,
and
6. The District Magistrate Concerned.
Chapter: Miscellaneous
Section 75: Register of Settlements
The Conciliation Officer shall file all settlements effected under
this Act in respect of disputes in the area within his jurisdiction
in a register maintained for the purpose as in Form O.
Chapter: Miscellaneous
Section 75-A: Notice of lay off
1. If any workman employed in an industrial establishment as
defined in the Explanation below section 25A not being an
industrial establishment referred to in sub-section (1) of
that section is laid off, then, the employer concerned shall
give notices of commencement and termination of such
lay-off in Forms O-1 and O-2 respectively within seven days
of such commencement or termination, as the case may be.
2. Such notices shall be given by an employer in every case
irrespective of whether, in his opinion, the workman laid-
off is or is not entitled to compensation under section 25-
C.
Chapter: Miscellaneous
Section 75-B: Application for Permission for Lay-off
under Section 25-M
1. Application for permission to lay-off any workman under
sub-section (1), or for permission to continue a lay-off
under sub-section (3) of section 25-M shall be made in
Form O-3 and delivered to the authority specified under
sub-section (1) either personally or by registered post
acknowledgment due and where the application is sent by
registered post the date on which the same is delivered to
the said authority shall be deemed to be the date on which
the application is made, for the purposes of sub-section (5)
of the said section.
2. The application for permission shall be made in triplicate
and copies of such application shall be served by the
employer on the workmen concerned and a proof to that
 effect shall also be submitted by the employer along with
the application.
3. The employer concerned shall furnish to the authority to
whom the application for permission has been made such
further information as the authority considers necessary for
arriving at a decision on the application, as and when called
for by such authority, so as to enable the authority to
communicate the permission or refusal to grant permission
within the period specified in sub-section (5) of section
25M.
4. Where the permission to lay-off has been granted by the
said authority, the employer concerned shall give to the
Regional Labour Commissioner (Central) concerned, a
notice of commencement and termination of such lay-off
in Forms O-1 and O-2 respectively and where permission to
continue a lay-off has been granted by the said authority,
the employer shall give to the Regional Labour
Commissioner (Central) concerned, a notice of
commencement of such lay-off in Form O-1, in case such a
notice has not already been given under sub-rule (1) of rule
75A, and a notice of termination of such lay-off in Form
O-2.
5. The notice of commencement and termination of lay-off
referred to in sub-rule (4) shall be given within the period
specified in sub-rule (1) of rule 75-A.
Chapter: Miscellaneous
Section 76: Notice of Retrenchment
If any employer desires to retrench any workman employed in
his industrial establishment who has been in continuous service
for not less than one year under him (hereinafter referred to as
‘workman’ in this rule and in rules 77 and 78), he shall give
notice of such retrenchment as in Form P to the Central
Government, the Regional Labour Commissioner (Central) and
Assistant Labour Commissioner (Central) and the Employ-
ment Exchange concerned and such notice shall be served on
that Government, the Regional Labour Commissioner
(Central), the Assistant Labour Commissioner (Central), and
the Employment Exchange concerned, by registered post in the
following manner:
a. Where notice is given to the workman, notice of
retrenchment shall be sent within three days from the date
on which notice is given to the workman;
b. Where no notice is given to the workman and he is paid one
months wages in lieu thereof, notice of retrenchment shall
be sent within three days from the date on which such
wages are paid; and
c. Where retrenchment is carried out under an agreement
which specifies a date for the termination of service, notice
of retrenchment shall be sent so as to reach the Central
Government, the Regional Labour Commissioner (Central),
the Assistant Labour Commissioner (Central), and the
Employment Exchange concerned, at least one month
before such date:
Provided that if the date of termination of service agreed upon
is within 30 days of the agreement, the notice of retrenchment
shall be sent to the Central Government, the Regional Labour
MANAGEMENT OF INDUSTRIAL RELATIONS
Commissioner (Central), the Assistant Commissioner (Cen-
tral), and the Employment Exchange concerned, within 3 days
of the agreement.
Chapter: Miscellaneous
Section 76-A: Notice of, and Application for
Permission for, Retrenchment.
1. Notice or, as the case may be, the application under sub-
section (1) of Section 25N for retrenchment shall be served
in Form PA and served on the Central Government or such
authority as may be specified by that Government under the
said clause either personally or by registered post
acknowledgment due and where the notice is served by
registered post, the date on which the same is delivered to
the Central Government or the authority shall be deemed to
be the date of service of the notice for the purposes of
sub-section (4) of the said section.
2. The notice or, as the case may be, the application, shall be
made in triplicate and copies of such notice, or as the case
may be, the application, shall be served by the employer on
the workmen concerned and a proof to that effect shall also
be submitted by the employer along with the notice or, as
the case may be, the application.
3. The employer concerned shall furnish to the Central
Government or the authority to whom the notice for
retrenchment has been given or the application for
permission for retrenchment has been made, under sub-
section (1) of Section 25-N, such further information as the
Central Government or, as the case may be, the authority
considers necessary for arriving at a decision on the notice
or, as the case may be, the application, as and when called
for by such authority so as to enable the Central
Government or the authority to communicate its
permission or refusal to grant permission within the period
specified in sub-section (4) of Section 25-N.
Chapter: Miscellaneous
Section 76-B: Notice of Closure
If an employer intend to close down an undertaking he shall
give notice of such closure in Form Q to the Central Govern-
ment, the Regional Labour Commissioner (Central), the
Assistant Labour Commissioner (Central), and the Employ-
ment Exchange concerned, by registered post.
Chapter: Miscellaneous
Section 76-C: Notice of, and application for
permission for, closure
1. Notice under sub-section (1) of Section 25-O of intended
closure shall be given in Form QA and served on the
Central Government either personally or by registered post
acknowledgement due.
A copy of such application shall be served simultaneously by
registered post on the President or Secretary of registered trade
union(s) functioning in the establishment and a notice in this
regard shall also be displayed conspicuously by the employer on
a notice board at the main entrance to the establishment for the
69
 information of all the concerned workmen at the same time Chapter: Miscellaneous
MANAGEMENT OF INDUSTRIAL RELATIONS

when applications are served on the Central Government. Section 79: Penalties
2. The notice, or, as the case may be, the application shall be Any breach of these rules shall be punishable with fine not
made in triplicate. exceeding fifty rupees.
3. The employer concerned shall furnish to the Central Chapter: Miscellaneous
Government to whom the notice of intended closure has
been given or the application for permission to close down Section 80: Repeal
has been made such further information as that The Industrial Disputes (Central) Rules, 1947, are hereby
Government considers necessary, for arriving at a decision repealed:
on the notice, or, as the case may be, the application, and Provided that any order made or action taken under the rules so
calls for from such employer. repealed shall be deemed to have been made or taken under the
Chapter: Miscellaneous corresponding provisions of these rules.

Section 77: Maintenance of Seniority List of

Workmen Notes -
The employer shall prepare a list of all workmen in the
particular category from which retrenchment is contemplated
arranged according to the seniority of their service in that
category and cause a copy thereof to be pasted on a notice board
in a conspicuous placed in the premises of the industrial
establishment at least seven days before the actual date of
retrenchment.
Chapter: Miscellaneous
Section 78: Re-employment of Retrenched Workmen
1. At least ten days before the date on which vacancies are to be
filled, the employer shall arrange for the display on a notice
board in a conspicuous place in the premises of the
industrial establishment details of those vacancies and shall
also give intimation of those vacancies by registered post to
every one of all the retrenched workmen eligible to be
considered therefor, to the address given by him at the time
of retrenchment or at any time thereafter:
Provided that where the number of such vacancies is less than
the number of retrenched workmen, it shall be sufficient if
intimation is given by the employer individually to the
seniormost retrenched workmen in the list referred to in rule 77
the number of such seniormost workmen being double the
number of such vacancies:
Provided further that where the vacancy is of a duration of less
than one month there shall be no obligation on the employer
to send intimation of such vacancy to individual retrenched
workmen:
Provided also that if a retrenched workman, without sufficient
cause being shown in writing to the employer, does not offer
himself for re-employment on the date or date specified in the
intimation sent to him by the employer under this sub-rule, the
employer may not intimate to him the vacancies that may be
filled on any subsequent occasion.
2. Immediately after complying with the provisions of sub-
rule (1), the employer shall also inform the trade unions
connected with the industrial establishment, of the number
of vacancies to be filled and names of the retrenched
workmen to whom intimation has been sent under that
sub-rule:
Provided that the provisions of this sub-rule need not be
complied with by the employer in any case where intimation is
sent to every one of the workmen mentioned in the list
prepared under rule 77.
70

LESSON 14:
THE TRADE UNIONS ACT 1926
Objective
The study of this lesson will help you identify:
Chapter: Preliminary
Section 1: Short Title, Extent and Commencement
1. This Act may be called the [* * * ] Trade Unions Act, 1926.
2. It extends to the whole of India [* * * ].
3. It shall come into force on such date as the [Central
Government] may by notification in the [Official Gazette],
appoint.
Chapter: Preliminary
Section 2: Definitions
In this Act, the appropriate Government’ means, in relation to
Trade Unions whose objects are not confined to one [State], the
Central Government, and in relation to other Trade Unions, the
[State] Government, and, unless there is anything repugnant in
the subject or context, -
a. “executive” means the body, by whatever name called, to
which the management of the affairs of the Trade Union, is
entrusted;
b. “office-bearer” in the case of a Trade Union, includes any
member of the executive thereof, but does not include an
auditor;
c. “prescribed” means prescribed by regulations made under
this Act;
d. “registered office” means that office of a Trade Union,
which is registered under this Act as the Head Office
thereof;
e. “registered Trade Union” means a Trade Union registered
under this Act;
f. “Registrar” means -
i. A Registrar of Trade Unions appointed by the appropriate
Government under Section 3, and includes any additional or
Deputy Registrar of Trade Unions ; and
ii. In relation to any Trade Union, the Registrar appointed for
the State in which the head or registered office, as the case
may be, of the Trade Union is situated] ;
g. “trade dispute” means any dispute between employers and
workmen or between workmen and workmen, or between
employers and employers which is connected with the
employment or non-employment, or the terms of
employment or the conditions of labour, of any person,
and “workmen” means all persons employed in trade or
industry whether or not in the employment of the
employer with whom the trade dispute arises ; and
h. “Trade Union” means any combination, whether temporary
or permanent, formed primarily for the purpose of
MANAGEMENT OF INDUSTRIAL RELATIONS
regulating the relations between workmen and employers or
between workmen and workmen, or between employers
and employers, or for imposing restrictive conditions on
the conduct of any trade or business, and includes any
federation of two or more Trade Unions ; Provided that
this Act shall not affect-
i. Any agreement between partners as to their own business ;
ii. Any agreement between an employer and those employed
by him as to such employment ; or
iii. Any agreement in consideration of the sale of the goodwill
of a business or of instruction in any profession, trade or
handicraft.
Chapter: Registration of Trade Unions
Section 3: Appointment of Registrars
1. The appropriate Government shall appoint a person to be
the Registrar of Trade Unions for each State.
2. The appropriate Government may appoint as many
Additional and Deputy Registrars of Trade Unions as it
thinks ft for the purpose of exercising and discharging,
under the superintendence and direction of Registrar, such
powers and functions of the Registrar under this Act as it
may, by order, specify and define the local limits within
which any such Additional or Deputy Registrar shall exercise
and discharge the powers and functions so specified.
3. Subject to the provisions of any order under sub-section
(2), where an Additional or Deputy Registrar exercises and
discharges the powers and functions of a Registrar in an
area within which the registered office of a Trade Union is
situated, the Additional or Deputy Registrar shall be
deemed to be the Registrar in relation to the Trade Union
for the purposes of this Act.]
Chapter: Registration of Trade Unions
Section 4: Mode of Registration
1. Any seven or more members of a Trade Union may, by
subscribing their names to the rules of 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.
2. Where an application has been made under sub-section (1)
for the registration of a Trade Union, such application shall
not be deemed to have become invalid merely by reason of
the fact that, at any time after the date of the application,
but before the registration of the Trade Union, some of the
applicants, but not exceeding half of the total number of
persons who made the application, have ceased to be
members of the Trade Union or have given notice in
71
 writing to the Registrar dissociating themselves from the
MANAGEMENT OF INDUSTRIAL RELATIONS
application.
Chapter: Registration of Trade Unions
Section 5: Application for Registration
1. Every application for registration of a Trade Union shall be
made to the Registrar, and shall be accompanied by a copy
of the rules of the Trade Union and a statement of the
following particulars, namely-
a. The names, occupations and addresses of the 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.
2. Where a Trade Union has been in existence for more than
one year before the making of an application for its
registration, there shall be delivered to the Registrar,
together with application, a general statement of the assets
and liabilities of the Trade Union prepared in such form
and containing such particulars as may be prescribed.
Chapter: Registration of Trade Unions
Section 6: Provisions to be Contained in the Rules of
a Trade
Union A Trade Union shall not be entitled to registration under
this Act, unless the executive thereof is constituted on accor-
dance with the provisions of this Act and the rules thereof
provide for the following matters, namely-
a. The name of a Trade Union ;
b. The whole of the objects for which the Trade Union has
been established ;
c. The whole of the purposes for which the general funds of
the Trade Union shall be applicable, all of which purposes
shall be purposes to which such funds are lawfully
applicable under this Act ;
d. The maintenance of a list of the members of the Trade
Union and adequate facilities for the inspection thereof by
the [office-bearers] and members of the Trade Union ;
e. The admission of ordinary members who shall be persons
actually engaged or employed in an industry with which the
Trade Union is connected, and also the admission of the
number of honorary or temporary members as [office-
bearers] required under Section 22 to form the executive of
the Trade Union ;
ee. The payment of a subscription by members of the Trade
Union which shall be not less than twenty-five naye paise
per month per member] ;
f. The conditions under which any member shall be entitled
to any benefit assured by the rules and under which any fine
or forfeiture may be imposed on the members ;
g. The manner in which the rules shall be amended, varied or
rescinded ;
72
h. The manner in which the members of the executive and the
other [office-bearers] of the Trade Union shall be appointed
and removed ;
i. The safe custody of the funds of the Trade Union, and
annual audit, in such manner as may be prescribed, of the
accounts thereof, and adequate facilities for the inspection
of the account books by the [office-bearers]and members
of the Trade Union ; and
j. The manner in which the Trade Union may be dissolved.
Chapter: Registration of Trade Unions
Section 7: Power to call for Further Particulars and
to Require Alteration of Name
1. The Registrar may call for further information for the
purpose of satisfying himself that any application complies
with the provisions of Section 5, or that the Trade Union is
entitled to registration under Section 6, and may refuse to
register the Trade Union until such information is supplied.
2. If the name under which a Trade Union is proposed to be
registered is identical with that by which any other existing
Trade Union has been registered or, in the opinion of the
Registrar, so nearly resembles such name as to be likely to
deceive the public or the members of either Trade Union,
the Registrar shall require the persons applying for
registration to alter the name of the Trade Union stated in
the application, and shall refuse to register the Union until
such alteration has been made.
Chapter: Registration of Trade Unions
Section 8: Registration
The Registrar, on being satisfied that the Trade Union has
complied with all the requirements of this Act in regard to
registration, shall register the Trade Union by entering in a
register to be maintained in such form as may be prescribed, the
particulars relating to the Trade Union contained in the state-
ment accompanying the application for registration.
Chapter: Registration of Trade Unions
Section 9: Certificate of Registration
The Registrar, on registering a Trade Union under Section 8,
shall issue a certificate of registration in the prescribed form
which shall be conclusive evidence that the Trade Union has
been duly registered under this Act.
Chapter: Registration of Trade Unions
Section 10: Cancellation of Registration
A certificate of registration of a Trade Union may be withdrawn
or cancelled by the Registrar-
a. On the application of the Trade Union to be verified in
such manner as may be prescribed, or
b. If the Registrar is satisfied that the certificate has been
obtained by fraud or mistake, or that the Trade Union has
ceased to exist or has wilfully and after notice from the
Registrar contravened any provision of this Act or allowed
any rule to continue in force which is inconsistent with any
such provision, or has rescinded any rule providing for any
matter provision for which is required by Section 6:
 Provided that not less than two months’ previous notice in Section 14: Certain Acts not to Apply to Registered

MANAGEMENT OF INDUSTRIAL RELATIONS

writing specifying the ground on which it is proposed to Trade Unions
withdraw or cancel the certificate shall be given by the The following Acts, namely-
Registrar to the Trade Union before the certificate is a. The Societies Registration Act, 1860 (29 of 1860),
withdrawn or cancelled otherwise than on the application of
b. The Cooperative Societies Act, 1912 (2 of 1912). [* * *] and
the Trade Union.
c. The Companies Act, 1956 (1 of 1956), shall not apply to
Chapter: Registration of Trade Unions any registered Trade Union, and the registration of any such
Section 11: Appeal Trade Union under any such Act shall be void.
1. Any person aggrieved by any refusal of the Registrar to
register a Trade Union or by the withdrawal or cancellation
Notes -
of a certificate of registration may, within such period as
may be prescribed, appeal-
a. Where the head office of Trade Union is situated within the
limits of a Presidency town [* * *], to the High Court, or
b. Where the head office is situated in any other area, to such
Court, not inferior to the Court of an additional or
assistant Judge of a principal Civil Court of original
jurisdiction, as the [appropriate Government] may appoint
in this behalf for that area.
2. The appellate Court may dismiss the appeal, or pass an
order directing the Registrar to register the Union and to
issue a certificate of registration under the provisions of
Section 9 or setting aside the order for withdrawal or
cancellation of the certificate, as the case may be, and the
Registrar shall comply with such order.
3. For the purpose of an appeal under sub-section (1) an
appellate Court shall, so far as may be, follow the same
procedure and have the same powers as it follows and has
when trying a suit under the Code of Civil Procedure, 1908,
and may direct by whom the whole or any part of the costs
of the appeal shall be paid, any such costs shall be recovered
as if they had been awarded in a suit under the said Code.
4. In the event of the dismissal of an appeal by any Court
appointed under clause (b) of sub-section (1), the person
aggrieved shall have a right of appeal to the High Court,
and the High Court shall, for the purpose of such appeal,
have all the powers of an appellate Court under sub-
sections (2) and (3), and the provisions of those sub-
sections shall apply accordingly.
Chapter: Registration of Trade Unions
Section 12: Registered Office
All communications and notices to a registered Trade Union
may be addressed to its registered office. Notice of any change
in the address of the head office shall be given within fourteen
days of such change to the Registrar in writing, and the changed
address shall be recorded in the register referred to in Section 8.
Chapter: Registration of Trade Unions
Section 13: Incorporation of Registered Trade Unions
Every registered Trade Union shall be a body corporate by the
name under which it is registered, and shall have perpetual
succession and a common seal with power to acquire and hold
both movable and immovable property and to contract, and
shall by the said name sue and be sued.
Chapter: Registration of Trade Unions

73
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 15:
THE TRADE UNIONS ACT 1926
Objective:
The study of this lesson will help you identify:
• Rights, liabilities and regulations of registered TU
• Penalties and Procedure
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 15: Objects on which General Funds may be
Spent
The general funds of a registered Trade Union shall not be
spent on any other objects than the following, namely-
a. The payment of salaries, allowances and expenses to office-
bearers of the Trade Union ;
b. The payment of expenses for the administration of the
Trade Union, including audit of the accounts of the general
funds of the Trade Union ;
c. The prosecution or defence of any legal proceeding to which
the Trade Union or any member thereof is a party, when
such prosecution of defence is undertaken for the purpose
of securing or protecting any rights of the Trade Union as
such or any rights arising out of the relations of any
member with his employer or with a person whom the
member employs ;
d. The conduct of trade disputes on behalf of the Trade
Union or any member thereof ;
e. The compensation of members for loss arising out of trade
disputes ;
f. Allowances to members of their dependants on account of
death, old age, sickness, accidents or unemployment of
such members ;
g. The issue of, or the undertaking of liability under, policies
of assurance on the lives of members, or under policies
insuring members against sickness, accident or
unemployment ;
h. The provision of educational, social or religious benefits for
members (including the payment of the expenses of
funeral or religious ceremonies for deceased members) or
for the dependants of members ;
i. The upkeep of a periodical published mainly for the
purpose of discussing questions affecting employers or
workmen as such ;
j. The payment, in furtherance of any of the objects on which
the general funds of the Trade Union may be spent, of
contributions to any cause intended to benefit workmen in
general, provided that the expenditure in respect of such
contributions in any financial year shall not at any time
during that year be in excess of one-fourth of the
combined total of the gross income which has up to that
time accrued to the general funds of the Trade Union
74
during that year and of the balance at the credit of those
funds at the commencement of that year ; and
k. Subject to any conditions contained in the notification, any
other object notified by the appropriate Government in the
Official Gazette.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 16: Constitution of a Separate Fund for
Political Purposes
1. A registered Trade Union may constitute a separate fund,
from contributions separately levied for or made to that
fund, from which payments may be made, for the
promotion of the civic and political interests of its
members, in furtherance of any of the objects specified in
sub-section (2).
2. The objects referred to in sub-section (1) are -
a. The payment of any expenses incurred, either directly or
indirectly, by a candidate or prospective candidate for election
as a member of any legislative body constituted under [* *
*] the Constitution or of any local authority, before, during,
or after the election in connection with his candidature or
election ; or
b. The holding of any meeting or the distribution of any
literature or documents in support of any such candidate or
prospective candidate ; or
c. The maintenance of any person who is a member of any
legislative body constituted under [* * *] the Constitution
or of any local authority ; or
d. The registration of electors or the selection of a candidate
for any legislative body constituted under [* * *] the
Constitution or of any local authority ; or
e. The holding of political meetings of any kind, or the
distribution of political literature or political documents of
any kind.
2-A. In its application to the State of Jammu and Kashmir,
references in sub-section (2) to any legislative body
constituted under the Constitution shall be construed as
including references to the Legislature of that State.
3. No member shall be compelled to contribute to the fund
constituted under sub-section (1); and a member who does
not contribute to the said fund shall not be excluded from
any benefits of the Trade Union, or placed in any respect
either directly or indirectly under any disability or at any
disadvantage as compared with other members of the Trade
Union (except in relation to the control or management of
the said fund) by reason of his not contributing to the said
fund ; and contribution to the said fund shall not be made
a condition for admission to the Trade Union.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 17: Criminal Conspiracy in Trade Disputes
No office-bearer or member of a registered Trade Union shall
be liable to punishment under sub-section (2) of Section 120-B
of the Indian Penal Code (45 of 1860), in respect of any
agreement made between the members for the purpose of
furthering any such object of the Trade Union as is specified in
Section 15, unless the agreement is an agreement to commit an
offence.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 18: Immunity from Civil Suit in Certain
Cases
1. No suit or other legal proceeding shall be maintainable in
any Civil Court against any registered Trade Union or any
office-bearer or member thereof in respect of any act done
in contemplation or furtherance of a trade dispute to which
a member of the Trade Union is a party on the ground only
that such act induces some other person to break a contract
of employment, or that it is in nterference with the trade,
business or employment of some other person or with the
right of some other person to dispose of his capital or of
his labour as he wills.
2. A registered Trade Union shall not be liable in any suit or
other legal proceeding in any Civil Court in respect of any
tortious act done in contemplation or furtherance of a trade
dispute by an agent of the Trade Union if it is proved that
such person acted without the knowledge of, or contrary to
express instructions given by, the executive of the Trade
Union.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 19: Enforceability of Agreements
Notwithstanding anything contained in any other law for the
time being in force, an agreement between the members of a
registered Trade Union shall not be void or voidable merely by
reason of the fact that any of the objects of the agreement are
in restraint of trade :
Provided that nothing in this section shall enable any Civil
Court to entertain any legal proceeding instituted for the express
purpose of enforcing or recovering damages for the breach of
any agreement concerning the conditions on which any mem-
bers of a Trade Union shall or shall not sell their goods, transact
business, work, employ or be employed.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 20: Right to Inspect Books of Trade Union
The account books of a registered Trade Union and the list of
members thereof shall be open to inspection by an office-bearer
or member of the Trade Union at such times as may be
provided for in the rules of the Trade Union.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 21: Rights of Minors to Membership of
MANAGEMENT OF INDUSTRIAL RELATIONS
Trade Unions
Any person who has attained the age of fifteen years may be a
member of a registered Trade Union subject to any rules of the
Trade Union to the contrary, and may, subject as aforesaid, enjoy
all the right of a member and execute all instruments and given
all acquittance necessary to be executed or given under the rules :
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 21-A: Disqualifications of Office-bearers of
Trade Unions
1. A person shall be disqualified for being chosen as, and for
being, a member of the executive or any other office-bearer
of a registered Trade Union if-
i. He has not attained the age of eighteen years ;
ii. He has been convicted by a Court in India of any offence
involving moral turpitude and sentenced to imprisonment,
unless a period of five years has elapsed since his release.
2. Any member of the executive or other office-bearer of a
registered Trade Union who, before the commencement of
the Indian Trade Unions (Amendment) Act, 1964, has been
convicted of any offence involving moral turpitude and
sentenced to imprisonment, shall on the date of such
commencement cease to be such member or office-bearer
unless a period of five years has elapsed since his release
before that date.
3. In its application to the State of Jammu and Kashmir,
reference in sub-section (2) to the commencement of the
Indian Trade Unions (Amendment) Act, 1964, shall be
construed as reference to the commencement of this Act in
the said State.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 22: Proportion of Office-bearers to be
Connected with the Industry
Not less than one-half of the total number of the office-
bearers of every registered Trade Union shall be persons actually
engaged or employed in an industry with which the Trade
Union is connected :
Provided that the appropriate Government may, by special or
general order, declare that the provisions of this section shall
not apply to any Trade Union or class of Trade Unions specified
in the order.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 23: Change of Name
Any registered Trade Union may, with the consent of not less
than two-thirds of the total number of its members and
subject to the provisions of Section 25, change its name.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 24: Amalgamation of Trade Unions
75
 Any two or more registered Trade Unions may become
MANAGEMENT OF INDUSTRIAL RELATIONS
amalgamated together as one Trade Union with or without
dissolution or division of the funds of such Trade Unions or
either or any of them, provided that the votes of at least one-
half of the members of each or every such Trade Union entitled
to vote are recorded, and that at least sixty per cent of the votes
recorded are in favour of the proposal.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 25: Notice of Change of Name or
Amalgamation
1. Notice in writing of every change of name and of every
amalgamation, signed, in the case of a change of name, by
the Secretary and by seven members of the Trade Union
changing its name, and, in the case of an amalgamation, by
the Secretary and by seven members of each and every Trade
Union which is a party thereto, shall be sent to the Registrar,
and where the head office of the amalgamated Trade Union
is situated in a different State, to the Registrar of such State.
2. If the proposed name is identical with that by which any
other existing Trade Union has been registered or in the
opinion of the Registrar, so nearly resembles such name as
to be likely to deceive the public or the members of either
Trade Union, the Registrar shall refuse to register the change
of name.
3. Save as provided in sub-section (2), the Registrar shall, if he
is satisfied that the provisions of this Act in respect of
change of name have been complied with, register the
change of name in the register referred to in Section 8, and
the change of name shall have effect from the date of such
registration.
4. The Registrar of the State in which the head office of the
amalgamated Trade Union is situated shall, if he is satisfied
that the provisions of this Act in respect of amalgamation
have been complied with and that the Trade Union formed
thereby is entitled to registration under Section 6, register
the Trade Union in the manner, provided in Section 8, and
the amalgamation shall have effect from the date of such
registration.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 26: Effects of Change of Name and of
Amalgamation
1. The change in the name of a registered Trade Union shall
not affect any rights or obligations of the Trade Union or
render defective any legal proceeding by or against the Trade
Union, and any legal proceeding which might have been
continued or commenced by or against it by its former
name may be continued or commenced by or against it by
its new name.
2. An amalgamation of two or more registered Trade Unions
shall not prejudice any right of any such Trade Unions or
any right of a creditor of any of them.
76
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 27: Dissolution
1. When a registered Trade Union is dissolved, notice of the
dissolution signed by seven members and by the Secretary
of the Trade Union shall, within fourteen days of the
dissolution, be sent to the Registrar, and shall be registered
by him if he is satisfied that the dissolution has been
effected in accordance with the rules of the Trade Union,
and the dissolution shall have effect from the date of such
registration.
2. Where the dissolution of a registered Trade Union has been
registered and the rules of the Trade Union do not provide
for the distribution of funds of the Trade Union on
dissolution, the Registrar shall divide the funds amongst
the members in such manner as may be prescribed.
Chapter: Rights and Liabilities of
Registered Trade Unions
Section 28: Returns
1. There shall be sent annually to the Registrar, on or before
such date as may be prescribed, a general statement, audited
in the prescribed manner, of all receipts and expenditure of
every registered Trade Union during the year ending on the
3lst day of December next preceding such prescribed date,
and of the assets and liabilities of the Trade Union existing
on such 3lst day of December. The statement shall be
prepared in such form and shall comprise such particulars as
may be prescribed.
2. Together with the general statement there shall be sent to
the Registrar a statement showing all changes of office-
bearers made by the Trade Union during the year to which
the general statement refers, together also with a copy of the
rules of the Trade Union corrected up to the date of the
despatch thereof to the Registrar.
3. A copy of every alteration made in the rules of a registered
Trade Union shall be sent to the Registrar within fifteen
days of the making of the alteration.
4. For the purpose of examining the documents referred to in
sub-sections (1), (2) and (3), and Registrar, or any officer
authorized by him, by general or special order, may at all
reasonable times inspect the certificate of registration,
account books, registers, and other documents, relating to a
Trade Union, at its registered office or may require their
production at such place as he may specify, in this behalf,
but no such place shall be at a distance of more than ten
miles from the registered office of a Trade Union.
Chapter: Regulations
Section 29: Power To Make Regulations
1. The appropriate government may make regulations for the
purpose of carrying into effect the provisions of this Act.
2. In particular and without prejudice to the generality of the
foregoing power, such regulations may provide for all or
any of the following matters namely :-
a. The manner in which trade unions and the rules of trade
unions shall be registered and the fees payable on
registration;
b. The transfer of registration in the case of any registered
trade union which has changed its head office from one
State to another;
c. The manner in which, and the qualifications of persons by
whom, the accounts of registered trade unions or of any
class of such unions shall be audited;
d. The conditions subject to which inspection of documents
kept by Registrars shall be allowed and the fees which shall
be chargeable in respect of such inspections, and
e. Any matter which is to be or may be prescribed.
3. Every notification made by the Central Government under
sub-section (1) of section 22, and every regulation made by
it under sub-section (1), shall be laid, as soon as may be
after it is made, before each House of Parliament, while it is
in session, for a total period of thirty days which may be
comprised in one session or in two or more successive
sessions, and if, before the expiry of the session
immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in
the notification or regulation, or both Houses agree that the
notification or regulation should not be made, the
notification or regulation shall thereafter have effect only in
such modified form or be of no effect, as the case may be;
so, however, that any such modification or annulment shall
be without prejudice to the validity of anything previously
done under that notification or regulation.
4. Every notification made by the State Government under
sub-section (1) of section 22 and every regulation made by
it under sub-section (1) shall be laid, as soon as may be after
it is made, before the State Legislature.
Chapter: Regulations
Section 30: Publication of Regulations
1. The power to make regulations conferred by section 29 is
subject to the condition of the regulations being made after
previous publication.
2. The date to be specified in accordance with clause (3) of
section 23 of the General Clauses Act, 1897 (10 of 1897), as
that after which a draft of regulations proposed to be made
will be taken into consideration shall not be less than three
months from the date on which the draft of the proposed
regulations was published for general information.
3. Regulations as made shall be published in the Official
Gazette, and on such publication shall have effect as if
enacted in this Act.
Chapter: Penalties and Procedure
Section 31: Failure to Submit Returns
1. If default is made on the part of any registered trade union
in giving any notice or sending any statement or other
document as required by or under any provisions of this
Act, every office-bearer or other person bound by the rules
of the trade union to give or send the same, or, if there is
no such office-bearers or person, every member of the
MANAGEMENT OF INDUSTRIAL RELATIONS
executive of the trade union, shall be punishable with fine
which may extend to five rupees and, in the case of a
continuing default, with an additional fine which may
extend to five rupees for each week after the first during
which the default continues :
Provided that the aggregate fine shall not exceed fifty rupees.
2. Any person who wilfully makes, or causes to be made, any
false entry in, or any omission from, the general statement
required by section 28, or in or from any copy of rules or of
alterations of rules sent to the Registrar under that section,
shall be punishable with fine which may extend to five
hundred rupees.
Chapter: Penalties and Procedure
Section 32: Supplying False Information Regarding
Trade Unions
Any person who, with intent to deceive, gives to any member
of a registered trade union or to any person intending or
applying to become a member of such trade union any
document purporting to be a copy of the rules of the trade
union or of any alterations to the same which he knows, or has
reason to believe, is not a correct copy of such rules or alter-
ations as are for the time being in force, or any person who,
with the intent, 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 two hundred rupees.
Chapter: Penalties and Procedure
Section 33: Cognizance of Offences
1. No court inferior to that of a Presidency Magistrate or a
Magistrate of the first class shall try any offence under this
Act.
2. No court shall take cognizance of any offence under this
Act, unless complaint thereof has been made by, or with
the previous sanction of, the Registrar or, in the case of an
offence under section 32, 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.
77

MANAGEMENT OF INDUSTRIAL
LESSON 16:
CONCEPT OF COLLECTIVECHAPTER
BARGAINING
3 : COLLECTIVE BARGAINING
Learning Objective
MANAGEMENT OF INDUSTRIAL RELATIONS
• The study of this lesson will help you:
• Understand the rights and interest of the employee in the
industries.
Introduction
As we can put and all will agree that industrial relations (IR) is
inherently a bipartite relationship. Like in any other relationship
IR too has parties to it. The parties to this relationship include
union and management, representing workers and employer,
respectively. Similar to other relationships, the union manage-
ment relationship is highly complex.
The complexity can be attributed to:
Divergence of interests,
Perspectives,
Expectations,
Value systems and
Goals of the two parties.
Consequently, there is immense possibility of misunderstand-
ing incongruence and conflict at any point of time in
organizational setting over the terms and conditions of
employment. As the organizations find it difficult to survive
and grow in an environment of conflict and misunderstand-
ings, it is desirable that both the parties sit together to resolve
their differences and conflicts through mutual discussions and
negotiations without the intervention of a third party. This
process of resolving the differences between union and
management in the absence of any third party is widely
designated as collective bargaining.
Perhaps, Sydney and Beatrice Webb coined the term ‘Collective
Bargaining’ in 1897. Probably, it means: ‘to bar the gains (of
others), collectively’.
According to Harbinson, collective bargaining is ‘a process of
accommodation between two institutions which have both
common and conflicting interests’. It purports not to attain
industrial peace at any price. Rather, it aims at the attainment of
the commonly held goals of a free society.
Irrespective the causes of industrial disputes the consequences
are harmful to all
Stakeholders
Management
Employees
Economy and
Society
As the famous saying goes ‘United we stand and Divided we
fall’. A dispute therefore needs to be settled as early as possible.
Among the various available methods for resolving disputes
Collective Bargaining is one. And we can say it is probably the
78
UNIT 5
UNIT 5
RELATIONS
PROCESS
‘most effective method of resolving industrial disputes. It
occurs when representatives of two groups (labour union and
management) meet and attempt to negotiate an agreement that
specifies the nature of future relationships between the two. It
could be to determine employees wages and benefits, to create
or revise work rules, and to resolve disputes or violations of the
lobour contract.
The bargaining is collective in the sense that the chosen
representative of the employees (i.e. the union) acts as a
bargaining agent for all the employees in carrying out negotia-
tions and dealing with the management.
In the case of the corporation in which the paid professional
managers represent the interest of the stockholders and the
board of directors in bargaining with the union leaders.
On the employee side too it could be collective in those
common situations in which the companies have joined
together in an employer association for purposes of bargaining
with union.
The ILO (International Labour Organization) Workers Manual
defines collective bargaining as:
Negotiations about working conditions and terms of employ-
ment between an employer, a group of employers or one or
more employers’ organizations and one or more representatives
workers’ organizations on the other, with a view to reaching
agreement wherein the terms of an agreement serve as a code
defining the rights and obligation of each party in their
employment relations with one another; it fixes a large number
of detailed conditions of employment, and during its validity
none of the matters it deals with can in normal circumstances
give grounds for dispute concerning an individual worker’.
Thus, as opposed to individual bargaining, it relates to group
bargaining about wages and salaries and working conditions.
The parties may be trade unions or their federations on the one
hand and an employer or his representative or an employers’
association or federation, on the other.
Flanders identifies the distinctive nature of collective bargaining
to be basically a political institution in which the rules are made
by trade unions of workers, employers and corporations/
organizations. In fact, despite the divergence in their structures
and functions, trade unions have a common objective of
negotiation with the employer about a written agreement
embracing employment conditions as well as labour manage-
ment relationship on mutually accepted terms. Thus, collective
bargaining is nothing but negotiation, administration and
interpretation of written agreement between the union and
management, which covers a specific period of time. It is a
procedure adopted by union and management to compromise
their conflicting interests. Further, it is collective, because, it is a
group action involving two parties having trade unions or their
federations on the one hand and the employer or his represen-
tative or an employers’ association or federation on the other. It market place haggling by a group of workmen with an em-

MANAGEMENT OF INDUSTRIAL RELATIONS

is opposed to individual bargaining because it relates to group ployer.
bargaining about wages and salaries and working conditions of As we have already mentioned Flanders identifies the distinctive
the entire organization. It is a democratic process in the labour nature of collective bargaining to be basically a political institu-
management relationship as parties to this process discuss and tion in which the rules are made by the trade unions of
solve their problems across the negotiation table. workers, employers and corporations/organizations.
According to Dunlop and Healy, the system of collective Secondly, since the two aspects of administration and legislation
bargaining represents the extension of the democratic idea into are interlinked, there is a considerable degree of joint regulation
work organizations and it gives workers the feeling of participa- by both the parties, governed by the conventions and customs
tion in the affairs of their department and organization that prevail at the enterprise level.
through various committees.
Thirdly, collective bargaining is not merely an economic process,
According to Adams, collective bargaining is considered to be but more a socio-economic one. The values, aspirations and
the major function of trade unions. expectations also playa significant role.
Jones and Morris viewed that collective bargaining in all its
current complexities is the bread and butter activity of trade
unions, their life blood what their member regard as the reason
for their existence normal means of defending their interests
and maintaining and improving their living standard. More-
over, collective bargaining is a mutual obligation not
compulsion of parties to sign agreement in good faith on
wages and allied conditions of employment.
According to Leap and Crino, one primary indication of good
faith bargaining is willingness to compromise during negotia-
tions and the key for negotiation is to maintain a flexible
attitude and willingness to listen to proposals submitted by the
other side and to make counter offer on those proposals.
Further, it is a continuous and dynamic activity in the employer
and employee relationship because once the agreement period
expires, similar agreement or with different other demands
come up and the nature and duration of agreement may change
with the changing expectations, circumstances and position of
the parties. As, rigidity and arrogance on any party creates
bitterness and gap in any healthy and long lasting relationship,
collective bargaining brings flexibility and dynamism between
the parties in industrial relationship.
Salient Features of Collective Bargaining are:
1. It is a ‘group’ process, wherein one group representing the
employers and the other representing employees sit
together to negotiate terms of employment.
2. It is a process in the sense that it consists of a number of
steps. The starting point is the presentation of the charter
of demands and the last stage is reaching of an agreement,
or a contract, which would serve as the basic law governing
labour management relations over a period of time in an
enterprise.
3. Negotiations form an important aspect of the process of
collective bargaining, Le. there is considerable scope for
discussion, compromise or mutual give and take in the
collective bargaining deliberations rather than confrontation.
4. It is a bipartite process. The employers and the employees
are the only parties, involved in the bargaining process.
There is no third party intervention. The conditions of
employment are regulated by those directly concerned.
The concept of collective bargaining needs to be understood in
its proper perspective. It is not merely a replacement of the

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MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 17:
STAGES AND PREREQUISITES FOR COLLECTIVE BARGAINING
Learning Objective
The study of this lesson will help you:
• Understand of how and in what levels the collective
bargaining can be done.
Collective bargaining is generally structured and con-
ducted at three levels:
• Plant level
• Industry level
• National level
Plant Level
This is the basic or micro level unit, where negotiations are
conducted between the management of the plant and union(s)
of the plant. Generally the unions are centered around the
plant, with little or no involvement in other bodies. There are
many plant, level agreements but the pioneers, in this field, are
Tata Iron and Steel Co. Ltd.
Industry Level
Several units in the same industry band together and form an
association, which negotiates with a union having a similar
status. The agreements are somewhat broader in scope and
delineation than the plant level settlements that are very specific.
The Rashtriya Mill Mazdoor Sabha negotiates with the mill-
owners of Mumbai on behalf of the workers, as it is the
recognized industry union.
National Level
Here the terms of reference and scope are much wider though
such agreements are not so common in India. The representa-
tives of the trade union and the employer negotiate and arrive
at a settlement, but given the industry-cum-region convention
in India, such national level agreements are few. At some
tripartite conferences convened by the Government of India,
certain specific issues have been negotiated and contracted, e.g.
the Agreement to Rationalise Work Practices and manning and
related issues, concluded in 1951 between labour unions
(INTUC) and management.
Stages in Collective Bargaining
Sloane and Witney classify the contract negotiation process in
three stages including the early stages, the later stages and the
final stages. Union representatives who propose numerous
economic and non-economic demands initiate the negotiation
process. The management representatives, who do not have any
prior experience in bargaining, visualize these demands as
unjustified. Some of the extreme demands may include
appointment of union officers in the board of directors and
free transportation for all employees. The experienced manage-
ment representatives are not at all disturbed by these demands
because they consider unions as “political animals” which throw
untenable but “pet” demands of the workers. One of the
reasons of these unreasonable demands is that their real
80
objectives and conceals their real positions ‘until the proper
times have reached. Further, the union representatives attempt
to pose of winning the management in the long run rather
than getting accepted in the current bargaining year.
Early Stages
As Dunlop and Healy point out, neither group can normally be
experienced to permit the new demand the first time it is posed.
Indeed, a new issue initially causes merely opposition Item the
other group but it may be less novel and seen less outrageous
after the passing of one year. The opposite group may avail
opportunity to think it over and visualize administrative
difficulties involving mutual diagnosis. Accordingly, proposals
regarding a pension of a health and welfare issue made by
union representative may obtain a cool reception initially.
Explicitly, several years may be required before the management
is in a position to consider such issues carefully. There is a
period of gestation involved in new contract demands.
Sometimes, despite the large number of initial demands,
several new demands are introduced at any point during the
‘long period of negotiations prior to the [mal agreement. Some
of the demands by the union may be related to its apparent
madness and used as ploys in a logical bargaining strategy. There
demands should not to taken literally. Some management
representation representative appreciates the strategic significance
of the large number of demands and makes similar counter
proposals.
However because of theses exaggerated demands and similar
unrealistic counter proposals, the parties remain quite remote
from each other in the initial stage.
Indeed, in the initial meetings, it is not possible to reach
agreement because of presence of numerous invited guests
from the ranks of each group. Of course, the initial participa-
tion of rank and files as well as lawyers and consultants is of
utmost significance from political and human relations
standpoints. These initial meetings have also utmost educa-
tional significance for the bargainers. The presence of numerous
factors does not refrain the bargainers to evaluate each other’s
general position and precisely assess the quality of the other
side’s proposals are being taken seriously and which are simply
introduced to establish bargaining position. It may be noted
that time element is very crucial in negotiation process. Through
experience and understanding of the tactics of the other group,
the bargainers can effectively use the time principle. Indeed, they
should know when to listen, speak, stand firm and concede,
when to make counter proposals, compromise and suggestion,
when to sue illustration or a funny story to resolve tension and
when to become deadly serous and take a final position.
Later Stages
As Sloane and Witney observe, after the termination of the
stage, both parties have adequate understanding of the overall
climate of the negotiation process. The union tends to
understand the objectives of management while the manage-
ment tends to realize what the union is proposing. Both parties
end to determine to what extent t they have to go in the
negotiation, the maximum levels they will accept. At these later
stages, the skilled negotiators don not take extreme., rigid
positions and tend to throw something on the table for
discussion without taking a defmite stand on a particular issue.
A pattern of agreement seems to appear with the minimized
disagreement and offer of mutual concessions. They tend to
understand each other’s ultimate goals buy evaluating the
arguments and attitudes towards proposals on the bargaining
table. Through the process of counter proposal and compro-
mise, they finally reach a “package” of settlement representing
the minimum and maximum levels acceptable to both groups.
Frequently, the skied negotiators employ several techniques to
determine the content of the alternative packages. Among,
these techniques are included trading points and counter
proposals. As regards the trading points, there are several
perquisites of this technique. First, attempt should be made to
access the demands of the union from the quantities as well as
qualitative standpoints. The negotiators should visualize the
points at which the group is very serious. For example, the
union representatives seem utmost concerned about reduction
of work hours. Later on, they realize that the management
cannot accept it and therefore, they withdraw it in return for
wage increases and union shop. Thus, reduction of hours is
used as a trading point. Counter proposals relate it the compro-
mise in bargaining process. For example, if the union
representatives demand four weeks’ vacation with pay for
employees having three years of service with the company and
one week for those having less than three years’ service.
Sometimes, several counter proposals are made prior to the
attainment of a final agreement.
Final Stage
In the final stages of the contract negotiation process, several
strategies may be used to reach the agreement. For example, in
some situations, the mere silence may indicate a concession
while in others the extent of stress on different points can
provide a significant hint. They may suggest a position by citing
statistics or by discussing a settlement in some other industry.
On the basis of these strategies, the parties may reach agreement
on even thorny issues on management rights, union security,
the role of seniority and financial benefits. Frequently, prepara-
tion of an acceptable package involving these may become a
complicated function. This may even lead to a strike deadline,
which frequently provides motivation to labour relation’s
agreement. Both groups tends to reassesses their ‘final’ position
and balance their rock bottom demands as well as visualize the
earlier bargaining position from a different standpoint.
Explicitly, in view of threats of strikes both group are willing to
promise as they are exposed to reality. Indeed, the stoppage of
work may cause uncertainties and loss of income to the both
parties and accordingly, they are more keen to bridge differences
than before. This stage is characterized by new developments
because each side tends to offer new and generous final
proposals. The chief representative from each side may meet
separately in an informal way and reach new agreements. The
MANAGEMENT OF INDUSTRIAL RELATIONS
extremely insolvable issues may be entrusted to along-range
joint study committee to solve subsequently.
Accordingly, as Stevens observes, the approach of the deadline
squeezes elements of bluff and deception out of the negotia-
tion process as well as exerts pressures to bear with others
changing the earlier unfavourable situation. Indeed the threat to
strike or lockout tends to bring about conditions necessary for
an agreement. The deadline seems to foster positive attitudes
and cause positive actions between the two groups. However,
sometimes strikes take place, especially in situations where the
union representatives feel that the package of settlement would
be refused by the rank and files. They may also happen where
the negotiators fail to evaluate the significance of concession to
the other group and refuse to grant it. In some cases, in some
cases bargainers do not give up initial position because of pride
as well as in rare situations they desire a strike to provide an
outlet and accomplish allied objectives.
Before the process of collective bargaining is initiated there
would thus appear to be certain preconditions without which
collective bargaining cannot exist. Here we are going to view and
discuss the prerequisites for collective bargaining.
Prerequisites for Collective Bargaining
1. Careful thought and selection of the negotiation team is
imperative. The team should have a mixed composition,
including production, finance and IR experts. A person,
preferably personnel, should head it and industrial relation
specialist of seniority who has an adequate brief to commit
the enterprise and take decisions, without frequent referrals
to top management. For instance, many organizations have
a vice –president personnel or director-personnel heading
the team with a brief to commit the organization up to a
certain amount which can be spread out depending on the
negotiating situation based on union demands.
2. It is necessary for the management to recognise the union
and to bargain in more good faith, in unionized situations.
Unions as representatives of the workers’ interest are a
growing phenomenon. This also puts pressure on the
union to formulae plans and demands in a systematic
manner. Strong union and progressive managements can
help create an atmosphere of mutual confidence.
3. The necessity of having open minds, to listen and
appreciate the others’ concern and point of view and to
have some flexibility in making adjustments to demands
made.
4. The need to study adequately or do ‘homework’ on the
demands presented, i.e. to gather data on wages and welfare
benefits in similar industries in the geographical area.
5. Both the management and the union should be able to
identify grievances, safety and hygiene problems on a
routine basis and take appropriate remedial steps.
6. Trade unions should encourage internal union democracy
and have periodic consultations with the rank and file
members.
81
 7. Trade unions should equally be concerned with, both
MANAGEMENT OF INDUSTRIAL RELATIONS
leading up to a consistent concern for the viability of the
firm and its product/services.
8. Strikes/lockouts should be resorted to, in the ultimate
analysis. Periodic discussion may be necessary between the
management and the union to interpret the provisions of
the contract and clarify doubts.
The above mentioned prerequisites are important for both the
parties before they start with the process of collective bargaining.
In addition to the above we shall also talk and examine the
other conditions prior to the process of collective bargaining.
To begin with let us first talk about Parity of Power between
the two parties-management and unions should be more or les
equal in the matter of power or strength to achieve genuine
bargaining status. A weak union, as already seen cannot force
managements even to bargain, let alone achieve anything of
substance for its members. But it holds equally well for the
managements, and a weak management can surrender so many
things to powerful unions that the agreement cannot be
rightfully said to represent the results of a bargain.
Bargaining In Good Faith is another aspect which the bona
fides of the bargaining parties have to be clear right from the
start and the existence of hidden agendas can only hamper the
process.
Bargaining may often result in a stalemate, with neither
managements nor unions budging from their respective offers
or demands. Therefore there should exist Mechanisms To
Break A Deadlock . The breaking of this deadlock can be
achieved in two ways, either through an ultimatum like strikes
or lockouts, or through third party mediation, like arbitration or
conciliation.
Having talked about these conditions let us examine whether
these conditions exist or not.
Parity of power does not exist in many enterprises. In the
MNCs, where union legitimacy was accepted from the start,
though not always with good grace, unions had a locus standi
vis-à-vis management. Consequently they had some power. In
the public sector units, union legitimacy was never in doubt and
unions thrived in the PSU ambience, though there were other
constraints. Collective bargaining therefore , flourished in these
enterprises. But there are sectors where management have
strongly and persistently resisted collective bargaining, just
because it bestows the unions with legitimacy. There being no
statutory compulsion to bargain, employers have often refused
point blank or in some cases tried to pre-empt union demands
by giving workers fairly large wage increases as a preventive
measure. In other sectors and enterprises, union existence itself
was in doubt and collective bargaining made either a late start or
is still in its infancy. In some sectors, like informal and small-
scale export industries, collective bargaining if it exists at all, is
rudimentary, dealing only with basic wages. Government
employees still have no bargaining.
Multiplicity of unions has further reduced union strength and
managements are only too easily able to play one union off
against the other. Rival union demands weaken not only the
unions but also the workers’ case. Managements can rationally
82
claim that they are undecided about benefits when the workers
themselves do not know what they want. Sengupta (1993 ) feels
that ‘the trade union movement, barring a few centres, is still
quite weak in India’ (p.6). Obviously, such disparity in power is
not conducive to collective bargaining.
But even in the public sector units, there is a weakness of
another kind . Excessive political interference and supervision
by the controlling ministries reduces reduces managements’
elbowroom and weakens them. Political links make unions
appear larger than they really are and intimidate managers of
these undertakings. But the main blame may well lie with the
government, which did little to give bargaining the legitimacy
that it badly needed.
Bargaining in good faith is another problem. It has been
observed in several industries like ‘jute, that bargaining is never;
undertaken unless employers can exercise a large degree of
intimidation over the other side: Often; bargaining is taken
towards a deadlock, which is used as a pretext to close down the
plant. Bargaining is not done, therefore, in good faith. If
unions are at all able ,to force it on an unwilling management,
the employers’ intention may well be to engineer a stalemate
and then declare a closure or lockout It is only when both the
management and unions want to arrive at a settlement, that
they will behave rationally. .
The other conditions necessary for bargaining to culminate in an
outcome is the existence of deadlock-breaking devices. These
exist, since strikes and lockouts’ are both legitimate industrial
activities. Except for certain restrictions on timing of strikes or
lockouts, there is considerable freedom for both unions and
managements to make their position clear with regard to certain
issues and try and break the rigidity of the other party by calling
a strike or. a lockout. At the same time, the existence of
conciliation and arbitration also leaves the parties with options
other than striking or closing. In fact, it is found that in recent
years, many of the negotiations end up in .he conciliation
officers’ chambers and emerge as Section 12(3) settlements
under the Industrial Disputes Act. But voluntary arbitration is a
relatively weak process, since there is’ no standard body of
arbitrators and few, if any, norms exist for dispute arbitration.
The large private sector organisations where bipartite bargaining
takes place relatively freely may find that they are unable to
compose their differences and appeal to the government to step
in, either by way of ministerial intervention or by way of
conciliation. Many of the outstanding disputes may get carried
over to the judicial sphere, ‘as has been happening m recent
years. The deadlock-breaking strike or lockout is often not
possible in India because of the low sustaining power of
workers and the government’s frequent interventions in the
process, by requesting the two parties to settle up.
Another problem’, which keeps recurring in collective bargain-
ing, is the bargainability of issues. Even in those sectors where
collective bargaining has been accepted as a way of industrial
relations” there still seem to be doubts about the issues which
can or should be bargained. Obviously, unions would like to
bargain about as many issues as possible” since bargaining
establishes dual control over those issues. But managements
equally strongly would like to retain their control over as many
decisions as possible. A good example of this is the Bank of

MANAGEMENT OF INDUSTRIAL RELATIONS

Baroda strike in Calcutta in late 1987.
In this incident, the management of the regional office
,transferred some ‘TaI1ch employees on a Friday afternoon.
Saturday and Sunday were holidays at that time and employees
could not react. Earlier, there had been several representations
against ad hoc transfers in the bank. Except for a tribunal award
in the early 1950s and a 1981 circular of the bank management
laying down norms for non-executive transfers, there were no
proper guidelines for transfers. Banking had undergone major
changes in structure, clientele, purpose and location of branches,
and transfers had become a key issue. Unions wanted a
thorough discussion while the management continued to
maintain that transfer was a managerial prerogative and was not
negotiable. Several other banks had negotiated bipartite
corporate-level agreements on this thorny issue and achieved a
measure of peace. Bank of Baroda was not one of them. On
the Monday following the transfer order, a strike decision was
taken. A 50-day strike ensued, which was called off only at the
intervention of the Chief Minister. The main union involved
was the CITU-affiliated BEFI. But the Chief Minister’s
intervention actually” put the unions and management face-to-
face on the issue. They had to discuss the transfers and arrive at
an agreement, and transfer became negotiable, after a 50-day
strike.
The primary issue in this strike was the bargainability of transfer
as an issue. This was not a problem confined to the public
sector. Many private sector companies have also refused to
bargain on some specific issues from time to time, though in
the end, many of them have capitulated. In the Mico case
mentioned earlier, it was the issue of manning of machines.
The management refused to bargain on the ground that
manning and deployment were managerial prerogatives, a fact
disputed by the unions.
But in spite of the non-existence of some pre-conditions for
successful bargaining, or a minimal infrastructure in the form of
determination of bargaining agent, or compulsion to negotiate,
collective bargaining has been growing. In other words, it is
obviously the more preferred form of dispute resolution
‘among industrial enterprises. Even though the wage boards
gave decisions favourable to workers, both unions and
managements showed their preference for collective bargaining,
no matter how circumscribed it was.

83
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 18:
COLLECTIVE BARGAINING AS A WAGE FIXATION METHOD
Learning Objective
The study of this lesson will help you:
• Understand of how collective bargaining concept helps in
the fixation of wages.
A significant feature of collective bargaining is the wages that
will be paid for the work done by the employees. The union’s
concern as well as that of the management is the criteria utilized
in wage negotiations. In actual fact the union is rarely involved
in setting the original job rates; management does this. The
union is actually involved in enhancing, or, at least, preventing a
decrease of wages. This factor is significant in determining the
union’s wage criteria and is to be taken in conjunction with the
economic factors prevalent in the plant or the industry. The
major criteria used by
unions and management in setting wage levels can be classified
as: (i) measures of equity; (ii) measures of need; and (iii)
measures of contribution. However the most commonly used
criteria are comparable wages, cost power. Only unions use the
living wages and purchasing power criteria as a justification for
their demands. To the management, wages are a cost and to the
worker (union) income. Some concerns for management would
be in terms of saving by reducing workers or transferring
resources for technological improvements. The workers
(unions) will constantly
compare themselves with others in the same field. These issues
are usually examined in the context of the commonly used
wage criteria referred to earlier.
Another area of significance is that of productivity bargaining.
The concept of productivity bargaining has gained increasing
attention in the Indian industrial relations system. In such
agreements advantages such as higher wages or increased leisure
are given to workers for accepting changes on established work
practices and organization of work itself, thus reducing/
eliminating waste and leading to more effective working.
Randle and Wortman state: “ Productivity usually refers to
output in physical units per man-hour of work. It is a measure
of the relationship between the volume of goods produced
and one factor of input-Iobour time.” However, labour is only
an input and there are several other variables such as “ more
efficient utilization of fuel, more economical materials; technical
improvements in machines; in organization and in processes;
the skill and effort of the work force; the efficiency of manage-
ment and the state of Lobour Relations”. Increased
productivity is usually reflected in increased ability to pay and
therefore industries with high or increasing productivity are
generally able to pay high wages. Data shows that historically
productivity has been going up at the aggregate for the national
level. Productivity data is computed both nationally and plant-
wise. Man-hour production over time is the basis for calculating
the productivity, but as argued earlier Lobour’s contribution is
84
difficult to isolate. This data therefore serves as the base for
negotiations to move on, coupled with other
arguments by unions, particularly in boom and normal periods.
The engine plant of Amalgamations group in Madras did
resort to a productivity type bargain many years back. In the
plantation industry, work norms are established for each type of
activity. The emphasis here is on achievements of targets. If the
worker is fast and does not take the full time for scheduled
breaks and if he [mishes his assigned task early, then he does
not have to wait; he may leave the work spot. The emphasis
here is not on time spent, but on output and quality. The
Indian Railways have also established a productivity base, taking
a base year as a norm and comparing subsequent years’ perfor-
mance with the base, to identifY variations and establish the
productivity achieved. In fact the Government of India tried
hard to propagate the concept of productivity-linked bonus, to
boost output and control inflation, especially at the time of
payment during the festive season.
In India, collective bargaining as one of the methods of wage
fixation has been adopted in many industries. Most of the
agreements are at the plant level, though some significant
industry level agreements have also been concluded. The
numbers of long-term agreements are also on the increase in
the range of two to five years. Since the Industrial Disputes Act
1947, which governs the relations between management and
workers of Industrial establishments, does not provide for
recognition of trade union as a sole bargaining agent, collective
bargaining has been more frequent in industries where there are
majority unions.
Apart from dealing with issues relating to wage matters,
collective agreements cover a wide range of aspects of employ-
ment from recruitment to retirement.
The scope of collective bargaining agreements now covers issues
such as:
Wages Bonus
Overtime Paid holidays
Paid sick leave Safety wear
Production norms
Hours of work Performance appraisal
Workers’ participation in management Hiring
Fixing of job evaluation norm and Modernization.
Although the scope of collective bargaining is expanding, wages
remain their main concern. The ILO in its comparative study of
collective bargaining methods and practices in industrialized
countries notes that in many of the countries the terms of
employment settled across the table set a pattern in industries,
i.e. the new terms are incorporated informally. In other coun-
tries, the terms settled across the bargaining table received a legal
sanction. For instance, in USA and Canada, the law enforces that
the union certified as the exclusive bargaining agent represent
the interests of all employees in the bargaining unit, whether or
not they are union members. Collective bargaining in most
industrialized countries has gained acceptance to such a great
extent that it is regarded as synonymous with, or as constitut-
ing, an essential part of the industrial relation system.
Wage Policy - Assessment and Issue
In all countries, wage policy is a complex and sensitive area of
public policy. This is because the relative status of workers in
the society, their commitment to industry and attitude towards
management, their morale and motivation towards productiv-
ity, their living standard and in fact their way of life are all
conditioned by wages. Hence, a policy dealing with this crucial
problem cannot be simply economic, as it has to reckon with
the realities of multi-dimensional social phenomena, in which
besides the worker and the management, the consumer and the
society at large, and in consequence the State, are all vitally
interested. Wage policy is a determinant of the shares of the
rival claimants of the product of industry and national
dividend, but there may often be a conflict between its short
run and long run objectives as well as between private and social
interests. There are, of course, theoretical generalisations or
principles that may provide scientific guidelines for framing a
wage policy. Equally important in this context are the concrete
social facts that must be taken into account in its formulation at
any given time. No principle of wage policy can ever be applied
in vacuum and in disregard of the realities of a situation. Wage
policy has to be pragmatic, though it does not follow that it has
to be unscientific and remain simply a matter of expediency.
In well-organised and developed economies, inter-relations
between wages and other factor prices can be worked out on a
priori considerations. In others with a large measure of
regimentation, dogmatic solutions can be enforced. But in an
economy in the process of development and with people
wedded to democratic institutions, the difficulties in framing a
wage policy are manifold. It is in this setting that we have to
view the various issues connected with wage policy in our
country.
Early History
For a long time, laissez faire operated in dealing with wage
problems. But the beginnings of third party intervention are
not all that recent as is popularly believed. Without Govern-
ment being brought in, settlement of wage demands through
third party intervention was accepted in Ahmedabad as far back
as 1918 at the instance of Mahatma Gandhi. Ad hoc enquiry
committees, without statutory backing, for settling specific wage
issues were not unknown either. Government’s intervention in
the field of industrial relations came with the Indian Trade
Disputes Act, 1929; and in early days such intervention was
mainly for regulation of wages. The Whitley Commission
which reported later, apart from giving a factual account of wage
levels in different industries, referred to questions connected
with minimum wages, standardisation, inter-sectoral wages and
incentives, and suggested surveys for collection of wage data.
It—recommended a minimum-wage fixing machinery of a
wage board type for industries satisfying certain criteria laid
down by it. These included prima facie establishment of a case
MANAGEMENT OF INDUSTRIAL RELATIONS
for Governmental intervention, as much as feasibility of
enforcement, including the cost of such enforcement. Legisla-
tion was also hinted at if the need was proved. That
Commission was, however, more concerned with the problem
of payment of wages. Unfair deductions seemed to be the rule
then, and special measures were needed to check them. A direct
result of the emphasis in the Whitley Commission’s report on
unfair deductions and the need to check them was the passing
of the Payment of Wages Act, 1936. Among other observa-
tions of that Commission we would like to point out one
which holds good even today. The Commission felt that the
problems of wages of the industrial workers should not be
considered in isolation; the prosperity of the industrial workers
and the community would have to advance simultaneously. In
this regard it observed:’ “Indian industry is not a world in itself;
it is an element, and by no means the most important element,
in the economic life of the community. Care must be taken,
therefore, to ensure that, in adopting measures for the better-
ment of industry or of industrial workers, the interests of the
community as a whole are not overlooked.”
There were no significant developments in the field of wage
policy consequent on the Whitley Commission’s report. But
towards the end of the thirties, ad hoc committees were
appointed for settling the wage structure in some Provinces.
Active Government intervention started on an all-India basis
only during the Second World War. Additional payments in the
form of dearness allowance to workers for rise in prices and a
share in war-time prosperity through bonuses became more
commonly acceptable than in the past. The Rege Committee
which surveyed the position prevailing at that time felt that in
the matter of wage fixation the guiding principles, if any,
appeared to be in favour of maintaining the status quo ante. It
felt that the practice of thinking in terms of short term gains
without adopting a scientific attitude in regard to wage fixation
would be in the long run detrimental no less to labour than to
industry. It also referred to the difference in the levels of wages
in agriculture and in industries and observed that such differ-
ences should not be over-emphasised; they could be partly
justified because of the conditions under which the industrial
workers were made to work and live. The fact that agricultural
wages were low could not be a justification for keeping indus-
trial wages low as well1 The 1946 Programme referred to the
following three elements of wage policy which are equally
relevant today:
i. “the statutory prescription of minimum wages in sweated
industries and occupations and in agriculture”,
ii. “promotion of ‘Fair Wage’ agreements”, and
iii. “steps to secure for workers in plantations, a living wage”.2
Policy Statements Since Independence
The next significant event of the period was the adoption of
the Industrial Truce Resolution (1947) which was an aftermath
of the industrial unrest immediately prior to and after Indepen-
dence. The relevant portion3 of the Resolution states. “...The
system of remuneration to capital as well as labour must be so
devised that while in the interests of the consumers and the
primary producers excessive profits should be prevented by
85
 suitable measures of taxation and otherwise, both will share the
MANAGEMENT OF INDUSTRIAL RELATIONS
product of their common effort after making provision for
payment of fair wages to labour, a fair return on capital
employed in the industry and reasonable reserves for the
maintenance and expansion of the undertaking”.
The Industrial Policy Resolution (1948) emphasised inter alia its
intension (a) to fix statutory minimum wages in sweated
industries and (b) to promote fair wage agreements in the more
organised industries. To facilitate the former, the Minimum
Wages Act, 1948 had already been passed. For the latter the
Government appointed the Committee on Fair Wages (CFW)
“to determine the principles on which fair wages should be
based and to suggest the lines on which these principles should
be applied”.
The CFW defined three distinct levels of wages, viz., living
wage, fair wage and minimum wage. The ‘living wage’ according
to it, represented a standard of living which provided not
merely for a bare physical subsistence but for maintenance of
health and decency, a measure of frugal comfort including
education for the children, protection against ill-health, require-
ments of essential social needs and some insurance against the
more important misfortunes. The ‘minimum wage’ was to
ensure not merely the bare sustenance of life but the preserva-
tion of the efficiency of the worker by providing some measure
of education, medical requirements and amenities. It envisaged
that while the lower limit for “fair wage” must obviously be the
minimum wage, the upper limit was set by the capacity of the
industry to pay. Between these two limits the actual wage would
depend on (i) the productivity of labour, (ii) the prevailing rates
of wages, (iii) the level of national income and its
distribution,and (iv) the place of the industry in the economy
of the country.* In the actual calculation of the fair wage, the
CFW observed that it was not possible to assign any definite
weights to these factors. The wage fixing machinery should
relate a fair wage to a fair load of work and the needs of a
standard family consisting of three consumption units inclusive
of the earner. The capacity of a particular industry in a specified
region should be taken into account to determine ‘the capacity
to pay’ and this in turn could be ascertained by taking a fair
crosssection of the industry in the region concerned. The
Committee recognised, “the present level of our national
income does not permit of payment of a ‘living wage’ on
standards prevalent in more advanced countries”. But, according
to it this should not preclude the fixation of fair wages on
different and lower standards. “At almost any level of the
national income, there should be a certain level of minimum
wages which the society can afford; what it cannot afford are
minimum wages fixed at a level which would reduce employ-
ment itself and thereby diminish the national income”
The CFW recognised that the concepts laid down by it could
not be viewed in any static sense; they would vary from time to
time, depending on the economic and social developments in
the country. The principle that luxuries of today become
necessities of tomorrow was implicit in this recognition. These
recommendations have exerted considerable influence on wage
fixing authorities in the period under review.
86
To give effect to the recommendations of the CFW, the Fair
Wages Bill was introduced in the Constituent Assembly of
India (Legislative). Though it was not enacted, the then Prime
Minister, the late Shri Jawaharlal Nehru, stated in the Parliament
in April, 1950: “Government are committed to the principles of
fair wages as recommended by the Tripartite Committee”.2 The
Bill lapsed after the dissolution of the Constituent Assembly. It
was not pursued in the Parliament later. The Constitution of
India which was adopted in November, 1949 included the
securing of a ‘living wage’ to workers as one of the Directive
Principles of State Policy. An important development at about
this time was the setting up of the First Pay Commission
(1946-47) which examined and reshaped the salary structure of
the Central Government employees. The principles of wage
fixation enunciated by that Commission and accepted by
Government influenced the wage fixing authorities when they
dealt with cognate issues. It would also be not incorrect to state
that the Pay Commission was itself influenced by what was
happening in the field of wages and salaries in non-Govern-
mental employment. It is possible that this aspect off
inter-relationship will continue to have an impact on any policy
leading to remuneration for work.
The First Plan, while cautioning against a general upward
movement of wages which would set in motion a wage-price
spiral, recommended that wage increases should be granted
mainly to remove anomalies or where the existing rates were
very low. It also recommended restoration of the pre-war levels
of real wages as a first step towards the ‘living wage’ through
increased productivity. Factors like the need for reduction of
disparities in income, the distance which wages of different
categories of workers had to cover before attaining the living
wage standard, the need for standardisation, and maintenance
of wage differentials at a level necessary to provide incentives
were suggested for being taken into account in making wage
adjustments. These features were reasserted in the Second Plan,
but a shift in emphasis was introduced; it required that
improvement in wages should result mainly from increased
productivity brought about not merely by more efficient work
on the part of labour but also by better layout of plants,
improvements in management practices and the like. A wider
application of the system of payment by results, subject to
safeguards like fall-back wages, protection against fatigue and
undue speed-up, was envisaged. But the more significant
contribution of the Second Plan was its recommendation that
for settling industry-wise wage disputes, tripartite wage boards
which gave the parties themselves a hand in shaping the wage
structure would be more appropriate. Two other developments
in this period which deserve special mention are: (i) the
recommendations of 15th Indian Labour Conference in regard
to the need-based minimum wage, and (ii) the report of the
Second Pay Commission in respect of Central Government
employees, whose recommendations about the need-based
minimum wage created a public controversy.3 The Third Plan
generally endorsed the recommendations made in the earlier
Plans in regard to minimum wage fixation, reduction of
disparities, wage differentials and the like, but brought into
sharper focus the role of productivity in improving the living
standards of workers. It observed “neither the exercise of their
organised strength in industrial conflicts, nor laws and the
intervention of the State can help the workers much in realising
their aspirations. Their gains can arise only out of the strength
and dynamism of the economy, the only enduring basis of
which is a rising level of productivity”.1 Thus, while the policy
in regard to wages as enumerated in the Plans remained more or
less the same in its essential features, a shift in emphasis
towards productivity in recent years is discernible.
Indicators of Assessment
Every aspect of wage policy cannot be evaluated in this section
nor is such an evaluation called for. Some aspects, however,
figure in the detailed analysis in the following chapters. What is
attempted here is an assessment of the general wage policy, and
in this, the first task is to identify the indicators for such
evaluation. This is not easy since different indicators may not
necessarily lead to the same conclusion, while firm data may not
be available for some. We have, therefore, chosen the indicators
which are intended to provide an overall view and tried to make
our assessment as reliable and practicable within the limitations
cf the data available to us. The indicators selected by us are: (i)
the state of industrial harmony; (ii) the changes in workers’ level
of living; (iii) changes in productivity; (iv) the impact of wages
on prices; and (v) the share of wages in the value added by
manufacture.
Industrial Harmony
An index of industrial harmony is the number of mandays lost
owing to industrial disputes. Although the break-up of the
total time loss is not available according to the causes of
disputes for the whole period, it would not be unreasonable to
assume that the trend in time loss would be considerably
influenced by disputes relating to wages and cognate issues as
they constitute nearly 40 per cent of the total number of
disputes even now. An appraisal of the trend in mandays lost
over the period shows that the loss was maximum between
Independence and the First Plan which also happened to be the
period when the real earnings of industrial workers were below
the 1939 level. On an average, 11.3 million mandays were lost
per annum between 1946 and 1950. The improvement in real
wages brought about in the years of the First Plan seems to
have had a salutary effect on industrial harmony; the loss was
on an average only 3.9 million mandays per annum. More than
the absolute level cf earnings, it appears that it was the rate of
improvement in real earnings which was significant. Between
the Second Plan and the first four years of the Third Plan, for
which we have reliable data, real earnings have been falling. The
time loss was higher than what was witnessed in the First Plan,
but much below that in the years prior to 1950. Provisional
figures on real earnings for the two years thereafter show a
confirmation of this downward trend. The spurt in price level
in 1967 eroded the real wage further. The years 1966 and 1967
saw a deterioration in the industrial harmony with the time loss
per annum averaging much higher than in the years between
1956 and 1965.
For a realistic appreciation of the industrial relations situation, it
is not enough to study only the trend in time loss over a period
of years. It has to be related to the time worked. On this we do
not have reliable information to come to a definite conclusion.
However, a part of the increased time loss could be attributed
MANAGEMENT OF INDUSTRIAL RELATIONS
to the number of new units established in recent years and the
consequent increase in industrial employment and improve-
ments in the methods of reporting mandays lost. Taking these
factors into account, we feel that loss of production through
wage disputes is not that significant. This statement should not
be interpreted to suggest that we are indifferent to the possible
effects of work stoppages on production, nor do we wish to
minimise the serious consequences of a work stoppage in a key
sector which results in indirect production loss elsewhere.
Levels of living
The level of living is a function of real wages. It has been urged
before us by the
workers’ representatives that the industrial relations machinery
set up by the Government to settle wage disputes worked in
such a manner as to result in a restraint on wages. This has been
so on account of the time taken in the judicial process or by the
tribunals in giving wage awards particularly when these were
extended beyond their original period of application. While it is
not possible to say what the precise impact of this aspect on
levels of living has been, taking the period 1947 to 1966 for
which data have been analysed in the last chapter, it would
appear that real wages after a rise in the period 1947 to 1955
(reaching in the process the 1939 real wage level in 1952, and
improving upon it thereafter) have been declining subsequently.
Part of the real wage increase between 1947 and 1955 was
fortuitous because of a tall in living costs. The net effect of the
operations of the industrial disputes machinery on wages of
factory workers has been that in 1965 the industrial workers at
the lower levels were earning hardly a real wage corresponding to
that of the year 1952. Evidence from the side of labour has
emphasised this fact. Some independent researches also
corroborate this fall in real earnings. Wages of coal miners,
however, have
consistently improved since 1956. But this improvement is due
to the initial low level of wages at which the miners worked
prior to 1956. In plantations, the situation appeared to be
somewhat better than in the case of factory establishments. In
ports and docks and in some sections of white collar employ-
ments, workers did secure gains. On the whole, between 1952
and 1965, while per capita real income has improved, the real
wages of workers have, with few exceptions, at best not fallen.
But the situation has deteriorated since 1965—66 due to a
further rise in living costs.
Changes in Productivity
Labour productivity and changes therein are difficult to measure
and there are no reliable indices available in. this respect. A few
independent researches in the field in specified industries have
generally been limited by the assumptions made and lack of
availability of data and precision in operational concepts. Their
results have not been generally acceptable. The main difficulty in
measuring labour productivity arises owing to the output not
being an exclusive product of labour. Capital, technology and
management—all contribute to it along with labour and these
seldom remain constant. In consequence, increases in per capita
output cannot be attributed to labour alone, much less the total
output. Valuation of the physical product presents another set
87
 of problems. All that we have is information about changes in
MANAGEMENT OF INDUSTRIAL RELATIONS
output per worker at constant prices. These cannot, of course,
be taken as indices of labour productivity. With these limita-
tions on understanding the changes in productivity, we notice
that for industries for which serial data are
available, value added by manufacture has increased from Rs.
2,113 in the year 1952 to Rs. 4,621 in 1964.1
Adjusting the increase in net output for price changes during
the period 1952 to 1964—and in this case it would be safe to
use the index numbers of wholesale prices (for manufac-
tures)—we find that production per worker has increased by
about 63 per cent between 1952 and 1964. A part of it must
have been contributed by labour whose real earnings have
remained almost static during the period.
Impact on Prices
An analysis of data in the Census of Indian Manufactures upto
1958 and in its
successor, the Annual Survey of Industries, for later years
shows that between 1952 and 1958, money wages as a percent-
age of total output dropped from 13.7 to 11.4. Between 1960
and 1964, on the basis of the new series of the Annual Survey
of industries, the drop was from 10.9 to 9.7. The decline varies
from industry to industry but has been registered in all cases,
except in case of fair sized units in the match industry where
wage costs as a proportion of the cost of production have gone
up. Even after adjusting the gross output in 1964 for prices
(1952=100) and working out the share of wages to the output,
so adjusted, there is a fall between 1952 and 1964.
Share of Wages
Finally, one has to take into account the share of workers in the
value added by
manufacture. And in this indicator, only two shares count: (i)
of employers and those who have provided capital in the
expectation of a dividend and (ii) of workers. The percentage
of wages to the value added by manufacture, on the basis of
the CMI data, shows a decline from about 50 per cent in the
period 1949-50 to about 40 per cent in 1958. This trend seems
to have continued in the subsequent years as revealed by the
data from the ASI. For instance, wages as a percentage of value
added declined from about 40 per cent in 1960 to 36.5 per cent
in 1964, the latest year for which information is available. Even
if the money value of benefits and privileges is taken into
account, the conclusion remains the same, though the decline
then becomes less sharp.
To sum up, we note that increases in money wages of industrial
workers since Independence have not been associated with a rise
in real wages nor have real wage increases been commensurate
with improvements in productivity. Simultaneously, wage costs
as a proportion of total costs of manufacture have registered a
decline and the same is true about workers’ share in value added
by manufactures. Wage disputes under these conditions have
continued to be the single most important cause of all indus-
trial disputes.
88
Trend of Evidence
In the evidence before us, every group, Government, employers,
trade unions or independent persons, agreed that wage policy
should be geared to policies for economic development. Each
group, however, had its own notions of how development
should be achieved. Employers emphasised that industrial
wages should have relationship with wages in agriculture as also
with the average per capita national income. Linking wages to
productivity was another argument of theirs though in the
course of further discussion, they admitted such linkage to be
valid only for levels beyond the basic minimum wage. They
agreed that a subsistence minimum wage must be a primary
charge on the employer, but the minimum as defined by the
CFW should have some relationship with the capacity to pay.
Employers also sense some dangers in the present arrangement
of neutralising rise in prices by providing dearness allowance
linked with consumer price index numbers. They feel the need
for a flexible wage arrangement, consistent with industry’s need
to raise resources out of its own surpluses, to meet at least a
part of the cost of its expansion programme as suggested by
the Government.
Unions in their evidence emphasised restoration of the recent
fall in real earnings as a first step and, eventually, raising of
living standards of workers through increases in wages
commensurate with increases in productivity. Some of the facts
which have been brought out in the earlier section of this
chapter have been mentioned in support of their demand.
Workers’ organisations do not recognise that their claim is
antithetical to development. Fair wage to labour is an item of
cost. Resource requirements for the development of industry
capital formation and return to entrepreneur in their opinion,
should come after provision of fair wages for labour. According
to unions, planning in India, in spite of its operations for the
last 18 years, has not improved the per capita availability of
consumer goods to the common man. On the contrary, the
supply position has been such as to have resulted in a sacrifice
by the working class. Income disparities have, likewise, not been
reduced nor is there any evidence in the current policies that they
will be kept under control. Some of the arguments used by
employers for shaping wage policy so as to deny to workers
their proper share could, with equal justification, be used against
capital. Established social and economic relationship will have
to change if progressive wage policies are to be pursued; and
national commitment to planning should amount to a change
in the established social order. Administrative agencies have
lacked vigour in giving relief to labour even where beneficial
legislation has been enacted and suitable policies have been
framed.
The State Governments have generally recognised the need for a
change in wage policy. The relative emphasis which according to
them is now in favour of labour should be modified and the
interest of consumers should also be taken into account.’ While
in this respect their evidence seems to go counter to that of
labour representatives, they are at one with labour in accepting
that such beneficial policy measures as have been enunciated or
enacted have suffered for want of adequate implementation.
Government’s commitment to improve living conditions in the
country and to bring about a fair distribution of income and
wealth have been reiterated in a memorandum which we
received from the Cabinet Secretary in response to the
Chairman’s request to the then Deputy Prime Minister and
Minister for Finance and to the Home Minister for an authorita-
tive statement from Government on some issues relating to
wages. It was also urged by the Government spokesmen that
the scope of economic development to raise living standards
and to provide more employment in the immediate future was
limited by resources. The same view was expressed by the
Planning Commission.
We analyse at this stage some of the suggestions made in the
evidence before us. A point is made that industrial wages
should not be out of alignment with (a) per capita national
income, (b) wages earned in the agriculture/cottage industries,
(c) the general level of earnings of the self-employed, and (d)
levels of productivity. This needs examination.
a. The main contentions of those advocating a linkage of
industrial wages with per capita income are that (i) wages at
any given time in any sector should not be out of gear with
average earnings as reflected by per capita income and (ii)
wage changes over time should not be out of tune with
changes in per capita income. The first contention fails to
recognise that in any economy sectoral productivities are
bound to differ due to differences in skills, technology and
capital and hence wage differentials are not only inevitable
but based on sound grounds. It is of course necessary that
the extremes which reflect imperfections of the market and
inadequacies of measurement should be avoided. The
second contention would be valid if wages in each sector
were related to marginal productivity and the latter changed
at the same rate throughout the economy. In so far as this is
not so, wage changes cannot rightly be related to changes in
per capita income. Here again, it has to be recognised that
while changes in real per capita income reflect changes in
productivity of the economy as a whole, wage variations in
any particular sector may not always be based on
productivity changes. A check against unsound wage
increases may be provided by changes in per capita income.
But this would ever remain a crude index and its limitations
must be fully recognised in applying it to any specific case or
situation.
b. The argument that industrial wages should be at par with
agricultural wages or wages in small-scale industries is
apparently based on the assumption that marginal
productivity of unskilled labour is the same throughout the
economy. This is nowhere true, far less in our own
economy, where marginal productivity due to surplus
labour in agriculture may be almost zero. The same applies
to workers in cottage industries and handicrafts. Apart from
differential productivity, this argument ignores differences in
costs of subsistence of workers in agriculture and cottage
industries on the one hand and in the organised sector on
the other. An industrial worker has to pay for many things
the cost of which is simply nominal at the margin in his
village home. There are similar differences in the disutility
of work or the effort that a worker has to put in, in
different sectors. Finally, this argument ignores not only
market imperfections in agriculture and cottage industries
MANAGEMENT OF INDUSTRIAL RELATIONS
leading to sweated labour, but it also tails to recognise the
economic necessity of a higher wage in the modern
organised sector to transfer labour from the traditional
sector. It is generally so in all transitional economies where
such ‘pull factors’ have to be built up. The disparity between
industrial and other wages may not be due to the fact that
the former are disproportionately high, but because the
latter are disproportionately low. It was for this reason that
the Minimum Wages Act had to be enacted in 1948 to cover
the scheduled industries. In any case, agricultural wages have
been increasing in recent years; and in all areas, agricultural
labour is seldom available in the peak season on the
statutory minimum wages. But a certain amount of
disparity between industrial wages and wages in agriculture
or cottage industries is necessary and must continue for the
general health of the economy.
c. The earnings of the self-employed persons and wages of
employees can bear no comparison anywhere. Their effort
and sacrifices are altogether different and so are their
working conditions. Their respective productivities and
earnings cannot be related. Very often a self-employed
worker may be under-employed. His earnings, therefore,
cannot be taken as a criterion to determine the wages of a
worker required to put in full-time work.
d. The argument that wages be linked to productivity has
much to commend itself on principle. It is actually on this
basis that wage differentials have a justification; and on this
basis, industrial wages in general have to be higher than
wages in agriculture or cottage industries. It may further be
conceded that wage changes beyond a certain level must
reflect productivity changes. But it is the application of this
principle in practice that presents difficulties as contribution
to productivity levels and changes therein are not easy to
measure. It may be hoped that efforts to solve these
practical difficulties will be intensified and made to succeed.
Even then, productivity will be one of the factors affecting
wages.
Our Approach
We sought the assistance of the Study Group on Wage Policy
which we constituted to sort out the issues connected with
wage policy and help us in framing our recommendations in
this difficult area. The Group could not reach unanimity. The
report it presented has two minutes of dissent, and rejoinders
by its Chairman to each. We have carefully considered all these
views in leaching our conclusions. We believe that on an overall
plane, issues concerning wage policy are inter-related with
broader economic decisions on the one hand and on the other
with the goals set for social policy. Wage rates and differentials
have a functional role in sustaining and developing the structure
of society and thus merge with other elements of economic
and social policy.
The functional role of wages is evident, since wages are a price
for labour as a factor of production. The prices paid for various
types of skills and labour inputs, therefore, influence among
other factors the pattern of allocation of labour. At the same
time, these prices are also the incomes of wage earners and
89
 provide the necessary motivation for organisation of economic
MANAGEMENT OF INDUSTRIAL RELATIONS
activity. If these factor prices are not in harmony with other
prices in the system, the result is a disequilibria which may
manifest itself in deflationary or inflationary tendencies. In
either case, the ensuing consequences affect the stability of the
economy.
It is this need for ensuring the stability of the economy which
has led countries like Netherlands, Norway, Sweden, France and
the United Kingdom to adopt wage policies which are closely
linked with policies relating to incomes and prices. The main
aim has been to ensure that wage increases and increases in
other incomes do not outstrip the growth in real national
product. Wage increases inconsistent with the rate of growth of
real output and productivity have been looked upon as a cause
of wage-price spiral’. The emphasis on the practical measures
adopted for achieving this stability by the countries referred to
above has indeed varied according to the social and political
environments in which they operate. Although conditions are
different in our country in many respects, the experience does
indicate that the wage policy has to be framed taking into
account such factors as the price level which can be sustained, the
employment level to be aimed at, requirements of social justice,
and capital formation needed for future growth.
In our context while an integrated type of incomes and prices
policy may hold out promise of fruitful
results, the limits in pursuing it have to be recognised. In
contrast with advanced countries, which have a predominance
of wage employment, self-employment is dominant in our
economy. The incomes and wages policy that may be formu-
lated has to take into account this structural feature of the
economy and has to be in accord with the pattern of income
generation and distribution as envisaged in our development
plans. Even so,the social basis of wage policy we have referred
to earlier may require consideration of wage policy as a distinct
element of the incomes policy. We have to accept it as a distinct
entity in the overall framework of policies for economic growth.
Having said this, we recognise that each one of the consider-
ations which have guided wage policies in other countries is
present in varying degrees in ours too. Viewed thus, our wage
policy will comprise a set of principles capable of being
consciously adopted to guide, by means of legislation or
otherwise, actions of Government as also of parties vitally
concerned.
It is often argued that in all industrially advanced countries like
the U.S.A. the U.K., West Germany, Japan and the USSR, both
the absolute level of per capita wages and the share of labour in
the national product were more or less stable or were declining
during the initial period of economic development. But in all
of them, the political and social factors at the time of develop-
ment were different from those obtaining in our country. The
growth of the economy certainly depends on the rate of
investment which in turn depends on the rate of savings. To
the extent wage incomes are consumption oriented rather than
savings oriented, rise in wage levels signifies a corresponding
diversion of a portion of the total national product from
savings and investment to consumption. In certain situations
this can retard the process of economic growth and can act as a
90
constraint. On the other hand, in order to maintain the tempo
and the pace of growth, consumption increases cannot be
continuously postponed or kept in abeyance in a period of
rising expectations and possible social tensions. In fact increase
in consumption may be necessary to sustain and improve the
morale of workers and thereby the level of production and pace
of economic growth. Wage earners expect to share in the gains
of economic development and growth. Commensurate with
checks and restraints on consumption required for sustaining
the growth process, the standard of living of the workers has
to improve. A democratic society with ideals of social justice will
have to reconcile considerations of equity and fairness with
economic compulsions.
In our country, due to large additions to the working force, the
effect of wage levels on employment has a particular relevance.
With an inadequate rate of growth of the economy, the sheer
number of new entrants to the working population exerts a
downward pressure on wage rates. Low wages, however, do not
generate more employment in a less developed economy, since
the latter is limited by scarcity of means of employment and the
rate of capital formation. But high wages may result in a shift in
favour of capital-intensive techniques and industries aggravat-
ing further the employment situation. To the extent this in not
done, high wages may reduce the surplus for capital formation
and affect employment potential. There is thus a conflict
between the employment and wage goals. Its intensity depends
on the choice of techniques and industries in the course of
planned development. We, however, believe that this conflict,
even when the techniques are given and cannot be changed in
certain sectors of the economy, is not such that it cannot be
resolved. Technologically, our economy will have to be for long
a dual economy with a large range of capital and labour
intensive techniques. Wage policy should foster an appropriate
choice of techniques so as to maximise employment at rising
levels of productivity and wages.
Wage policy should aim at a progressive increase in real wages.
At the same time, any sustained
improvement in real wages cannot be brought about without
increasing productivity. The real wages of any group of workers
cannot be unrelated to their productivity unless inroads into the
share of other groups are made. The urgency of improving
productivity levels to sustain increases in real wages cannot be
overemphasised. This in turn needs a widening and deepening
of capital to raise technology on the one hand and investment
in human capital on the other.
The wage levels will also have to recognise the dualism which
reflects itself in different areas of wage employment. We have
for instance the modern capital intensive large scale sector where
rewards will continue to be more attractive, both to capital and
labour. We have also, side by side, small enterprises and other
traditional labour-intensive sectors, including agriculture. A
uniformity in wage levels is either likely to affect the growth of
the latter if the wage level is high or make inequalities even
more glaring if the level is low and fiscal measures inefficient.
Wage differentials consequent on this dualism, i.e., simulta-
neous existence of the modern capital-intensive sector and the
traditional labour-intensive sector, are therefore, inevitable and
desirable. But this does not necessarily mean that all existing
differentials are scientific or based on differences in productivity.
Steps should therefore be taken to standardise job classifications
and reduce differentials, wherever necessary, to suitable limits on
a scientific basis.
The determination of wages implies evolving and sustaining a
wage structure which (i) permits a fair
remuneration to labour, (ii) permits a fair return to capital and
(iii) strengthens incentives to efficiency. Apart from these intra-
industry wage-differentials, the inter-industry and inter-regional
wage differentials have a relevance. The latter may be due to the
limitations of the market or on account of inter-regional
disparities in productivity due to differences in technology,
capital per worker or organisation. It is expected that with the
industries competing for skill in the country as a whole these
will soon be eliminated. Inter-industry differentials likewise are
also unjustified except on grounds of local differences in
technology and capital per worker.
Obviously, a crucial issue in regard to the wage-structure is that
of the level at which it should be fostered. Here, the right of
the workers for a fair standard, the claim of industry for
expansion through its own surplus, the charges on the industry
for public revenues, the need of the economy for resources and
the need of the consumer to get supplies at stable and fair
prices, all become relevant factors. But we are clear about one
point that the first claim is of the worker for a basic minimum
wage irrespective of any other consideration. Beyond this,
however, in the determination of wage differentials the capacity
to pay becomes relevant.
These considerations highlight the need for a wage-regulating
mechanism that should deal both with wage structure and its
level from time to time.
An area of wage adjustment which we would like to specifically
mention, and which is dealt with in detail in the next chapter, is
in regard to adjustments in wage levels due to price changes.
Often enough, the growth process may lead to a rise in the
general level of prices and a change in the structure of relative
prices. In order to protect the real wages from erosion, the level
of money wages has to be adjusted to price changes. The
present practice in this regard has been to pay dearness or dear
food allowance over and above the basic pay to take account of
an increase in prices. It is possible that this practice of adjust-
ment of wage levels may conceivably lead to inflation. It is also
possible that in an inflationary situation the mere maintenance
of the real wage itself may entail monetary outlays on a scale
which reduces the surpluses available for further investment.
Keeping living costs under check should therefore form an
integral part of wage policy. At the same time, social consider-
ations do cast an obligation to mitigate through some
adjustment mechanism the hardships caused by price increases
at least in respect of the vulnerable sections of labour.
We would like to emphasise here that the existing system of
neutralisation of a rise in the cost of living either through
dearness allowance or periodic wage adjustment can not fully
safeguard against a fall in real wages. Firstly there is a time lag;
secondly neutralisation can seldom be cent per cent at all levels;
and thirdly, the very process of neutralisation may push up the
cost of living further, giving rise to the well-known spiral in
MANAGEMENT OF INDUSTRIAL RELATIONS
which wages and living costs push up each other continuously.
This last relationship or the feed-back mechanism is, however,
often exaggerated. Firstly, the increased purchasing power in the
hands of the workers on account of compensatory payments
for rise in cost of living forms a small part of the overall
increase in purchasing power. Secondly, the elasticity of compen-
satory payments to changes in cost of living is generally less
than unity so that the feed-back must taper oft. Money wage
stability, though important for price stability, is seldom a
necessary, much less a sufficient condition for it. On the other
hand, holding of the price line, particularly of the cost of living,
is an adequate condition for preventing increases in money wage
payments that are not related to increases in productivity. This
alone can prevent a fall in real wages. Hence, policies that hold
down living costs should form an integral part of wage policy.
A successful implementation of such policies would not only
restrain increases in dearness allowance and compensatory wage
payments, but it would also lead to the stabilisation of prices
of goods whose costs are sensitive to wages.
Any wage policy, to be effective, has to take into account the
existing practices in regard to methods and modes of paying
wages as well as the machinery for wage determination. In the
context of improving production and productivity, it will have
to recognise the role and the feasibility of introduction of
payment by results in particular lines of activity with necessary
safeguards. The extent of prevalence of the system of payment
in kind and the existing practice of looking at the total wage as
comprising different components like basic wage, dearness
allowance and bonus have practical significance in wage determi-
nation and regulation. Benefits and privileges in kind partake
the nature of substitutes for cash compensatory allowances.
In the unorganised sector for the most part, adequate govern-
mental or quasi-governmental machinery may be necessary to
provide for minimum wage regulation according to conditions
in different areas and industries, but more specifically to protect
the workers in weak position. Thus it may be that different
institutional arrangements for wage fixation may be needed for
different groups. In one case, it could consist of Commission/
Boards for framing wage awards and suitable administrative
arrangements for supervising their implementation. In others,
both for reaching wage decisions and for enforcing them,
bipartite arrangements or collective bargaining between workers
and employers may be the most appropriate system. In still
other cases, a tripartite machinery may be appropriate. All these
can co-exist in the country depending upon the traditions and
experience which are built up for utilising them.
The broad objectives of wage policy as outlined by us have to
be looked upon as guidelines for instituting concrete steps as
the economy moves from one phase to another. In each phase,
the emphasis on different objectives may change. The main aim
of a wage policy as we envisage it is to bring wages into
conformity with the expectations of the working class and, in
the process, seek to maximise wage employment.
Review of Wages and Wage Policy
Our terms of reference make only a tangential and incidental
reference to the question of wages and productivity. They do
91
 not form part of the central focus of the task that has been
MANAGEMENT OF INDUSTRIAL RELATIONS
entrusted to us. Even so, it cannot be denied that wages and
productivity are among the central concerns of workers as well
as entrepreneurs. One seeks employment so that one can attain
a ‘decent’ or dignified standard of living. The wage or income
that one obtains from one’s work is therefore, what enables one
to achieve a fair standard of living. One seeks a fair wage both to
fulfill one’s basic needs and to feel reassured that one receives a
fair portion of the wealth that one works to generate for society.
Society, in its turn, feels that it has a duty to ensure a fair wage to
every worker, to ward off starvation and poverty, to promote
the growth of human resources, and to ensure social justice
without which continuous threats to law and order may
undermine economic progress.
But the resources to pay wages have also to be created. They
have to come from the economic
viability and profit of undertakings. So those who run under-
takings are concerned with their capacity to pay the wages that
are considered to be fair both in terms of individual needs and
the social responsibility to citizens.
Our Constitution accepts the responsibility of the state to create
an economic order in which every citizen finds employment and
receives a ‘fair wage’. One of the earliest decisions taken by the
government of free India was to set up a Committee to define
a fair wage, and indicate the economic and legal means for
ensuring a fair wage to every employed citizen. An examination
of this question established the integral relation between the
quantum of the fair wage and the capacity to pay the wage, and
the need to balance and constantly upgrade both to ensure a fair
standard of life, social security and social justice.
Ever since then, we have made many attempts to define the
concept of a fair wage, a minimum wage, a floor wage, and a
living wage. We have also tried to identify how far the capacity to
pay can be allowed to determine the minimum wage, and at
what point the capacity to pay should be taken into account and
should be regarded as the main determinant. The meandering
progress that we have made is reflected in the reports of
Committees, Conferences, Commissions, and Judgments of
the Supreme Court. They can also be traced to the Fundamental
Rights and Directive Principles specified in our Constitution
and the International Conventions we have accepted or ratified.
We will therefore, begin our observations with a review of the
thinking and legislation on wages in our country, and the ideas
and attempts at making wage differentials more equitable.
A Brief History of Wages
As early as in the year 1860, Government of India passed the
Employers’ and Workmen’s (Disputes)Act. This Act was an
enabling measureand was designed to secure settlement of
wage disputes by magistrates summarily. Along with this it also
provided for penal sanctions for breaches of contract by
workers. In the year 1929, the Royal Commission on Labour
found that the Act had ceased to be used. The Government
therefore, repealed the Act in 1932.
Legislation for the settlement of industrial disputes including
the setting up of Wage Boards was the subject of investigation
by the Governments of Bengal and Bombay in 1921 and 1922,
92
and the Government of India prepared a Bill on such disputes
in 1924. However, the Indian Trade Disputes Act 1929 pro-
vided for setting up Courts of Inquiry and Boards of
Conciliation for the settlement of industrial disputes. Some
provincial Governments assumed statutory powers to intervene
in labour management disputes and established machinery to
bring both labour and management together to settle such
disputes. These developments made a significant contribution
towards the evolution of a wage policy aimed at protecting
wages. The first direct step in this regard was taken in 1936,
when the Payment of Wages Act was passed.
With the commencement of the Second World War, the
Government assumed more powers under the Defence of
India Rules to ensure uninterrupted industrial production. Rule
81A of the Defence of India Rules issued in January 1942 gave
Government wide powers to make rules or issue special orders
to restrain strikes and lockouts and to refer any dispute
including wage disputes to conciliation or adjudication. The
broad features of these measures were later incorporated in the
Industrial Disputes Act of 1947 and agencies like Conciliation
Officers, Industrial Tribunals, Labour Courts etc. were set up by
the Government to promote the settlement of industrial
disputes.
In September 1946, the Interim Government announced a five-
year programme of legislative and administrative action in the
field which included: 1. Statutory prescription of minimum
wages in sweated industries, 2. Standardisation of wages and
occupational terms in all major industries and the determina-
tion of differentials in wage rates as between various
occupations in an industry, and 3. Promotion of “fair wage”
agreements wherever possible with due regard to the capacity of
the industry to pay.
In December 1947, the Government convened a tripartite
conference at which an Industrial Truce Resolution was adopted
unanimously. The object of the Resolution was to devise
measures to arrest rapidly deteriorating relations between labour
and management and to increase industrial production.
According to this Resolution, “the system of remuneration to
capital as well as labour must be so devised that while in the
interest of the consumers and primary producers, excessive
profits should be prevented by suitable measures of taxation
and otherwise, both will share the product of their common
effort after making provision for payment of fair wages to
labour, a fair return on capital employed in the industry and
reasonable reserve for the maintenance and expansion of the
undertakings”.
The Industrial Policy Resolution announced on 6th April 1948
emphasised (1) fixation of statutory minimum wages in
sweated industries and (2) promotion of fair wage agreements
in the more organised industries.
This made it necessary to quantify or lay down clear criteria to
identify a fair wage. Therefore, the Central Advisory Council in
its first session (November 1948) appointed a Tripartite
Committee on Fair Wages consisting of representatives of
employers, employees and Government to enquire into and
report on the subject of fair wages to labour.

LESSON 19:
COLLECTIVE BARGAINING AS A WAGE FIXATION METHOD
Learning Objective
The study of this lesson will help you:
• Understand of how collective bargaining concept helps in
the fixation of wages.
Committee on Fair Wages
The Committee on Fair Wages defined three different levels of
wages viz; living wage, fair wage and minimum wage. The
Committee felt that the living wage should enable the worker to
provide for himself and his family not merely the basic
essentials of food, clothing and shelter but a measure of frugal
comfort including education for children, protection against ill
health, requirements of essential social needs and a measure of
insurance against more important misfortunes including old
age. The Committee was not sure how it could aim at or
approach this standard in the prevailing economic conditions.
It, therefore, analysed the basis for fixing a minimum wage, and
came to the conclusion that a living wage should be the target.
Even in advanced countries the general level of wages and the
capacity of the industry to pay had been considered relevant. In
India, the level of the national income was so low that it was
generally accepted that the country could not afford to prescribe
by law a minimum wage which would correspond to the
concept of the living wage described in the preceding para-
graphs. Taking Indian conditions into consideration, the
Committee was of the view that a minimum wage must
provide not ‘merely for the bare sustenance of life, but for the
preservation of the efficiency of the worker’. For this purpose
the minimum wage must also provide for some measure of
education, medical requirements and amenities. It further
observed that its members were unanimous that the fair wage
should on no account be less than the minimum wage. It also
observed that while the lower limits of the fair wage must
obviously be the minimum wage the upper limit should be set
by what may broadly be called the capacity of industry to pay.
This would depend not only on the present economic position
of the industry but also on its future prospects. The Commit-
tee further recalled that between these two limits the actual
wages should depend on a consideration of the following
factors: a. the productivity of labour; b. the prevailing rates of
wages in the same or similar occupations in the same or
neighboring localities; c. the level of the national income and its
distribution; and d. the place of the industry in the economy of
the country.
It then went on to consider the first item, that is, productivity
of labour. It observed that in India collective bargaining had
not so far been a potent factor in the determination of wages.
That being so it was more than likely that at least in certain
occupations and industries the workers were getting a wage
lower than the value of their marginal net product. It also
observed that the awards of industrial tribunals and courts had
made only a casual reference to the productivity of labour. In
MANAGEMENT OF INDUSTRIAL RELATIONS
deciding upon a minimum wage, tribunals and courts had
largely been guided by considerations of the minimum needs
of workers and of the capacity of industry to pay. It was
therefore of the view that the wage fixing machinery should
relate to a fair wage, a fair rate of work and that in case of doubt
whether the existing work-load was reasonable or not proper,
time and motion studies should be instituted on a scientific
basis.
As regards the prevailing rates of wages, its observations were
that, while prevailing rates of wages fixed as a result of proper
collective bargaining would bear a close approximation to fair
wages and should, therefore, be taken into account in fixing fair
wages, the same could not be said of prevailing wages resulting
from unequal bargaining. The wage fixing machinery should
therefore make due allowance for any distortion of wages
caused by unequal bargaining.
It then referred to the question of the capacity of the industry
to pay. It first observed that the capacity would mean one of
three things, viz. (1) the capacity of a particular unit (marginal,
representative or average) to pay; (2) the capacity of a particular
industry as a whole to pay; or (3) the capacity of all industries in
the country to pay.Ideas on this subject have varied from
country to country. The Committee was, however, of the
opinion that capacity should not be measured in terms of the
individual establishment, but the main criterion should be the
profit-making capacity of the industry in the whole province.
The Fair Wages Committee was of the view that in determining
the capacity of the industry to pay, it would be wrong to go by
the capacity of a particular unit or the capacity of all the
industries in the country. The relevant criterion should be the
capacity of a particular industry in a specified region, and as far
as possible the same wages should be prescribed for all units of
the industry in that region.
As regards the measure of the capacity, there were two points of
view in the Committee itself. One view was that the wage fixing
machinery should, in determining the capacity of the industry
to pay, have regard to: (1) a fair return on capital and remunera-
tion to management; and (2) a fair allocation to reserves and
depreciation so as to keep the industry in a healthy condition.
The other view was that the fair wage must be paid at any cost,
and that industry must go on paying such a wage as long as it
does not encroach on the capital to pay that wage. The Commit-
tee was of the view that the main objective of the fixation of
fair wages should not be lost sight of. The objective was not
merely to determine wages which are fair in the abstract, but to
see that employment at the existing levels is not only main-
tained but if possible increased. From this point of view, it will
be clear that the level of wages should be such as enables the
industry to maintain production with efficiency. The Commit-
tee, therefore, recommended that the capacity of the industry to
pay should be assessed by the wage board in the light of this
93
 very important consideration. The wage board should also be
MANAGEMENT OF INDUSTRIAL RELATIONS
charged with the duty of seeing that the fair wages fixed for any
particular industry are not very much out of line with wages in
other industries in the region because wide disparities would
inevitably lead to movement of labour and consequent
industrial unrest not only in the industry concerned but in other
industries as well.
The Committee then considered the classes of workers for
whom, and industries in regard to which, fair wages should be
determined. It came to the conclusion that in the initial stages,
in view of administrative and other difficulties, provision
needed to be made for the fixation of fair wages of only
categories up to the supervisory level. The Committee observed
that in the written evidence received by them, there was
unanimity of opinion that fair wages should be determined on
an industry-cum-region basis. The Committee supported that
view since it felt that it would not be feasible to fix wages on
any other basis.
The Committee then identified the criteria that had to be
considered in fixing wage differentials as: 1. the degree of skill,
2. the strain of work, 3. the experience involved, 4. the training
required, 5. the responsibility undertaken, 6. the mental and
physical requirements, 7. the disagreeableness of the task, 8. the
hazard attendant on the work, and 9. the fatigue involved.
The Committee was of the view that the wage fixing authorities
should carefully go into the question of wage differentials after
deciding on the weight to be attached to each of the above
factors. It felt that it was not possible to advise the wage fixing
machinery on what weight should be attached to each factor, as
it was a matter that would have to be evolved gradually on the
basis of experience. The Committee also suggested that the
wage board should try to evolve standard occupational nomen-
clature so that the work of classifying and assessing may be
undertaken on a uniform basis throughout the country.
We have dealt in detail about the report of this Committee
because it has influenced the principles of wage fixation, the
form of wage fixation machinery and other matters for a long
time. The judiciary too has evolved many principles of wage
fixation basing themselves on the criteria prescribed by this
Committee.
Setting up of Wage Boards
The First and Second Five Year Plans gave importance to (1)
laying down principles for bringing wages in conformity with
the aspirations of the working class and (2) setting up an
appropriate machinery for the application of these principles.
According to them, the existing machinery for the settlement of
disputes, namely the Industrial Tribunals, had not succeeded in
giving full satisfaction to the parties and, therefore, they
recommended authorities like Tripartite Wage Boards consisting
of equal representatives of employers and workers and an
independent Chairman. Accordingly, Wage Boards were set up
for the following sectors: cotton textile industry, jute, planta-
tions, mines, engineering, iron and steel, chemicals, sugar,
cement, railways, posts and telegraphs, ports and docks etc.
12.152 For quite some time, these Wage Boards determined the
wages and other remuneration to be given to the workers in
these industries. Thus wage bargaining mostly took place at the
94
industry level, and through Government controlled wage
boards. Since there were not much regional variations, this
system worked well for quite some time.
In 1973 and 1978, Indian economy suffered two oil shocks.
During these years the actual growth rates of industrial
production fell far below the plan targets; unemployment rates
doubled, new forms of workers’ protests such as hartal, go-
slow and gherao emerged. The number of strikes and the
number of mandays lost increased considerably. This culmi-
nated into an all India Railway Strike in May 1974 that paralysed
the entire economy.
This period also saw the growth of independent plant based
militant unions without any political affiliations. In order to
share the monopoly gains of an industrial unit and productivity
increases as a result of technological changes, such unions were
organised on unit basis, and through their militancy, they were
successful in obtaining much higher wages and other facilities
for the workers. Slowly industry-wise wage boards and wage
settlements took a back seat, and company-wise negotiations
and wage settlements emerged. Though there are many
principles that are taken into consideration in wage determina-
tion in the unit-based bargaining system, the two main
principles are: first, the capacity of the industrial unit to pay, and
second, the bargaining strength of the trade union to negotiate
with the management.
Sectoral Bargaining at the National Level
As has been said earlier, prior to the 1970s, Wage Boards
appointed by the Government gave awards on wages and
working conditions. The number of Wage Boards declined
from 19 in the late 1960s to two (one for journalists and other
for non-journalist newspaper employees) in the late 1990s. Since
the early 1970s sectoral bargaining at the national level has been
occurring mainly in industries in which the government was the
dominant player. These included banks and coal, steel and ports
and docks. Fifty eight private, public and multinational banks
are members of the Indian Banks’ Association. They negotiate
long-term settlements with the All India Federations of Bank
Employees. There is one national agreement for the entire coal
industry. In steel, there is a permanent bipartite committee for
integrated steel mills in the public and private sectors. Since
1969, this Committee, called the National Joint Consultative
Committee for Steel Industry (NJCS), has signed six long-term
settlements. The 11 major ports in the country have formed the
Indian Ports’ Association. They hold negotiations with the
industrial federations of the major national trade union centres
in the country.
A feature of national-level sectoral bargaining is the presence of
a single employer body and the involvement of the concerned
administrative ministry from the employers’ side. In many
sectors, two to five major national centres of trade unions,
which have a major presence through their respective industry
federations of workers’ organisations, negotiate. In banks, coal
and ports and docks, often agreements have been preceded by
strikes or threats of strike. It is only in the steel industry that
this has not happened during the past 29 years. Even though
industry-wide bargaining is not extended to the oil sector,
which was nationalised in the 1970s, the oil coordination
committees achieve a great deal of standardisation in pay and
service conditions even if collective bargaining occurs at the firm
and/or plant level (for instance, Hindustan Petroleum Corpora-
tion Limited). Agreements in banking and coal covered 8,00,000
workers each while those in steel and ports and docks covered
2,50,000 workers each.
Wage Policy – Theory and Various Issues
Wage policies have engaged the attention of politicians,
administrators, and academic analysts for many years now. We
have the classical theory of wages, insideroutsider models, and
the efficiency wage theory - that have emerged in the USA, and
quite a few other models and theories. Perhaps it is also
possible to visualise other criteria and models. But we have not
gone into the advantages and disadvantages or compulsions of
all these theories because we feel that a self-contained and
detailed discussion of all these are beyond the terms of
reference of our Commission. We have suggested elsewhere
that the Government should appoint a high level committee
with technically competent people including economists, trade
unionists, entrepreneurs, consumers, and establishments to go
into all aspects of the inter-related questions and to formulate a
national wage policy. It should have been done much earlier in
view of the commitments in our Constitution and the
Conventions we have accepted. The need has become all the
more important in the light of the new circumstances and
changed factors that have emerged with globalisation and new
technology.
Growth in Inequality of Wages and
Earnings
There is increasing inequality in the labour market, and wage
differentials present among various groups and various sectors
of the economy. There are large interindustry and intra-industry
wage differentials. In different sectors of the economy, a worker
will be paid differently though he may be doing the same kind
of job. Even in the same industry, different units may pay
different wages for the worker who is having the same measur-
able skills. First the differentials are found across a occupations:
the firms that pay professionals a premium over the market
average also pay less skilled workers a premium over the average
in their occupations. Second, these differentials have a strong
tendency to persist over time, industries that pay premia in one
period tend to be found paying them in later periods.
Different areas of wage employment will have different wage
levels and we have to recognise this fact. We have the modern
capital intensive organised sector of IT industry, petro-
chemicals, pharmaceuticals, etc., where wages and other
allowances are likely to be more attractive than in small-scale
industry and other traditional labour-intensive sectors such as
the unorganised urban and rural sector and agriculture. Though
our efforts should be to reduce these wage differentials and
introduce some sort of standardisation, as the matter stands
today, it is practically very difficult and these differences in
earnings of the workers in different sectors of industry are likely
to continue. Much depends upon the capacity to pay and
profitability of these sectors. Any wage policy will have to take
these factors into consideration.
Rise in Real Wages
MANAGEMENT OF INDUSTRIAL RELATIONS
A wage policy will also have to aim at a progressive rise in real
wages. Wage increases can come on account of increase in cost
of living and improvement in standard of living. As a result of
increase in prices, there is an erosion in the wage levels in real
terms, and in order to prevent such an erosion, dearness
allowance is paid and it is linked to the consumer price index.
There are various methods of linking the consumer price index
with the dearness allowance and determining the extent of
neutralisation of price rise through payment of D. A. Some
enterprises pay a fixed dearness allowance and also a variable
dearness allowance linked to the consumer price index. Some
pay dearness allowance only linked to the consumer price index.
The extent of neutralisation also differs from organisation to
organisation.
In 1978, Government of India appointed a Committee on
Consumer Price Index Numbers under the chairmanship of Dr.
N. Rath. After examining the method of constructing con-
sumer price index numbers that was being followed at that time
by the Labour Bureau, Shimla, the Committee made a number
of suggestions regarding collection of information for
constructing index numbers, the number of centres to be
covered, coverage of workers, sample size design for family
living surveys, selection of commodities, linking factors, etc. We
are told that based on the recommendations of this Commit-
tee, the series were suitably revised.
The present series of consumer price index for industrial
workers for 70 centres, all India and 6 additional centres (on the
base year 1982 = 100) is based on the working class family
income and expenditure surveys conducted during 1981-82.
These series were released w.e.f October 1988 index. As per ILO
Recommendation (Recommendation No. 170 vis-à-vis
Convention No. 160 ratified by India in 1992) the Household
Expenditure Surveys should be conducted at least once in every
ten years. But the work was delayed because of the delay in
sanctioning the scheme. Now in 1999 - 2000, the surveys have
been conducted at 78 centres by the Labour Bureau, Shimla
through the NSSO. On the basis of this survey, new series are
likely to be released in 2003. Thus there is a considerable delay in
conducting the survey and in constructing the new series of
index numbers.
Therefore, the very purpose of linking dearness allowance to the
price index is lost. This is because the consumption pattern of
the population undergoes changes, many varieties of items go
out of the market and prices for them are not available, some
items become obsolete, and since the index numbers have an
upward bias, the employers have to pay higher dearness
allowance than is necessary.
Therefore, it is necessary that the consumption surveys are
conducted with fixed periodicity and new series of index
numbers are constructed every ten years. A suggestion has been
made that there should be a separate legislation to ensure that
new index series are undertaken on the basis of fixed time
schedules. For this provision has to be made for necessary
resources, staff components, cooperation from NSSO and State
Governments etc. The Commission endorses this suggestion
and would request the Ministry of Labour to move in the
95
 matter. Apart from the organised sector, dearness allowance is
MANAGEMENT OF INDUSTRIAL RELATIONS
also paid to workers in the unorganised sector as a part of
minimum wages. Their dearness allowance is revised every six
months depending upon the movement of index numbers.
This is how erosion in the purchasing power of workers in the
unorganised sector is prevented. For them too, it is necessary to
assure revision of consumer price index at fixed time intervals.
Wages in the Unorganised Sector
If one is considering the problem of a wage policy from the
point of view of the national economy, one cannot restrict
one’s vision only to the organised sector. A national wage policy
must bring within its purview problems of workers in the
unorganised sectors who are not unionised and therefore who
have no bargaining strength. In fact the entire emphasis of
Government wage policy should be on fixing minimum wages
and implementing them for the workers in the unorganised
sector. Fixing a national minimum wage, fixing minimum
wages for different jobs in the unorganised sector, revising these
wages periodically, linking them to dearness allowance in order
to prevent erosion in real wages and the like assume much
significance in this context. Government has to set up a proper
machinery for fixing these wages and also ensuring that they are
paid.
Objectives of a Rational Wage Policy
What can be the objectives of a rational wage policy? There are
many objectives, and we have to isolate and discuss them
separately. a) Do we need a national minimum wage in order to
ensure that those who are employed in any region or in any
sector of the economy are assured of a minimum income that
can buy minimum necessities of life for them? b) Do we need a
wage policy under which we have to secure as much employ-
ment as possible? Is it necessary to have a poverty level low
wage for this purpose? c) Do we need a wage policy as part of a
total anti-poverty programme in which our goal is to remove
poverty of the bottom classes of our society through the use
of employment at a level of wages which removes such
poverty? d) Do we want to remove the differentials of wages of
workers in the organised sectors, and between the organised
and the unorganised sectors? Is it possible to do so? e) Is it
possible to standardise wages in the same type of industry?
Should we attempt to do so? f ) Should we give more empha-
sis on prescribing wages for the unorganised sector, and leave
the wages in the organised sector to be decided by collective
bargaining? g) What can we do to ensure at least a minimum
income to the workers in the unorganised sector? h) Can the
wage rise be linked to increase in productivity? i) Can we have a
wages, incomes and prices policy? What is the practical shape it
can take, and what will be the machinery to enforce it?
National Minimum Wage
Various Committees and Commissions have discussed the
necessity of introducing the concept of a national minimum
wage below which no employer should be allowed to engage
any worker in the country. The advocates of a national mini-
mum wage claim that such a minimum would have more
extensive coverage, and would make implementation easier and
effective because of its simplicity and applicability to all types of
employments in all parts of the country.
96
Recommendations of the First National
Commission on Labour
The First National Commission on Labour discussed this issue
and came to the conclusion that “a national minimum wage in
the sense of a uniform minimum monetary remuneration for
the country as a whole is neither feasible nor desirable. If one is
fixed, the dangers are that there will be areas which will not
afford the minimum if the minimum is worked out somewhat
optimistically. And if calculations are allowed to be influenced
by what a poorer region or industry can pay, the national
minimum will not be worthy enforcing”.
The Commission also pointed out the difficulties in construct-
ing a national minimum wage because of the large variations in
consumption patterns of persons in different regions, the wide
variety of items used by them, regional price variations and so
on. In view of these, the Commission suggested that in
different homogeneous regions in each state regional minima
could be notified. The Commission recommended fixation of
such regional minima in view of the wide variation in rates of
minimum wages fixed under the Act even within a small
geographical region.
Recommendations of the Bhoothlingam
Committee
Government of India set up a Study Group on Wages,
Incomes and Prices, popularly known as the Bhoothlingam
Committee in 1977. The Committee gave its report to the
Government in 1978. This Committee did not agree with the
recommendations of First National Labour Commission, and
said that “in our view, the real minimum wage can only be the
absolute national minimum, irrespective of sectors, regions or
States below which no employment would be permitted”. This
Group also observed that in determining such a national
minimum wage, several considerations had to be kept in view
and it had to be consistent with factors like (a) the per capita
national income adjusted after applying the participation rate (b)
average national income per consumption unit and (c) per capita
rural consumption expenditure. It could not also deviate too
much from prevalent earnings in the small-scale sector and its
impact must not be such as to inhibit the generation of
employment. It recommended that the national minimum
wage should be Rs.150 per month at 1978 prices, to be achieved
within a period of seven years, starting with not less than Rs.4
per day for eight hours of unskilled work or not less than Rs.
100 per month and being revised every two years to achieve the
goal. Thereafter the revision in the minimum wage should be
done every three years (as was also recommended by the
National Commission on Labour, 1969) in relation to the trend
increase in per capita national income. This minimum wage was
to be applicable throughout the country for unskilled work for
every adult of 18 years or above, irrespective of sex, bringing up
the statutory minimum wages wherever they were lower. State
Governments were to continue to have the freedom to fix
higher minimum wages wherever they were lower. For the
agricultural sector the Group felt that a desirable minimum rural
household income would be a more meaningful concept
because of the irregular and seasonal nature of employment
and unstable and varied sources of income. The minimum
income to be aimed at should be such as to enable the bottom
30% to come up roughly to the level of the next higher decile.
It was placed at Rs.1800 per annum (1977-78 prices) for
planning purposes. Policy measures should be directed towards
creating conditions in which the households of those who
work part time or sporadically, as well as landless labourers and
marginal farmers are enabled to earn the minimum within a
period of seven years. The measures were to include improve-
ment of the productivity of marginal farmers through higher
value crops and increasing opportunities for work with better
returns.
Recommendations of the National
Commission on Rural Labour
In 1991, the National Commission on Rural Labour consti-
tuted under the chairmanship of Dr. C. H. Hanumanth Rao
made a strong recommendation for a national minimum wage
for rural labour. They deplored the wide variations in the
minimum wages prescribed for unskilled workers in agriculture
by various State Governments, and laid down the following
principles for fixation of minimum wages: a) the cost of living
relating to the minimum subsistence level for the worker and
his family of three adult consumption units, and b) the
minimum wage will be the same for all employments
The National Commission on Rural Labour thought that the
application of these principles would naturally bring about
uniformity in the minimum wages throughout the country
irrespective of the authorities notifying the wage. The Commis-
sion called this the basic minimum wage applicable for the
country as a whole, and no wage should be fixed or permitted
below this level. This is to be distinguished from the minimum
wage which may be notified above this level under the Mini-
mum Wages Act by different State Governments. Differences in
the wages arrived at on the basis of cost of living would be
accounted for only by the differences in the comparative cost of
living between various regions in the country. The Commission
felt that this approach will admit of minor variations.
Recommendation by the National
Commission on Self Employed Women
In 1987, the National Commission on Self Employed Women
and Women in the Informal Sector was appointed with Mrs.
Ela Bhatt as the Chairperson. In its report, the Commission
recommended a reasonable wage of Rs. 500 for women
workers. The Commission did not call it a national minimum
wage, but it amounts to the same.
The National Minimum Wage has been discussed on many
other occasions in different fora. Because fixation of wages
depends on a number of criteria like local conditions, cost of
living and paying capacity which vary from State to State and
from industry to industry, many difficulties have been pointed
out. The Indian Labour Conference held in November, 1985
expressed the following view: “Till such time a national wage is
feasible, it would be desirable to have regional minimum wages
in regard to which the Central Government may lay down the
guidelines. The Minimum Wages should be revised at regular
periodicity and should be linked with rise in the cost of living”.
Accordingly, the Government issued guidelines in July, 1987 for
MANAGEMENT OF INDUSTRIAL RELATIONS
setting up Regional Minimum Wages Advisory Committees.
These committees renamed subsequently as Regional Labour
Ministers’ Conference, made a number of recommendations
which included reduction in disparities in minimum wages in
different States of a region, setting up of Inter-State Coordina-
tion Council, consultation with neighbouring States while
fixing/ revising minimum wages etc.
Floor Level Minimum Wage
In the absence of a National Minimum Wage Policy, the Central
Government introduced the concept of a National Floor Level
Minimum Wage of Rs. 35/- per day in 1996 based on the
recommendations of the National Commission on Rural
Labour. The floor level of minimum wage was further
enhanced to Rs. 40 per day in August 1998. We were told that
this had been revised to Rs. 45 this year, and accordingly the
Prime Minister had written letters to all State Governments. For
the time being this has become a sort of national minimum
wage. It can, therefore, be that till such time as a National
Minimum Wage Policy is evolved, this floor level minimum
wage may be treated as the current national minimum wage.
In view of the importance of the subject, our Commission
feels that the Government of India should appoint an expert
Committee to study the pros and cons of this subject and
make suitable recommendations for the construction of such a
national minimum wage.
Our Constitution gives us a mandate to assure ‘fair wages’ to
the workers. We have endorsed this commitment in the
International Conventions and Declarations that we have
accepted. A Fair Wage Committee was appointed in 1948. In
spite of all this, we have not been able to determine a national
minimum wage. The diversities in the different parts of the
country and different regions in the same State, including
unequal capacities to pay, have delayed the fulfilment of the
promise in the Constitution. Some Committees have held the
view that a uniform national minimum wage is difficult to
determine, and will be even more difficult to enforce every-
where. Some members of our Commission hold the same
view, and feel that it may be impractical to suggest a national
minimum wage. The general opinion in the Commission is
that the concept or commitment of a national minimum wage
can not abandoned on the plea that there are difficulties. It has
to remain an ideal or goal to be reached. We have recommended
that an Expert Committee must be appointed to study all
aspects, and make a recommendation that is practical and leads
to the goal even if it is in progressive phases. Till we reach the
target, our immediate attempt should be to progress towards
the next phase, leading from a floor level minimum wage to a
regional minimum and finally to a national minimum. In
determining such a wage, the recommendations of different
Committees, the 15th session of the ILC, and the judgments
of the Supreme Court should be used as guidelines
Low Wage Policy
As is said earlier, now no one advocates a low wage policy, and
payment of the minimum wage as prescribed is legally binding
on the employers. But such a low wage policy was advocated by
a few economists and politicians in order to encourage employ-
97
 ment in the country, and in order to keep industrial costs down.
MANAGEMENT OF INDUSTRIAL RELATIONS
The first Five Year Plan had also warned against any upward
movement of wages. Their theory was that if wages are low,
more employment can be generated in the country, and costs of
production of products can also be held under check.
Differentials in Wages
What should be the maximum-minimum differential in wages
of employees of an organisation?
It is difficult to lay down a clear cut criterion for fixing an
appropriate ratio between salaries of the top management and
wages paid to the worker at the lowest rung of the ladder. In
general, the ratio seems to be high in a developing country
where the level of higher education in many fields is not
commensurate with the needs of economic development and
where the general level of education of workers is not very high.
Therefore, the unskilled worker is paid the minimum, and
managerial experts whose skills are rare are paid much more.
Sometimes, foreign experts are also hired, from countries where
the general levels of pay are high compared to our country, and
they have to be paid much higher salaries than would be
warranted by the paying capacity of our country. Higher salaries
are thus fixed externally at the international level. Thus they get
completely out of line with the wages of purely local labour
which is unskilled and which is abundant in supply.
It would be worthwhile to quote the example of China. In
China as well as in the erstwhile communist East European
economies bringing down maximum and minimum differen-
tial had been one of the important objectives of a wage policy.
Government of India had tried to fix a ceiling on managerial
remuneration, and thus an effort was made to bring down the
differential in wages in private enterprises. But as a result of
persistent demand and severe criticism, after the new economic
policy of liberalisation, the ceiling on managerial remuneration
was raised substantially in July 1993 and relaxed completely for
profit making companies in February 1994. Companies were
required to make disclosures for employees earning more than
Rs. 12 lakh annually. But their number has increased consider-
ably over the years. Now under Schedule XIII of the
Companies Act 1956, companies can pay 100% increase in the
maximum level of remuneration. Therefore, the clause has been
amended, and Companies need to give details of only such
employees as are paid over Rs. 24 lakh per annum. The trend is
towards increased remuneration to top management and
widening differentials. Apart from the removal of such ceilings,
most of the top managerial personnel receive a share of 1 or 2
percent in the profits of the company. In addition to this they
also receive perquisites like free housing, chauffeur driven cars,
free club memberships, free international travel etc. In the
absence of full data, it is very difficult to comment generally on
the wage-differentials. But the general observation is that after
the policy of economic liberalisation, these differentials have
been further widened.
The Fifth Pay Commission appointed by Government of India
has discussed this issue while fixing maximum pay for Govern-
ment servants. The Commission had analysed the maximum
and minimum disparity ratios of Government servants. Their
conclusions were: a) During the period 1948-1996, the mini-
98
mum salary of the lowest Government employee rose from
Rs.55 to Rs.2,060. b) During the same period, the pretax
maximum salary rose from Rs. 3,000 to Rs. 16,580, while the
post-tax salary rose from Rs. 2,263 to Rs. 12,615. c) The
disparity ratio between the maximum pre-tax remuneration and
the minimum went down progressively from 54.5 (1948) to
46.2 (1949), 37.5 (1959), 34.0 (1965), 24.8 (1970), 10.7 (1986)
and 8.0 (1996). d) The post-tax disparity ratio came down even
more drastically from 41.0 (1948) to 6.1 (1996). The post-tax
ratios were naturally lower than the pre-tax ratios because of
progressive rates of taxation.
The falling disparity ratio was the result of a deliberate policy
followed by successive Commissions. This was probably in
tune with the prevalent socialist ideas of the time. The ratios
did not remain constant even in the intervening period between
two consecutive Pay Commissions. Thus the pre-tax ratio
slipped from 10.7 (1986) to 8.0 (1996). This phenomenon is
explained by the prevailing practice of offering only partial
neutralisation for increased cost of living at the higher levels,
while there is complete neutralisation at the lower level.
International Comparisons
The Fifth Pay Commission had also collected data from various
countries in order to know these differentials in wages. The
information received on maximum-minimum Government pay
scales in different countries was as follows:
International Disparity ratios, 1995
Country Ratio Country Ratio Malaysia 3.0 Sweden 4.0 France 6.6
Indonesia 6.9 Australia 7.7 China 8.0 Thailand 9.0 Hongkong
40.0 Perhaps the disparity ratios are likely to be different for the
private sector enterprises in these countries.
The Fifth Pay Commission had also carried out studies on
remuneration paid to top management personnel in the private
sector. Their observations were as follows: a) The CEO in
private sector gets a pay packet which is nearly 50% higher than
his counterparts in public sector undertakings and Government.
b) In addition to the salary, the CEO in private sector draws an
average performance related incentive which works out to 65%
of the basic salary. c) The CEO in private sector draws sundry
allowances for club membership, credit cards, services, ameni-
ties, domestic servants, use of car, housing, free travel etc.
Thus there was, and even now there is a difference in the
compensation paid to employees in the private sector and to
Government employees. It can be observed that the disparity
ratio ranges between 3 in Malaysia and 40 in Hongkong.
An OECD study on the salaries of senior functionaries has
reported that Japan, UK and Canada reward their senior civil
servants better than Germany, USA, the Netherlands, Ireland,
Australia, France, Finland and Sweden. While the real incomes
of senior civil servants rose in the range of 20 to 40% between
1980 and 1990 in the case of Japan, UK, Canada, Ireland,
Finland, Sweden and US, it fell in the case of Germany, the
Netherlands, Australia and France. Differentials between the
senior and lower grades are clearly compressed in the case of
Canada, Australia, France, Germany, the Netherlands, UK and
US. Also substantial remuneration discounts for public service
vis a vis private service exist in countries like France, Germany
and the United Kingdom. This information is for the year 1995
and for Government servants in the respective countries.
The increase in the salaries of the Government employees as a
result of the Pay Commission recommendations, resulted in
pre-tax disparity ratio between maximum and minimum
remuneration reach the level of 10.7
Logic of Wage Differentials
What is the logic of this differential in wages? The chief factor
determining the excess earning of trained personnel over
minimum wage is the cost of investment in education,
including time spent on education, the excess earning being
meant to compensate for the investments and time spent in
education. Secondly, in the case of top managerial personnel,
they have adequate technical experience of management, they
have to carry risks of business and are responsible to produce
results. Their job is more than full-time. Therefore, they are to
be paid higher salaries to compensate for the risks and for
sacrificing all their time for business. Such managerial talents are
rare to be found and therefore, they have to be adequately
compensated and retained. 12.196 How does it happen that a
film star receives a remuneration which is so much higher than
that of a street cleaner? Why does a foreman receive more than
an unskilled worker, or an accountant more than a sweeper?
These are stock questions to be found in economic text books.
The answers given also are stock answers. Foremen and
accountants are few have to spend long years in training and
unskilled workers and sweepers are available in plenty and they
need no training. This is the way the differentials in employ-
ments are sought to be justified. The actual higher or lower
wages depend upon the scarcity of labour in that category.
The country needs to reward persons who have put in more
efforts to acquire specialised skills, as long as better quality or
talent is sought to be recruited or trained. Moreover the
differentials will continue to exist when the intellectual capital of
a person, skills and experience acquired differ from person to
person. This also differs from industry to industry. In a labour
intensive industry say cotton textile industry, where wages
constitute 25% of the total costs, we see that wages per worker
are lower than in a capital intensive industry like petro-chemicals
or fine chemicals. Again a small industry or an industry in rural
area is not expected to pay the same wages and fringe benefits to
workers as in large-scale industry. The capacity and profitability
of such industries is much less, and the skills required from
workers in such small units are also less. We can hope that over
a period of time these differentials will narrow.
Thus the differentials in wages are bound to persist and it is
difficult to eliminate them. Their differential ratio perhaps can
be brought down by judicious wage policies to be pursued at
the enterprise level. It is up to the management of the enter-
prise to initiate action.
As long as we follow a laissez-faire policy in respect of wages
and both employers and employees are free to fix their wages,
the Government will find it difficult to exercise strict control.
As has been mentioned earlier, there have been differences in
the wages paid in different sectors. These differences prevailed
for the same skills within an industry itself and that too at the
same place. This problem has been discussed in India since
MANAGEMENT OF INDUSTRIAL RELATIONS
long. As far back as in 1922, the Bombay Industrial Disputes
Committee discussed this problem and again the Textile Tariff
Board did so in 1927. The Whitley Commission pointed out
the need for adopting a common standard of payments for
similar classes of work in some of the leading industries. In
1934, a wage census was conducted by the Government of
Bombay and it compiled data for standardisation. The Textile
Labour Enquiry Committee (1940) and Committee on Fair
Wage (1948) showed strong preference in favour of
standardisation. The First National Commission advocated
standardisation of occupational nomenclature and arrange-
ments for a wage census on a regular basis because it felt that,
that would assist in standardising wage rates
In the changed circumstances, with a variety of wage rates in
different industries and in enterprises of the same industry,
standardisation has become pretty difficult. This is because of
the large variation in the capacity of each industry to pay and
different market conditions in which they operate.
West Bengal Experiment
But because of the peculiar circumstances in the seventies, this
standardisation was brought about in the engineering industry
in West Bengal. This was a unique experiment that is worth
mentioning.
In the sixties, wages in major industries in West Bengal such as
jute, cotton textiles, plantation and engineering, wage fixation
and revision in salary scales was done through awards of
industrial adjudication. Thus in the case of the engineering
industry, there were three omnibus engineering tribunal awards
namely that of 1948, of 1950 and of 1958. These were followed
by Wage Board recommendations for the engineering industry
in 1966. There was also a Special Engineering Tribunal Award
which was known as the 7th Industrial Tribunal Award which
related to engineering establishments employing less than 250
employees.
Around 1969, when the leftist government came to power in
West Bengal, the image of West Bengal industry suffered a set
back. Those were the days of gheraos, strikes, sudden stoppage
of work, frequent intimidation by workers etc. As a result, the
State received a big set back in its industrial development.
Investors were not prepared to go to West Bengal and no new
industrial projects were coming up in West Bengal. The
Government wanted to improve this tarnished image of the
state. It took considrable interest in settling labour problems
and in ensuring investors that there would be no labour
problems in the state. Most of the trade unions were controlled
by the leftist parties and, therefore, it was easy to convince the
trade unions and force them to be more accommodative and
less militant. As a part of this effort, the parties in power
almost forced trade unions in the State to come together and
carry on negotiations with industry to have industry-wise wage
settlements. As a result, the first wage settlement in the
engineering industry in West Bengal was signed in 1969. The
Government played a major role in bringing the two parties
together and forcing them to sign such a settlement. Following
this settlement, four successive industry wise agreements
through collective bargaining and intervention of the Govern-
99
 ment were reached in 1973, 1979, 1983 and 1988. Most of the
MANAGEMENT OF INDUSTRIAL RELATIONS
Federations of Trade Unions, and the Confederation of Indian
Engineering Industries (CIEI) would sit and negotiate wages
of all types of workers in engineering industries in West Bengal.
A good deal of preparatory work was also done by both unions
and employers.
Role played by the State Government
The State Government played a positive role in bringing about
the settlements. All the meetings of negotiations were presided
over by the Labour Commissioner and he acted as a conciliation
officer. If there was an impasse in negotiations, there was
political intervention and the Labour Minister as well as the
Chief Minister intervened to see that the negotiations were
successful. The State Government tried to bring both parties
together. It used its influence and saw that there was a reason-
able settlement. The State Government was also a party to the
settlement and, therefore, this was a tripartite settlement. This
was a unique experiment and, therefore, it has been narrated in
detail. At no other place, according to our information, were
such experiments carried out. Now we are told that this system
of industry-wise negotiations do not take place, and unit-wise
bargaining is resorted to.
Wage Determination through Collective
Bargaining
We have earlier refered to the elimination of Industry level Wage
Boards and the increasing trend of resorting to collective
bargaining at the individual plant level. Let us understand the
legal position of such agreements. There is no law at the
national level for recognition of trade unions. But some states
like Maharashtra and Madhya Pradesh have legal provisions for
recognition. In some states like Orissa, West Bengal and
Andhra Pradesh, unions are recognised as bargaining agents
through secret ballots. Under section 2(p) of the Industrial
Disputes Act, 1947 collective agreements can be reached with or
without the involvement of the conciliation machinery
established by legislation. While settelments reached in concilia-
tion are binding on all parties, settelments arrived at, otherwise
than in the course of conciliation proceedings are binding only
on parties to the agreement. It is not binding on workmen who
did not sign the agreement or did not authorise any other
workman to sign on his behalf. A collective agreement presup-
poses the participation and consent of all the interested parties.
When workmen are members of different unions, every union,
without regard to whether or not it represents a majority,
cannot, but be considered an interested party. Also, some
workmen may not choose to be members of any union and
one or more unions may, for reasons of their own, not like to
reach a settlement. Section 2(p), and 18(3) of the Industrial
Disputes Act, 1947 deal with such practical difficulties by
making collective agreements binding even on indifferent or
unwilling workmen as the conciliation officer’s presence is
supposed to ensure that the agreement is bonafide
Unorganised Sector
Collective bargaining is not common in the unorganised sector.
In several cases bipartite collective agreements in the
unorganised sector have provided for wages lower than the
applicable minimum wages. Where such agreements are entered
100
into through conciliation and/or registered with the appropriate
government, the labour commissioners concerned are expected
to ensure that the wages, benefits and other conditions are not
lower than the applicable minimum wages and other standards
laid down in labour laws
Special Features of such Collective
Agreements
In any industry, some units are doing well and some are not
doing so well. While signing wage agreements on industry-wise
basis, one has to take care of what is affordable to the least
profitable unit in the industry. Many times workers in more
profitable units feel that they are not given adequate remunera-
tion and facilities. This was one important reason why trade
unions in such profitable units opted out, and signed indi-
vidual agreements with managements of such companies. As a
result, they got better remuneration and better facilities. As has
been started earlier, workers in such prosperous enterprises were
able to wages that were described as disproportionate. They
were also able to share the monoply gains of such companies
because of the militant methods they followed.
Following are the some of the special features of such agree-
ments: (a) A steep rise in wages not comparable to any other
sector of the economy. Unions were able to achieve better terms
because of their bargaining power. (b) As a result of the steep
increase in wages, incomes of many workers became taxable.
Unions then preferred a variety of allowances apart from rise in
wages. Some of these allowances were not taxable. One will
thus find a variety of allowances being added to emoluments.
Thus, as in the case of managerial personnel, workers too have
had the benefit of augmenting incomes through special
allowances and perquisites
Wages are generally defined as only basic wage, fixed and variable
dearness allowance and not any other allowance and benefits.
Thus all the other allowances paid and monetary value of the
facilities provided by employers in the organised sector are not
included in “wages”. But the value of all these allowances and
perquisites is substantial if one is to compute the total remu-
neration paid to the workers.
Court Decisions
The principles of wage determination have been greatly
influenced by Court decisions from time to time. In many cases
of wage disputes, the Supreme Court has given decisions which
lay down some principles of wage fixation and these principles
later have become important factors in wage determination.
Here are a few important decisions.
In the case of Crown Aluminium Works vs. their workmen
(1958 I LLJ 1), on the specific issue of capacity to pay, the
Supreme Court has said “There is, however, one principle which
admits of no exceptions. No industry has a right to exist unless
it is able to pay its workmen at least a bare minimum wage. It is
quite likely that in the under-developed countries where
unemployment prevails on a very large scale, unorganised
labour may be available on starvation wages.....
If an employer can not maintain his enterprise without cutting
down the wages of his employees below even a bare subsis-
tence or minimum wage, he would have no right to conduct his
enterprise on such terms”.
In M/s Unichem Laboratories Ltd. vs. Their Workmen, [1972 –
I LLJ 576, 590, 591], the Supreme Court observed as follows:
“In the fixation of wages and dearness allowance the legal
position is well established that it has to be done on an
industry-cum-region basis having due regard to the financial
capacity of the unit under consideration.... Industrial adjudica-
tion should always take into account, when revising the wage
structure and granting dearness allowance, the problem of the
additional burden to be imposed on the employer and ascertain
whether the employer can reasonably be called upon to bear
such burden.... As pointed out in Greaves Cotton and Co. and
others vs. Their Workmen, [1964 – I LLJ 342], (1964) 5 S.C.R.
362, one of the principles to be adopted in fixing wages and
dearness allowance is that the Tribunal should take into account
the wage scale and dearness allowance prevailing in comparable
concerns carrying on the same industry in the region....”
From an examination of the decisions of the Court, it is clear
that the floor level is the bare minimum subsistence wage. In
fixing this wage, Industrial Tribunals will have to consider the
position from the point of view of the worker, the capacity of
the employer to pay such a wage being irrelevant. The fair wage
must take note of the economic reality of the situation and the
minimum needs of the worker having a fair-sized family with
an eye to the preservation of his efficiency as a worker
Minimum Wage - a Statutory Obligation
A minimum wage was considered a necessary catalyst to advance
the social status of the worker even according to our ancient law,
and treated as an obligation of the State
In the Secunderabad Club vs. State of Andhra Pradesh case
(1997- I LLJ 434), Mr. Justice Y. Bhaskara Rao adverting to the
concept of minimum wages as laid down in the SUKRA
NEETI, observed: “It would be relevant to look at the
conditions governing wage, life and other social aspects of
workers, which are delineated in SUKRA NEETI, an ancient
treatise. The English translation of which is: ‘Wages to be
considered as fair must be sufficient to procure the necessities
of life from out of the wages. The wage of an employee
should therefore be a fair wage, so as to enable him to procure
all the necessary requirements of life.’ (SUKRA NEETI II, 805-
806) ‘By payment of very low wages, employees (of the king)
are likely to become his enemies and they are also likely to
become plunderers of treasuries and cause harassment to the
general public.’ (SUKRA NEETI II, 807-808)
Thus the concept of payment of minimum wages is inbuilt in
our society even before the introduction of the Minimum
Wages Act of 1948. The principle that it is the duty of the State
to ensure the payment of minimum wages has been recognised
by the framers of the Constitution by incorporating Article 43
in the Constitution of India. Though this Article is included in
the Chapter on Directive Principles, and in its sweep contem-
plates payment of ‘living wages’ to a worker, nevertheless, it is
the duty of the State to ensure that workers are paid minimum
wages. The exercise to fix minimum wages thus is the responsi-
bility of the State. It enacted the Minimum Wages Act in 1948,
whereby it has directly imposed statutory minimum standards
MANAGEMENT OF INDUSTRIAL RELATIONS
on the scheduled employments.
Components of Minimum Wages
In Unichoyi vs. State of Kerala, (1961 – I LLJ-631), the
Supreme Court explained what the components are that would
make up the minimum wages and stated: “It is, therefore,
necessary to consider what are the components of a minimum
wage in the context of the Act. The evidence led before the
committee on fair wages showed that some witnesses were
inclined to take the view that the minimum wage is that wage
which is essential to cover the bare physical needs of a worker
and his family, whereas the overwhelming majority of witnesses
agreed that a minimum wage should also provide for some
other essential requirements such as a minimum of education,
medical facilities and other amenities. The committee came to
the conclusion that a minimum wage must provide not merely
for the bare subsistence of life but for the preservation of the
efficiency of the worker, and so it must also provide for some
measure of education, medical requirements and amenities. The
concept about the components of the minimum wage thus
enunciated by the committee have been generally accepted by
industrial adjudication in this country. Sometimes, the mini-
mum wage is described as a bare minimum wage in order to
distinguish it from the wage-structure which is “subsistence
plus” or fair wage, but too much emphasis on the adjective
“bare” in relation to the minimum wage is apt to lead to the
erroneous assumption that the minimum wage is a wage which
enables the worker to cover his bare physical needs and keep
himself just above starvation. That clearly is not intended by
the concept of minimum wage. On the other hand, since the
capacity of the employer to pay is treated as irrelevant it is but
right that no addition should be made to the components of
the minimum wage which would take the minimum wage near
the lower level of the fair wage, but the contents of this concept
must ensure for the employee not only his sustenance and that
of his family but must also preserve his efficiency as a worker.
The Act contemplates that minimum wage rates should be
fixed in the schedule industries with the dual object of provid-
ing sustenance and maintenance of the worker and his family
and preserving his efficiency as a worker.”
Industry-cum-Region
The principles which govern the field have been laid down in
several judgments of the Supreme Court. One of the early
decision was a decision of the Supreme Court in French Motor
Car Company Ltd vs Their Workmen, reported in 1962 II LLJ
744, in which it was held that: “It is now well settled that the
principle of industry-cum-region has to be applied by industrial
court, when it proceeds to consider questions like wagestructure,
dearness allowance and similar conditions of service. In
applying that principle industrial court have to compare wage-
scales prevailing in similar concerns in the region with which it is
dealing, and generally speaking, similar concerns would be those
in the same line of business as the concern with respect to
which the dispute is under consideration.” It was also
obsevered that amongst the factors which must be considered
for the purpose of wage fixation were (i) the extent of business
carried on by the concern, (ii) the capital invested therein, (iii) the
101
 profits made, (iv) the nature of the business carried on, (v) the
MANAGEMENT OF INDUSTRIAL RELATIONS
standing of the business, (vi) the strength of the labour force,
(vii) the presence or absence and the extent of the reserves, (viii)
the dividend declared and (ix) the prospects of the future of the
business and other relevant circumstances. Comparability would
also postulate that there must be comparability of size.
The Supreme Court in Greaves Cotton & Co Ltd vs Their
Workmen, (1964 I LLJ 342) held that where there are large
number of industrial concerns of the same kind in the same
region, it would be proper to put greater emphasis on the
industry part of the industry-cum-region principle as this
would place all concerns on an equal footing in the matter of
production cost and in the matter of competition in the
market. On the other hand, where the number of comparable
concerns were small in a particular region and the aspect of
competition is not the same importance, the region part of the
industry-cum-region formula assumes greater importance. The
Supreme Court in the Greaves Cotton case also observed that
the Industrial Tribunal while making a comparison must take
into account the total wage packet for each category of factory
workmen
Financial Capacity of the Employer
The judgment of the Supreme Court in Ahmedabad
Millowners, Association vs. Textile Labour Association, [1966 I
LLJ 1], enunciates the considerations which must inter alia
guide the Industrial Tribunal in dealing with the financial
capacity of the employer to meet an additional burden occa-
sioned by a revision of the wage structure. In this regard the
Supreme Court held as follows: “On the other hand, in trying
to recognise and give effect to the demand for a fair wage,
including the payment of dearness allowance to provide for
adequate neutralisation against the ever-increasing rise in the
cost of living, industrial adjudication must always take into
account the problem of the additional burden which such
wage-structure would impose upon the employer and ask itself
whether the employer can reasonably be called upon to bear
such burden.... What has been the progress of the industry in
question; what are the prospects of the industry in future; has
the industry been making profits; and if yes, what is the extent
of profits; what is the nature of demand which the industry
expects to secure; what would be the extent of the burden and
its gradual increase which the employer may have to face? These
and similar other considerations have to be carefully weighed
before a proper wagestructure can be reasonably constructed by
industrial adjudication vide Express Newspapers (Private) Ltd.,
& Anr. Vs. Union of India & Ors. [1961-I LLJ 339]. Unusual
profit made by the industry for a single year as a result of
adventitious circumstances, or unusual loss incurred by it for
similar reasons, should not be allowed to play a major role in
the calculations which industrial adjudication would make in
regard to the construction of a wage-structure. A broad and
overall view of the financial position of the employer must be
taken into account and attempt should always be made to
reconcile the natural and just claims of the employees for a fair
and higher wage with the capacity of the employer to pay it; and
in determining such capacity, allowance must be made for a
legitimate desire of the employer to make a reasonable profit”.
102
Pretax profits of the Company
In Unichem Laboratories Ltd. vs. Their Workmen, reported in
1972 I LLJ 576, a Bench of three Learned Judges of the
Supreme Court referred to the earlier Judgment in
Gramophone Company Ltd. vs. Its Workmen, (1964 II LLJ.
131), where the Court had held that: “When an Industrial
Tribunal is considering the question of wage structure and
gratuity which in our opinion stands more or less on the same
footing as wage structure, it has to look at the profits made
without considering provision for taxation in the shape of
income-tax and for reserve. The provision for income-tax and
for reserve must in our opinion take second place as compared
to provision for wage structure and gratuity, which stands on
the same footing as provident fund which is also a retirement
benefit.” This principle was quoted with approval by the
Supreme Court in Unichem Laboratories case.
Principles of Wage Fixation
In Kamani Metals & Alloys ltd. vs their workmen, [1967 – II
LLJ 55]; (1967) 2 S.C.R. 463, the Court observed as follows:
“Fixation of a wage-structure is always a delicate task because a
balance has to be struck between the demands of social justice
which requires that the workmen should receive their proper
share of the national income which they help to produce with a
view to improving their standard of living, and the depletion
which every increase in wages makes in the profits as this tends
to divert capital from industry into other channels thought to
be more profitable. The task is not rendered any the easier
because conditions vary from region to region, industry to
industry and establishment to establishment. To cope with
these differences certain principles on which wages are fixed have
been stated form time to time by this Court. Broadly speaking
the first principle is that there is a minimum wage which, in any
event, must be paid, irrespective of the extent of profits, the
financial condition of the establishment or the availability of
workmen on lower wages. This minimum wage is independent
of the kind of industry and applies to all alike big or small. It
sets the lowest limit below which wages cannot be allowed to
sink in all humanity. The second principle is that wages must be
fair that is to say, sufficiently high to provide a standard family
with food, shelter, clothing, medical care and education of
children appropriate to the workmen but not at a rate exceeding
his wage, earning capacity in the class of establishment to which
he belongs. A fair wage is thus, related to the earning capacity
and the workload. It must, however be realized that ‘fair wage’
is not ‘living wage’ by which is meant a wage which is sufficient
to provide not only the essentials above mentioned but a fair
measure of frugal comfort with an ability to provide for old age
and evil days. Fair wage lies between the minimum wage, which
must be paid in any event, and the living wage, which is the
goal”.
In Hydro (Engineers) (Private) Ltd. vs. their workmen, 1969 – I
LLJ 713-716], the Supreme Court further observed as follows:
“It is thus clear that the concept of minimum wages does take
in the factor of the prevailing cost of essential commodities
whenever such minimum wage is to be fixed. The idea of fixing
such wage in the light of cost of living at a particular juncture
of time and of neutralizing the rising prices of essential
commodities by linking up scales of minimum wages with the
cost of living index cannot, therefore, be said to be alien to the
concept of a minimum wage”.
In the case of Killick Nixon Ltd. Vs Union (1975- II LLJ 53SC),
the Supreme Court has laid down certain considerations of
fixing wages. They are as follows: 1) Condition of the wage
scales prevalent in the Company. 2) Condition of the wage level
prevalent in the industry and the region. 3) The wage packet as a
whole of each earner in the company with all amenities and
benefits and its ability and potency to cope with the economic
requirements of daily existence consistent with his status in
society, responsibilities, efficiency at work and industrial peace. 4)
The position of the company concerns in relation to other
comparable concerns in the industry and the region. 5) Pre-
emptive necessity for full neutralisation of the cost of living at
the rock-bottom of the wage scale if at all just above the
subsistence level. 6) The rate of neutralisation which is being
given to the employees in each salary slab. 7) Avoidance of huge
distortion of wage differentials taking into reckoning all
persons employed in the concern. 8) Degree of sacrifice
necessary even on the part of workers in general interest. 9) The
compulsive necessity of securing social and distributive justice
to the workmen. 10) Capacity of the company to bear the
additional burden. 11) Interest of the national economy. 12)
Repercussions in other industries and society as a whole. 13)
The state of the consumer price index at the time of decision.
14) Forebodings and possibilities in the foreseeable future as far
as can be envisaged.
We should also point out that the revision of DA is not the
same as the revision of wages.
Price, Income and Wage Policy
In the context of wage fixation, very often questions regarding
price policy and income policy are raised. In fact it is advocated
that there should be an integrated price, income and wage policy
in a country. It is necessary to consider a number of questions
in this context. a) What could be the minimum wage and what
are the norms on which a minimum wage should be based? b)
Will the minimum wage be different or same for (i) agriculture,
industry and the service sectors (ii) organised and unorganised
sectors (iii) urban and rural sectors (iv) different states and
regions (v) between different employers in the organised sector
c) What would be the criteria for determining differentials
between minimum and maximum wages, could the ratio be
different for different industries? d) What can be the criteria for
determining the maximum income? Should there be any
relationship between maximum income and maximum wages?
e) Can there be any common policy for fixation of wages,
income and prices in the economy?
All these issues go into the making of a price, income and wage
policy. The Government has to take a position on all these
issues and attempt implementation and coordination of these
policies.
Take for instance differentials of wages and incomes. Differen-
tials between different sectors of the economy are bound to
exist in a dynamic society. As we have seen earlier, they are
indicative of differences in skills formation, capital endow-
ments, risk taking abilities, forecasting skills etc., only difference
is that the incomes policy asks the rationale of these differences.
MANAGEMENT OF INDUSTRIAL RELATIONS
But the effect of market forces cannot be ignored. An income
policy based on rigid differentials may break down. This has
been the experience even in the communist countries. Soviet
Russia was not able to control such differences in remuneration
of different persons working in various sectors of its economy.
Income policy in the sense of controlling incomes of different
sectors of the economy and freezing the existing incomes may
run into problems. The case for an incomes policy is strong if
we use it in India as one important policy element in supplying
a sense of proportion to the various competing groups, as an
important weapon of “high growth, higher distribution”,
strategy of development, as a supplier of valuable guidelines to
anomalies not only in wages but also in investments, prices and
profits, and as an instrument not only of rationalising wages,
bonus and dearness allowance, but of the system of price
controls, investment and taxation.
As we said earlier, in 1977, a Study Group was appointed on
wages, incomes and prices under the chairmanship of Dr. S.
Bhoothlingam and their recommendations for a price, wage
income policy were as follows: a) Wage policy has to strike a
balance between ensuring minimum incomes for unorganised
labour and increasing opportunities for employment. This
policy must pay adequate attention to rationalisation of wage
structure and ironing out anomalies. It should encourage
systems of incentives for higher productivity and better
performance. b) Incomes policy should cover all non-wage
incomes. The level of incomes of those below poverty level
should be enhanced. Apart from progressive taxation, the
emphasis should be on encouraging savings and investments,
discouraging ostentations and luxury and reducing disparities in
consumption. c) The main objectives of prices policy should be
to maintain reasonable stability of prices while reasonable prices
can be assured to producers like farmers. Consumers should
also be taken care of. Wherever subsidised prices are imple-
mented, efforts should be to see that the benefits actually go to
those for whom they are intended. Price system should serve
the economic objective of growth and development.
What is the scene like today? Economic conditions have
changed in the last few decades. We are no longer in a regi-
mented economy or a semi-regimented economy, economic
forces are now allowed to play freely. Government is not in a
position to fix the incomes of workers or the management in
the organised sector; it cannot put any ceilings over the incomes
of self-employed persons; price controls operate on a very few
commodities.
In fact prices of some commodities like fertilisers, cooking gas,
kerosene etc. are controlled through subsidies on their prices.
For foodgrains, higher prices are offered as a part of Govern-
ment monopoly procurement policies. The result is an
overflowing stock of foodgrains in Government godowns.
Both these policies have put considerable strain on Govern-
ment resources and Government is reconsidering these policies.
But because of anti-poverty considrations, it has to continue
these policies. Will it be possible to control prices of all
commodities and services? For instance, it is not possible to cut
back the incomes of some categories of highly paid doctors or
103
 lawyers or the selfemployed. Quite often their high incomes are
MANAGEMENT OF INDUSTRIAL RELATIONS
earned only during certain phases of their working lives. It is
also not possible to control the income of a private business-
man. It can be done only through steep taxation. But the
experience is that if we have such steep taxation, businessmen
do not disclose their incomes and large business operations take
place outside the books. We thus come across the difficulties
that the government is experiencing in controlling prices, wages
and incomes. The moot question seems to be whether we can
have a free economy or an economy in which the state does not
want to exercise the functions of control, and at the same time
formulate and implement a policy of wages, prices and
incomes.
Minimum Wages
The 15th Session of the Indian Labour Conference held on
11th and 12th of July 1957 at New Delhi adopted a resolution
on the fixation of minimum wages. It was agreed by the
Conference that the minimum wage had to be need based, and
had to ensure the minimum human needs of the industrial
worker, irrespective of other considerations. To calculate the
minimum wage, the Committee accepted the following norms
and recommended that they should guide all wage fixing
authorities, including minimum wage committees, wage
boards, adjudicators, etc.: (i) In calculating the minimum wage,
the standard working class family should be taken to consist of
3 consumption units for one earner; the earnings of women,
children and adolescents should be disregarded; (ii) Minimum
food requirements should be calculated on the basis of a net
intake of 2,700 calories, as recommended by Dr. Akroyd for an
average Indian adult of moderate activity; (iii) Clothing
requirements should be estimated at a per capita consumption
of 18 yards per annum which would give for the average
worker’s family of four, a total of 72 yards; (iv) In respect of
housing the norm should be the minimum rent charged by
Government in any area for houses provided under the
Subsidised Industrial Housing Scheme for low-income groups;
and (v) Fuel, lighting and other ‘miscellaneous’ items of
expenditure should constitute 20 percent of the total minimum
wage.
The Committee took note of the steps taken by Government
for conducting (a) a wage census, and (b)family budget enquiries
in various industrial centres.
As for fair wages, it was agreed that the Wage Boards should go
into the details in respect of each industry on the basis of the
recommendations contained in the report of the Committee on
Fair Wages. These recommendations of the Fair Wages
Committee should also be made applicable to employees in the
Public Sector.
Thus in 1957, the Minimum wage was evolved as a need based
concept.
In 1968, some more criteria for the determination of minimum
wages came to be recognised when the International Labour
Organisation listed three criteria for fixing minimum wages.
These were (i) the needs of the worker; (ii) the capacity to pay of
the employer; and (iii) wages paid for comparable work. In
1969, the capacity to pay was explicitly admitted as a relevant
factor by the National Commission on Labour when it held
104
that in fixing the need-based minimum wage the capacity to pay
should be taken into account
In 1991, the Supreme Court, in its judgment in the case of
Reptakos Brett and Co. versus others, expressed the view that
the criteria recommended by the Indian Labour Conference
1957 may not suffice. It held that an additional component for
children’s education, medical requirements, recreation including
festivals/ceremonies and provisions for old age and marriage
should constitute 25% of minimum wages
The Minimum Wages Advisory Board (Central) in its 24th
Meeting in 1991 recommended that minimum wages should be
linked to productivity, and the appropriate Government under
the Minimum Wages Act may fix piece-rate wages wherever
feasible.
The Indian Labour Conference in its Thirtieth Session in
September, 1992 expressed the view that while the tendency to
fix minimum wages at unrealistically high levels must be
checked, implementation of wages once fixed must be ensured.
It felt that the implementation machinery, consisting of labour
administration in the States had been far from effective. It was
desirable that workers’ organisations and non-governmental
voluntary organisations etc., played a greater role instead of
engaging an army of inspectors for this purpose.
Approach of the Pay Commissions
The Pay Commissions of the Central Government took
different approaches for the determination of the Minimum
Wages for government employees. They were as follows: (i) The
need based approach; (ii) Capacity to pay approach; (iii) Relative
Parities approach; (iv) Job evaluation approach; (v) Productivity
approach; (vi) Living wage approach
We are not suggesting that each of these was an exclusivisit
approach. These various aspects have found mention and been
given varying emphasis in the report of different Pay Commis-
sions. The decision of the Pay Commissions on minimum
wages was often determined by some kind of harmonisation
between the first two i.e., the need-based approach and the
capacity to pay approach. This was essential because a minimum
wage which was found to be socially desirable was not necessar-
ily economically feasible. Job evaluation and measurement of
productivity was not found to be feasible by the earlier Pay
Commissions, and fair comparisons with the public and private
sector were also not conceded by them. On living wages they
observed that a living wage was a desirable level towards which
the State must endeavour to go.
The Fifth Pay Commission after comparing public sector and
private sector employees, comparisons with State Governments
and considering the expectation of the employees tried to work
out a minimum wage for Central Government Employees of
the lowest cadre. The Commission used a modified version of
the constant relative income criterion and fixed Rs : 2440/- as
the salary of lowest paid employee of the Central Government.
This meant more than a three-fold jump in the basic pay from
Rs. 750/- to Rs. 2400. The Commission had estimated that this
would mean an additional outgo to the tune of Rs. 294.1 crores
every year for this category of employees.
It is not necessary to describe the pressure that such a steep rise
in pay scales of Government Employees causes on the
Government’s Budget.
Minimum Wage vis-a-vis Government Pay
Our Study Group on Unorganised Labour recommended that
the minimum wage prescribed by the Fifth Pay Commission
for the lowest category of Government employees (Rs. 2400 +
Rs. 2100 DA = Rs. 4500/-) should be the minimum wage for a
worker in the unorganised sector. We could not agree with this
recommendation. It may be adviseable to repeat our arguments
on this question from earlier paragraphs in our chapter on the
‘Unorganised Sector’.
We fully appreciate the considerations that have prompted the
Study Group to make this recommendation. But we regret that
we do not find it possible to accept and endorse this sugges-
tion. Firstly, in monetary terms, the minimum wage that the
Study Group has recommended will approximate to Rs. 4500/-
. Secondly, there are lakhs of people with very low incomes both
in the rural areas, and in the urban areas, – perhaps just around
the amount that the Study Team has recommended as the
minimum wage, who engage or employ others as domestic
servants or in sundry services like those provided by dhabas
(eating places) in the rural areas. They may not be able to pay a
minimum wage almost as high as their own incomes. In such a
situation, if the law on minimum wages is observed or
enforced in letter and spirit, many lakhs of workers will cease to
be employed. They will lose their jobs. An alternative scenario
will be that to protect their jobs or employment, domestic
workers and others of the kind we have referred to earlier, will
agree to work for a sum of remuneration that is lower than the
prescribed minimum wages. The worst development will be
when the custodians of law and order who are mandated to
enforce the law on minimum wages and trade unions who are
committed to struggle for and protect the rights and real wages
of workers come to an agreement, outside the law, on a
remuneration or wage far below or appreciably below the legally
prescribed minimum. Such a possibility is not a creation of our
imagination. In the course of the evidence tendered before us in
West Bengal, we were informed that the actual wage paid to bidi
workers in West Bengal is much less (Rs. 35 per 1000) than
notified minimum wage (Rs. 70 per 1000 bidis).
Disparity in minimum wages, lapses in the implementation of
the law and enforcement, periodic nonrevision of minimum
wages are among the factors that make a mockery of such an
Act. The State government of Bihar fixed Rs. 27.30 as the
minimum wage for agricultural workers in 1996, while an
agricultural worker near Dhanbad received Rs. 20. A female
agricultural labourer in the same area received a daily wage of Rs.
15 and 200 to 250 grams of muri (puffed rice). In Fatehpur,
Ahrawa and Fulepur villages of Barh in Bihar, the agricultural
workers got as wages one kilogram of rice or flour and half a
kilogram of sattu for breakfast. In the Baruhi village of
Bhojpur, in 1996, women got Rs. 15 and a breakfast comprising
of 2 rotis, while men got Rs. 25, lunch and breakfast. Bihar,
which has the highest number of inspectors exclusively for the
agricultural sector could not enforce the minimum wages, set by
the State government during this period.
In West Bengal, when we enquired why the minimum wage law
MANAGEMENT OF INDUSTRIAL RELATIONS
was not being enforced, we were told that both the Trade
Unions and the Government Department had agreed to the
below-minimum wage payments as both were agreed on
protecting the jobs of bidi workers. We have enough reasons to
believe that similar arrangements are entered into elsewhere too
by the enforcing authorities and the representatives of workers.
We believe that any law that creates such a situation becomes a
mockery, if not a self-inflicted fraud. We, therefore, feel that we
should legislate only what is capable of being put into practice
at the ground level. Anything higher that is desirable will have
to remain an aspiration or an eventual goal, not a clause in the
law. Any other course will breed disrespect, unconcern and
contempt for the law and law enforcing authorities. We feel that
the purpose of the law and highly desirable social goals can be
better served by prescribing an adequate minimum wage, and
providing for compulsory review of the adequacy of the
minimum to keep pace with aspirations, needs and the cost of
living (and increasing levels of expectancy about higher stan-
dards of living to which the worker is entitled).
Almost all the Committees and Commissions are against a
subsistence level minimum. In principle, every committee
constituted in this regard has agreed with the standard con-
sumption units and calorie contents. However, the Wage
Boards after the Second Pay Commission (1957-59) have not
found it possible to fix the need-based minimum wages
recommended by the Indian Labour Conference (1957). The
Report of the Committee, set up by the first National Com-
mission on Labour, on the Functioning of the System of Wage
Boards (cited in the Report of NCL, 1969) found it infeasible
because the need-based minimum would be beyond the
capacity of the industry to pay and might result in the transfer-
ence of the burden to the consumer.
Sub-committee ‘D’ of the Standing Committee of Labour
Ministers (1981) recommended that the level of minimum
wage should not be below the poverty line. The Report of the
Committee of Secretaries of States (1981) has also recom-
mended that the minimum wages should be at such a level as
to take a family of 3 adult units of consumption above the
poverty line, and the consumption basket should consist of per
capita per day requirements of 2400 calories in rural areas and
2100 calories in urban areas as well as clothing, shelter, fuel,
light, education, etc. The Report of the National Commission
on Rural Labour (1991) endorsed a similar concept of three
consumption units.
Variable DA and Price Adjustments
Though there is no definition for the term minimum wage in
the Act, its section 4(1) states that the minimum rates of wages
fixed or revised by the appropriate authority for the scheduled
employments shall take into account the following: (i) a basic
rate of wages and a special allowance at a rate to be adjusted at
intervals with the variation in the cost of living index number
applicable to such workers; or (ii) a basic rate of wages with or
without the cost of living allowance, and the cash value of the
concessions in respect of supplies of essential commodities at
concessional rates, where so authorised; or (iii) an all inclusive
105
 rate allowing for the basic rate, the cost of living allowance and have authorities like the claims authority under section 15 of the
MANAGEMENT OF INDUSTRIAL RELATIONS

the cash value of the concessions, if any. Payment of Wages Act 1936 or section 20 of the Minimum
That means that the minimum wage consists of (1) a basic rate Wages Act 1948, or the authority under section 39 (2) of the
of wage (2) cost of living allowance, and/or (3) cash value of Bidi and Cigar Workers (Conditions of Employment) Act
concessions or (4) a combination of all the three components. 1966, at levels not higher than that of the Block or Panchayat
It also means that the cost of living allowance varies with Samiti. It also says that already some State Governments have
changes in prices. 12.255 The Minimum Wages Advisory Board amended the central laws to provide for appointment of claims
(1981) observed that it would be desirable to attach a variable authorities under the Payment of Wages Act and the Minimum
DA formula to the minimum wages so that it may be adjusted Wages Act at these levels, for example, Minimum Wages
as and when necessary to protect the real wages of the workers. (Maharashtra Amendment) Act 1975, and the Wage Laws
The Subcommittee ‘D’ of the Standing Committee of Labour (Rajasthan Amendment) Act, 1976. We agree that it is necessary
Ministers (1981) also recommended that the variable DA and important to take an effective settlement machinery down
should be an element of minimum wage wherever possible. to the local level.
The Report of the Committee of Secretaries of States (1981) The involvement and mediation of local bodies including
said that the DA might be revised once in six months based on village panchayats in the enforcement of the rates and payment
the average All India Consumer Price Index numbers of the of wages is important. The prevailing government enforcement
series 1960=100. The Gurudas Dasgupta Committee (1988) machinery cannot redress their grievances. The fixation of
recommended that the minimum wages should be linked to minimum rates of wages and the widespread awareness of
the movement of consumer price index (CPI) to account for these rates would become a great basis of protection to the
the cost of living. To protect the minimum wage from falling workers. The moment the rates fixed are known to the working
below subsistence level, the National Commission on Rural people, voluntary organisations and workers’ organisations and
Labour (1991) suggested that the cost of living element (DA) the public at large, they will mount vigil, and the implementa-
should be linked to the minimum wage and adjusted every six tion of the minimum rates will become easy. In cases of
months. dispute, the local bodies and panchayats can provide relief
through persuasion, mediation and Lok Adalats etc. to which
Revision of Minimum Wages
we have referred in our earlier.
The Minimum Wages Act stipulates that review/revision of
minimum wages in the scheduled employments should be
undertaken at intervals not exceeding 5 years. However, the first
National Commission on Labour (1969) recommended that the
period should be reduced to three years. At the 31st session of
the Labour Ministers Conference held in July 1980, it was
decided that the minimum rates of wages may be reviewed and
revised if necessary, within a period not exceeding two years, or
on a rise of 50 points in the CPI numbers, whichever is earlier.
The 36th Labour Ministers Conference held in May 1987 also
reiterated these recommendations. The Gurudas Dasgupta
Committee (1988) recommended a revision every two years or
on a rise of 50 points in the CPI. The Umbrella legislation
should provide a separate facility within the body to be
instituted for the unorganised sector workers, to undertake a
constant review of wages as and when needed, as for example
with changes in prices. We feel that the wages may be revised
after an interval of 2 to 3 years. It will be difficult to administer
if too frequent revisions take place.
The 31st Labour Ministers’ Conference had recommended in
July 1980 that both the Central and State Governments should
bring down the periodicity of fixation of wages from 5 years to
2 years and should link the variable dearness allowance. Despite
these recommendations, we are told that many State Govern-
ments have not been able to bring down the periodicity of
fixation of minimum wages from 5 years to 2 years while only
19 out of 32 states and union territories have been able to link
minimum wages to dearness allowance.
The Shramshakti report (pg. 100) proposes the panchayat or
block level administrative set-up for the execution of provisions
of different labour laws, especially on payments and claims, as
far as possible . The Report says that it would be necessary to

106
 MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 20: UNIT 6
COLLECTIVE BARGAINING AS A WAGE FIXATION METHOD

Learning Objective Orissa 42.50 -

The study of this lesson will help you: Punjab 69.25 151.32
• Understand of how collective bargaining concept helps in Rajasthan 47.05 60.00
the fixation of wages.
Sikkim (Minimum Wages Act, 1948 not yet
Non-Implementation of Minimum Wages extended and enforced)
A number of States that have reviewed and revised minimum
Tamil Nadu 35.00 115.80
wages in scheduled employments for which they are the
appropriate governments show disturbing results. In Sikkim, Tripura 20.63 45.00
the Minimum Wages Act is yet to be extended and enforced. Uttar Pradesh 42.02 70.62
Only 19 states/union territories have made provision for West Bengal 48.21 87.28
Variable Dearness Allowance as a part of the minimum wage
Andaman & Nicobar Islands 50.00 86.76
for a few or all of the scheduled employments. The wages vary
from state to state; the disparity is so wide that one has to Chandigarh 81.65 -
conclude that different appropriate Governments are following Dadar & Nagar Haveli 60.00 71.00
different criteria for the fixation of minimum wages. The Daman & Diu 50.00 60.00
adjustment of Variable Dearness Allowance is also very
Delhi 93.00 -
irregular. The lowest among the minimum wages, meant most
probably for unskilled workers, was below Rs.30 in some states Lakshadweep 46.80 -
and union territories, as on October 1, 2000: Rs.19.25 in Pondicherry 19.25 65.00
Pondicherry, Rs.20.63 in Tripura, Rs.21 in Goa, Rs.26 in Source: Ministry of Labour, Annual Report 2000-2001, p. 50.
Himachal Pradesh and Karnataka, and Rs.27 in Andhra Pradesh
An evaluation study conducted by the Labour Bureau, Ministry
(see Table12.16). The daily minimum wages for different
of Labour, on the implementation of Minimum wages in the
occupations vary widely within the States. The Table carries both
agricultural sector in selected States shows that agricultural
the minimum and maximum payment from among the variety
workers are not receiving full minimum wages in the surveyed
of occupation-specific wages fixed as Minimum Wages within
States. The surveyed States were Karnataka, Rajasthan, Andhra
each State.
Pradesh, Uttar Pradesh, Bihar and Gujarat. The situation is
Table: Daily Minimum Wages (in Rs.) as on 01/10/2000 similar in the low technology labour intensive sectors like
Centre/ States/Union Territories Min. Max. forestry, fisheries, cottage industries and artisanry, and in urban
Central Sphere 80.74 90.19 employments like vending and slum based and home based
productions.
Andhra Pradesh 27.00 63.19
Arunachal Pradesh 35.60 37.60 Need for Minimum Wages in the
Unorganised Sector
Assam 32.80 55.70
The character and nature of the informal or unorganised sector
Bihar 49.19 61.59 are undergoing fundamental changes. The movement is from
Goa 21.00 125.00 permanent to casual, contractual, temporary employment; from
Gujarat 34.00 92.40 establishment based to home-based production; from time-rate
to piece-rate work; male dominated to female intensive work
Haryana 70.30 74.30
situation; regulated to unregulated forms of labour. Mean-
Himachal Pradesh 26.00 51.00 while, the labour market, in particular, the rural labour market,
Jammu & Kashmir 30.00 – is experiencing the influx of casual labour from the traditional
Karnataka 26.00 74.03 subsistence occupations like forestry, fisheries, agriculture,
handlooms, etc. as a result of dispossession of assets, and the
Kerala 30.00 164.77
integration of these sectors into the market economy. At the
Madhya Pradesh 50.46 56.46 same time, researchers point out that the labour force is highly
Maharashtra 42.46 108.95 segmented due to factors like sectoral disparities, variations in
Manipur 44.65 55.00 skills, education, caste, religion, and regional and linguistic
differences. In such a situation, workers cannot be given
Meghalaya 50.00 –
minimum protection unless minimum wages are prescribed
Mizoram 70.00 – and enforced in the unorganised sector. 12.263 India signed the
Nagaland 40.00 – ILO Convention 26 of 1928 (Concerning the Creation of

107
 Minimum Wage-Fixing Machinery) as early as in 1955. India Union Territories
MANAGEMENT OF INDUSTRIAL RELATIONS

accepted the commitment to offer minimum wages to its 27. Andaman & Nicobar Islands 4
workers.
28. Chandigarh 44
The minimum wages are different for different industries. The
29. Dadra & Nagar Haveli 43
following table shows the number of schedules of employ-
ment each state government has notified. We feel that the state 30. Daman & Diu 72
government should specify a minimum wage for all unskilled 31. Delhi 29
category workers and these wages should be the same for all 32. Lakshadweep 9
industries. This is a need-based minimum wage and it has to be
33. Pondicherry 6*
the same for all workers irrespective of where they are em-
ployed. This has to be paid irrespective of the capacity to pay. TOTAL 1254**
Hence it is not necessary to fix different types of wages for * Also includes scheduled employments for which minimum
different industries or professions. In other words, we recom- wages have not been fixed yet.
mend that the distinction between scheduled and unscheduled **Includes 44 scheduled employments under State Sphere for
employment should be given up, and whatever the employ- which minimum wages have not been fixed yet.
ment, the notification should prescribe the same minimum
The irregularities committed under the Minimum Wages Act are
wage to all. Perhaps the Minimum Wage Committee may fix
on the increase. In 1997, 1,05,639 irregularities were brought to
the minimum wage for a region and then the Governments can
notice. This number went up to 1,41,913 in 1998. A study
notify these, and the minimum wage for the region can be
could be undertaken of such irregularities to find out why such
made applicable to all employments in that region.
large numbers of irregularities take place. On the basis of the
Table: No. of Scheduled Employments in Different States: study, either the law or practices, can be modified.
Sl.No. Centre/States/UTs No. of Scheduled
Procedure for Fixation/Revision
Employments
In Section 5 of the Minimum Wages Act, 1948, two methods
1. Central Sphere 44 have been provided for fixation/revision of minimum wages.
2. Andhra Pradesh 72* These are the Committee method and the Notification method.
3. Arunachal Pradesh 25 (a) Committee Method Under this method, committees and
sub-committees are set up by the appropriate Governments to
4. Assam 72*
hold enquiries and make recommendations with regard to the
5. Bihar 74 fixation and revision of minimum wages, as the case may be.
6. Goa 23 (b) Notification method In this method, the Government
7. Gujarat 49 publishes its proposals in the Official Gazette for information
of the persons likely to be affected thereby, and specifies a date
8. Haryana 50
not less than two months from the date of the notification for
9. Himachal Pradesh 24 taking the proposals into consideration.
10. Jammu & Kashmir 18 After considering the advice of the Committee/Sub-commit-
11. Karnataka 59 tees and all the representations received by the specified date, the
12. Kerala 46* appropriate Government will, by notification in the Official
Gazette, fix/revise the minimum wage in respect of the
13. Madhya Pradesh 36
concerned scheduled employment, and that will come into force
14. Maharashtra 62 on the expiry of three months from the date of issue of the
15. Manipur 5 notification. 12.268 We feel that the second alternative is better
16. Meghalaya 21 because it gives an opportunity to all concerned to have a say in
the matter. Mutual consultations and understanding the
17. Mizoram 3
difficulties and problems of both are possible in this method.
18. Nagaland 36
Productivity – Wage Relation
19. Orissa 83 Though we have been talking of the relation between produc-
20. Punjab 60 tivity and wage, the country has not yet evolved or adopted a
21. Rajasthan 38 policy of linking wages to productivity. We have not been able
to find an acceptable method of linking the two. As a result
22. Sikkim Minimum Wages Act, 1948 have
there has been a mismatch between wages and productivity in
not yet been extended and
the Indian Economy. According to a study made by Dr.
enforced.
Pramod Verma, of the Indian Institute of Management,
23. Tamil Nadu 62* Ahmedabad, the wage index overtook the productivity index in
24. Tripura 9 1977-78 and wages have increased thereafter at a higher rate than
25. Uttar Pradesh 65 productivity. Wage is an important component of the cost of
product/services, hence the increase in wages without increase in
26. West Bengal 55*
productivity does make products uncompetitive.

108
Productivity in India In Table, we have figures of labour productivity growth in

MANAGEMENT OF INDUSTRIAL RELATIONS

Table compares India’s performance in recent years with that of
the USA, the world economic leader with the highest levels of
labour productivity. For this purpose the national output has
been measured in terms of market values as well as after
adjusting for variations in Purchasing Power Parity (PPP).
India’s Labour productivity is distressingly low, the GDP per
person employed being as low as 1.39% of that in USA. GDP
per person hour employed is even lower at 1.18 % obviously
implying that the hours of work per person in India is higher
than in the USA.
Table
Labour Productivity Levels In India And Usa In 2000 (Us $)
India in the nineties in the manufacturing sector vis-à-vis in
other countries from both the developing and the developed
world. We have relied on the ILO’s latest key Indicators of the
Labour Markets 2001-02. It is found that though labour
productivity in India has grown at a rate higher than that of
many in the developed west (Germany 2.2, UK:2.0, against
India’s 3.5, all percent per annum compound, during the
nineties), we have been lagging significantly behind our Asian
competitors. For instance, China recorded a high productivity
growth rate, as high as 6.1% per annum (on the basis of official
figures). Taiwan and Korea also made rapid progress in
productivity, at 4.8% and 8.9% per annum respectively.

Actual PPP Adjusted Indias Labour Productivity as percentage to USA’s

India USA I n d ia USA Actual PPP Adjusted GDP per person
1033 73888 5452 69193 1.39 7.90
employed GDP per person
0.458 38.52 2.42 36.08 1 .1 8 6 . 7 0
employed per hour GDP per person
501 51695 2696 48410 0.96 5.57
employed in Agriculture GDP per person
2110 85911 11267 8451 2.46 14.00
employed in Industry GDP per person
2116 70930 11833 66422 2.98 17.81
employed in Services
Source: Based on IMD (2001)

Country 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
USA 51148 51259 53222 54948 58276 61519 63161 65775 68168 72228 3.5
France 39798 40777 42309 42518 45924 48185 48461 51915 52657 53833 3.1
Canada 41360 40975 43118 45525 48348 48594 48191 50178 49709 51347 2.2
Germany 36791 37623 37238 36434 3845 7 40278 41686 42722 — — — - — — - 2.2
Australia 29655 30286 30932 32135 32140 32899 33187 33551 33596 38227 2.6
Taiwan 16766 18277 19114 20377 21569 23175 24548 24686 25102 26 857 4.8
Netherlands 38370 38407 38693 38854 42845 44890 45824 46289 47422 48439 2.4
Sweden 35746 36169 39393 42326 48970 50471 51647 55227 56325 58120 5.0
Japan 44695 45592 44462 43624 44220 47838 51071 53223 51662 53126 1.7
U.K. 31764 32814 35282 36622 38136 37763 37256 37562 37423 38648 2.0
Korea 12659 13548 14751 16152 27756 19413 21194 23644 25164 29824 8.9
(Rep. Of) 12659 13548 14751 16152 27756 19413 21194 23644 25164 29824 8.9
Indonesia 3651 3908 4145 4339 3950 4688 4918 4972 4947 4361 1.8
China 3644 2797 3148 3608 4167 5357 5070 5530 -------- -------- 6.1
India 2719 2481 2538 2702 2972 3328 3529 3526 3590 ------- 3.5
India as 5.32 4.84 4.77 4.92 5.10 5.41 5.59 5.36 5.27 ---- ---
% to US
Source: Based on ILO2002

109
 Annual Compound 16. Switzerland 27.73 16. Switzerland 51,446
MANAGEMENT OF INDUSTRIAL RELATIONS

rate of Growth (%) 17. Sweden 27.02 17. Netherlands 51,342

Tables give the comparison of labour productivity amongst 18. Japan 26.69 18. Iceland 51,117
Asian countries. A comparison of labour productivity indices
19. U.K. 26.63 19. Hong Kong 50,971
of Asian Countries for the period 1988 to 1995 reveals that the
rate of growth in labour productivity has been highest in 20. Iceland 26.34 20. Sweden 50,262
Malaysia, followed by China, Singapore, Korea, Nepal, Hong 21. Israel 24.89 21. Japan 49,741
Kong, India, Pakistan, Japan, Phillipines and Iran. India’s 22. Greece 24.11 22. Israel 49,558
position is 7th among the 11 Asian countries. Average produc-
23. Taiwan 23.93 23. U.K. 48,811
tivity of the Chinese worker seems to be about 20 % higher
than that of the Indian worker. 24. Hong Kong 23.37 24. Singapore 43,056
Table: Labour Productivity In Asian Countries: 25. New Zealand 22.73 25. Greece 42,914
26. Singapore 21.66 26. New Zealand 42,571
27. Portugal 20.55 27. South Africa 42,040
SL.No: Country 1987 1988 1989 1990 1991 1992 1993 1994 1995
28. South Africa 19.65 28. Korea 38,034
1. Malaysia 100 105.55 111.24 116.66 122.91 128.67 133.75 141.85 151.25
2. Republic 100 106.71 113.38 119.14 125.77 131.28 137.76 143.58 150.50 29. Argentina 18.49 29. Argentina 37,067
of China Ranking Country US$ Ranking Country US$
3. Singapore 100 106.10 111.24 113.34 118.61 121.85 133.21 141.66 149.53 30. Korea 18.35 30. Portugal 35,710
4. Republic 100 107.88 110.24 116.91 124.33 128.20 133.05 140.64 149.24 31. Slovenia 17.36 31. Slovenia 35,564
of Korea 32. Hungary 15.69 32. Hungary 31,182
5. Nepal 100 106.24 111.18 115.79 122.34 127.05 130.25 139.50 142.47 33. Czech Republic 14.38 33. Czech Republic 29,312
6. Hong Kong 100 105.99 109.10 113.23 117.23 125.03. 128.92 131.24 134.93
34. Slovak Republic 13.11 34. Slovak Republic 27,626
7. India 100 100.73 111.78 115.73 117.12 114.42 119.05 120.42 125.61
35. Poland 12.63 35. Chile 25,767
8. Pakistan 100 105.39 106.92 108.66 118.54 122.65 121.29 123.02. 125.29
36. Chile 11.48 36. Poland 23,618
9. Japan 100 104.40 110.13 114.06 116.18 116.24 115.25 116.20 117.97
10. Phillipines 100 103.27 107.90 107.82 105.10 101.32 101.25 102.66 105.53
37. Estonia 10.83 37. Malaysia 21,159
11. Iran 100 89.28 89.02 96.51 103.37 105.28 106.32 104.04 104.58 38. Turkey 9.96 38. Estonia 21,065
39. Russia 9.93 39. Turkey 20,663
40. Malaysia 9.64 40. Mexico 20,511
Comparison of Labour Productivity and Overall Productivity in
41. Brazil 9.33 41. Russia 18,104
49 countries:
42. Mexico 8.66 42. Brazil 16,493
Table:
43. Venezuela 7.29 43. Columbia 15,212
Labour Productivity (PPP) Overall Productivity (PPP)
Estimate: GDP(PPP) per person Estimate: GDP(PPP) per 44. Columbia 6.97 44. Venezuela 14,258
person employed per hour. US$ employed US$ Ranking 45. Thailand 5.59 45. Thailand 11,696
Country US$ Ranking Country US$ 46. Philippines 4.94 46. Philippines 10,694
1. Luxembourg 41.90 1. Luxembourg 73,999 47. China 3.47 47. China 6,884
2. Belgium 39.95 2. USA 69,193 48. Indonesia 3.14 48. Indonesia 6,660
3. France 73.72 3. Belgium 68,402 49. India 2.42 49. India 5,452
4. Italy 36.64 4. Italy 63,460
5. USA 36.08 5. Ireland 62,486 Tables are from the World Competitive Year Book 2001. They
6. Ireland 34.75 6. France 59,856 indicate the comparison of Labour Productivity (PPP) and
7. Denmark 34.72 7. Denmark 58,570 Overall Productivity (PPP) in 49 countries. The comparison
reveals that in India Labour Productivity as well as Overall
8. Norway 33.75 8. Norway 58,389 Productivity (PPP) are the lowest, i.e. we are in the 49th
9. Austria 33.19 9. Austria 56,389 position.
10. Germany 32.76 10. Canada 56,262 If we continue to be at the lower end of labour productivity
11. Finland 31.63 11. Germany 55,297 and overall productivity, we will not be able to hold our own in
12. Australia 30.97 12. Finland 54,497 global competition. Our companies will continue to incur losses
and there will be growing industrial sickness leading to the
13. Netherlands 30.45 13. Australia 54,174
closure of a large number of unviable units causing loss of
14. Spain 30.01 14. Taiwan 52,072 jobs to millions of workers. 4
15. Canada 29.75 15. Spain 51,731

110
We have therefore to make our industries competitive by
adopting suitable changes in the existing policies.
Wages and Productivity
The wages in the organised sector are decided mostly by
collective bargaining. Wherever necessary, the government
intervenes in the wage determination process. The government
has been fixing minimum wages for different occupations and
also linking these wages to dearness allowance.
An ideal wage policy should aim at a minimum wage and
progressive rise in real wages. But any sustained improvement
in real wages cannot be brought about unless it is accompanied
by corresponding improvements in productivity. Hence linking
of wages to productivity is of the utmost importance. There are
various misconceptions about productivity and therefore it is
necessary to have a clear idea about productivity.
The Seventh Plan (1987-92) summarised the objectives of a
wage policy as “a rise in the level of real income in consonance
with an increase in productivity, promotion of productive
employment, improvement in skills, sectoral shift in desired
directions and reduction in wage disparities”.
Single and Total FactorProductivity
Productivity is the ratio of output to inputs and is a measure
of efficiency of production. Productivity can be total factor
productivity or single factor productivity. Single factor produc-
tivity refers to output per unit of an individual input such as
labour or capital. A commonly used measure is labour produc-
tivity which can be defined as – Output Labour Productivity=
____________ Labour units.
Similarly we can define the productivity of capital or any other
input. It may be possible that labour productivity may be
increasing, as a result of infusion of more capital inputs,
therefore it is useful to look at the productivity of the entire
bundle of inputs. This is called Total Factor Productivity (TFP)
and is defined as Output TFP = ___________________
Entire bundle of inputs
For technical reasons, we generally look at the Total Factor
Productivity Growth or TFPG. This is defined as the difference
between the growth of output and the growth of inputs
(suitably weighted).
Thus TFPG is that part of output growth which is not
explained by an increase in input use. In this sense, positive
TFPG reflects technical change and any other improvements in
the management of resources. At the level of the firm,
improvements in productivity lead to lower costs and possibly
higher profits. The workers will also get a share in productivity
gains in the form of higher wages or higher profit sharing
bonus or both. If we take the economy as a whole, increased
productivity means lesser costs and proper utilisation of
resources. There will be more goods available in the market at a
reasonable price, with enhanced income, workers will have
opportunities to consume more and of course a greater variety
of products to choose from. In the long run, this will ensure
higher standards of living to all. Thus, TFPG = (Growth of
output) – (Growth of weighted inputs) In the short run,
increased efficiency results from improvements in managerial
efficiency and organisational competence, innovation, fuller
utilisation of capacity, economies of scale, and improvement in
MANAGEMENT OF INDUSTRIAL RELATIONS
labour management and skills. This is not an exhaustive list
and anything leading to more efficient resource management is
identified as productivity gain. Much depends upon the
innovative skills of the management and the willing coopera-
tion of workers.
Relations between Liberalisation and
Productivity
During the last two decades, several developing and socialist
economies that had followed highly interventionist and import
substituting policy regimes implemented a radical policy shift in
terms of reducing government intervention and opening up of
their economies to international trade and investment. Some of
these economies have achieved rapid economic progress during
the post-reform period. Therefore, it is generally believed that
developing economies benefit from free international trade and
flow of investment from developed economies, free flow of
technology, access to international markets and internal and
external competition.
An increase in competition puts a downward pressure on prices
and profits thereby providing a challenge to which firms have to
respond. They have to increase their technical efficiency, reduce
their costs, improve managerial efficiency, have higher productiv-
ity of labour, better capacity utilisation and more innovations.
The resultant increase in the efficiency of use of resources can be
interpreted as increase in productivity.
Liberalisation enables cheaper and easier access to foreign
technologies, global capital, imported inputs, and makes
possible greater international exchange of information.
However, it is not an automatic process. A developing economy
needs to have a certain level of human capital, and technological
and industrial endowments in order to reap the benefits of free
trade and liberalisation. The ability to put new ideas and
technology into productive activities requires resources and skills
and right kind of incentives.
Post-Liberalisation Effects in India
What is the effect of the policy of liberalisation on productivity
improvement in Indian industries? Have we gained as a result?
Researchers and academicians appear to be divided on this issue.
The National Council of Applied Economic Research under-
took a special study on “The impact of India’s economic
reforms on industrial productivity, efficiency and competitive-
ness”. This study was sponsored by the IDBI, and the NCAER
had taken 3000 firms as the sample size. According to this
study, there is some evidence that suggests that even the limited
reforms of the mid- seventies and the mid to late eighties
engendered higher Total Factor Productivity Growth (TFPG),
and that this was conducive for higher economic growth.
Further, the available evidence also suggests that the positive
impact of liberalisation on firm level productivity and efficiency
depend on factors such as the availability of long term finance,
access to imported inputs and the ability to export.
At the same time, the NCAER Study has drawn the conclusion
that productivity and efficiency of Indian industry during the
nineties has been worse than in the eighties. The total factor
productivity growth rate during the 1990s is lower than during
111
 the 1980s. NCAER has also drawn the conclusion that there are
MANAGEMENT OF INDUSTRIAL RELATIONS
certain exogeneous factors that are relevant in this context. The
study mentions the poor quality and slow growth of infrastruc-
ture facilities such as power, roads, ports, transport and
communications acting as a serious drag on industrial produc-
tivity and growth. In spite of these factors some sectors of
industry have recorded increased TFPG than others.
Mrs. I.J. Ahluwalia4 , in her study observes that the improved
productivity performance of the 1980s was a consequence of
policy changes of liberalisation, initiated in the mid 1970s. Her
cross country analysis indicates that both import substitution
and capital intensity have had a negative effect on productivity
while output growth and scale have had a positive effect Mr. P.
Balkrishna and K. Pushpangadan5 have taken objection to
these conclusions. According to them establishing accelerated
productivity growth in the 1980s is contingent on the use of
single deflation, a procedure which is flawed in principle.
According to them there is no credible option to double
deflation when working with value added as the output
measure in physical terms. Mr. B. Golder found that both
competition and greater availability of imported inputs had a
positive impact on productivity.6
All these analyses relate to the organised manufacturing sector
of Indian industry. There are very few studies that have analysed
productivity trends in the small-scale or unorganised sector of
manufacturing industry in India. This is obviously because of
the inadequacy of data.
J. Unni, N. Lalitha and Uma Rani have attempted an analysis of
trends in total factor productivity in both organised and
unorganised sectors of Indian industry.7 Following is their
summary table.
4 Ahluwalia I.J (1991) Productivity and Growth in Indian
Manufacturing, Oxford University Press, New Delhi
5 P. Balkrishnan & K. Pushpangadan: TFPG in
Manufacturing. The 80s visited EP Weekly Jan. 26,2002
6 Golder B (2000): Productivity Measurement in Indian
Manufacturing: A Brief review A paper presented at the
workshop on Productivity measurement in India – Institute
of Eco. Growth, New Delhi Dec.20-22, 2000
7 Economic Reforms and Productivity Trends in Indian
Manufacturing: J. Unni, N. Lalitha, Uma Rani, E.P Weekly
October 13, 2001 P3914
Growth of Total Factor Productivity Labour Productivity in
Organised and Unorganised Manufacturing Sector in India
Table:
Years Organised TFPG Labour Unorganised
TFPG Labour ur
1978-85 0.26 4.2 14.57 7.6
1985-90 4 7.9 11.37 6.8
1990-95 1.28 11.9 3.13 7.5
1978-90 1.13 5.9 2.66 1.1
1978-95 0.1 7.8 2.47 3.1
112
According to the table cited above, during the period 1978-85,
India has experienced a decline in TFP in both organised and
unorganised sectors at the All India level. The TFPG was high
in the pre-reforms period, but appeared to decline in the
reforms period. During the entire period the growth of
employment was higher in the unorganised sector, and this has
resulted in lower labour productivity growth compared to the
organised sector.
The growth of value added, employment and capital in the
organised manufacturing sector in the country as a whole
moved forward after the introduction of economic reforms.
However, this growth was achieved with an inefficient use of
resources as reflected in the declining and negative total factor
productivity. This is the conclusion that the Study has drawn.
There is another angle to this. Murli Patibandla and B. V. Phani
have addressed the issue of explaining industrial productivity
by micro level factors.8 They do not discuss whether the
productivity has increased or decreased after the reforms.
According to them, the studies that show increase in productiv-
ity at the aggregate level, are theoretically flawed. In any given
industry, some firms could adjust more efficiently to the
changed market conditions; and others who could not adjust,
remain inefficient and slowly die out. In the short run, the
inefficient remain or exist in the industry. In such a case, the
average productivity of the industries may not show any
increase owing to the existence of both efficient and inefficient
firms. The opening up of the economy has certainly helped
some firms who have more exposure to international trade.
They are open to the free flow of new ideas and technologies,
and as a result the idea gap is reduced. They have also the ability
to adjust to the changed market conditions.
Thus one can say that the policy of economic liberalisation has
certainly helped some Indian firms who have the ability to face
international competition. They would always, try to reduce the
cost, use the inputs more efficiently, try to innovate and such
firms are likely to have more total factor productivity growth.
Indian industry can be efficient only if we have more firms of
this type in any industry.
We have already seen that wages in the organised sector are
decided mostly by collective bargaining, and much depends
upon the bargaining strength of the management and trade
unions. Generally, the practice has been to revise wages,
allowances of all types and other facilities given to workers every
three years. Now some enterprises are signing agreements for
five years. But this has been the recent trend. So far wage rises
have not been linked to productivity and profitability condi-
tions. This had worked well because we were not facing
competitive conditions. Now after the introduction of policies
of economic liberalisation, these conditions have changed.
Indian industry has suddenly become cost conscious and any
effort to reduce cost and increase the efficiency of an
organisation are now welcome. As a result a large number of
industrial undertakings are resorting to cost cutting exercises
and are resorting to reducing the number of workers by
resorting to VRS and outsourcing. This raises the question of
the links between productivity or cost reduction and wages or
wage increases.
One extreme way of linking wages to productivity is to
introduce a “share contract” system for giving compensation to
workers. The share contract wage moves down with poor
earnings so that labour costs adjust quickly without resort to lay
offs.
But this system will introduce a lot of uncertainty about the
incomes of workers. Moreover, workers and their unions may
not believe the employers and the truthfulness and transparency
of their book-keeping practices. This will lead to disputes about
the profitability or otherwise of the company. Therefore, this
practice of share contract does not seem practicable in a country
like India today.
We are still left with the question, how can wages and produc-
tivity be linked?
An ILO-National Tripartite Workshop (1996) observed that
there was no operationally effective mechanism for linking wage
changes to changes in productivity or profitability. It was
suggested by the Tripartite Workshop that income stability for
employees in the organised sector should be ensured through
full indexation of the basic wage while bonus and wage
revisions should be related to productivity and profitability.
Productivity of labour (net value added per worker) in the
organised sector was generally found to vary with changes in
capital intensity and the ratio of salaried staff to total employ-
ees. In addition to productivity, wages were influenced by capital
intensity, the ratio of salaried staff to total employees, the ratio
of wages to value added, and the consumer price index.
Productivity Linked Wages
If a productivity linked wage system is to succeed, it would
need the involvement and commitment of all the parties,
particularly the employers and the unions in coming up with a
productivity linked wage system acceptable to all. As we have
pointed out, productivity emerges from an integrated approach
and hence all, from the top management to the bottom rung
of workers, should a share the gains from increased productiv-
ity. Wages for various jobs reflect differences in skills and
provide necessary incentives for skill upgradation. The variable
wage element can be determined with the participation of
employees at the individual, group, company, or national level.
In a productivity linked wage system, the wage structure will
consist of a basic wage and a variable component. The former
reflects the value of the job within the market, while the variable
component provides the flexible linkage with a measure of
performance based on either the performance of the economy,
the company or the individual. The wage structure will then be:
Total wage = Basic Wage + Variable component (Depending
upon productivity)
The key elements of fixed and variable components include:
• Basic Wage
• Annual Increment (wherever mentioned in the agreement)
• Contractual Bonus (where applicable) Variable component
• Wage increases based on the productivity/profit sharing
formula.
Basic Principles of productivity wage reform should include the
following:
• Wages should aim at providing an adequate standard of
MANAGEMENT OF INDUSTRIAL RELATIONS
living to workers.
• Wage increase must take into account the company’s ability
to pay and the performance of the employees.
• Wage must reflect the value of the job.
• There must be variable components to accommodate
business cycles.
• Wage increase must be commensurate with productivity
growth.
The methodology to be applied for deciding the variable part
has to be negotiated and decided by mutual agreement by
unions and management, and will involve technical time and
motion studies. There are various methods available and there
are also expert industrial engineers to undertake such studies
and evolve a commonly acceptable solution. The local Produc-
tivity Councils do provide training to trade union leaders on
greater details about these techniques.
The methodology to link wages with productivity will depend
on the nature of the enterprise, and the formulae used can be
determined by consensus between employers and the employ-
ees. The following are important for successful implementation:
i. Wage reform at the macro level must be a tripartite effort
among the Government, the Unions and Employers.
ii. There must be allowances for a phasing period, during
which adjustments and changes could be made.
iii. Real built-in wage increases should be tuned to productivity
growth.
iv. At the micro level, there must be satisfactory labour
management relations and mutual trust and understanding.
v. There should be sharing of relevant information.
The productivity wage system may be applied companywise.
The typical characteristics of the system are:
• Employee involvement
• Linkage of a portion of wages with performance at
individual, group and company level
• Improvement of work culture
• Recognition of job differentials and skill development.
Indian experience reveals that linkages between wages and
productivity can at best be partial. If the objective of the linkage
is to limit inflationary pressures then wage increases should be
restricted to improvements in labour productivity, making the
unit cost constant. The linkages can be used for making wages
more flexible in tandem with the market conditions. Wage
productivity linkage can also improve the economic performance
through paying higher wages or bonus for making extra efforts
to achieve the performance goals.
Wage productivity linkages vary depending on the objective viz.,
labour cost containment, wage flexibility, or worker motivation
etc. When wage cost containment is the paramount concern, a
conventional measure of labour productivity is generally used,
i.e., output divided by a measure of labour input. When wage
flexibility is the objective, and when the objective is worker
motivation, wages linked with productivity can take a number
of forms.
113
 The most common method used involves worker incentive
MANAGEMENT OF INDUSTRIAL RELATIONS
schemes, the traditional payment-byresults schemes (piece-work
etc.) rating or performance appraisal systems. Motivation may
also be enhanced through a variety of bonus schemes based on
measures of collective performance. Other performance
measures used for calculating collective bonus incentives are
based on quality, machine utilisation, or savings in raw materi-
als, energy, or other costs. Increases may also be granted in
anticipation of productivity improvements linked with changes
agreed upon in work methods, as specified in so-called produc-
tivity bargaining. The feasibility of identifying suitable
performance measures will obviously vary with the circum-
stances of individual enterprises and groups of workers.
In the foregoing paragraphs, we have tried briefly to state some
of the considerations that have been urged on the question of
linking productivity and wages. We have not put forward any
formula because the time and resources at our disposal did not
permit an exhaustive and satisfactory study, and because there
was no specific mandate to us to propose such a formula.
Productivity Agreements
Our attention has been drawn to the fact that, in a good
number of industries now productivity agreements have been
signed.
We have already seen that productivity is not merely labour
productivity. Labour productivity can be improved without
economising on the use of labour as an input. By seeking the
co-operation and commitment of workers and by sharpening
their skills and attitudes, employers can raise productivity
through better use of other resources. This is what some of
these agreements have proposed to do. We shall cite a few of
them.
The common interpretations of productivity in recent years
include the following:
1. Waste reduction in all forms.
2. Working intelligently, not merely putting in hard work
3. People will take action for productivity improvement only
when they are convinced about the rationale and usefulness
of the action.
4. Positive involvement and commitment of workers and
unions.
5. Change as a continuous process in terms of technology,
materials, products, processes, etc.,
6. Productivity is a multidimensional concept. It depends on
quantity, quality and features of products and the efficiency
and effectiveness with which they are produced.
The productivity linked wages settlement by Southern India
Textile Association is a unique example of joint agreement of
systematic assessment of work loads and the principle of
sharing by workers of 50% of the savings by the total category
of basic workers. 30 Mills were party to the agreement.
The TI Cycles entered into an agreement, during the period it
was faring badly, providing for DA linked to productivity
instead of inflation. After three years, however, the DA’s linkage
with inflation was restored. INDAL’s Belur Unit links bonus
not to profit, but to overall plant efficiency and output.
114
In juxtaposition, Madura Coats agreed for higher bonus
prospectively for the next three years, and ONGC started the
practice of giving ad hoc fixed performance and productivity
allowances.
Incentive schemes are increasingly being calculated on the basis
of pre-determined plant efficiency parameters. Eicher
Goodearth scrapped its incentive scheme and introduced, in its
place, Total Quality Allowance (TQA) based on 13 parameters.
Kirloskar Oil Engines Ltd. entered into an agreement whereby
the management would demonstrate actual working of a job
and time taken to complete a job in case there is a difference
over the attainability of the standards prescribed.
Bombay Mills have agreed to pay 4% allowance for 7 days
working, 3% allowance for working during recess period and 1.5
times the wages for working on holidays.
Many agreements begin with opening paragraphs about
productivity, work culture and the role to be played by the
union and the management. The agreement that Bajaj Auto
entered into is an example:
“Productivity, Quality, Work Culture, Time Study And Ex-
pected Production Output.
“The Union and the Company agree that in view of the
increased competitive environment in the domestic and global
markets, the company can survive, let alone prosper, only by
gaining competitiveness and improving levels of production,
productivity and ensuring better quality in all its operations and
activities by means of maximum utilisation of plant, machin-
ery, equipment, human and other resources at its disposal.
Therefore, both the parties agree to achieve higher output and
man/ machine utilisation by continuously reducing cycle time,
work simplification, up-to-date maintenance, upkeep of
machines and tools, toolings, gauges, fixtures, reduction in
consumption of consumables and energy and by use of
improved and latest technology. The Union and the Company
also agree to ensure continuous improvement in productivity
and quality in all the operations of the Company. Further, the
Company and the Union acknowledge that the conditions in
two and three-wheeler industry are fast changing due to
improvements in technology and the emergence of competitive
markets where the buyer dictates the terms and therefore it is
absolutely imperative that higher quality products are to be
consistently produced at lower costs. “The Union agrees that
the company will continue to conduct time studies to decide the
rate of production (output rates) and all workmen shall give the
production as per the output rates fixed by the Company. The
Union also agrees that these output rates may change from time
to time by retime study, depending on changes in work
methods, raw material, jigs, fixtures etc10.”
Similar provisions can be found in many agreements signed
recently.
“In view of the globalisation of the economy leading to a
competitive environment the union and the company recognise
the need to improve production and productivity”.
“Survival in the demanding business environment calls for a
greater degree of working together and sharing together to
bring about higher and higher degree of qualitative perfor-
mance”.
“Workers shall extend wholehearted cooperation for optimising
performance of the company at all levels”.
“Purpose of the agreement is to increase the level of productiv-
ity and to improve it further”.
“Purpose is to become more versatile, more flexible and more
innovative so that the company can be more competitive”.
All these indicate that both managements and workers are aware
of the changed economic environment and the need for
working together to enhance productivity.
Special Provisions in Collective
Bargaining
Collective bargaining provisions in wage agreements have come
to provide for an element on contingency based on individual/
group/organisational performance. They are manifested in one
or more of the following ways:
a. managerial discretion in setting new norms of production/
productivity;
b. Proportionate deductions if standard output is not
achieved;
c. two – tier wage agreements;
d. linking dearness allowance to cost of production rather than
to cost of living;
e. wage cuts/freezes in sick enterprises and
f. arbitration.
a. Managerial discretion in setting new norms: Several
collective agreements provide for incentive schemes, but few
attempt to link wages with productivity and/or bonus. Very
few companies – Eicher Goodearth, in New Delhi, a pioneered
it in 1990 – withdrew incentive schemes altogether, clubbed
average incentives for the past three years with salary, and
announced that workers must do what management asks them
to do.
The agreement in Bajaj Tempo Ltd., Akurdi, Pune (19th April
1993) provides that:
a. Union will be provided information regarding the issuance
of new norms;
b. workers who fail to achieve the norms are liable for
disciplinary action and denial of all allowances; and
c. management decision with regard to work norms and
work-load will be final and binding on all concerned daily
and monthly-rated workmen.
b. Proportionate deductions if standard output is not
achieved: The agreement in Asian Paints Ltd., Cochin (Kerala)
provides that, “——wages agreed upon in this settlement are
for standard output………. and any persistent shortfall in the
output will attract proportionate deduction in the wages payable
for the period.”
c. Two – tier wage agreements: When existing collective
agreements are revised, some companies have created new
grades which start at a lower basic wage than is provided to
similar jobs/grades as per earlier statements. This does not
seem to conflict with the Equal Remuneration Act in India
which is concerned solely with gender based discrimination.
However, recognising the impact of such discrimination on
team work, many agreements provide for tapering off the
MANAGEMENT OF INDUSTRIAL RELATIONS
differences over a three year period. There are exceptions as the
agreement in Mahindra and Mahindra and Larsen and Toubro
reveal. In Mahindra and Mahindra Limited, Igatpur Plant, Nasik
the agreement dated 24th April 1995 provides for increase in
effective working time by 10 minutes per shift/person: “The
Union and the workmen have agreed to work for 420 man
minutes as Effective Working Time” per shift. In addition to
the above, the union and the workmen have agreed to carry out
work related activities such as filing of production/precontrol
charts, minor setting, minor maintenance including oiling,
greasing and cleaning of respective machines, equipments and
jigs-fixtures etc., in each shift and for this purpose they will
work for an additional 10 minutes on average per shift. Thus in
the first and second shifts of 480 minutes duration there will be
effective utilisation of 430 (420+10) minutes. It was agreed in
the agreement in Larsen & Toubro Limited, Powai Works,
Mumbai (30 December 1993) covering daily rated workmen and
monthly rated technical staff that “effective working hours for
the Day shift (General/First shift) shall be reduced to 45 hours
per week (from 48 hours). Flexi-time is yet to be introduced
through collective agreements. The problem that many
employers face concern utilisation of the agreed working hours.
In the past guaranteed overtime agreements were not uncom-
mon. In recent years, agreements provide that such overtime
will be paid only if people are physically present. Interestingly,
the thrust is on presence, not work. It confirms that in the past,
it was possible, due to norms established through collective
bargaining, to claim predetermined overtime without being
physically present, let alone working, for the extra hours.The
main thrust of the agreements on working hours concerns
punctuality and regularity in attendance. With the result, many
companies have begun to link payment of a variety of benefits
like canteen allowance, conveyance allowance, etc., to attendance
on top of the attendance bonus. In rare cases even house rent
allowance and children’s education allowance are linked to
employee’s attendance. A few firms have also given attendance
bonus if any employee does not avail any leave for the first
three years; (a) from the company’s point of view a fresh worker
takes at least three years before he or she rises to peak perfor-
mance on the learning curve; (b) from the union’s point of
view, loyal, long serving members should have better reward
than fresh employees who may or may not have joined the
union yet.
d. Linking dearness allowance (cost of living allowance)
to cost of production:
This is done on an exceptional basis in chronically sick compa-
nies. For example, T.I. Cycles in Madras attempted this in 1984
for a couple of years. Once the company began to earn profits
the union requested the management to link dearness allowance
back to cost of living index which the management accepted. In
quite a few sick companies dearness allowance was frozen for a
limited period.
e. Wage Cuts/freezes: Wage cuts and temporary freezes on
employee benefits and allowances are common in sick compa-
nies deep in debt or facing funds crisis. Wage cuts upto 30% are
usually regarded as a trade off against job cuts. Freezes are
considered as a temporary contribution to tide over a financial
115
 crisis. In the Fifth round of wage negotiations in the public
MANAGEMENT OF INDUSTRIAL RELATIONS
sector during 1993-95, nearly one-fourth of the 240 central
public sector undertakings (CPSUs) did not have wage revision
agreements even though most of the existing agreements
expired on 31 December 1991. Such companies lost one round
of wage revision covering the period 1992-96. The Sixth round
of wage revisions covering the period 1997-2006 will also be
skipped in these ‘sick’ companies because of the increases in
wage cost. Wage cuts and freezes take place in the sick private
sector units too.
f. Arbitration: Wherever there is any dispute between trade
unions and management on time study and work measure-
ment, disputes are not settled through courts, but through
technical experts. In many agreements in the Pune region, these
disputes are referred to industrial engineers of the Poona
Division Productivity Council whose decision is binding on
both the parties. This willingness to abide by the verdicts of
technical experts is something new.
In linking wages with productivity and in effectively implement-
ing such a scheme, the primary responsibility lies on the
management. Technology, processes and people are the major
sources of productivity. The scope of technology has extended
far beyond production, to cover materials, processes, packaging,
energy, maintenance, transportation, logistics, dispensing,
recycling etc. Secondly, various processes can also contribute to
productivity. Industrial Engineering, Operation Research
Technique, SQC, TQM, ERP, CRM, SCM and simple techniques
like Quality Circles all add up to improve productivity. The third
factor is people. If they are handled properly people can unlock
the productivity latent in themselves.
Such a change cannot be brought about without co-operation
between unions and management. The co-operation of
workers is crucial in all efforts to increase productivity. It is the
responsibility of the management as well as the union to
bring about the culture of co-operation on which productivity
depends. The Government too has its share of responsibility
to ensure the infrastructure that is needed to assure and
improve productivity – roads, power supply, communications,
quick administrative responses, elimination of corruption,
transparency and so on.
Wage Determination
Thus, the factors that are relevant to wage determination can be
briefly recounted:
a. Recommendations of various Committees appointed by
the Government for the purpose.
b. Various judicial pronouncements and the principles
enunciated therein from time to time.
c. Capacity of an industry to pay.
d. Bargaining strength of the negotiating union of workers.
e. Regional wages prevailing in that region.
f. Prices, profits and productivity.
Recommandation:
We therefore, strongly recommend that, in view of the
a. Constitutional commitments to a fair wage;
116
b. The international agreements or Declarations that we have
accepted on the social need and responsibility for a fair wage;
c. The reports of Committees and Commissions and the
judgments of the Supreme Court on minimum wages, fair
wages and related matters,
d. The economic link between a fair wage and the capacity to
pay;
e. The relation between the capacity to pay, prices, profit and
productivity;
f. The new methods that have emerged to promote as well as
to assess productivity;
g. The gradual withdrawal or weakening of the control of the
state in economic matters (including wage fixation) that has
followed globalisation;
h. The crucial and continuing importance of the quantum and
regular payment of minimum wages in the vast and
dispersed areas of the unorganised sector where more than
90% of the working opulation are engaged, and where weak
organization and poor public awareness further weaken the
bargaining power of workers; i) The experience that all
social partners have gathered in this field in the last half
century;
j. The view that the diversity in conditions within States and
between States makes it necessary for us to approach a
national uniform minimum wage through effective
enforcement of regional minima within regions in the
States, and States in proximate regions;
k. The view that with globalisation, market forces will
increasingly influence wages; and
l. The countervailing (opposite) view that globalisation and
the consequent job uncertainty have made it all the more
necessary to ensure fair and just wages and social security
through the intervention of legislation and the machinery
of the State and public bodies; The Government should
appoint a high power committee consisting of
representative of Trade Unions, entrepreneurs, State and
Central Governments, academicians, social activists, and
other concerned and competent groups to study the
question of fair wages and minimum wages and make
recommendations on methods of determination and
revision, quanta, methods of enforcement, relation to
capacity to pay, the socially desirable linkages with
productivity, and other relevant matters.

LESSON 21:
TYPES OF COLLECTIVE BARGAINING
AND STUDIES IN COLLECTIVE BARGAINING
Learning Objective
The study of this lesson will help you:
• Understand the types of collective bargaining
• Collective bargaining in India.
Types of Collective Bargaining
At the outset it should be stated that there is a great deal of
variation in the collective bargaining practices ranging from an
informal oral agreement to a very formal and detailed agree-
ment.
Collective Bargaining takes the following forms:
I. It may be a single plant bargaining, that is, bargaining may
be between a single trade union . This type of collective
bargaining prevails in the United States and India.
II. It may be a multiple plant bargaining, that is, bargaining
may be between a single factory or establishment having
several plants and the workers employed in all these plants.
III. It may be a multiple employer bargaining, that is,
bargaining between all trade unions of workers in the same
industry through their federal organizations, and the
employer’s 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 agreements, however, are sent to
appropriate sent to appropriate governments and to
conciliation officers.
III. Agreements which are negotiated 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 goodwill and co-operation of the parties.
Collective Bargaining in India
Collective bargaining in India grew at par with the growth of
Trade Unionism. Collective bargaining arrangements for the
first time were made at Ahmedabad cotton textile industry. The
main purpose of the arrangements was regulation of labour
and management relation ships. But there was no considerable
MANAGEMENT OF INDUSTRIAL RELATIONS
growth until the second world war. Even this growth during
the second world war was not the result of management and
unions’ influence but due to government efforts. There was not
much awareness of collective bargaining and its importance at
that period.
Only after independence , there was considerable growth in
collective bargaining. Trade unions gained importance after
independence. From management’s side, there emerged a new
class of managers, who saw the labour with sympathy and
understanding. But Collective Bargaining process took place
mainly at plant level and organization level unlike western
countries where the agreements are reached at industry level.
Another flow of collective bargaining process in India is that it
is mostly used for basic monetary benefits. In recent years
Collective bargaining is gaining momentum.
Causes for the Limited Success of Collective
Bargaining in India
Though, it is argued that collective bargaining has grown in
India due to the statutory provisions, voluntary measures,
Industrial Truce Resolution of 1962 and the amendments to
the Industrial Disputes Act , 1947, its success is limited. The
causes for its limited success are:
1) Problems with the unions: Collective bargaining process
mainly depends on the strength of Unions. But still there are
not many strong unions in India. Indian unions are marked
with multiplicity, inter and intra –union rivalry, weak financial
position and non-recognition. Weak trade unions cannot
initiate strong arguments during negotiations. There is usually
no unanimous decision among workers to be presented at the
negotiable table.
2) Problems with the Government:The government has not
been making any strong effects for the development of
Collective bargaining. The government has imposed many
restrictions regarding strikes and lockouts, which is an obstacle
for the development of collective bargaining process.
3) Legal problems: Now adjudication is easily accessable. As
such now collective bargaining process is losing its importance.
4) Political Interference: Interference of political leaders in all
aspects of union matters, has increased over the years. Almost
all the unions are associating themselves with some political
party or the other. And there are many such unions. To protect
their own unions, all political parties interfere into the matters,
creating inter union rivalries.
5) Attitude of management: In India management have
negative attitude towards unions. They do not appreciate there
workers joining unions. As strong unions are must for the
collective bargaining process this attitude of management
hampers the process.
117
 Recommendations of the National Commission of
MANAGEMENT OF INDUSTRIAL RELATIONS
Labour for Successful Functioning of Collective
Bargaining.
National Commission of Labour in 1969 made the following
recommendations after considering the problem.
(a) Government intervention in industrial relations particularly
in the settlement of the industrial disputes, should be reduced
gradually to the minimum possible extent. Compulsory
adjudication of disputes should be used only as a last resort.
(b) Trade unions should be strengthened both organizationally
and financially by amending the Trade Union Act of 1926 to
make registration of unions compulsory, enhance the union
membership fee, reduce the presence of outsiders in the union
executive and among the office-bearers and increase the
minimum number of the members in the respect of union
applying for registration.
(c) Legal provision may be made either by a separate legislation
or by amending an existing enactment for :
1. Compulsory recognition of the trade unions and
certification of unions as bargaining agents.
2. Prohibition and penalisation of unfair labour practices.
3. Bargaining in good faith by both employers and unions.
4. Conferring legal validity and legitimacy on collective
agreements.
Suggestions for the Effective Functioning of
Collective Bargaining
i. There must be a change, in the attitude of employers and
employees. They should realize that Collective Bargaining
approach does not imply litigation as it does under
adjudication. It is an approach which indicates that the two
parties are determined to resolve their differences on their
respective claims in a peaceful manner relying only on their
own strength and resources; they do not look to a third
party for the solution of their problems.
ii. Collective bargaining is best conducted at plant level. The
bargaining agents of both the parties should be determined
to arrive at an agreed solution of their respective problems.
The employers should be represented by the employers and
the workers by their trade unions. Both should know which
is the recognized union, incase there is more than one in a
plant; and this union, recognized in the proper manner,
should be the sole bargaining agent of all the workers in an
organization.
iii. Employers and employees should enter upon negotiations
on points of difference or on demands with a view to
reaching an agreement . The trade unions should not make
or put forward unreasonable demands. Any refusal to
negotiate on the part of either side should be looked upon
as an unfair practice. Rigid attitudes are out of place in a
collective bargaining system.
iv. Negotiations can be successful only when the parties rely on
facts and figures to support their point of view. The trade
union should be assisted by such specialists or economists,
productivity experts and professionals, so that their case is
properly presented to the representative of the
118
management. In order to bring this to pass, the
organizational set-up of a trade union will have to be
changed; and the later should adopt a constructive approach
at the bargaining table rather than the present agitational or
litigation oriented approach.
v. To ensure that collective bargaining functions properly,
unfair labour practices should be avoided and abandoned by
both the sides. The negotiations between the management
and the recognized trade union will then be conducted in
the atmosphere of goodwill, which will not be vitiated by
malpractices, and neither side would take advantage of the
other by resorting to unfair practices.
vi. When negotiations result in an agreement, the terms of the
contract should be put down in writing and the embodied
in a document. When no agreement is reached, the parties
should agree to concilation, mediation or arbitration. If no
settlement is is arrived at even then, the workers should be
free to go on strike, and the employees should be at liberty
to declare a lockout. To restrict this right is to inhibit and
the very process of Collective Bargaining.
vii. Once an agreement is reached , it must be honoured and
fairly implemented.
No strike or lockout should be permitted in respect of
issues which have already been covered in the contract; and
the trade union should not be allowed to raise fresh
demands.
viii.A provision for arbitration should be incorporated in the
agreement, which should become operative when there is
any disagreement on the interpretation of its terms and
conditions. The disputes arising out of the agreement
should be referred to an agreed third party with a view to
arriving at a final and binding decision.
Indian Institute of Personal Management offered
the following suggestions
i. A truly representive, enlightened and strong trade union
should come into being and should function on strictly
constitutional lines;
ii. There should be a progressinve and strong management
which is conscious of its obligations and responsibilities to
the owners of the business, to the employers, the
consumers and the country.
iii. There should be unanimity between labour and
management on the basic objectives of the organization
and of the workers and a mutual recognition of their rights
and obligations.
iv. When there are several units of the company, there should
be a delegation of authority to the local management ;and
v. A fact finding approach , and a willing ness to use new tools
– for example, industrial engineering- should be adopted
for the solution of industrial problems.
The National Commission on Labour offered the
following recommendations
i. In the absence of arrangements for statutory recognitions
of unions except in some states and provisions which
require employers and workers to bargain in good faith’, it
 is no surprise that reaching of collective agreements has not

MANAGEMENT OF INDUSTRIAL RELATIONS

made much hgeadway in our country. Nonethe less the
record of collective agreements has not been as
unsatisfactorily as it is popularly believed. Its extention to a
wider area is certainly desirable.
ii. There is a case for shift in emphasis and increasingly greater
scope for and reliance on collective bargaining. Any sudden
change replacing adjudication by a system of collective
bargaining is neither called for nor is practicable. The process
has to be gradual. A beginning has to be made in the move
towards collective bargaining by declaring that it will acquire
primacy in the procedure of setting industrial disputes.
iii. Conditions have to be created to promote collective
bargaining. The most important among them is statutory
recognition of a representative union as the sole bargaining
agent. The place strikes/lock-out should have in the overall
scheme of industrial relations needs to be defined; collective
bargaining cannot exist without the right to strike/lock-out.

Notes -

119

LESSON 22: MANAGEMENT OF INDUSTRIAL
APPROACHES AND NATURE OF GRIEVANCES,
CHAPTER 4 : GRIEVANCE REDRESS
CAUSES, PROCEDURE AND GRIEVANCE
REDRESS MECHANISM
Learning Objective
MANAGEMENT OF INDUSTRIAL RELATIONS
The study of this lesson will help you understand:
• Nature,causes and procedure of grievance.
• Grievance redress mechanism.
Grievance
Efficient grievance management is an important and integral
part of the human recource management. There are several
aspects of HRM, human relations and industrial relations
practices which generate feelings of discontent on the part of
individual workers. In fact, it is the starting point of the process
since further arguments and agreements emanate on the basis
of the agreement arrived at earlier. In this implementation of a
collective agreement a number of problems-— grievances –
arise frequently and on account of this reason both manage-
ment and workers show utmost concern to the collective
agreement. If an individual’s grievances are unattended and
unresolved they will become collective disputes. Hence, there is a
necessity of providing a procedure for redressal of individual
grievances.
A grievance is a sign of employee’s discontent with job and its
nature. The employee has got certain aspirations and expecta-
tions which he thinks must be fulfilled by the organization
where he is working. When the organization fails to satisfy the
employee need, he develops a feeling of discontent or dissatis-
faction. For instance, the employee expects proper
implementation of the Central and State Government’s laws,
collective agreements, company policies and management
responsibilities. A violation of any one among these cause
dissatisfaction on his part. Thus, grievance is caused due to the
difference between the employee expectation and management
practice.
The concept ‘grievance’ has been defined in several ways by
different authorties.
Some of the definitions are as follows:
Beach defines a grievance as ‘any dissatisfaction or feeling of
injustice in connection with one’s employment situation that is
brought to the notice of the management’, whereas Flippo
indicates the grievance as a ‘type of discontent which must
always be expressed. A grievance is usually more formal in
character than a complaint. It can be valid or ridiculous, and
must grow out of something connected with company
operations or policy. It must involve an interpretation or
application of the provisions of the labour contract.
Jucius defines a grievance as “… any discontent or dissatisfac-
tion, whether exposed or not, whether valid or not, arising out
of anything connected with the company which an employee
thinks, believes or even feels to be unfair, unjust or inequitable.
The above definitions indicate that a grievance may be factual or
imaginary or disguised and it is problem whether it is expressed
or not, valid or not. When an employee presents a problem, the
120
UNIT III
RELATIONS
MECHANISM
grievance redressing authority, has to analyze the problem, find
out the route cause of the problem rather than viewing it from
legal aspects and solve it based on humanitarian approach. This
approach of grievance redressal is known as clinical approach to
grievance handling. Hence, a grievance may be viewed as
complex psychological phenomenon calling for human rather
than any procedural or legal action in its analysis and solution.
Characteristics of Grievances
A grievance may have the fallowing characteristics:
a. Factual: The employer-employee relation ship depends
upon the job contract in any organization. This contract
indicates the norms defining the limits with in which the
employee expects the organization to fulfill his aspirations.
When these legitimate needs of expectations or aspirations
are not fulfilled, the employee will be dissatisfied with the
job. Such dissatisfaction is called Factual Grievance. For
instance, when an employee is not given promotion, which
is due to him, or when work conditions are unsafe,
grievances of employees relating to these issues are based
on facts. In other words, these grievances reflect the
drawbacks in the implementation of the organizational
policies.
b. Imaginary: when the job contract is not clear-cut and does
not indicate the norms defining the limits with in which the
employee expects the organization fulfill his needs and
aspirations, the employee develops such needs which the
organization is not obliged to meet. Here grievances are not
based on facts. Even then the employee feels aggrieved.
Normally, the organization does not feel any kind of
responsibility for such grievances and their redressal, because
they are not only based on the wrong perceptions of the
employee but also on wrong information. However, such
grievances can have far-reaching consequences on the
organization because the employees are likely to develop an
altogether negative attitude towards the organization, which
decreases their effectiveness and involvement in work.
c. Disguised: In general organizations consider the basic
requirements of their employees. Psychological needs of
their employees such as need for recognition, affection,
power, achievement etc., normally unattended and ignored.
For instance, an employee complaining very strongly about
the working conditions in the office may in turn be seeking
some recognition and appreciation from his or her
colleagues. Hence, disguised grievances should also be
considered since they do have far-reaching consequences in
case they are unattended and ignored.
Need for a Grievance Procedure
Grievance procedure is necessary for any organization due to the
following reasons:
1. Most grievances seriously disturb the employees. This may
affect their morale, productivity and their willingness to co-
operate with the organization. If an explosive situation
develops, this can be promptly attended to if a grievance
handling procedure is already in existence.
2. It is not possible that all the complaints of the employees
would be settled by first time supervisors, for these
supervisors may not have had a proper training for the
purpose, and they may lack authority. Moreover, there may
be personality conflicts and other causes as well.
3. It serves as a check on the arbitrary actions of the
management because supervisors know that employees are
likely to see to it that their protest does reach the higher
management.
4. It serves as an outlet for employee gripes, discontent and
frustrations. It acts like a pressure valve on a steam boiler.
The employees are entitled to legislative, executive and
judicial protection and they get this protection from the
grievance redreessal procedure, which also acts as a means of
upward communication. The top management becomes
increasingly aware of employee problems, expectations and
frustrations. It becomes sensitive to their needs, and cares
for then well-being. This is why the management, while
formulating plans that might affect the employees – for
example, plant expansion or modification, the installation
of labour-saving devices.
5. The management has complete authority to operate the
business as it sees fit-subject, of course, to its legal and
moral obligations and the contracts it has entered into with
its workers or their representative trade union. But if the
trade union or the employees do not like the way the
management functions, they can submit their grievance in
accordance with the procedure laid down for that purpose.
A well-designed and a proper grievance procedure
provides
I. A channel or avenue by which any aggrieved employee may
present his grievance,
II. A procedure, which ensures that there will be a systematic
handling of every grievance,
III. A method by which an aggrieved employee can relieve his
feelings of dissatisfaction with his job, Working conditions
or with the management and
IV. A means of ensuring that there is some measure of
promptness in the handling of the grievance.
Nature and Causes of Grievances
A grievance is a problem and submitted by an employee or
several employees of different types. It may be concerning a
situation or likely to effect the terms and conditions of the
employment of one worker or several workers. If a problem is
related to and endorsed by all or majority of the employees or
if trade union submits a problem as a general claim it falls
outside the scope of grievance procedure and generally comes
under the purview of the collective bargaining. Thus, if an issue
is wider in scope or general in nature it will be outside the
grievance machinery. For example, if the majority of the
employees or the trade unions in an organization demand wage
MANAGEMENT OF INDUSTRIAL RELATIONS
revision, such issue does not come under the scope of grievance
machinery and falls with in the scope of collective bargaining. In
contrast if the workers of different departments submit to the
management that there wage is not in accordance to with the
award given by the Wage boards and if they ask the manage-
ment to correct the wage inequity such issues falls with in the
scope of grievance machinery. Thus, a grievance – (a) Has a
narrower perspective; (b) Is concerned to an individual or a few
employees of different types. As such policy issues do not fall
with in the scope of grievance machinery.
Causes of grievances related to interpretation of all personnel
policies: National Commission on Labour states that “
complaints affecting one or more individual workers in respect
of their wage payments, overtime, leave, transfer, promotion,
seniority, work assignment and discharge would constitute
grievances. The causes of grievances include the interpretation
of areas like placement, transfer, working conditions, promo-
tion, payment of wages, allowances, overtime pay,
victimization, medical benefits, housing facilities, increments,
granting loans, conditions of work, leave, seniority, safety
measures, fines, conditions of work, suspension, break in the
service and the like.
The Causes of Grievances
The causes of employee grievances include:
1. Demands for individual wage adjustments,
2. Complaints about the incentive system,
3. Complaints about the job classifications,
4. Complaints against a particular foreman,
5. Complaints concerning disciplinary measures and
procedures,
6. Objections to the general methods of supervision,
7. Loose calculation and interpretation of seniority rules, and
unsatisfactory interpretation of agreements,
8. Promotions,
9. Disciplinary discharge or lay-off,
10. Transfer for another department or another shift,
11. Inadequacy of safety and health services/devices,
12. Non-availability of materials in time,
13. Violation of contracts relating to collective bargaining,
14. Improper job assignment, and
15. Undesirable or unsatisfactory conditions of work.
Pre-requisites of a Grievance Procedure
The efficiency of a grievance procedure depends upon the
fulfillment of certain per-requisites. These are as follows:
a. Conformity with Prevailing Legislation: While designing the
grievance procedure due consideration must be given to the
existing statutory provisions. In other words, the existing
grievance machinery as provided by law may be made use of.
b. Clarity: There should be clarity regarding each and every
aspect of the grievance procedure. An aggrieved employee
must be informed about the person to whom a
representation can be made, the form of submission
121
 (written /oral), the time limit for the redressal of grievance
MANAGEMENT OF INDUSTRIAL RELATIONS
etc. Similarly, the redressing authority should be very clear
about what is expected from him, what measures he can
take, the limits with in which he should resort to an action
etc.
c Simplicity: The grievance procedure should be simple. Every
employee must understand different stages of the
procedure, the forms to be filled up, and the witnesses
required etc. if there are too many stages in the procedure,
too many forms to be filled up, too much going around
etc., the very purpose of the procedure is defeated. Instead
of resorting to the formal procedure an employee may
ignore it.
d. Promptness: The promptness with which a grievance is
processed adds further to the success of the grievance
procedure. Since justice delayed is justice denied the
procedure should aim at rapid disposal of the grievances.
e. Training: The success of the procedure also depends upon
imparting training to the supervisors and the union
representatives in handling grievances.
f. Follow-up: The successful working of a grievance procedure
depends upon a proper follow up by the personnel
department. The department should periodically review the
procedure and introduce the essential structural changes
making it more effective.
Basic elements of a Grievance Procedure
The basic elements of a grievance redressal procedure are:
A. The existence of a sound channel through which a grievance
may pass for redressal if the previous stage or channel has
been found to be inadequate, unsatisfactorily or
unacceptable. This stage may comprise three, four or five
sub-stages.
B. The procedure should be simple, definite and prompt, for
any complexity or vagueness or delay may lead to an
aggravation of the dissatisfaction of the aggrieved
employee.
C. The steps in handling a grievance should be clearly defined.
These should comprise:
a. Receiving and defining the nature of the grievance;
b. Getting at the relevant facts, about the grievance;
c. Analyzing the facts, after taking into consideration the
economic, social, psychological and legal issues involved in
them;
d. Taking an appropriate decision after a careful consideration
of all the facts; and
e. Communicating the decisions, to the aggrieved employee.
D. Whatever the decision, it should be followed up in order
that the reaction to the decision may be know and in order
to determine whether the issue has been closed or not.
Errors in the Grievance Procedure
I. Stopping too soon the search for facts;
II. Expressing the opinion of the management before all the
pertinent facts have been uncovered and evaluated;
122
III. Failing to maintain proper records;
IV. Resorting to an executive fiat instead of dispassionately
discussing the facts of the grievance of the employee;
V. Communicating the decision to the grievance in an
improper way; and
VI. Taking a wrong or hasty decision, which the facts or
circumstances of the case do not justify.
Measures to Avoid the Errors
Managements should try to avoid the errors in the grievance
procedure by following the measures indicated here under:
1. Helpful attitude and support of the management.
2. Belief on the part of all concerned in the practice of the
procedure.
3. Introduction of the procedure with the concurrence of
employees and trade unions.
4. Following the simple, fair and easily comprehensible
procedures.
5. Formulating the clear policies and procedures of the
company.
6. Delegation of appropriate authority to the parties
concerned.
7. Functioning of the personnel department in the advisory
capacity.
8. A fact-oriented and issue-oriented rather than employee-
oriented procedure.
9. Respect the decisions taken at all the levels.
10. Adequate publicity to the procedure.
11. Periodic evaluation and review of the procedure.
Grievance Interview
Despite the fulfillment of the above pre-requisites, there is
some inherent impersonality in the procedure, which makes it
insensitive to imaginary and disguised grievances. Hence they
should be supplemented or sometimes replaced by a good
personal approach, i.e., the grievance interview. This also
facilitates the identification of the basis –whether factual or not.
Even when the basis is factual the grievance interview reduces
the magnitude of the problem and develops an understanding
between the aggrieved and the organization.
The effectiveness of the interview depends on the skills on the
part of the interviewer. He must give a patient listening to the
employee and the employee should feel free to ventilate his
grievance. If the interviewer is competent in professional
handling of the situation and well conversant with the tech-
niques of interview he can draw the aggrieved to him and in the
process of interview he can bring about an integration of the
employee’s objectives of the organizational objectives.
The open Door Policy
How to minimize/eliminate the source of an employee’s
grievances?
This question is normally ignored and prevention of grievances
is a neglected part of grievance management in a number of
organizations. What is required is the development of sensitive
feelers with in an organization for tapping the source of
dissatisfaction. In other words, the upward

MANAGEMENT OF INDUSTRIAL RELATIONS

channels of communication should be free from
blocks and hindrances. Unfortunately, in many
organizations there is a notion among superiors
that a negative content generates dissatisfaction on
the part of higher-ups and gives a negative feeling
about the concerned department. Hence an
endeavor is made for suppressing the grievances
and individuals are prevented from speaking out.
To overcome the barriers of upward communica-
tions some experts have suggested an ‘open door
policy’, which requires efforts and willing ness from
the individual’s superior. In other words there
should be a general invitation to all employees to
walk in at any time and speak over their grievances.
However this policy is workable only in small
organizations. Since the principle of management
by exception is practiced in large organizations, the
top level managements have time neither to look
after the innumerable grievances of their employees
nor familiarity with their work situation.
Grievance Procedure
The model grievance procedure suggested by the
National Commission on Labour has provided for the N.S Not Satisfied
successive time bound steps each leading to the next in case of All the above-mentioned steps may not be resorted to by a
lack of satisfaction. worker. In case the grievance arises on account of dismissal or
At the outset an aggrieved worker shall approach the foreman discharge of the worker, he can resort to the second step. In the
and informs his grievance orally and seeks the redressal of his later stage he can make an appeal to the dismissing authority
grievance. If it is not redressed to his satisfaction he approaches designated by the management with in a week from the date of
the supervisor who has to give to the complaint of the worker dismissal or discharge.
with in 48hrs. if the decision(answer)is not acceptable by the Thus, there is voluntariness in so far as the implementation of
worker or if the superior does not give any answer, the worker the model grievance procedure is concerned. But there is a great
can go to the next step. At the third stage the worker can, either need for providing a statutory backing to the grievance machin-
in person or accompanied by his departmental representative, ery since voluntariness failed to get the desired resulting in a
approach the head of the department who has to give the number of cases. Further, there is a need to introduce sugges-
answer before the expiry of three days. If the department head tion schemes which are helpful in overcoming the barriers in
fails to do so or if the answer is not acceptable by the worker upward channels of communication. In the western countries
given by him, then the worker can resort to the Grievance suggestion schemes have helped a lot in harmonizing the
Committee, which comprises of the representatives of relations between labour and management. In India also,
employers and employees. This committee shall communicate suggestion schemes have been success in some organizations
its recommendations to the manager with in seven days of the due to monetary rewards, establishment of suggestion
grievance reaching it. If there are unanimous decisions, those committees and dissemination of full information about the
shall be implemented by the management. In case unanimous suggestions received. Hence, the importance of suggestion
decisions have been not arrived at, the views of the committee schemes should be recognized and measures should be initiated
members shall be recorded and all the relevant record shall be for the introduction of such schemes.
placed before the manager for decision. The manager shall Certain Do’s and Don’ts in handling grievances:
communicate his decision with in three days. The worker has a
right to appeal against the managers decision. These appeals Do’s-
shall be decided with in a weak. If the aggrieved desires he can 1. Investigate the handle each and every case as though it may
take along with him a union official for discussion with the eventually result in an arbitration hearing.
authority. In case a decision has not been arrived at, at this stage, 2. Talk with the employee about his grievance; give him a
the union and management may refer the grievance to voluntary good and full hearing.
arbitration with in a week of receipt of the management’s
3. Get the union to identify specific contractual provisions
decision by the worker.
allegedly violated.
4. Enforce the contractual time limits.
5. Comply with the contractual time limits for the company to
handle a grievance.

123
 6. Determine whether all the procedural requirements, as
MANAGEMENT OF INDUSTRIAL RELATIONS
dictated by the agreement have been complied with.
7. Visit the work areas where the grievance arose.
8. Determine if there were any witnesses.
9. Examine the relevant contract provisions, and understand
the contract thoroughly.
10. Determine if there has been equal treatment of employees.
11. Examine the grievant’s personal record.
12. Fully examine prior grievance records.
13. Evaluate any political connotations of the grievance.
14. Permit a full hearing on the issues.
15. Identify the relief the union is seeking.
16. Treat the union representatives as your equal.
17. Command the respect of the union representatives.
18. Hold your grievance discussions privately.
19. Provide the grievance process to non-union members as
well.
20. Satisfy the unions right to relevant information.
21. Demand that proper productivity levels be maintained
during the processing of incentive grievances.
22. Fully inform your own superior of grievances matters.
Don’ts
1. Discuss the case with the union steward alone; the grievance
should definitely be there.
2. Make agreements with the individuals that are inconsistent
with the labour agreement.
3. Apply the grievance remedy to an improper grievance.
4. Hold back the remedy if the company is wrong.
5. Admit the binding effect of a past practice.
6. Relinquish your authority to the union.
7. Settle grievances on the basis of what is fair. Instead, stick
to the labour agreement, which, after all, should be your
standard.
8. Make mutual consent agreements regarding future action.
9. Bargain over items not covered by the contract.
10. Concede implied limitations on your management’s rights.
11. Argue grievance issues off the work premises.
12. Treat as “arbitrable” claims demanding the disciplining or
discharge of management members.
13. Commit the company in areas beyond your limits of
responsibility or familiarity.
14. Give away your copy of the written grievance.
15. Discuss the grievances of striking employees during an
illegal work stoppage.
16. Settle a grievance when you are in doubt.
17. Support another supervisor in a hopeless case.
18. Refer a grievance to a different form of adjudication.
19. Overlook the precedent value of prior grievance settlement.
124
20. Trade a grievance settlement for a grievance withdrawal(or
try “to make” up for a bad decision in one grievance by”
bending over backs wards” in another).
21. Give long written grievance answers.
22. Negate the management’s right to promulgate plant rules.
23. Deny grievances on the premise that “your hands have been
by the management”.
24. Agree to informal amendments in the contract.
Grievance Management in Indian
Industry
At present, there are three legislations dealing with grievances of
employees working in industries. The industrial employment
(standing orders) Act, 1946, requires that every establishment
employing 100 or more workers should frame standing orders.
These should contain, among other things, a provision for
redressal of grievances of workers against unfair treatment and
wrong full exactions by the employer or his agents. The
Factories Act, 1948 provides for the appointment of a welfare
officer in every factory ordinarily employing 500 or more
workers. These Welfare Officers will also look after complaints
and grievances of the workers. They will look after proper
implementation of the existing labour legislation. Besides,
individual disputes relating to discharge, dismissal or retrench-
ment can be taken up for relief under the Industrial Disputes
Act, 1947 amended in 1956.
However, the existing labour legislation is not being imple-
mented properly by employers. There is a lack of fairness on
their part. Welfare Officers have also not been taken for
protecting the interests of the workers in the organized sector.
In certain cases, they are playing a dual role. It is unfortunate
that the public sector, which should set up an example for the
sector, has not been implementing the labour laws properly.
In India, there is a Model Grievance Procedure, which has
adopted by the Indian Labour Conference in its 16th session
held in 1958. At, present Indian Industries are adopting either
The Model Grievance Procedure or procedures formulated by
themselves with modifications in the Model Grievance Proce-
dure. In other words, at present the grievance procedures are
voluntary in the Indian Industry.
Guiding Principles of Grievance
Procedure
The guiding principles under the model procedure:
1. Conformity with existing legislation: A procedure should
form part of an integrated scheme which should promote
satisfactory relations between employees and management.
2. Need for simple and Expeditious Machinery: It was laid
down that, as far as possible,
a. A grievance should be settled at the lowest level;
b. No matter should ordinarily be taken up at more than two
levels;
c. Different types of grievance should be referred to
appropriate bodies or authorities;
3. Workman Should Know Whom to Approach: For this
purpose, it should be essential for the management to
 designate the authority or body to be contacted at various

MANAGEMENT OF INDUSTRIAL RELATIONS

levels.
Other Guiding Principles
i. When a grievance arrives out of an order issued by the
management, the order itself must be complied with before
the procedure is activated;
ii. The right of the worker’s representative on the Grievance
Committee to see a document and the right of the
management’ representative to refuse to show a document
of a confidential nature; in the later case, confidential
documents shall not be used against him.
iii. There is a time limit of 72 hrs with in which an appeal can
be taken from one step to another .
iv. Payment for the time that has been spent on the redressal
of the grievance.
v. In the event of the grievance arising out of discharge or
dismissal, the worker has the right to appeal either to the
dismissing authority or to a senior body, specified for the
purpose by the management, with in a week from the date
of dismissal or discharge.
Checklist to Evaluate, the Grievance
Procedure
Management should evaluate the grievance procedure to know
its functioning through the following checklist.
i. Was the case handled in such a way that the parties involved
in it were able to identify, and agree upon, what was at
stake?
ii. Was the incident closed with a sense of satisfaction on the
part of everyone immediately involved in the original
complaint?
iii. Was the case handled in a way which strengthened the line
authority, specially at the level immediately above that at
which dissatisfaction was first expressed?
iv. Did the solution result in a better understanding and a
better adjustment between the supervisor and his
subordinate?
v. As a result of this case, did this understanding spread
among others in the management and in the trade union
who were not directly involved in the original complaint?
vi. Did the solution contribute to the operational efficiency of
the organization?

125
MANAGEMENT OF INDUSTRIAL RELATIONS

LESSON 23:
CASE STUDY

Case: Organisational Discipline – A Goal 20th and 27th September. The suspension of Mr. A at ‘Z’ bus
Or a Means depot served as the potential ‘fuel’ for the staff, the officials of
A nationalized road transport corporation introduced an the corporation re-examined the whole case and withdrew the
incentive scheme for the bus crew (staff) so as to provide better suspension order served on Mr. A on 27th September 1983.
transport facilities to the maximum number of passengers as
Questions
there was no other transport agency operating on the same
route. Moreover, this would increase the revenue of the Q1.Was the conductor guilty of negligence of duty?
corporation. In accordance with this scheme, the corporate fixed Q2. Should the corporation officials ignore the pleas and
a certain amount of the level of revenue to each route as base evidences of the passengers traveling in that bus while
revenue. If the revenue earned by a particular trip was equal to imposing a penalty?
the base revenue, the conductor and driver of that bus would Q3. Should a genuine mistake call for the drastic punishment
be eligible to receive the incentive amount of one per cent of of suspension?
the base revenue. If the revenue exceeded the base amount the Q4. Should the disciplinary rules, be applied for the sake of
conductor and driver could get higher per cent on incremental mere discipline or should they contribute to the goals and
revenue as incentive bonus. objectives of a corporation?
In a bid to take advantage of this incentive scheme, the bus
conductors of almost all the routes started to overload the
buses exceeding double the seating capacity (i.e., 49 seating
capacity plus 49 standing passengers). This scheme had been
functioning successfully, benefiting the passengers, the bus crew
and particularly the corporation, as the cost of operation of the
bus did not increase in proportion to the increase in revenue.
Mr. ‘A’ had been working as a conductor in ‘Z’ depot of the
road transport corporation. He was on duty on 19th September
’83 on a route (R to K passenger bus). He had overloaded the
bus almost to double of the seating capacity. Mr. X – a
passenger of that bus did not purchase a ticket despite repeated
enquiries of the conductor, because the heavy overloaded
condition of bus and his illness. The conductor was unable to
count the passengers because of the overload. In this state, the
ticket checking officers stopped the bus, verified the tickets of all
the passengers and found that Mr. X had not purchased a ticket.
They blamed the conductor for not issuing the ticket and the
passengers for not buying the ticket. Then Mr. X in a written
appeal to the checking staff stated that he had not purchased
the ticket despite repeated enquiries by the conductor because he
was ill and the bus was heavily overloaded. He requested,
therefore, not to take any action against the conductor. The
ticket checking staff collected the ticket fare and penalty from
Mr.X and suspended the conductor ignoring the written request
made by Mr.X .Moreover, the repeated requests made by the
co-passengers of that bus was not paid any heed to.
The suspension of the conductor created an uproar among all
the bus crew of the depot (Z). The operating staff (conductors
and drivers) held a meeting on 19th September itself and
resolved to limit the intake of passengers to the seating capacity.
This decision was implemented with immediate effect. Conse-
quently, most of the commuters were unable to leave for their
destination. Passengers of almost all the routes experienced
many difficulties while travelling. Average revenue per day of ‘Z’
bus depot declined to Rs. 75,000 from Rs. 1,00,000 between

126
 MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 24: UNIT 7
CASE STUDY

Case: Grievance Procedure VS. Collective

Bargaining
The Andhra Pradesh State Road Transport Corporation has
been providing passenger transportation facilities since 1956. It
has been extending its operation from one region to another by
nationalizing the private passenger transport companies on a
phased manner. Presently it is operating its services in 80% of
the routes in the State. It nationalized two routes in East
Godavari district in the State in October, 1988. Normally it
absorbs all the employees working in passenger transport
companies before nationalization and fix their wages at par with
the scales of similar categories of jobs.
The pay scales in the corporation are determined on the basis of
mutual agreement between the management and the recognized
trade union. The scales are revised once in three years. The recent
agreement came into force with effect from September, 1988.
there are two classes in the drivers’ category, i.e., Class I (drivers
working on long distance buses) and Class II (drivers working
in short distance routes). The pay scale of Class II drivers is
enhanced from Rs. 600-1200 to Rs. 900-1600 (with effect from
September,1988) in cocequence to the latest agreement . The
agreement further says that the pay scales of the drivers drawing
the scale of
Rs. 600-1200 will be fixed in the scale of Rs. 900-1600.
The corporation absorbed 10 drivers who were with the private
passenger transport companies upon the recent nationalization
of two routes. The personal department fixed the scale of these
10 drivers in the scale of Rs. 600-1200 and it rejected their plea
of fixing their pay in the scale of Rs.900-1600 saying that only
the drivers drawing the scale of Rs. 600-1200 are now eligible to
draw the new scale of collective bargaining machinery to resolve
employee problems. Then these drivers submitted this issue to
the foreman who is their immediate superior. The foreman told
them to raise this issue in collective bargaining with the help of
trade union leaders as it is a policy issue. These drivers ap-
proached the trade union leaders and persuaded them to solve
this issue. The trade union leaders included this item in the
draft agenda to the collective bargaining committee to be held in
January, 1989. but the collective bargaining committee deleted
this item from the draft agenda saying that this issue can be
settled through grievance machinery as only 10 drivers out of
3,000 drivers of the corporation are concerned with this issue.
Questions
Q1. Who is correct? The personnel department or the foreman
or the collective bargaining committee.
Q2. Where do you place this issue for redressal?
Q3. How do you redress this grievance?

127

MANAGEMENT OF INDUSTRIAL
LESSON 25:
JUDICIAL APPROACHES TOCHAPTER
DISCIPLINE
5 : DISCIPLINE MECHANISMS
Learning Objective
MANAGEMENT OF INDUSTRIAL RELATIONS
The study of this lesson will help you understand:
• Aspects,causes and approaches to discipline
Maintenance of harmonious human relations in an organiza-
tion depends upon the promotion and maintenance of
discipline. No organization depends upon the promotion and
maintenance of discipline. No organization can prosper
without discipline. Discipline has been a matter of utmost
concern for all organizations. There are some people who
believe and state that maintenance of discipline is concerned
with only higher echelons of an organization. But discipline is
concerned with employees at all levels.
Maintenance of effective discipline in an organization ensures
the most economical and optimum utilization of various
resources including human resources. Thus, the objective of
discipline in an organization is to increase and maintain
business efficiency. Effective discipline is a sign of sound
human and industrial relations and organizational health.
Need for Disciplinary Measures
Rules and regulations are essential to maintain peace, prevent
anarchy, regulate behavior of people and to hold the pieces
together. Moreover, most of the employees prefer to work
under disciplined environment as fair rules protect the indi-
vidual and the organization and enable the teamwork. Further,
disciplinary measures ensures just and equal treatment to all
employees, efficient two-way communication, encourages
cooperation and builds team pride. Disciplinary rules regulate
the behavior of the employees in an organization as the law
regulates the behavior of the people in the society.
Meaning and Definitions
Discipline refers to a condition or attitude, prevailing among the
employees, with respect to rules and regulations of an organi-
zation. Discipline in the broadest sense means”... orderliness,
the opposite of confusion. It does mean a strict and technical
observance of rigid rules and regulations. It simply means
working, cooperating and behaving in a normal and orderly way,
as any responsible person would expect an employee to do.”
Discipline is defined as “... a force that prompts individuals or
groups to observe the rules, regulations and procedures which
are deemed to be necessary for the effective functioning of an
organization.”
According to Ordway Tead, discipline is “... the orderly conduct
of affairs by the members of an organization, who adhere to
do necessary regulations because they desire to cooperate
harmoniously in forwarding the end which the group has in a
view, and willingly recognize that. To do this their wishes must
be brought into a reasonable unions with the requirements of
groups in action.” Discipline is said to be good employees
willingly follow company’s rules and it is said to be bad when
128
UNIT III
RELATIONS
employees follow rules unwillingly or actually disobey regula-
tions.
Webster’s dictionary gives three meanings of the word ‘Disci-
pline’, viz.,
i. It is training that corrects, moulds, and strengthens for
perfects.
ii. It is control gained by enforcing obedience, and
iii. It is punishment or chastisement.
This definition indicates the aspects of discipline, viz., Positive
approach and Negative approach.
Aspects of Discipline
There are two aspects of discipline, viz., Positive and Negative
aspects.
1. Positive Aspect: Employees believe in and support discipline
and adhere to the rules and regulations and desired standards
of behavior. Discipline takes the form of positive support and
reinforcement for approved actions and its aim is to help the
individual in moulding his behavior and developing him in a
corrective and supportive manner. This type of approach is
called positive approach or constructive discipline or self-
discipline. Posluve discipline takes place whenever the
organizational climate is marked by aspects such as payment of
adequate remuneration and incentives appropriate avenues for
career advancement, appreciation of proper performance and
reinforcement of approved personnel behavior or actions etc.,
which all motivate employees to adhere to certain rules and
regulations or exercise self control and work to the maximum
possible extent.
2. Negative Aspect: Employees sometimes do not believe in
and support discipline. As such, they do not adhere to rules,
regulations and desired standard of behavior. As such disciplin-
ary programme forces and constraints the employees to obey
orders and function in accordance with set rules and regulations
through warnings, penalties and other forms of punishment.
This approach to discipline is called negative approach or
corrective approach or punitive approach. This approach is also
called autocratic approach as the subordinates are given no role
in formulating the rules and they are not told why they are
punished. Negative or enforced discipline connotes that
personnel are forced to observe rules and regulations on
account of fear or reprimand, fine, demotion, or transfer. But
these are helpful in extracting just minimum standard of work
from the employees since they work on account of fear they
have got. In fact, punishment, penalties, demotions and
transfers provide or establish a climate which demotivate and
delead employees. Hence, such climate is not helpful for the
accomplishment of group goals and for enhancing the morale
on the part of employees. Therefore, “where the end is not
accepted as necessary or desirable, where there is no common
aim between the discipliners and disciplined, discipline becomes
a mere frustration of human purpose, stunts development of
human personality, embitters human relation, for it is then a
denial of freedom to the individuals.
But it has been felt that, “if employment relationship is good
in other respects, most employees can be counted on the
exercise of a considerable degree of self--discipline. They will
respond to positive leadership and need not be threatened or
punished. In contrast, if the authority is exercised arbitrarily, or
if rules of conduct are unreasonable or if employees do not
have sense of adhering to the rules and regulations, discipline is
threatened and if it is prolonged, it affects the organizational
health. Any programme of discipline will be effective and
successful only when it is used to supplement and strengthen
self-discipline.
Objectives of Discipline
The objectives of discipline are:
i. To obtain a willing acceptance of the rules, regulations and
procedures of an organization so that organizational
goals may be attained;
ii. To impart an element of certainty despite several differences
in informal behaviors patterns and other related changes in
an organization;
iii. To develop among the employees a spirit of tolerance and a
desire to make adjustments;
iv. To give and seek direction and responsibility;
v. To create an atmosphere of respect for the human
personality and human relations; and
i. To increase the working efficiency and morale of the
employees so that their productivity is stepped up the cost
of production improved.
Constructive Programme of Discipline
Some of the employees, for various reasons, deviate from the
expected standards of behaviour. Hence, it becomes essential to
have constructive programme of discipline to deal with these
violations.
According to Walkins, Dodd, McNaughton and Prasow, a
constructive programme of discipline to promote harmonious
industrial relations should be developed around the following
essential elements:
• Formulation of a set of clear and reasonable rules carefully
publicized and administered.
• Impartial enforcement of these rules by means of
announced warnings and penalties, corrective in purpose,
proportionate and uniform in their application.
• Supervisory leadership that is uniformed on disciplinary
rules and procedures, but firm in the handling of
disciplinary matters, and itself a good example for employee
behavior.
• An impartial and uniform procedure for investigation of
apparent infractions, whose procedure is subject to review
by higher levels of management and includes a system of
appeal against disciplinary decisions that are considered
unjust.
The Red Hot Stove Rule
MANAGEMENT OF INDUSTRIAL RELATIONS
Without the continual support and regard of the subordinates,
no managers can get the things done. But disciplinary action
against a delinquent employee is painful and generates resent-
ment on his part. Hence, a question arises as to how to impose
discipline without generating resentment? This is possible
through what Douglas Mc Grover called the “Red Hot Stove
Rules”, which draws an analogy between touching a hot stove
and undergoing’ discipline, when one touches a hot stove
Undergoing discipline, when one touches a hot stove -
a. The burn is immediate.
b. He had warning. When the stove was red hot, he knew what
would happen if he touched it.
c. The effect is consistent. Everyone who touches a red-hot
stove gets burned.
d. The effect is impersonal. A person is burned not because of
who he is but because he touched the hot stove.
The same thing is true with discipline. The disciplinary proce-
dure should start immediately after an omission is noticed. It
should give a clear-cut warning regarding the extent or punish-
ment for an offence. The same punishment should be
consistently given for the same type of offence. Irrespective of
status, different punishment should be imposed, i.e., it should
be impersonal.
Indiscipline
Indiscipline means disorderliness, insubordination and not
following the rules and regulations of an organization. The
symptoms of indiscipline are change in the normal behavior,
absenteeism, apathy, go-slow at work, Increase in number and
severity of grievances, persistent and continuous demand for
overtime allowance, lack of concern for performance etc. The
parties responsible for indiscipline in Indian industries are Trade
Unions and management: Politicized Trade Union leadership in
India encouraged and instigated indiscipline. Intra-union rivalry
and inter-union rivalry are also major causes of indiscipline.
‘Similarly, management tactics like deliberate delay in discipline
procedure, concealed penalties such as transfer to an inconve-
nient place at a short notice, maintenance of confidential
reports, withholding of pay and the level of sincerity, honesty
and commitment of superiors are also responsible for indisci-
pline in India.
Causes of Indiscipline
The main causes of indiscipline are as follows:
i. Non-placement of the right person on the right job which
is suitable for his Qualifications, experience and training;
ii. Undesirable behavior of senior officials, who may have set a
pattern of behavior which they expect their subordinates to
follow; but ‘their expectations are often belied, and an
infringement of rules follows;
iii. Faulty evaluations of persons and situations by executive’s
leads to favoritism, which generates undisciplined
behaviour;
iv. Lack of upward communication, as a result of which the
thoughts, feelings and reactions of employees cannot be
129
 conveyed to the top management. This may lead to
MANAGEMENT OF INDUSTRIAL RELATIONS
aggressive or rebellious behaviour;
v. Leadership which is weak, flexible, incompetent and
distrustful of subordinates is often an instrument which
makes for the creation of indiscipline among the
employees, particularly when a decision is taken in haste and
withdrawn under pressure;
vi. Defective supervision and an absence of good supervisors
who know good techniques, who are in a position to
appreciate critically the efforts or their subordinates, who can
listen patiently to them who are capable of giving definite
and specific instructions, and who believe in correcting their
men rather than in uprooting them:
vii. Lack of properly drawn rules and regulations, or the
existence of rules and regulations which are so impracticable
that they cannot be observed and the absence of service
manuals and a code Of behaviour;
viii.The “divide and rule” policy of the management, as a result
of which friction,’ and misunderstanding are created among
the employees which destroy, their team spirit;
ix. Illiteracy and the low intellectual level of workers as well as
their social background; for example, there may be
indebtedness, drinking habits casteism and other social evils
from which an employee may suffer,
x. Workers’ reactions to the rigidity and multiplicity of rules
and their improper interpretation;
xi. Workers’ personal problems; their fears, apprehensions,
hopes and aspirations; and their lack of confidence in, and
their inability to adjust with their superiors and equals;
xii. Intolerably bad working conditions;
xiii.Inborn tendencies to flout rules;
xiv. Absence of enlightened, sympathetic and scientific
management;
xv. Errors of judgment on the part of the supervisor or the
top management’
xvi. Discrimination based on caste, colour, creed, sex, language,
and place in matters of selection, promotion, transfer,
placement and discrimination’ in imposing penalties and
handling out rewards;
xvii.Undesirable management practices, policies and activities
aiming at the control of workers; e.g., employment of
spies, undue harassment of workers with a view to creating
a fear complex among them, and the autocratic attitude of
supervisors towards their subordinates.
xviii.Improper co-ordination, delegation of authority and
fixing of responsibility and ‘
xix Psychological and sociological reasons, including
misunderstanding, rivalry and distrust among workers and
supervisors, an absence of fellow-feeling, a widespread
sense of injustice, or apathy on the part of the
management.
130
Approaches to Discipline
The different approaches to discipline include,
i. Human relations approach,
ii. Human resources approach,
iii. Group discipline approach,
iv. The leadership approach, and
v. The judicial approach.
The employee is treated as human being and his acts of
indiscipline will be dealt from the viewpoint of values, aspira-
tions, problems, needs, goals behaviour etc. Under human
relations approach the employee is helped to correct his
deviations. The employee is treated as a resource and the acts of
indiscipline are dealt by considering the failure in the areas of
development, maintenance and utilization of human resources
under the human resources approach. The group as a whole
sets the standards of discipline, and punishments for the
deviations. The individual employees are awarded punishments
for their violation under the group discipline approach.
Every superior administers the rules of discipline and guides,
trains and controls the subordinates regarding disciplinary rules
under- the leadership approach.
In Judicial approach, in disciplinary cases are dealt on the basis
of legislation and ‘cote decisions. The industrial Employment
(Standing Orders) Act, 1946, to a certain prescribed the correct
procedure that should be followed before awarding punish-
ment to an employee in India. No other enactment prescribed
any procedure for dealing with disciplinary problems. But over a
period of time, a number of principles regarding the basic
formalities to be observed in disciplinary procedures emerged,
gradually resulting from the awards of several Industrial
Tribunals, High Courts and supreme Court. Principles of
Natural Justice:
The principles indicated by the Supreme Court for proceeding
against a delinquent employee are known as the “Principles of a
Natural Justice.” These include:
a. The delinquent employee must be indicated in
unambiguous terms about the charge leveled against him.
b. The delinquent employee must be given an opportunity for
conducting his defence, i.e., by cross examination of the
witnesses.
c. The enquiry should be fair and the enquiry office should be
impartial.
d. the evidence should be put forward in the presence of the
employee charged.
e. Punishment should be proportionate to the misconduct
committed.
Industrial Employment (Standing
Orders) Act, (1946)
The Industrial Employment (Standing Orders) Act, 1946
requires the employees the employees in “Industrial Establish-
ments” employing one hundred or more employees to define
in precise terms, the conditions of employment under them.
The States can extent the application of the enactment to the
‘establishments’ employing less then one, hundred employees.
The ‘establishment’ covered by the Act can have their own
standing orders certify by the State Labour Commissioner or an
officer under hims called’ certifying these standing orders, inter
alia, define acts and omissions which amount to mis conduct,
are required to be in conformity with the Model Standing
Orders framed by the respected State Governments. Until an
employer gets his own standing orders certified the establish-
ment stands governed by the Model Standing Orders.
Omission and Misconduct
For instance, the Model Standing Orders under the Bombay
Industrial Employment (Standing Orders} Rules, 1959, specify
the acts and omissions as mis-conduct for which the charged
employee can be punished. These omissions and misconduct
include: Willful insubordination or disobedience of any lawful
and reasonable order of the superior, going on an illegal strike
or inciting the workers for that willful slowing down of work,
theft, fraud or dishonesty in connection with the employers
business or property or the theft of the property of another
worker within the factory premises, or taking or giving bribes,
habitual absence without leave for more than ten consecutive
days or overstaying the sanctioned leave without adequate
grounds or satisfactory explanation, late attendance, on not less
than four occasions with in a month, habitual breach of any
Standing Order or any law applicable to the establishment,
collection with the consent of the manager any money with in
premises of the establishment except as sanctioned by law for
the time being enforced, engaging in trade within the premises
of the establishment habitual neglect of work or gross or
habitual negligence, canvassing for union membership except in
accordance with any law or with the permission of the manager,
willful damage to work in process or to any property of the
establishment, holding meetings inside the premises of the
establishment except in accordance with any law or with the
permission of the manager, disclosing about the process of the
establishment to any unauthorized person which may come
into the possession of the workmen in the course of his work,
gambling within the establishment where it is prohibited,
smoking or spitting on the premises of the establishment
where it is prohibited, failure to observe safety instructions
notified by the employer, refusal to accept a charge-sheet,
ordered to other communication served in accordance with
these Standing Orders, and unauthorized possession of any
lethal weapon in the establishment. No act of misconduct
committed on less than three occasions within a period of one
year shall be treated as habitual. (Exhibit). Omissions and
commissions constitute misconduct according to clause 14 of
the model standing orders.
Omissions and Commissions
i. Willful insubordination or, disobedience (whether alone or
in combination with others) of any lawful and reasonable
orders, rule or regulation;
ii. Refusal to work on a job or a machine which has been
assigned to him;
iii. Refusal to accept or reply to a charge sheet within the
prescribed period of time;
iv. Theft, fraud, or dishonesty in connection with the property
MANAGEMENT OF INDUSTRIAL RELATIONS
of the company;
v. Theft of another employee’s property inside the industrial
area or company premises;
vi. Causing willful damage to, or loss of, the employer’s goods
or property;
vii. Causing damage to a product in process or to any property;
viii.Sabotage of, or interference with, safety devices;
ix. Disregard of any operational or maintenance instructions or
carelessness in the performance of operational and
maintenance jobs.
x. Non-observance of safety precautions and rules;
xi. Taking or giving a bribe or any illegal-gratification;
xii. Acceptance of gifts from subordinates;
xiii.Habitual late coming;
xiv. Absence from duty without leave;
xv. Overstay when on leave without prior authorized
permission;
xvi.Absence from work without permission for more than ten
consecutive days;
xvii. Leaving the work premises without authorized leave;
xviii. Entering or leaving, or attempting to enter or leave, the
work premises except through authorized entrances and
exits;
xix.Assaulting or abusing or in any way insulting an officer of
the company inside or outside the premises of the
organization;
xx. Insubordination and indiscipline;
xxi.Drunkenness, or coming to work under the influence of
drink;
xxii. Gambling on company property and company premises;
xxiii Fighting, or indulging in a riotous, disorderly or indecent
behaviour in the company premises, or indulging in any act
which is subversive of discipline;
xxiv. Smoking in prohibited areas;
xxv. Sleeping while on duty
xxvi. Threatening or intimidating any employee inside or
outside the company premises.
xxvii. Unlawful interference in the work of other employees;
xxviii. Gross negligence of duty;
xxix. Tradiness, malingering, or slowing down on work, or
neglecting to perform it properly;
xxx. Striking work or inciting others to strike work;
xxxi. Collecting any money or canvassing the collection of it for
any purpose in the company premises and during the hours
of work without the written permission of the
management;
xxxii. Holding meetings in the company premises without the
written permission of the management;
131
 xxxiii. Distribution or exhibitions within the boundaries of the No disciplinary action can be taken for any act or omission
MANAGEMENT OF INDUSTRIAL RELATIONS

establishment, of any newspaper, notice, pamphlet or poster which is not misconduct.

without the prior permission of the management in writing;
xxxiv. Unauthorized use of the company’s quarters or land for
any purpose other than the lawful purpose of his own
residence;
xxxv. Subletting of the accommodation given to’ him by the
company;
xxxvi. Conduct in private life which is prejudicial to the
reputation of the company;
xxxvii. Conviction in any court of law of any criminal offence or
an offence involving moral turpitude;
xxxviii. Approaching the higher authorities, either directly or
through any outside person for promotion or any other
personal favour or gain except through proper and lawful
channels;
xxxix. Giving false information about his name, father’s name,
age, qualifications, previous experience, etc., at the time of
his employment;
xl. Unauthorized communication of official documents’ or
information or the disclosure to any unauthorized persons,
including fellow-workers, of any information bearing on
the operations and business of the organization to which
he belongs:
xli. Writing of anonymous letters, or letters written under a
pseudonym, criticizing the management, or collecting
signatures or collective representations during working
hours;
xlii.Spreading false rumours or giving false information or
making defamatory statements (written or oral) which tend
to bring the management or its officers into disrepute;
xliii. Failure on the part of an employee to inform the medical
officer of the company of any case in his home of an
infectious or epidemic disease, such as cholera, small-pox,
diphtheria, cerebrospinal meningitis, plague, yellow fever or
typhoid, or any other dangerous or contagious disease;
xliv. Carrying on a money lending or any other private business;
xlv. Speculation in any commodity;
xlvi. Insolvency;
xlvii. Abetment of, or an attempt to commit, any of the acts of
misconduct;
xlviii. Breach of any of the rules applicable to the
establishment;
xlix. Preaching or inciting people to violence;
a. Going on an illegal strike, either singly or with other
workers, without giving a notice of 14 days; and
b. Failure or refusal to wear or use any protective equipment
given by the employer.
Source: C.B. Mamoria, op. cit, p. 854-857.
Thus, the above list briefly indicates acts and omission on the
part of an employee which can be termed as misconduct.
Besides, the above list of acts and omissions, an employer may
consider certain other acts and omissions and get them certified.

132

LESSON 26:
DISCIPLINARY PROCEEDINGS
Learning Objective
The study of this lesson will help you understand:
• Disciplinary procedure
Disciplinary Procedure
Disciplinary procedures in Indian industries comprise of the
following stages
1. Issuing a Letter of Charge to the Employee Calling upon
him for Explanation: When the management of the establish-
ment comes to conclusion that an act of misconduct
committed by an employee warrants disciplinary action, the
concerned employee should be issued a charge-sheet. The charge
sheet should indicate the charges of indiscipline or misconduct
clearly and precisely, Explanation should also be called from the
delinquent employee and for that sufficient time should be
given to the employee. Saving of the charge sheet may be either
personally or by post.
2. Consideration of the Explanation: When the delinquent
employee admits, in an unqualified manner, about his miscon-
duct, there is no need for conducting any enquiry further.
Besides, when the employer is satisfied with the explanation
given by the delinquent action. On contrary, when the manage-
ment is not satisfied with the employee’s explanation, there is
need for serving a show-cause notice.
3. Show-cause Notice: In the show-cause notice, the employer
provides another chance to the employee to explain his conduct
and rebut the charges made against him. Show-cause notice is
issued by the manager, who decides to punish the employee.
Besides, a notice of enquiry should be sent to the employee and
this should indicate clearly the name of the enquiring officer,
time, date and place of enquiry in the misconduct of the
employee.
4. Holding of a Full-fledged Enquiry: The enquiry should be in
conformity with the principles of natural justice, that is, the
delinquent employee must be given a reasonable opportunity
of being heard. The enquiry officer should record his findings
in the process of an enquiry. He may also suggest the nature of
disciplinary action to be taken.
The important steps in domestic enquiry are: preparing and
serving the charge sheet supervision in grave cases. Obtain reply
to charge-sheet, selecting enquiry officer, conducting enquiry
proceedings, holding of enquiry in the free environment,
recording findings, submitting enquiry officer’s report to the
disciplinary authority, decision of the disciplinary authority,
communication of the order of punishment.
5. Considering the Enquiry Proceedings and findings and
Making final Order of Punishment: When the misconduct of
an employee is proved, the manager may take disciplinary action
against him. While doing so, he may give consideration to the
employees previous record, precedents, effects of this action on
MANAGEMENT OF INDUSTRIAL RELATIONS
other employees, consulting others before awarding punish-
ment rate. No inherent right to appeal has been provided unless
the law provides it. In case the employee feels the enquiry is not
land action unjustified, he must be given a chance to make an
appeal.
6. Follow-up: After taking disciplinary action, there should be
proper follow-up. The disciplinary action should not make the
employee repeat his mistake.
Section ll-A of the Industrial Disputes Act, 1947, which was
introduced by an amendment in 1971 reads as follows:
“Where an industrial dispute relating to the discharge or
dismissal of a workman has been referred to a labour court,
tribunal or national tribunal, as the case may be, is satisfied that
the order of discharge or dismissal was not justified, it may, by
its award, set aside the order of discharge or dismissal as the
circumstances of the case may require, provided that in any
proceedings under the section the labour court, tribunal or
National tribunal as the case may be, shall rely only on the
materials on record and shall not take any fresh ordinance in
relation to the matter.”
Intervention by a Tribunal
Only under the following circumstances can the tribunal exercise
the right to consider the case
• When there is a want of good faith;
• When there is victimization or unfair labour practices are
used;
• When management has been guilty of a basic error or
violation of a principle of natural justice; and
• When the findings are baseless and perverse.
Types of punishment
When a delinquent employee is going to be punished, the type
of punishment should be commensurate with the severity of
the omission or misconduct. Different types of punishments
resulting from various types of omissions or misconduct are as
follows:
1. Oral Wamings: Whenever an employee commits minor
omissions he may be given an oral reprimand by the superior
concerned. In such cases, the superior should enlighten the
employee as to how to prevent their recurrence. Since repeated
warnings may bring down drastically the level of morale of the
employee, oral warnings should be used sparingly.
2. Written Warnings: Whenever oral warnings fail to achieve the
desired behaviour on the part of an employee, written warn-
ings, which are the first formal state of progressive discipline,
may be resorted to. Written warnings are also referred to as
“pink slips” which indicate that certain rights would be
withdrawn in case the employee continues his omission or
misconduct.
133
 3. Loss of Privileges and Fines: If an employee leaves the work, employer must prove them. But discharge has acquired a
MANAGEMENT OF INDUSTRIAL RELATIONS

without taking the permission of the superior, he may not be meaning analogous to dismissal and an employee may be
allowed to select good tools and machine for himself and to punished by way of discharge also. In such case, discharge
move freely in the company. All these might have been the should not be regarded as discharge simpliciter’ but discharge in
privileges enjoyed hitherto by the employee. Further, if the lieu of dismissal.
contract of employment provides for imposition of fines by Thus, though both discharge and dismissal culminate in
the employer on the delinquent employee, the employer may termination of employment, discharge is regarded as some kind
resort to them. of punishment less severe than that dismissal. Discharge
4. Punitive Suspension: Under punitive suspension the requires either an advance notice or payment of money in lieu
employer prohibits the employee from performing the tasks there of, whereas there is no such requirement in case of
assigned to him and the wages are withheld or withdrawn dismissal. However, dismissal attaches some kind of stigma to
during the period of such prohibition. the employee concerned or casts a slur on him.
5. Withholding of Increments: This is a major punishment. The Role of Personnel Manager/
Under this method, the employer withholds the annual Supervisor
increments of the delinquent employee in a graded scale. In so far as maintenance of effective employee discipline is
6. Demotion: Under this kind of punishment, an employee is concerned, personnel manager has got a crucial role to play. He
reduced to a lower grade from the grade enjoyed by him earlier. has got numerous responsibilities such as advising and
Normally this method is resorted to when an employee is assisting top and, line management in determining and
promoted by mistake and he is not able to perform the job. developing an appropriate disciplinary procedure, assisting in
7. Termination: The employee’s service can be terminated in the communication the same to all employees of the organization,
following forms: seeing that the disciplinary policy conforms to the legal decisions
of the State, looking after the procedures laid down, looking
i. Discharge simpliciter;
after the disciplinary action as fair, and conforms with appropri-
ii. Discharge; ate principles of personnel management, training the
iii. Dismissal. supervisors and executives in dealing with disciplinary cases
Exhibit shows disciplinary actions for various offences problems, involving the trade union and the employees in
determining and implementing disciplinary procedures,
development of self-discipline and self-control on the part of
EXHIBIT the employees and winning over the confidence of employees
Disciplinary Actions for Various Offences in disciplinary policies and procedures.
First Second Third Fourth
Type of
Analyzing the role of personnel manager in regard to employee
Offence Offence Offence Offence
Offence discipline, the Indian Institute of Personnel management
Unexcused absence Warning Warning Suspension Discharge indicates: “In advising management whether to proceed with a
Unauthorized soliciting Warning Suspension Discharge
Theft Discharge - -
disciplinary case, the personnel officer must give careful thought
Carelessness Warning Warning Suspension Discharge to the likely repercussions on discipline and general relationship
Sleeping on the job Warning Discharge
Insubordination Warning Discharge
in the organization, Even when there is a prima facie case
Leaving work without
Warning Suspension Discharge
against an employee, it is to be ‘considered whether an enquiry,
permission
Slowdown on
with all publicity and excitement that it causes, is advisable, or
Warning Suspension Discharge
production whether some other line of action might prove more effective
Willful damage to
property
Discharge - - in improving discipline for the future, such’ as consultation
Unexcused excessive
Warning Warning Suspension Discharge
with the trade union or the works committee in the hope that
lateness
social pressure may be brought on the delinquent to apologize
and not to repeat the offence.” Besides, it adds: “Because he has
Discharge and Dismissal to be familiar with the correct procedure and with tribunal
When the conduct of an employee is deemed to be incompress- rulings in disciplinary cases, the personnel officer is often felt by
ible with the faithful discharge of his duties and undesirable or top management to be the most suitable person to
against the interest of the employer to continue him in conduct an enquiry. He has the advantage of being removed
employment, dismissal will be justified. This is an extreme kind from the direct line of production, and he is also well known to
of punishment. But in case of discharge, an employer termi- both employees and union, It is generally he who makes the
nates the employment of delinquent employee either by giving preliminary investigation, and he may be asked to give his views
agreed advance notice or by paying money in lieu of such notice. on the enquiry report, even if he does not himself conduct the
In other words, in discharge, the reciprocal promises and enquiry.”
obligations are stated to be discharged. Termination of the Whenever employers go against the predetermined rules and
service of an employee IY not be on account of his misconduct regulations and commit serious mistakes or create serious
but may be for certain other reasons which do not cast a slur on problems to the organization and its interests, the employees’
him. This is referred to as ‘discharge simpliciter.’ In such a case, misconduct should not be condoned since it amounts to the
if the employee challenges the employer’s bona fides, the encouragement of misconduct which ultimately leads to serious

134
repercussions on the morale of the organization and its

MANAGEMENT OF INDUSTRIAL RELATIONS

discipline. Hence, where employees fell out seriously in adhering
to disciplinary rules and regulations, they must be given
punishment. Otherwise, they will not have any respect for the
management. At the same time, the personnel manager should
also make an endeavor to develop self-discipline on part of the
employee.;
Emphasizing self-discipline, the American Management
Association states “Until human nature attain greater perfection,
the fullest measure of individual freedom of action can be
realized only within the framework of an expressed discipline.
In the social situation, this takes the form of laws; in industry,
it manifests in standard firmness in securing conformity, in
both instances it is wholly consistent with our democratic
approach. But the requirements must be fair, the reasons
behind them must be clear, and so far as possible, they must be
arrived at cooperatively, This is the road to self-discipline, this is
the aim of a wise leadership.”
Guidelines for Creating a Climate for Discipline
The personnel manager/supervisor has to handle the problems
or indiscipline based on management’s policies, trade unions
and industrial relations policies and practices. He should also
create conducive climate for discipline by following the guide-
lines such as: clearly laid down rules, regulations and procedures,
impartial decisions and consistent enforcement of rules, select
and award right punishment, verify the past records of the
offender, consider the precedents, make sure that action corrects
but not punishes, be sure that reprimand is necessary, be sure
the principle of just cause are observed.
Principles of Effective Discipline
Personnel manager/supervisor should,
a. have interest in the welfare of each employee,
b. View discipline as a corrective measure,
c. Not take disciplinary action unless it is a must,
d. Not administer discipline on routine basis,
e. Have all the facts and circumstances,
f. Give a fair chance to the worker to defend himself,
g. Discover the employee’s mind,
h. Maintain consistency in disciplinary actions,
i. Admit his mistake willingly,
j. Resume normal attitude and behaviour towards the
employee, and
k. Have the audit over the entire action and situation to correct
the employee.

135
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 27:
DOMESTIC ENQUIRES, CHARGE SHEETS, CONDUCT
OF ENQUIRY AND AWARD OF PUNISHMENT
Learning Objective
The study of this lesson will help you understand:
• Domestic enquries in industry.
• Issue of charge sheets.
• Conduct of enquiry and award of punishment.
Domestic Enquiries in Industry
The first and primary step is to carry out a preliminary investiga-
tion before the employer holds a disciplinary enquiry in order to
find out whether a prima facie case of misconduct is evident.
Thus the enquiry should be the result of a preliminary investi-
gation and should not be adopted merely as a matter of course.
After the preliminary investigation is carried out and a prima
facie case of misconduct is established, the following stages of
disciplinary enquiry should be followed:
1. issue and service of a charge sheet calling upon the
employee to sub-mit an explanation,
2. consideration of the explanation,
3. giving notice of an enquiry into the charges in case of
unsatisfactory explanation,
4. suspension with or without pay, pending enquiry (if
needed),
5. enquiry into the charge;
• deciding as to who should conduct
• deciding as how to proceed
• deciding about the order of examining witnesses
6 recording of findings by the enquiry officer,
7. punishment-decision,
8. communication of punishment.
Let us examine each step in detail.
Issue of a Charge-Sheet
As soon as misconduct is observed and confirmed through
preliminary investigation a manager should frame a charge-sheet
which contains charges or a description of misconduct, and an
explanation should be asked for. A manager has to be very
careful in framing the charge-sheet because if the punishment
awarded is not in consonance with the charges it would be
invalidated.
The following points should be considered while framing the
charge-sheet:
I. The charge-sheet should be properly worded and loose
language should not be used so as to create apprehension
and confusion in the mind of the concerned workman.
2. While stating the offence, the date, time and place of its
commission and all other relevant details should be given.
136
3. If, in a firm, standing orders are in force, then the wording
of the charges should be in consonance with the wording in
the standing orders.
4. The proposed punishment may be mentioned.
5. It should call upon the worker to submit an explanation in
writing within a specified time or date.
6. The charge-sheet should be issued under the signature of
the disciplinary authority and not of the enquiry officer.
7. The charge-sheet should be properly served and there
should be strict proof of issue and delivery so that later the
worker may not deny it. The following alternatives exist: (i)
when the workman is present, hand over and obtain
signature on duplicate copy; (ii) if he refuses to sign, then
duplicate may be signed by the manager and two witnesses;
(iii) deliver it to him by registered post; (iv) if the registered
charge sheet is returned unserved, then it should be
displayed on the notice board, with a noting on it, as to
when displayed, when removed, etc; and (v) in appropriate
cases, the charge-sheet should be published in a local
newspaper having sufficient circulation or coverage.
Consideration of the Explanation
The workman receiving the charge-sheet may:
1. Submit his explanation admitting the charge and ask for
leniency -even if such an admission is unqualified and
unambiguous, the enquiry should be held before awarding
the punishment. In such an enquiry, the enquiry officer need
not record evidence but should record findings on the basis
of the admission of charges in the worker’s presence and
his signature may be obtained.
2. Submit his explanation refusing the charge-sheet. Then it is
to be care-fully examined, to find out whether the
explanation is satisfactory or not. A further decision about
proceeding in the matter and a detailed enquiry is to be
taken on that basis.
3. Apply for an extension of time for submitting an
explanation. If such an extension is reasonable then it
should be given, so as to avoid future controversy.
4. Fail to submit his explanation, the employer may follow
further pro-ceedings of enquiry.
Notice of Enquiry
The enquiry should be normally held within a reasonable time
of receiving the explanation.. Proper and sufficient advance
notice should be given indicat-ing the date, time and venue of
the enquiry and name of the enquiry officer, so that the
workman can prepare his case. It should also be notified that he
should be ready with oral and documentary evidence on the
date of enquiry and bring witnesses to prove his case.
In certain cases, the following steps may be observed instead of
those previously mentioned:
• issue of show cause notice;
• consideration of explanation; and
• issue of charge-sheet and notice of enquiry.
While framing the notice, care should be taken not to make a
statement which would indicate that the workman’s case has
been prejudged, e.g. statement that the explanation submitted
was false etc. should not be made.
Suspension with or without Pay
Pending Enquiry if Needed
Where the nature of misconduct is grave and serious, and if it
is in the interest of security and safety and maintenance of good
order and discipline in the establishment,-the worker may be
suspended with or without pay till disciplinary proceedings are
completed. A manager may suspend a worker even before the
charge-sheet is issued or an order of suspension may be given
along with the charge-sheet. In a case where standing orders
limit the period of suspension, the enquiry must either be
completed within the period or wages should be paid for the
time exceeded.
Conduct of the Enquiry
Who should hold the enquiry?
Enquiry Officer
Standing Orders may provide as to who should hold the
enquiry. Other-wise, an assistant manager, or administrative
officer, or labour welfare Officer may be nominated. Thus, he
may be either a member of the management, or an outsider, or
an employer’s lawyer or the manager of another business, but
not a person who is a witness or ~ho is himself involved in the
incident. He has to collect information and arrive at a conclu-
sion. He should not act as a prosecutor or an inquisitor. There
should be no personal bias, otherwise the principle of natural
justice is violated. The enquiry officer has authority to give an
adjournment to the charge-sheeted workman.
Request for Adjournment: If the workman concerned
requests for further time on reasonable grounds then another
enquiry date should be fixed and conveyed.
Nominee of the Accused Workman: If the charge-sheeted
employee would like another employee to represent and assist
him in the conduct of his defence, the enquiry officer should
allow this. However, it is left to the discre-tion of the manage-
ment to allow a non-employee union official to act as a
nominee of the workman at the enquiry.
Interpreter: He may be needed when the workman is not
familiar with the language of the enquiry officer.
The enquiry officer should record preliminary statements
pertaining to the date of holding the enquiry, persons present,
statement of charges, state-ment that the enquiry procedure was
explained to the workman.
In the presence of the accused workman, witnesses should be
examined one by one so that prospective witnesses do not
know what the previous witness has said. Each witness should
be first examined by the party which has called him (examina-
MANAGEMENT OF INDUSTRIAL RELATIONS
tion in chief) and then by opposite party (cross--examination).
The evidence may preferably be recorded by the enquiry officer in
a narrative form. .
Order of Examination of Witnesses. In the presence of the
workman, first the management witnesses should be examined.
Then fair opportunity should be given to the workman to
cross-examine the management witnesses. Documentary
evidence should also be produced through witnesses and be
made a part of the enquiry proceedings.
At the end of the recording of evidence given by a witness, he
should be asked to sign and then the enquiry’ officer should
also sign the evidence.
After that the worker’s witnesses including the worker should
be examined.
They can be cross-examined, and the records should be signed.
Expartite Enquiry. When the workman does not turn up for
the enquiry without notice or reasonable cause or refuses to
participate or walks out then the enquiry officer may proceed to
hold the enquiry ex parte.
Findings of the Enquiry Officer
At the conclusion of the enquiry proceedings, by applying his
mind to all the facts that emerged at the enquiry, the enquiry
officer should decide as to whether the charges made are valid or
not along with reasons for his findings. He may or may not
recommend punishment. As far as possible he
should refrain from awarding punishment and leave it to the
decision of the appropriate authority.
Awarding of Punishment
This is a management task and punishment awarded should be
based on the findings of the enquiry and past record of the
employee. The gravity of misconduct should be taken into
account.
Communication of Punishment
After a decision is taken regarding punishment, it should be
communicated to the concerned workman as expeditiously as
possible. The letter com-municating the punishment should
contain:
• reference to the letter of charge issued to the employee; -
reference to the enquiry;
• reference to the findings of the enquiry;
• decisions whether to punish or not; and
• date from which the punishment is to be effective.
When it is necessary to have the approval or prior permission
of the conciliation officer, court or tribunal for effecting the
order of punishment as provided under Section 33 of the
Industrial Disputes Act, a slightly diffe-rent procedure is to be
followed. In such a case, the letter communicating punishment
should mention permission obtained or being obtained. This
is so in case of prior permission. If the punishment is dis-
missal or discharge and permission is yet to be obtained, then
the letter should mention this and the concerned workman
should be placed under suspension. In cases where prior
approval is necessary the order of punishment is effective at
137
 once be-cause only an application to the concerned authority for
MANAGEMENT OF INDUSTRIAL RELATIONS

‘approval’ is to be sent by the management along with the

payment of one month’s wages to the concerned workman.

138

MANAGEMENT OF INDUSTRIAL
LESSON 28:
NATURE OF CONFLICT AND
CHAPTER 6 : INDUSTRIAL CONFLICT
ITS MANIFESTATIONS
Learning Objective
The study of this lesson will help you understand:
• Nature of conflict and its manifestations
Industrial Conflict
Though several measures are taken to manage human resources,
satisfy the demands of employees and employer, disputes
between employees and employer take place due to conflict of
interest between capital and labour. Profit maximization or
wealth maximization goal of management and profit sharing
or wage maximization goal of workers contradict each other.
These diversified goals of management and labour result in
dispute of interest and consequently industrial conflicts. These
disputes are also called ‘conflicts of interests’ or ‘conflicts of
rights.’
Industrial peace broadly implies the absence of industrial unrest
or the existence of a harmonious relationship or cooperation
between labour and capital. Industrial peace is a condition where
labour and management work together harmonic towards their
socially desirable goals. Industrial peace is not merely a negative
concept to industrial unrest. Industrial unrest is the result of
the discontent of workers and management.
Industrial conflicts can be classified into four groups, viz.:
i. Interest Disputes: These are the disputes that arise out of
deadlocks in negotiations.
ii. Grievance Disputes: These are the disputes that arise from
day-to-day grievances.
iii. Unfair Labour Practices: These are the disputes that arise
from acts of interference with the exercise of right to
organise acts etc.
iv. Recognition Disputes: These are the disputes that arise due
to the recognition of trade union as a bargaining agent.
Definition of a Dispute
According to the Industrial Disputes Act, 1947, Section 2 (k),
“Industrial disputes means any dispute or difference between
employers and employers, or between employers and workmen
or between workmen and workmen, which is connected with
the employment or non-employment or terms of employment
or with the conditions of labour of any person.”
For a dispute to become an industrial dispute, it should satisfy
the following essentials:
i. There must be a dispute or a difference - (a) between
employers and employers (such as wage-warfare where
labour is scarce); (b) between employers and workmen (such
as demarcation disputes); and (c) between workmen and
workmen;
ii. It is connected with the employment or non-employment
or the terms of employment or with the condition of
labour of any person (but not with the managers or
UNIT III
RELATIONS
supervisors), or it must be pertaining to any industrial
MANAGEMENT OF INDUSTRIAL RELATIONS
matter
iii. A workman does not wages exceeding Rs. 1,000 per month;
and
iv. The relationship between the employer and the workman
should be in existence and should be the result of the
contract and the workman actually employed.
Industrial disputes, means disputes relating to existing
industry. It must be a real dispute and the person regarding
whom the dispute is raised and the parties to a dispute must
have a direct or substantial interest.
The term ‘Industrial Dispute’ has been interpreted and analyzed
differently in different case situations by the Court. Some of the
principles to judge the nature of a dispute were evolved by the
courts as follows:
1. The dispute must affect large group of workmen who have
community of interest and the rights of these workmen
must be affected as a class in the interest of common good.
In other words, considerable section of employees should
necessarily common cause within the general lot.
2. The dispute should invariably be taken up by the industry
union or by an appreciable number of workmen.
3. There must be a concerted demand by the workers for
redress and the grievance becomes such that it turns from
individual complaint into the general complaint.
4. The parties to the dispute must have direct and substantial
interest in the dispute, i.e there must be same nexus
between the union which exposes the cause of the
workmen and the dispute. Moreover, the union must fairly
claim a representative character.
5. If the dispute was in its inception an individual dispute and
continued to be such till the date of its reference by the
Government for adjudication, it could not be converted
into an industrial dispute by support subsequent to the
reference even of workmen interested in the dispute.
By incorporating Section 2A in the Industrial Disputes Act,
1947, a right has been given to the individual workman himself
to raise an industrial dispute with regard to termination,
discharge, dismissal, or retrenchment of his service even though
no other workman nor any trade unions of workmen raised it
or is a party to dispute.
Industrial unrest, thus, takes an organized form when the work
people make common causes for their grievances against
employers through manifestations of strikes, demonstrations,
picketing, morchas, gate meetings, gheraos, etc.
Features of Industrial Conflicts
Features of industrial conflicts are as follows:
1. Many of the present-day conflicts are totally devoid of cost
benefit consciousness on the part of labour. Many of them
139
 were long-drawn-out. e issue raised by the strikes and the
MANAGEMENT OF INDUSTRIAL RELATIONS
quantitative benefits even in the cases total success, show a
lack of proportion to the disadvantage of labour. It is
though damage and loss to the employer rather than
benefits for labour have been the objectives of the struggle.
2. Another significant trend seen in those conflicts is the
frequency with which management met, “labour pressure by
the management pressure of lockou-t.”
3. Most of the strikes are “political strikes”, i.e., they are not
caused by any industrial dispute as such. Among these are
included physical restraint bandh, gherao, dharna etc.) go-
slows and work-to-rule. All these practices) show that the
dimensions of conflict in industrial relations are growing.
These are a cause of significant loss of mandays. A single
day’s bandh cause a loss of nearly one million mandays. A
single day’s bandh may cause a loss of nearly one million
mandays in industrialized States like kerala, Maharashtra,
West Bengal, Gujarat and Tamil Nadu.
4. Another significant fact is that lock-ours account for a sizable
number mandays lost. Such lock-outs are more frequent in
the eastern region and may be due to: (i) employers’ reaction
to a turbulent industrial situation erupting in ‘gheraos,
violence characterized by destruction of prop burning of
vehicles, snapping of telephone wires or even stabbing
Murdering; (ii) a habitual reaction of the traditional or authori-
tarian style\ management of labour intransigence (i.e., with a
view to teaching labour lesson by withholding employment).
The average duration of lockout is much larger than that of a
strike, as a lock-out represents an employer resistance and in
India the employer has more resources to ride out a period of
stoppage.”
Causes of Industrial Conflicts
It is not easy to identify a single factor as a cause of industrial
conflicts multifarious causes blended together result in indus-
trial disputes. Deep seated and more basic causes of disputes
can be identified through in-depth probe, though sum
Manifestations appear to be responsible for conflicts. The
relative importance of the causes, when more than one present;
is often very difficult to gauge.
According to Mukerjee, “the development of capitalistic
enterprise, which means the control of the tools of production
by small entrepreneur class has brought to the fore the acute
problem of friction between management and labour through
the world.”
Causes of industrial conflicts may be grouped into four
categories, viz.:
A. Industrial factors;
B. Management’s attitude towards workers;
C. Government machinery; and
D. Other causes.
A. Industrial Factors
“Under this category, some of the causes of a dispute may be:
i. An industrial matter relating to employment, work, wages,
hours of work Privileges, the rights and obligations of
140
employees and employers, terms and Conditions of
employment including matters pertaining to:
a. Dismissal or non-employment of any person;
b. Registered agreement, settlement or award; and
c. Demarcation of the functions of an employee. I
ii. An industrial dispute which connotes any difference which
has been fairly defined as is of real substances; i.e., a matter
in which both parties are directly and substantially
interested; or which is a grievance on the part of a worker
which the employer is in a position to redress; or which is
such as the parties are capable of settling between
themselves or referring to a adjudication.
iii. Disputes often arise because of:
a. The rapidly increasing population which has no
opportunities for gainful employment; there is, therefore,
no improvement in the standard of living of employees
who put forward demand for higher wages, which, if not
conceded, often lead to strained industrial relations and
strikes.
b. Rising unemployment.
iv. The galloping prices of essential commodities, their
shortages and/or non--availability, all these erode the value
of money, as a result of which the real wages of the
workers go down. Existing inadequate and unjustified wage
structure which has been chaotic, confusing and full of
anomalies; and failure to pay the “need-based wage”; and
fixation of D.A. as per the price--index based on 1961- have
created dissatisfaction among the workers, compelling them
to demand higher wages.
v. The attitude and temperament of industrial workers have
changed because of their education, their adoption of
urban culture and the consequent change in social values,
the growth of public opinion and progressive legislation
enacted for their benefit. They are, therefore, very conscious
of
their rights and will not put up with any injustice or wrong
done to them.
vi. The trade unions often failed to safeguard the interests of
workers. The, reasons affairs are:
a. Rivalry among, and multiplicity of, trade unions have
destroyed the solidarity of the working class;
b. Non-recognition of some trade unions as “bargaining
agents” of their members;
c. Compulsory adjudication has made trade unions seem
redundant for the wages and working conditions of
industrial employees can now be determined by courts,
tribunals, and wage boards;
d. Trade Unions generally do not bother about any aspect of
the lives of industrial labour except their wages;
e. Trade unions leaders who are them selves’ industrial
workers have become an eyesore
f. Trade unions generally function on the basis of caste,
language, or communal considerations, which ‘divide’ rather
than ‘unify’ industrial labour.
g. Trade unions are unstable and ephemeral;
a. Trade unions leadership aim at fulfilling ulterior motive
leading to thwarting the attempts of trade union unity.
B. Management attitude Towards Labour
i. Management is not willing to talk over any dispute with
their employees or their representatives or refer it to
‘arbitration’ even when trade unions want them to do so.
This enrages the workers.
ii. A management’s unwillingness to recognize a particular
trade union and the dilatory tactics to which it resorts while
verifying the representative character of any trade union have
been a very fruitfu1l source of industrial strikes.
iii. Even when representative trade unions have been
recognized by employers they do not, in a number of
castes, delegate enough authority to their officials to
negotiate with their workers, even though the
representatives of labour are willing to commit themselves
to a particular settlement.
iv. When, during negotiations for the settlement of a dispute,
the representatives. Of employers unnecessarily and
unjustifiably take the side of the management tensions are
created, which often lead to strikes, go-slow or lock-outs.
v. The management’s insistence that they alone are responsible
for recruitment promotion, transfer, merit awards, etc., and
that they need not consult their employees in regard to any
of these matters, generally annoys the workers, who become
un-cooperative and unhelpful and often resort to strikes.
vi. The services and benefits offered by a management to its
employees do promote harmonious employer-worker
relations. But a large number of managements have not
taken any steps to provide these benefits and services for
their workers.
C. Government Machinery
i. Though there is a plethora of enactments for promotion of
harmonious relations, yet it is ineffective and unsatisfactory
in most cases due to:
a. Their irrelevancy in the context of the challenges of present
industries climate/culture, as many have not been convinced
of their utility satisfactorily;
b. Incapability of understanding and answering imperatives of
development;
c. Improper and inadequate implementation by many
employers.
ii. The Government’s conciliation machinery has settled a very
negligible number of disputes because:
a Both employers and employees have very little confidence in
it;
b. Both have become litigation-minded;
c. It is inadequate, for the number of disputes referred to it is
very large and the personnel dealing with them is hopelessly
when thesis hopelessly inadequate, particularly because, in
addition to labour disputes, it is called upon to see to it that
labour laws are properly implemented; and
c. The officers associated with conciliation proceedings have
MANAGEMENT OF INDUSTRIAL RELATIONS
very little training in handling the problems or disputes
which are referred to them.
D. Other Causes
Among these the following may be included:
i. Affiliation of the trade unions with the political party. Each
political party, therefore, somehow, “engineers” strikes,
gheraos and bandhs to demonstrate its political strength.
Invariably, the political party which is in power favors that
trade union organization which is affiliated to it. Result:
Labour Conflicts and Disputes.
ii. Political instability, Centre-State relations, general
responsibility or all fronts are reflected in industry resulting
in industrial conflict.
i. Other potential factors, such rampant corruption in
industry and public life, easy money, conspicuous
consumption, permissive society, character crisis and general
break-down in the national morale have brought in their
train debasement of social values and social norms - all
these can and have perpetuated all kinds of unrest,
including industrial unrest. “
Exhibit
Causative Factors of Industrial Conflicts
i. Industrial Factors
Causes of industrial disputes under this category are:
a. Industrial matters relating to employment, work, wages,
hours of work, privileges, rights and obligations of
employees, terms and conditions of employment.
b. Disputes often arise because of the population explosion
and rising unemployment.
c. The increasing prices of essential commodities.
d. The attitude and temperament of industrial workers.
ii. Management’s Attitude Towards Workers
a. Disinterest of management to discuss with the workers and
their representa-tives.
b. Management’s unwillingness to recognize a particular trade
union.
c. Unwillingness of management to delegate required
authority to its officials for the purpose of discussing with
trade unions. .
d. Taking management side by the management officials while
discussing the issues in collective bargaining.
e. Disinterest of the management in involving the workers in
decision-making.
iii. Govemment Machinery
Though the Government enacted a number of legislations,
Government machinery is not successful in implementing
the machinery due to:
a. Their irrelevancy in the context of the challenges of present
industrial climate.
b. Inability to understand and answer imperatives of
development.
141
 c. Inability to check employers in implementing labour laws.
MANAGEMENT OF INDUSTRIAL RELATIONS

d. A little confidence of employees and employers in

government’s conciliation machinery.
e. Inability of government’s conciliation machinery in doing
its job effectively.
iv. Other Causes
a. Affiliation of trade unions with political party and political
leadership of trade union.
b. Political instability, poor center-state relations etc.
c. Other political reasons like character crisis, values etc.

Manifestation of industrial conflicts is below:

Manifestations of Conflict

Manifestation of organized group Manifestation of individual

and
Conflict (union Management conflict) unorganized conflict

Manifestations Manifestation of Workers Management

Of unions management

Non-co-operation Unwillingness Unorganized Autocratic

With holding supervision
Of efforts

Arguments Termination International Over strict

Waste and discipline
Inefficiency

Hospitality Demotion Labour Penalties

Turnover

Stresses and Lay offs absenteeism

Tensions complaints Demotion

Unwillingness
To negotiate

Resentment instances of
Absenteeism breaking of rules Lay offs

Work to rule
Strikes Lockouts
Demonstration
Morcha, Gherao

Loss of production

strike

142
 MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 29:
LABOUR ADMINISTRATION MACHINERY

Learning Objective Other offices connected with the Central Labour Ministry
The study of this lesson will help you understand: are:
• The labour administration machinery. The Industrial Tribunals set up in different centres for indus-
tries for which the Central Government is the appropriate
Labour Administration Machinery government. There are eight such tribunals dealing with
In India both Central and State Governments enact and disputes in the central sphere in India (Ministry of Labour,
administer labour laws. The division of jurisdiction between 1981).
Centre and States is provided by the Constitution which makes
Wage Boards, Commissions, Committees of Enquiry, ESI
a distinction between matters within the exclusive jurisdiction
Corporations, the Central Board of Workers’ Education, Safety
of the Centre and the State and within the concurrent jurisdic-
Councils which are ad-hoc bodies. (note: Most of these have
tion of the State and Centre. It is the Centre which plays the
been dealt with elsewhere.)
main role in laying down laws, making provisions and the State
Governments with the assistance of their labour departments While the labour secretary is overall in charge of both policy and
are in charge of law enforce-ment. The Centre in addition has administration, the commissioner of labour in the states is the
the functions of coordination through a variety of offices. operative arm for the implementation of labour laws. He is the
Registrar of Trade Unions. In some states, he has the functions
The Ministry of Labour and Employment of the Central
of the State Director of the National Employment Service or
Government is the main agency for policy formation and
of the Chief Inspector of Factories. In the states where there is
administration in. all labour matters. Together with the State-
no separate authority for labour welfare, the Commissioner
Governments, the local bodies and the Statutory Corporations
(State) looks after this function.
/ Boards, it sees to the implementation of these policies and
the decisions of the Tripartite Committees. These four agencies Statutory Measures
are also responsible for the enforcement of the labour laws. The Since Labour falls in the Concurrent List, the State Govern-
Ministry of Labour and Employment at the Centre discharges ments are free to legislate their own labour laws. For example,
the functions entrusted to it through a number of Directorates Uttar Pradesh, Madhya Pradesh, Gujarat, Rajasthan and
which are described briefly below. Maharashtra have their own laws to resolve industrial conflicts.
1. Directorate General of Employment and Training (DGET): For the states which have their own acts, the Industrial Dis-
DGET lays down policy for running of the employment putes Act, 1947 is applicable to industries no\ covered by the
exchanges and the industrial training institutes. It also runs State Legislations. In addition, the Defence of India rules114,
seven Central Training Institutes for craft instructors and two 118 and 119 govern industrial relations but they can be used
research institutions. only during an emergency by the government. Though the
Industrial Disputes Act, 1947 is a central Legislation, it is
2. Office of the Chief Labour Commissioner (CLC) (Central):
administrated by the Central and State Governments in their
This is also called the Central Industrial Relations Machinery
respective spheres.
(CIRM). He has the following functions: administration of
labour laws; verification of membership of registered unions
for granting recognition under the Code to industries which
come under the purview of the Central Government; determi-
nation of membership of the central federations for
representation at national and international forums; supervi-
sion of implementation of the Code. But his main duties relate
to resolving disputes.
3. The Director General of Mines Safety (DGMS): It looks into
the working conditions and implementation of the Mines Act,
1952, and the Maternity Benefit Act, 1961, in, mines other than
coal mines.
4. The Directorate General of Factory Advice Service and Labour
Insti-tutes: Provides advisory service to the factory inspectorates
of different states. Conducts research in problems relating to
safety, health, welfare and productivity. It runs a Central Labour
Institute and the Regional Labour Institutes.

143
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 30:
LNTER INDUSTRY PROPENSITY FOR STRIKES, STRIKE PATTERNS
Learning Objective
The study of this lesson will help you understand:
• Inter industry propensity for strikes.
• Strike patterns.
Inter-Industry Propensity to Strike
We review below the four major studies that have been carried
out in this field in various industries and countries.
Pandey and Pathak in their paper “Inter-Industry Conflict-
Proneness in India” have tried to analyze:
i. trends in conflict-proneness in different industries in India;
ii. the extent and direction of variation in industries with
regard to four measures of conflict-proneness which are:
• Frequency of conflicts,
• Duration of conflicts,
• Participation in conflicts, and
• Loss due to conflicts.
iii. the relationship, if any, between the abovementioned
measures of con-flict-proneness with a view to finding out
whether they move in the same or different directions.
Methodology and Findings
The authors have made a study of the nine-year period, i.e.
1959-1967, Which is divided il1tO three periods, viz. 1959-61,
1962-64, and 1965-67. It covers 14 major industry groups in the
manufacturing sector as classified under the International
Standard classification of industries, and two impor-tant non-
manufacturing industries, namely, mining and quarrying. Lately
plantations have also been considered.
The authors, by calculating the coefficient of variations for 16
industry groups during three periods as well as the average for
the nine-year period covering all these four measures, found
that there is no systematic pattern in inter-industry conflict-
proneness. By finding the mean values for each period, for each
measure and seeing whether a particular industry falls above or
below the mean values, it was concluded that industries like tex-
tiles, paper and paper products, leather find leather products
were compara-tively more conflict-prone. To find the interrela-
tionship between the four measures of conflict the coefficient
of correlation was tabulated over the nine-year period and it was
found that these measures ‘are positively rela-ted, which let us
conclude that in actual practice structural and organiza-tional
weaknesses of union have very little adverse influence on the
duration of conflicts and workers’ participation therein. The
data also reveals that the possibility of a quick settlement of
conflicts tends to decline with the increase in frequency of
conflicts.
Kerr and Siegel in their study on “The inter-industry propensity
to strike-an international comparison”, which is based on
generalized groupings of industries of eleven countries-
144
UNIT 8
Australia, Czechoslovakia, Germany, Italy, Netherlands, New
Zealand, Norway, Sweden, Switzerland, the United Kingdom
and to United States. The propensity to strike of the industries
is measured in terms of high, medium-high, medium, medium
-low and low categories as compared to the average value of the
incidence of conflict in specific industries. Several hypotheses
have been tested by the authors.
1. The location of the worker in the society: The location here
refers to the nature of his work environment, his relations with
the society of which he is a part, economic conditions and
standard of living, etc. This variable influences the propensity to
strike and is, in turn, heavily influenced by the industrial
environment. The nature of the industry creates a distinct
community in an isolated environment. This coupled with the
nature of work breeds a very distinct and identifiable culture.
Such communities which are removed from the mainstream of
activity are classified as a distinct “isolated mass”. The concept
of ‘isolated mass’ is tested by miners, long shore men people
who work in the dock s and to a lesser extent, by textile
workers, who are away from their own communities, social
standards etc. and have peculiar grievances. Industrial hazards,
severe depression, Un-employment, bad living conditions, low
wages, etc. are causes for disputes and therefore their propensity
to strike is also comparatively higher.
‘The integrated individual and the integrated group’ concept is
in con-trast to that of ‘isolated mass’. It is used in a sociological
sense and hence the propensity to strike is low or medium-low
(particularly in industries like railroads, trade, agriculture, etc.).
The workers in such industries play a role which integrates them
better with the general community and hence the individual
grievances are less likely to be turned into a mass grievance.
2. The character of the job and the worker: The nature of the
job deter-mines the kinds of workers employed and their
attitudes, which again determines whether there will be an
atmosphere of conflict or peace. Thus it is found that if the job
is physically difficult and unpleasant, the propen-sity to strike
will be higher, of course, this hypothesis is not universally true
and may be wrong in certain periods and in different countries.
Verma in his paper “Industries and Conflict in India: A
Statistical Analysis” has tried to study inter-industry differences
in conflict-prone-ness by taking 22 major industries. The study
relates to three periods, i.e. from 1961-65, 1966-70 and 1971-73.
The measure used is the number of man-days lost during these
periods in 22 industries. It was found that 12 out of 22
industries are not very conflict-prone as their values fall below
mean-values of man-days lost. The textile industry was the
most conflict prone industry in the combined period of 1961-
73, folio wed by metal products, plantations, tobacco, mining
and quarrying, machinery, food (except beverages) and transport
and communication, in that order.
Ross and Hartman’s study on “Changing Patterns of Industrial All these factors together, or some of them, or perhaps even

MANAGEMENT OF INDUSTRIAL RELATIONS

Conflict” reveals interesting findings on patterns of strikes over
4 major parts of the world-the North European Pattern
covering Denmark, the Netherlands and the UK; the Northern
European Pattern covering Sweden and Norway; the Mediterra-
nean-Asian pattern covering France, Japan, Italy and India and
the North American sphere covering Canada and the US. The
authors concluded that white-collar workers are less strike-
prone. As regards Mediterranean-Asian patterns, it was
observed that strikes are widespread in this group, involving
substantial proportions of union members and non-agricul-
tural employees in most years. However, the average duration
of the strike is short. This particularly holds true for France,
Italy and Japan. In India, strikes have continued for a longer
period than in other countries in this group. The pattern of
strike activity in India prior to independence resembles the
pattern in France, Italy and Japan but after that period the
resemblance is much less. With widespread participation and
moderately long strikes, the ratios of lost time in India have
been very high, in fact the highest in the world.
These research studies give us an idea of the various patterns of
conflicts among industries in different countries over the
periods of time. Various factors lead to these variations in
one factor could prompt a conflict situation.
An attempt has also been made here to study conflict in 19
major indus-tries over the period 1961 to 1976. This period is
broken up into 3 sub-periods-1961-65, 1966-70, and 1971-76.
The number of man days lost has been selected as a measure to
study conflict-proneness. Tables 9.8 a and b give the data on
these industries. After finding out the average man days lost for
each of the three periods, and for the entire 16 year period, the
industries have been divided into high, medium and low
categories by com” paring actual man days lost in that industry
to the average number of man days lost.
The above analysis brings us to the conclusion that the textile
industry is the most conflict-prone industry. This is concluded
from the fact that in all the three periods as well as for the entire
(16 years) period the number
TAB
LE Industry-wise Trends in Maydays Lost
9.8 ('000)
(a)
SI.
No. Industry 1 9 6 1- 6 5 1 9 6 6 -7 0 1 9 7 1- 7 6 1 9 7 7- 8 1 *

pattern of conflict propensity which can be generalized thus: 1. Plantation 1206 156 5560 1024
2. Mining and quarrying 1896 5147 6704 5253
1. The organization of unions: The nature of organization of 3. Food (except beverages) 2640 3725 3503 1576
4. Beverages and tobacco 6937 3341 4085 1884
unions may be responsible for a high or low frequency in 5. Textiles 7996 25793 31576 13950
conflicts in a particular industry. The variables that determine the 6.
Paper, paper products
a n d allied
relative frequency of conflict in an industry are the presence of Industries, printing and
427 1621 1902 2146
multiple unions, inter-union rivalry or even no unions at all; publishing
7. Leather and leather 173 153 830 205
also, whether the union is militant or weak. products
Rubber and rubber
8. 448 1170 2757 1399
2. Technology: Sometimes technology may be a primary or one products
Chemicals and chemical
among many causes contributing to the frequency of conflicts. 9.
products
Complex technology may evolve fear of change among Except petroleum and 939 2277 2978 2400
coal
employees leading to resistance and conflict. N o n -metallic mineral
10. 1800 3909 6156 2424
products
3. Maturity of parties: This is an inherent factor leading to a
ll. B a s i c m e t a l i n d u s t r i e s
high or low propensity to strike. When parties are mature and and transport
Equipments 769 1618 5377 5694
objective, there are relatively fewer chances of conflict and even if Metal products (except
12. machinery) 2615 7591 4052 1141
they occur they are of short duration and most often resolved Machines (except
384 5265 59 49 5498
quickly. Their maturity also facili-tates recourse to institutional 1 3 . electrical appliances)
Electrical machine
means to resolve their conflict. 14. apparatus 601 2291 4274 2444

4. Equality of partners: This refers not only to equality in terms 15.

Transport equipment 614 1814 2134 3511

of representation of both parties but also to the strength of 16. Construction 418 1025 1312 1126
each party to bargain and negotiate. A strong trade union may Electricity, gas, water
17. and sanitation
force a weak management either to accept the demands or force Services 964 2077 2711 581
a strike situation. It could also be the other way round in case 18. Commerce 92 473 846 1028
of a strong management and weak unions. So, strength and Transport and
731 4996
1332
1282
19. communication 2
ability on both sides would bring about a concrete and speedy 1060
Total 31550 82442 54516
resolution of problems. 28
Average 1660.5 4339.1 5580.4 28693
5. Wage rates: This could also be the sole cause of conflicts,
when they are set too low or arc not consistent with the rate of
inflation, or in parity with other industries.

145
 Table:Type of industry –conflict proneness Patterns
MANAGEMENT OF INDUSTRIAL RELATIONS
of man-days lost have been very high in this industry as
compared to the average values as a whole. The transport and
communication industry (excluding workshops and metal
products) are highly conflict-prone com-pared to others in the
higher category.
The industries with low conflict propensity as revealed by the
data are commerce, leather and leather products, paper and
paper products, print-ing, publishing and allied industries.
This data, relating to conflict-proneness in industry provides
material for further research and analysis. Why is the textile
industry highly conflict- prone-it could be the working condi-
tions, the low wage rates or even the militant unions and
depressed market conditions. Many more factors could also be
involved and each category offers scope for separate analysis.
1. Formation stage Hesitation / Hostility
2. Fighting stage Acceptance / Conflict
3. Friendly stage Acceptance / Understanding
4. Fraternal stage Friendship / Mutuality
5. Fusion stage Joint effort / Inter-dependence Union-management cooperation
146
Conclusion
The historical data on conflict patterns (refer earlier graphs and
charts) points clearly to the fact that the industrial relations scene
in India over the years has not been very encouraging. There is
no definite pattern towards the stabilization of peaceful
relations and this is particularly so after the Emergency, when
industrial conflict has become widespread.
Agarwala in his article has provided a model for the stages in the
growth of industrial relations. It consists of five stages and
describes the form of relations and the type of unions existing
in each stage. The model is des-cribed below:
Guilds and craft unions
Classical unions
Collective bargaining
Consultation, participation
This compartmentalization of stages may not be water-tight Notes -

MANAGEMENT OF INDUSTRIAL RELATIONS

and some overlapping might obviously occur. It, however, does
give an idea as to how from the stage of hesitation and
hostility, the two parties (the union and the management) can
reach the stage of joint effort and interdependence.
The National Commission on Labour after studying the
conflict patterns and the legal machinery to cope with it has felt
that the present settlement machinery is inadequate and
ineffective. This is attributable to the delay involved, the
expensive ad hoc nature of the process, and the fact that dis-
cretion is vested in the government in matters relating to
referring disputes for adjudication.
Keeping in mind the shortcomings of the present dispute
settlement machinery, the recommendations of NCL and a
study of foreign experience, the Government of India in its
Industrial Relations Bill, 1978 provided powers and formulated
the procedures and duties of various authorities like conciliation
officers, arbitrators, tribunals, etc. under the proposed system.
In addition the Bill proposed many far-reaching structural
changes such as election of bargaining agent or representative
union. However, the bill has yet to see the light of day. The
government has, in the meantime, enacted the ID Amendment
Bill 1982, in order to bring about speedier resolution of
disputes. How far this will be effective is yet to be seen. In an
industrial society a state of harmony and goodwill between the
management and its workers is usually an objective. This is not
always possible where two groups exist, each with different
ideologies, goals and interests which may be in conflict. Conflict
is therefore inevitable and could also prove healthy in the sense
that it brings inherent problems to the fore. The cause of
conflict, the mechanisms to resolve conflict, and the outcome of
conflict, are all governed by each situation. On the one hand,
there are macro-level vari-ables-economic, social, political and
legal factors which contribute in their specific ways to a particular
situation. Yet on the other hand there are unit level or micro-
variables such as company policies, corporate attitudes to
personnel issues that could also contribute to a conflict
situation. We have seen in the Indian environment, the
structural limitations and the causes of conflict over a broad
time span. To what extent has conflict been resolved by
institutional mechanisms, which stand the test of acceptance
and credi-bility to be utilized and wanted, remains a question.
If institutional mecha-nisms do evolve to meet the changing
situation, then the manifestations of conflict are likely to find
other outlets.
Increasing population and unemployment, an unstable political
situation, growing alertness among the unorganized sectors
who are beginning to be aware of their rights, etc. are the
challenges faced by industries, which make the achievement of
the objective of industrial harmony all the more difficult. In a
less developed economy the tradeoff is between growth and
develop-ment, which is dependent on non-stoppage of work
and at the same time acceptance of democratic rights to express
one’s dissatisfaction either through strikes or lockouts in the
ultimate analysis. Industrial harmony, an elusive ideal, tries to
balance these opposites.

147
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 31:
ENVIONMENTAL INFLUNCES: ARBITRATION, CONCILIATION,
ADJUDICATION,UNFAIR LABOUR PRACTICES
Learning Objective
The study of this lesson will help you understand:
• The settlement of conflicts.
Settlement of Conflicts
The methods of the settlement of conflicts generally include
Methods of settlement of Industrial conflicts
Investigation Conciliation Voluntary
compulsory
Meditation
Arbitration
Arbitration/Adjudication
i. Investigation.
ii. Mediation.
iii. Conciliation.
iv. Voluntary Arbitration.
v. Compulsory Arbitration/Adjudication.
1. Investigation
This is conducted by a board or court appointed by the
government. It may voluntary or compulsory. If the investiga-
tion is conducted on an application by either or both the parties
to the dispute, it is voluntary. If the Government appoints a
court of Inquiry to investigate into a dispute without the
consent of the parties, it is compulsory. Investigations do not
aim at bringing about the settlement of disputes directly, but by
analyzing the facts they aim at bringing about an amicable
solution. When the investigation is compulsory, the strikes and
lockouts are required to be stopped and employers should not
make any change in the conditions of employment. The result
of investigation has no serious effect on the disputes because
the general public is least bothered to make note of disputes.
2 Mediation
Another attempt to settle disputes is Mediation. In this
method an outsider assists the parties in their negotiations. It
takes place with the consent of both the parties. The mediator
performs the messenger’s job for both the parties and he
neither imposes his will nor his judgment upon them. The
main aim of mediation is the settlement disputes by bringing
about a voluntary agreement. There may be three kinds
mediation:
1. The Eminent Outsider;
2. Non-Government Board; and
3. Semi-Governmental Board.
If mediation is conducted skillfully and sympathetically along
proper lines, it can bring about the adjustment of differences
that might otherwise contribute to stoppage of work.
148
3. Conciliation
The main objective of a conciliation and arbitration is to reunite
the two conflicting groups in industry in order to avoid
interruption of production, distrust etc.
Conciliation is a process by which representatives of both
workers and employees are brought together before a third
party with a view to persuading them arrive at some sort of
settlement. Conciliation is an extension of collective bargaining
with third party assistance. It is practice by which the services of
a neutral third party are used in a dispute as a means of helping
the disputing parties to reduce the extent of their differences
and to arrive at an amicable settlement or agreed solution. It is a
process of rational and orderly discussions of differences
between the parties to a dispute under the guidance of a
conciliator.
Conciliation machinery consists of a conciliation officer and
board of conciliations. The conciliator induces the parties to a
course of action. He plays the roles of an innovator, protector,
discussion leader, stimulator, advisor, face-saver. He acts as a
safety value and a communication link.
The task of conciliation is to offer advice and make suggestions
to the parties to the dispute on controversial issues.
Qualities of a Conciliator
The essential qualities of a conciliator include:
1. Independence and impartiality are the two attributes which
every conciliator should possess. It is essential that he
should not only possess these qualities but be also ‘seen to
possess them. He must be above suspicion; and both
parties must have confidence in his integrity and neutrality.
He should be independent enough not to be or influenced
by others. He should be able to resist undue pressures or
persuasion from powerful employers or unions.
2. Since conciliation, in certain case, means arduous work, a
conciliator should be physically and psychologically fit for
the rigors of his task. He must have a strong held
conviction of the importance and usefulness of
conciliation, and he must like or learn to like the work. It
has been noted that “conciliation is an expression of one of
the highest virtues which can be practiced - the desire to
understand and be just to one another. Each time that one
attempts to resolve a conflict without force one renders to
men and enormous service in leading them in the path of
wisdom and of respect themselves and for each other.”
3. A conciliator should never allow conciliation proceedings
before him to constitute a mere formality or a step on road
to arbitration. He must be able to offer to the parties
inducements that will persuade them to prefer a settlement
with his assistance and to make serious efforts to reach
agreement.
4. Because of the nature of his work a conciliator must have
the ability to get along well with the people. He must be, to
a certain extent, a specialist in human relations in the
relations between the parties when they come face-to-face,
and in his own relations with them. He must be honest,
polite, tactful, self-confident, even- tempered and patient in
trying to accomplish results. He should have powers of
persuasion, including a good command of language and
facility of expression, and should be able communicate with
the parties in language they understand.
5. Since a conciliator has to deal with different persons and has
to preside over their joint meetings in conciliation
proceedings, he not only needs tact and ability to guide and
control their joint discussions, but must also give an
impression of expression, responsibility, dear-headedness
and mature judgement. He must be to show others that he
possesses enough common sense and practical-mindedness.
6. A conciliator should have a friendly personality, a sense of
humour, specially for releaving tensions of joint
discussions. A special alacrity of mind will enable him to
grasp quickly and analyse rapidly the main elements of
controversy.
7. A conciliator should be fully familiar with the law and
regulations concerning industrial re/alions and the
settlement of industrial disputes. He should be familiar
with the industrial relations system, e.g., the development
and structure of trade union and employers’ associations;
the prevailing methods of collective bargaining; negotiating
procedures and practices; the operation of agreed
negotiating bodies set up by the parties; the main causes
and patterns of disputes; knowledge of personnel
management, functioning of trade union within
undertakings, grievance and disciplinary procedures and
joint consultancy machinery.
8. He should be well-trained in different aspects of
management process. He should have some knowledge of
products and services, the production methods, practices,
etc., knowledge about wage rates and other financial
matters, incentive schemes; and the understanding of those
factors, traditional outlooks and cultural, peculiarities, and
of the way in which they affect labour relations.
9. He must have ability and versatility to form judgments. He
should, therefore, acquire knowledge from personal
experience and observation; besides getting knowledge in
social sciences, psychology, social institutions, group
behavior and cultural change.
Role of the Conciliator
The conciliator is a multi-facted individual. His contribution has
been discussed by the I.L.O publication thus:
“The conciliator induces the parties to a course of action. “ His
intervention in the dispute creates for the parties a situation
different from the direct confrontation they had before.
The conciliator establishes for the parties a need to re-examine”
the positions in this new situation and to consider possible
alternatives or options, The’ need to make a choice of possible
option continues after his initial intervention; and, depending
MANAGEMENT OF INDUSTRIAL RELATIONS
on the shifting pressures on the parties he can sharpen or blunt
the need to make a choice.
“The conciliator opens to the parties a variety of available
options besides those they can think of themselves. By
promoting their attitudes and discovering in what fields they
may be prepared to show some flexibility, he gains perspective
of the issues in dispute and of alternatives possibilities of
settlement. These options may vary in number according to the
nature of the issues involved; and they may be available in
respect of a single issue or on combination of issues.
“The conciliator controls the timing for the selection of option,
the acceptability of which to the parties may vary from time to
time. On the basis of his evaluation of the parties attitudes and
the progress of the discussions, he can decide whether it is
necessary to increase or shorten the time available for the
selection of option; his contribution is to offer the options at
the particular moment, when they are most likely to win a
positive response from the parties.”
The subsidiary role of a conciliator may be discussed under
following heads:
As a Discussion Leader
As a discussion leader the conciliator reduces irrationality and
antagonism between the parties. He guides them towards a
problem-solving approach to their dispute; he ensures that they
discuss their differences in as friendly a manner as possible; he
helps them to analyse their problem, always striving to keep the
analysis on rational ground; he identifies the elements of the
problem, both for the parties benefit and for his own.
As a Safety Valve
The conciliator places himself in the position of alternative
target when he feels that the parties are in an aggressive mood.
By setting a substitute target, the parties can achieve an emo-
tional release without direct and immediate damage to the
negotiations.
As a Communication Link
The conciliator fulfils an important function as a communica-
tion link between the parties; serving as a communication link
may either constitute his main conciliatory effort or be a
contribution to it. He not only works as a conduit through
which messages relayed from one side to the other, are passed,
but he also provides a thorough explanation and interprets the
intention of the party.
As an Innovator
The conciliator acts as an invaluable source of new information,
and new information the new thoughts, particularly in provid-
ing the parties with different views of the issues, with
alternative solution and possibly an entirely new approach.
As a Sounding Board
He is often described as a “flying ambulance squad” appearing
whenever or wherever a collision or conflict, which threatens to
disturb harmonious relationship occurs or his apprehended to
occur between the interests of the parties. He may indicate the
parties which of their own arguments, defenses and supports
cannot stand under a rational searching enquiry.
149
 As a Protector
MANAGEMENT OF INDUSTRIAL RELATIONS
The conciliator plays a protecting role for making the parties
ready for collective bargaining positions by exploring alternative
solutions during separate meetings.
As a Fail-Safe Device
The conciliator often assists a party which has overstated its
position to the extent or bluff or exaggeration of its reaction to
some move on the part of the other; or taken a clearly unten-
able stance to withdraw gracefully under the banner of reason.
As a Stimulator
Sensing the need for positive action, the conciliator can provide
necessary impulse; he makes a concise statement, supplies some
date, gives a hint or suggestion. He crystallizes changes of
opinion, in course of discussions, by intervening at the
appropriate moment and giving such ideas a concrete form.
As an Adviser
The conciliator tries to remove misunderstandings regarding the
other’s position, intentions and capabilities. He tries to see that
such misinterpretations do not occur and that each side
thoroughly understands the others’ point of view, obtains a
picture opponent’s strength and realizes its own limitations and
weaknesses.
As a Face Saver
When a party knows from the outset or realizes during the
course of proceedings that it has a weak case and can hope for
little success in pursuing the dispute. The people concerned are
often reluctant to admit defeat, because they feel that this will
involve them in a loss of face, or prestige, with their members
or with the public, In such situations, conciliator may device a
form of announcing settlement, which’ apparently make some
small concession to the party concerned but which in reality
gives it little or nothing.
As a Promoter of Collective Bargaining:
While intervening in a dispute he is not only concerned with
obtaining settlement, but often he assists and promotes
collective bargaining and helps and guides the parties in the
development of their relationship.
Thus, a conciliator has to playa wide variety of roles. When a
strike or lockout is threatened it is his duty to advise the party
concerned on the legality of the proposed action and to use all
his powers of pursuing so that at least the action can be
postponed while conciliation is going on. He makes all efforts
to persuade the parties against violent or disorderly behavior in
carrying out the proposed action which might lead to bitterness.
He also tries to bring the parties together to negotiate before the
factory is shut down or any damage, to equipment or property
is done. He also ensures that work is immediately resumed
when the strike or lock-out is terminated.
Criticisms Against Conciliation
i. The work of conciliation is often delegated by the State
Governments to the officers of the Labour Department,
who are already over-burdened and, therefore, cannot do
full justice in the matter. In actual practice these officers act
only “as post offices” and do little to conciliate disputes.
They carry no conviction with the, labour and in many cases
150
take recourse to the path of least resistance and make a
report to the Government for reference of the dispute for
adjudication.
ii. Most of the conciliation officers are young, inexperienced
and untrained who have no thorough training in the act of
mediation. They get both the parties together in the same
room and ask each to state its position which just makes
the situation worse. They are just rubberstamps and often
refer cases directly to adjudication. .
iii. Conciliation proceedings are abused and misused by the
parties. They often use the conciliators to find the position
and strength of each other and to feed wrong information
to each other. This often happens when the conciliator and
the adjudicator are the same person.
iv. It has been said that even when labour and employers reach
an agreement without the help of the conciliators “the
written document is frequently initiated and approved by
the State Labour Commissioner and this can then may be
reported as settled through conciliation.”
v. Conciliation is looked upon very often by the parties as
merely a hurdle to be crossed for reaching the next stage.
There is, therefore, casualness about it in the parties and a
habitual display of such casualness conditions conciliator
also into that attitude.
vi. Outside interference has been common in the working of
this machinery, Manager grudge that political pressure is
brought on them and conciliation machinery to settle the
issues in favour of workers. Unionists, on the other hand,
quip ‘that political pressure is exercised to safeguard the
employers’ interest.
vii. The machinery is often partial and puts only half-hearted
efforts to reach any settlement. Such things procreate a
failure orientation towards conciliation machinery both in
the workers and the management. Often the Government
officials and management as well as trade unionists have
predicted that conciliation is ineffective in India. This works
as an important tool in the hands of those who are
opposed to conciliation intervention at the plant level.
viii.The trade unionists are of the view that the machinery
favours management while taking decisions whereas
managers feel that it is pro-union. They also say that, “some
of the Conciliation officers lack the requisite qualities of a
conciliator and obvious of the necessary knowledge of
industry, labour problems, labour laws and industrial
relations and often look towards labour leaders and
management representatives for guidance. They are inept in
the art of mediation. The indiscriminate reference of
disputes to adjudication is also a contributory factor
towards inefficient working of the machinery.
ix. Finally, there are other impediments and problems facing
the machinery which have made it bootless, viz., sincerity of
efforts; interest in the working community, capacity to resist
external pressure; authority to enforce proceedings and get
the decisions implemented, initiative, drive and tactfulness;
and the physical distances involved in contacting the
machinery and attending proceedings, etc.
Suggestions for Effective Functioning of

MANAGEMENT OF INDUSTRIAL RELATIONS

Conciliation
“To make conciliation more effective the National Commission
on Labour has recommended that, “Conciliation machinery
should be part of the Industrial Relations commission, which
will make it free from other influences... The independent
character of the machinery will alone develop greater confidence
and will be able to evoke more cooperation from the parties ...
Apart from this basic change which will introduce important
structural, functional and procedural changes in the working of
the machinery; other measures are: (i}proper selection of
personnel, (ii) adequate pre-job training, and (iii) periodic in-
service training through refresher courses, seminars and
conferences.”
Following suggestions may be offered for improving the
working of the conciliation machinery:
1. The first basic need for making the conciliation machinery a
success is to free it from the clutches of any political or
administrative interference. This can be achieved by
assigning the control, of machinery to some autonomous
body:
2. The conciliation machinery should be invested with
adequate and more powers so that the parties could be
forced to arrive at a conclusion which is binding and not
only recommendatory in nature.
3. The mutual images of the parties towards each other need
be improved so that their negative conceptions may not
work like a self-fulfilling prophecy for the failure of
conciliation.
4. The parties should not treat conciliation machinery as a
more joy and ride and a sense of commitment towards the
resolution of dispute should be inculcated among them by
conciliator.
5. Conciliation should be introduced in all the industries in
spite of their being public utilities or otherwise.
6. The workload of the machinery should be periodically
assessed, if need be, the necessary staff should be
appointed so that it may not break down under the
unbearable workload which it is at present carrying.
7. The conciliation officers can be made more effective by: (i)
prescribing proper qualifications for a conciliation officer and
improving his qualities by proper selection and training, (ii)
enhancing their status for dealing with persons who appear
before them, (iii) delegating appropriate authority to these
officers, and (iv) minimizing political interference.”

151
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 32:
ENVIONMENTAL INFLUNCES: ARBITRATION, CONCILIATION,
ADJUDICATION,UNFAIR LABOUR PRACTICES
Learning Objective
The study of this lesson will help you understand:
• The settlement of conflicts.
Voluntary Arbitration
If the two parties to the dispute fail to come to an agreement,
either by themselves or with the help of a mediator or concilia-
tor agrees to submit the dispute to an impartial authority,
whose decision, they are ready to accept. The essential elements
in voluntary arbitration are:
• The voluntary submission of dispute to an arbitrator;
• The subsequent attendance of witness and investigations;
• The enforcement of an award may not be necessary.
Essential Elements of Voluntary
Arbitration
Essentials of voluntary arbitration are:
• The voluntary submission of dispute to an arbitrator;
• The subsequent attendance of witness and. investigations;
• The enforcement of an award may not be necessary and
binding because there is no compulsion. But generally, the
acceptance of an arbitration implies the acceptance of its
award - be it favorable or unfavorable; and
• Voluntary arbitration may be specially needed for disputes
arising under agreements.
Advantages of Arbitration
Advantages of Arbitration include:
1. Since it is established by the parties themselves, arbitration
has the particular advantage of bringing the dispute
settlement procedure down to the level of the parties to
dispute. Workers and management tend to have greater
faith and full confidence in settlement machinery which is in
effect their own.
2. Since arbitration is established by agreement, it is more
flexible than other procedures and can be adjusted to the
views, desires and experience of parties and to the
circumstances of the undertaking or industry.
3. This procedure, operating on the level closest to the parties
to disputes, has the advantage of enabling the arbitrators to
acquire a much greater familiarity with the characteristics of
the particular industry or undertaking concerned than most
courts or tribunals.
4. The procedure is relatively expeditious when compared to
ordinary courts or labour tribunals. It cuts down delays and
results in prompt settlement of differences.
5. It is informal in character and on that account as well as
because the disputes are handled by the parties themselves
often without recourse to lawyers, it tends to be less
expensive than other procedures.
152
6. Awards are capable of implementation without any grudge
on the part of both the parties at dispute and do not lead
to further chances of litigation.
7. Since it is based on the consent of both the parties it helps
building up a sound base for healthy industrial relations,
mutual understanding and cooperation.
“It is popular because it is suitable and compelling. It is far
better than a costly work-stoppage, even though not wholly
satisfactory from either parties’ point of views.
Disadvantages of Arbitration
Disadvantages of Arbitration include:
1. It deprives the labour of its right to go on strike - as there is
often a provision in the agreement that the trade unions
and workers will refrain from strike action during the course
of the continuance of the agreements.
2. Judgement is often arbitrary all ill-advised as the arbitrators
are not well- versed in the economic and technical aspects of
industry.
3. Arbitrators are often biased against labour and their award
is, therefore, usually not in favour of the labour.
4. Delay often occurs in arriving at the award and settlement
of disputes. This leads to break down in the morale of
members.
5. Though arbitration is an essential element in the creation of
better labour- management relations, its availability may
lead to less dependence of negotiation and conditions
imposed by a third party may be resented.
6. Too much arbitration is not a sign of healthy relationship.
Parties who find it necessary to leave the disposition of
disputes to third parties do so often because they they have
not learnt how to solve their own problems, how to live
with one another. Therefore, too frequent arbitration is not
only costly and time-consuming but it also promotes a
hostile and rigid relationship between the parties.
Reference of Dispute to Arbitration
Under Industrial Disputes Act, 194;
Under the Industrial Disputes Act, 1947, a dispute may be
referred to arbitration under following conditions:
a. An industrial Dispute exists or is apprehended in an
establishment;
b. The employer and the workmen of that establishment
agree, in writing, to refer the dispute to arbitration;
c. Arbitration agreement is in the prescribed form and signed
by the parties to it in the prescribed manner;
d. The agreement must be accompanied by the consent, in
writing, of the arbitration or arbitrators;
e. The dispute must be referred to arbitration at any time
before it has been referred to a Labour Court or Tribunal or
a National Tribunal;
f. The reference must be to certain person or persons specified
in the arbitration agreement to act as a arbitrator/arbitrators;
g. The arbitration agreement must set forth the issue/issues
to be decided by the arbitration procedure and a copy of the
agreements is forwarded to the Government and the
Conciliation Officer.
National Arbitration Promotion Board
“To make voluntary arbitration more acceptable to the parties
and to coordinate efforts for its promotion the government
appointed in July 1967, a National Arbitration Promotion
Board with a tripartite composition. The functions of the
Board are:
i. To review the position periodically;
ii. To examine the factors inhibiting wider acceptance of this
procedure and suggest measures to make it more popular;
iii. To compile and maintain up-to-date panels of suitable
arbitrators for different areas and industries and to lay down
their fees;
iv. To evolve principles, norms and procedure for guidance of
arbitrator and the parties;
v. To advise parties, in important cases, to accept arbitration
for resolving disputes so that litigation in courts is avoided;
vi. To look into the cause of delay and expedite arbitration
proceedings wherever necessary.
vii. To specify, from time to time, the types of disputes which
would normally be settled by arbitration in the light of
tripartite decisions.”
Compulsory Arbitration / Adjudication
Where trade unions are weak the method of Compulsory
Arbitration is used. Compulsory Arbitration is utilized generally
when the parties fail to arrive at a settlement through the
voluntary methods.
In India, Compulsory Arbitration is enforced because collective
bargaining was not used for regulating wages and other
conditions of employment.
It may be said that compulsory arbitration may be at times and
under certain circumstances, necessary and desirable. The nature,
scale and timing of state intervention should be suited to the
needs of different occasions. The objective of state intervention
in the field of industrial relations should be to do social justice
and make the weaker party equally strong to enable it ultimately
to stand on its own legs and settle its differences through
negotiations and collective bargaining.
Compulsory arbitration is one where the parties are required to
arbitrate without any willingness on their part. Anyone of the
parties may apply to the appropriate governments to refer the
dispute to adjudication machinery.
“Under compulsory arbitration, the parties are forced to
arbitration by the State when
i. The parties fail to arrive at a settlement by voluntary
method; or
ii. When there is a national emergency which requires that
MANAGEMENT OF INDUSTRIAL RELATIONS
wheels of production should not be obstructed by frequent
work-stoppages; or
iii. The country is passing through grave economic crisis; or
iv. There is a grave public dissatisfaction with the existing
industrial relations or
v. When industries of strategic importance are involved; or
vi. Parties are ill balanced, Le., where the unions are weak, ill-
organized, and powerless and the means of production are
in the hands of the capitalists who are well-organized and
more powerful; or
vii. Where public interest and the working conditions are
desired to be safeguarded that regulated by the State.
Compulsory arbitration leaves no scope for strikes and lock-
outs and thus deprives both the parties of their very
important and fundamental rights.”
Model Principles for Reference of
Disputes to Adjudication
The Indian Labour Conference (held in Chennai in July 1959)
evolved a set of model principles for reference of disputes to
adjudication. These principles were:
1. All disputes may ordinarily be referred to adjudication on
request.
2. Disputes may not, however, be ordinarily referred to
adjudication:
(a) Unless efforts at conciliation have failed and there is no
further scope for conciliation and the parties are not
agreeable to arbitration;
(b) If there is a strike or lock-out declared illegal by a Court, or a
strike or lock-out resorted to without seeking settlement by
means provided by law and without proper notice or in
breach of the Code of Discipline, as determined by the
machinery set up for the purpose unless such a strike or
lock-out, as the case may be, is called off;
(c) If the issues involved are such as have been the subject-
matter of recent judicial decision or in respect of which an
unduly long time has elapsed since the origin of the cause
of action; and
(d) If in respect of demands other legal remedies are available,
that is, matters covered by the Factories Act, Workmen’s
Compensation Act, Minimum Wages Act, Payment of
Wages Act, etc.
3. Industrial disputes raised in regard to individual cases, that
is, cases of dismissal, discharge or any other action of
management on disciplinary grounds, may be referred to for
adjudication when the legality or property of such action is
questioned, and in particular:
(a) If there is a case of victimization or unfair labour practice;
(b) If the Standing Orders in force or the principles of natural
justice have not been followed; and
(c) If the conciliation machinery reports that injustice has been
done to the workman.
153
 The following principles are derived form the judicial judg-
MANAGEMENT OF INDUSTRIAL RELATIONS
ments:
i. The Government must be of the opinion that an industrial
dispute actually exists or is apprehended;
ii. Making a reference is an executive and administrative act and
not a judicial or quasi-judicial act; Government’s order
making a reference, therefore, cannot be challenged on the
ground that the Government has no material before it to
come to the conclusion that the dispute exists;
iii. Expediency of making a reference is a matter entirely for the
Government to decide. Even if a dispute factually exists the
Government may not make a reference; the Government
cannot be compelled by a Court to make a reference; making
of reference, thus, is not a duty or an obligation on the part
of the Government but a matter of discretion;
iv. The Government may refer the dispute or any matter
appearing to be connected with or relevant to the dispute,
whether it relates to any matter specified in the Second
Schedule or the Third Schedule to a Tribunal for
adjudication;
v. Where the Government is of the opinion that any
industrial dispute exists or is apprehended and the dispute
involves any question of national importance or it is of
such a nature that industrial establishments situated in
more than one State are likely to be interested in or affected
by such dispute, it may refer the dispute for adjudication to
the National Tribunal - whether it relates to any matter
specified in the Second or the Third Schedule;
vi. Where the dispute relates to any matter specified in the
Third Schedule is not likely to affect more than 100 workers,
the Government may make a reference to Labour Court;
vii. It is mandatory upon the Government to make a reference
of disputes to Courts or Tribunals where:
a. The dispute relatives to public utility service; (b) A notice of
Strike or lockout has been given; (c) Where the parties to the
dispute apply in the prescribed manner for a reference and
the Government is satisfied that the persons applying
represent the majority of each party.
viii.The reference shall be made even if any other proceeding
has commenced but this mandatory power is subject to two
exceptions:
a. the notice has been frivolously or vexatiously given; or
b. that it would be expedient to make a reference.
An order of reference passed by the Government can be
challenged on the grounds:
1. That the order is void ab initio or without jurisdiction;
2. Where the order of reference is made in both faith or is
mala fide; or
3. The appropriate Government had no material before it; or
1. It did not apply its mind to a material; or
2. Has not taken into consideration certain vital facts and
materials which it ought to have taken into account.
154
Three Tier System of Adjudication
The Industrial Disputes Act, 1947, provides three-tier system
of adjudication:
1. Labour Courts,
2. Industrial Tribunals, and
3. National Tribunals.
These are adjudicating bodies who decide the disputes referred
to by the appropriate Government and pass their awards.
The Labour Courts adjudicate upon disputes listed in Schedule
II of the Act.
The Industrial Courts adjusticate upon disputes listed in
Schedule II or III of the Act.
The National Tribunals adjudicate upon the disputes which are
of national importance, or the dispute is of such a nature which
affects industrial establishments situated in more than one
State.
Labour Courts
One or more Labour Courts may be constituted by the
appropriate Government for adjudicating on industrial disputes
relating to any matter specified in the Second schedule to the
Act, and for performing such other function as may be assigned
to them.
Constitution
A Labour Court shall consist of one person only. Such a
person: (a) is or has been a judge of a High Court; or (b) has
been for a period of not less than 3 years a District judge; or (c)
has held any judicial office in India for not less than 7 years. No
person shall be appointed or continue in the office of the
Labour Court if he is not an independent person; or he has
attained the age of 65 years.
The duties of the Labour Court are: (i) to hold adjudication
proceedings expeditiously, and (ii) submit its award to the
appropriate Government as soon as practicable on the conclu-
sion of the proceedings. The Labour Court usually deals with
matters which arise in day-to-day working.
Jurisdiction
The jurisdiction of the Labour Courts extends to adjudication
of following disputes relating to matters specified in the Second
Schedule (given under):
1. The property or legality of an order passed by an employer
under the Standing Orders;
2. The application and interpretation of Standing Orders:
3. Discharge or dismissal of workmen, including
reinstatement of, or grant of relief to workmen wrongfully
dismissed;
4. Withdrawal of any customary concession or privilege;
5. Illegality or otherwise of a strike or lock-out; and
6. All matters other than those specified in the Third Schedule
to the Act.
Industrial Tribunals
The appropriate Government may appoint one or more
Industrial Tribunals for adjudication of industrial disputes
relating to any matter whether specified in the Second Schedule
or the Third Schedule. The matters which are in the form of
new demands and give rise to industrial disputes which affect
the working of a company or industry are usually referred to an
Industrial Tribunal. Industrial Tribunal may be: appointed for a
limited period on an ad hoc basis or permanently.
Constitution
A Tribunal shall consist of one or more persons. Such a person
(a) is or has been judge of a High Court, (b}has been a District
Judge for a period of not less than 3 years, (c) has held the
office of the Chairman or any other member of the Labour
Appellate Tribunal for a period of not less than 2 years.
The Government may, if it thinks fit, also appoint two persons
as assessors to advise the Tribunal in the proceedings before it.
The functions and duties of the Industrial Tribunal are very
much like those of a body discharging judicial functions
although it is not a court. It has all the necessary attributes of a
court of justice. It may create new obligations or modify
contracts in the interest of industrial peace, to protect legitimate
trade union activities and to prevent unfair practice and victim-
ization. The Tribunals are required to give award based on
circumstances peculiar to each dispute and they are, to a large
extent, free from restrictions of technical considerations
imposed on Courts. . transfer it to government created tribunals;
Jurisdiction
Industrial Tribunals have a wider jurisdiction than a Labour
Court. It has jurisdiction over any matter specified in the Second
Schedule or Third Schedule.
The matters specified in the Third Schedule are:
1. Wages, including the period and mode of payment;
2. Compensatory and other allowances;
3. Hours of work and rest intervals;
4. Leave with wages and holidays;
5. Bonus, profit sharing, provident fund and gratuity;
6. Shift working otherwise than in accordance with Standing
Orders:
7. Classification of grades;
8. Rules of discipline;
9. Rationalisation;
10. Retrenchment of workmen and closure of an
establishment;, and I, Any other matter than may be
prescribed.
Eight Industrial Tribunals-cum-Labour Courts have been set
up to adjudicate disputes in the Central sphere. Of these, three
are located at Dhanbad (Bihar), two at Mumbai ‘and one each at
Calcutta, Jabalpur and New Delhi. The services of Tribunals
and labour Courts set up by the State Governments are also
utilized by the Central 1ent as and when necessary.
National Tribunals
The Central Government may be notification in the Official
Gazette, constitute one or more National Tribunals for the
adjudication of industrial disputes which in the option of the
Central Government involve questions of national importance
or are of such nature that industrial establishments situated in
more than one State are likely to be interested in, or affected by,
MANAGEMENT OF INDUSTRIAL RELATIONS
such disputes.
Constitution
National Tribunal shall consist of one person only to be
appointed by the Central Government such a person: (a) is or
has been a judge of a High Court, or has the office of the
Chairman or any other member of Labour Appellate Tribunal,
for a period of not less than 2 years.
If the Central Government so thinks fit may appoint two
persons as assessors to advise the National Tribunal in the
proceedings before it.
Criticisms Against Adjudication
Adjudication or compulsory arbitration is criticized on the
following grounds:
i. Resort to compulsory arbitration promotes and prolongs
industrial disputes;
ii. Compulsory arbitration undermines self-government in
industry, i.e. it hampers the development of industrial
democracy;
iii. It takes away from the employers and union the
responsibility of working out their mutual problems and
iv. It kills collective bargaining and replaces it with litigation; it
allows the parties to avoid unpleasant confrontation of
their difficulties, creating a dependency upon public
authority;
v. By requiring even an air of compulsory labour it subjects
the workers to involuntary servitude;
vi. It exposes. workers to arbitrary restraints and penalties
before trial and corrections;
vii. It denies the working people the right to protect and resist a
wrong and to strive peacefully for improvement in their
conditions;
viii.Decisions handed down through arbitration could be
coloured by political expediency. Thus, both employers and
the unions would become deeply involved in political
pressures and efforts to win favours;
ix. It means loss of personal freedom, loss of mobility, loss
of power of initiative, loss of hope and aspiration for self-
betterment;
x. The prohibition of strikes is not readily enforceable; fines
levied on the workers depreciate workers’ morale, cause
showdown, lower productive efficiency, and imprisonment
shuts off all productive possibilities.
Alexander Frey has criticized compulsory arbitration on the
following four main grounds:
i. The minimizing effect which it exercise upon genuine
bargaining by disputants;
ii. The absence of standards without which the adjudicator
cannot avoid being either arbitrary or reactionary;
iii. Its tendency to increase rather than to diminish disputes
because of the probable reluctance of at least one of the
parties to live with the adjudicator’s order;
155
 iv. The impracticability of enforcing judgements. well as disputes in regard to unfair labour practice and the
MANAGEMENT OF INDUSTRIAL RELATIONS

like;”
Suggestions to Make Adjudication
Effective viii.For settlement of disputes in smaller units or where
The National Commission on Labour has stated, “During the unorganized workers are involved, the Labour
last 20 years, the adjudication machinery has exercised consider- Commissioner should intervene.”
able influence of several aspects of conditions of work and
labour management relations. Adjudication has been one of
the instruments of wages and working conditions and for
securing allowances for maintaining real wages, for standardiza-
tion of wages, bonus and introducing uniformity in benefits
and amenities. It has also helped to avert many work stoppages
by providing an acceptable alternative to direct action and to
protect and promote the interests of the weaker sections of the
working class, who were not well organized or were unable to
bargain on an equal footing with the employers.”
i. The recognition of trade unions, by methods to be decided
by an independent authority like the Industrial Relations
Commission;
ii. To bring about changes in the existing machinery,
permanent machinery, entirely independent of
administration, should replace the existing ad hoc
machinery;
iii. This machinery - National Industrial Relations Commission
- should be appointed by the Central Government for
industries for which the Government is the appropriate
authority ... to deal with such disputes which involve
questions of national importance or which are likely to
affect the interest of establishments situated in more than
one state, that is, disputes which are at present dealt with by
National Tribunals;
iv. There should be an Industrial Relations Commission in
each State for settlement of disputes for which the State
Government is the appropriate authority, The IRCs at the
Central and State levels should perform three functions:
adjudication, conciliation, and certification of unions as
representative unions;
v. If negotiations fail and the parties approach the IRC, it will
help them in choosing an arbitrator, or after service of
strike/lock-out notice either party may approach it for
naming a conciliator. On the failure of collective bargaining
and when parties do not agree to arbitration, either party
‘shall’, in case of essential services/industries, notify the
IRC of the failure of such negotiation where upon the IRC
shall adjudicate and its award shall be final and binding
upon the parties. In other case, the IRC may offer to the
parties its good offices for settlement;
vi. If after the expiry of notice period, no settlement is reached,
the parties will be free to resort to direct action; if such
action continues for 30 days, it will be incumbent on the
IRC to intervene and arrange for settlement of industrial
dispute;
vii. Labour Courts should be set up to deal with “disputes
relating to rights and obligations, interpretation and
implementation of awards of either the National or State
IRC and claims arising cost of rights and obligations, as

156

LESSON 33:
CASE STUDY
Case: All India Railway Strike, May 1974
Indian Railways - the core of the nations’ system - constitutes
Asia’s largest and World’s third largest rail system in terms of kil
in terms of employment, and second largest, in terms of
investment, public sector, undertaking in the country and is
spread geographically through the length and breadth of India.
With its wide network, the Indian Railways serve as a crucial
instrument in the socio-economic transformation in India.
With a total capital of around Rs. 248,084 million as on 31st
March 1992, the gross revenue earnings of Rs. 141,137 million
in 1991-92, route length of 61,836 km. and employment of
over 1. 76 million persons (including about 200,000 casual
workers), it is the largest enterprise owned and managed by the
Government of India, as a departmental undertaking.
Railways in India are owned and managed by the Union
Government, except a few branch lines on the narrow gauge
that are owned and managed by private companies and
municipal bodies.
The Minister for Railways represents the railways’ interest in the
Parliament. The administrative and management responsibili-
ties of the railways vest with the Railway Board under the
overall supervision of the Union Minister of Railways, who is
generally assisted by Minister of State and one or more deputy
ministers.
Since the Government of India is the “employer” in this
departmentally run public sector undertaking, the wage policy
of Indian Railways is linked to the wage policy of Union
Government. Further, the Government-instituted Joint
Consultative Machinery at national level is the body to discuss
and resolve the issues of union Government employees and
employees of departmentally run public sector undertakings.
Trade Union Movement in the Indian Railways had its origin in
1897. Even then, it is as old as the labour movement in India.
The All India Railway men’s Federation (AIRF) was formed in
1924 with affiliation to the All India Trade Union Congress
(AITUC) and was granted recognition in 1930. A rival federa-
tion - affiliated to Indian National Trade Union Congress
(INTUC) - was formed in 1948. Serious efforts were made to
bring unity between the two federations. Consequently, these
two federations merged into the National Federation of Indian
Railway men (NFIR) in 1953.
But this unity could not survive long and the organization was
segregated into AIRF and National Federation of Indian
Railway men (NFIR). Attempts made from time to time failed
to achieve unity of the two Federations.
Indian Railway administration solves the employee problem
through collective bargaining, which is represented by perma-
nent negotiating machinery and Joint Consultative Machinery.
It was decided in the 49th Annual Convention of AIRF held at
Secunderabad during October 1973, to solve the long pending
MANAGEMENT OF INDUSTRIAL RELATIONS
problems relating to bonus, need based minimum-wage, parity
in wages with other public sector employees etc., through the
JCM. The convention also decided to solve them through strike
action, if they were not solved through JCM. But later it was
felt by the AIRF that Government utilized this opportunity for
spending time, delaying its decisions and to put forth totally
unacceptable proposals. The NFIR working committee totally
disa
Unilateral decision taken by AIRF. In consequence, AIRF held a
General Council meeting on 6th and 7th February 1974, at
Nagpur and decided to hold a convention of all employees’
organizations (excluding NFIR) and other Central Government
employees and Central Trade Unions. Accordingly, a National
Convention of railway men was held on 27th and 28th
February 1974, at New Delhi which gave birth to the “National
Co-ordination Committee for Railway men’s Struggle”
(NCCRS) and an action committee of NCCRS was also
appointed. The leaders of AIRF, All India Trade Union
Congress, All India Railway Employees’ Confederation,
Bharatiya Mazdoor Sangh, Centre of Indian Trade Unions, and
all category-wise associations in Railways participated in this
convention. The convention formulated a six-point charter of
demands and urged the then Minister for Railways to redress
them through negotiations by April 10, 1974.
However, the then Railway Minister convened a meeting with
the members of action Committee of NCCRS headed by
George Fernandez, the then President of AIRF and the
representatives of NFIR on April 12, 1974, with the initiative
taken by the then Labour Minister. As a result of the discus-
sions in this meeting, it was decided that the Member Staff of
the Railway Board should commence negotiations with the
delegations from April 15, 1974. Accordingly, the Action
Committee of NCCRS and NFIR held talks on April 15, 1974,
with the Member Staff. This meeting was closed, with the
Member Staff declaring on behalf of the Railway Ministry that
no demand could be conceded and that he did not have the
authority to negotiate.” Thus, “the negotiations reached their
dead end on the very day they commenced within a matter of
hours.” In consequence to this crucial and turning situation,
“the National Co-ordination Committee of Railway men’s
Struggle called upon the railway men to go on indefinite general
strike from 6.00 hours on 8th May 1974,” whilst the “NFIR”
expressed its regret rover the casual manner in which these
negotiations were held.” In reply to its protest the NFIR was
assured by the Railway Minister that “what had happened on
the 15th April, 1974, meeting was not the last word and that he
would himself meet the Federation in the afternoon of 18th
April, 1974.” Thus, the railway, management played one
federation against the other. NFIR felt that the strike decision
taken by NCCRS was a hasty step.
157
 Meetings between the railway administration and Action within the living memory, has brought about significant
MANAGEMENT OF INDUSTRIAL RELATIONS

Committee of NCCRS changes in the employee-management relationship besides

And NFIR were, however, held on 20th and 27th April 1974, decline in efficiency of railways. Though the Government did
which did not bear fruit. Even then, NFIR decided to settle the not concede to the demands of the employees, they had taken
issues through negotiations. As a result the general strike broke action against the employees who participated in the strike as
out at 6.00 hours on 8th May 1974, and went on up to 27th shown in the table. Dismissal of employees in connection with
May 1974. But NFIR did not associate itself with this strike, May 1974 strike is found in all the nine zones, but the number
due to rivalry between AIRF and ‘NFIR. However, it was felt varies between 521 and 3,507. Number of employees who were
that there would have been possibilities to settle the problems dismissed was highest in Western Railway (3,507) followed by
of rail men through negotiations, if the incident of 15th April Northeast Frontier Railway (3,336) and was lowest in Southern
1974, had not occurred. This strike was organized to achieve the Railway (521). However, 15,840 employees (or 94.18 percent to
following “demands: number of employees dismissed) were taken back by all the
nine zonal railways by the end of 1975. The percentage of
(i)
employees taken back to total number of employees dismissed
a. all railwaymen be treated as industrial workers with full was highest in North-Eastern Railway (98.91) followed by
trade union rights including the right to negotiate; South Central Railway (98.62). Number of employees not taken
b. The working hours of railwaymen shall not exceed eight back, by the find of 1975 was 979 or 5.82 per cent to the total
hours per day; number of employees dismissed, However, these remaining
c. There shall be job evaluation of all railwaymen through a employees were taken into service in 1978 during Janata Party
scientific system to be followed by their classification and regime. The Government met some of the demands later and
degradation with the need-based minimum wage as the the important issue of bonus was solved in November 1979.
wage for the lowest paid worker. Table
d. Pending the completion of job evaluation and Position of Employees Dismissed in Connection with the
reclassification, immediate parity in wages with those of Strike of May 1974
workers in the Central Government undertakings be
granted;
(ii) Total
Railway Total Number Percentage Total Number
Number
Dearness allowance linked to the cost of living index with of Employees of Employees of Employees of Employees
full neutralization for every rise of four points in a six- Dismissed in Taken Back Taken Back not
month period be sanctioned; May 1974 by the End to the Number Taken Back
of 1975 of Employees by the End
(iii)
Dismissed of 1975
Bonus at the rate of one month’s wages for the years 1971- Central 1,704 1,619 95.01 85
72 and 1972.73; Eastern 2,848 2,490 84.43 358
(iv) Northern 1,389 1,354 97.48 35
North
Decasualisation of all casual railway men and their Eastern
826 817 98.91 9
confirmation in service with all benefits given to them with Northeast
3,336 3,172 95.08 164
retrospective effect; frontier
Southern 521 492 94.43 29
(v)
South
580 572 98.62 8
Adequate and subsidized food grains and other essential central
commodities through departmentally run shops; and South
2,108 1,881 89.23 227
eastern
(vi) Western 3,507 3,443 98.18 64
All victimization cases should be withdrawn. 16,819 15,840 94.18 979
This strike was mostly responsible for the maximum
number of mandays lost (14.84 million) and maximum
number of man-days lost per thousand workers employed It is evident from this analysis that, the category-wise unions,
910,560.89) during the history of Indian Railways. The particularly the Loco running Staff Association had organized
mandays were lost in all the nine zonal railways. It has been strikes frequently during 1961-62 to 1964-65, 1970-71 to 1973-
commented that “the All India Railwaymen’s strike in May 74,1978-79,1979-80 and 1980-81. Strikes of this nature disturb
1974 upset the industrial relations developed over the the industrial harmony, besides affecting the productivity and
years…” efficiency. In addition the policy of railway administration has
During the strike period, though the Railways kept the wheels been to discourage the category-wise unions. Hence, it may be
moving according to plan, the performance of railways declined suggested that the category-wise associations and unrecognized
severely, Traveling public, basic industries, power houses, trade federations unions and should be made ineligible to use the
and the like suffered a lot. Productivity in railways declined in weapon of strike action and or any other suitable steps should
the year 1974-75 compared to that in 1973-74. This strike, be taken to avoid these frequent strikes.

158
The comparative study of number of mandays lost per

MANAGEMENT OF INDUSTRIAL RELATIONS

thousand employees due to industrial disputes in Indian
Railways and in different sectors of India gives the useful
conclusions which are presented in Table . It can be observed
from this table that, despite the all India strike in July 1960, the
mandays lost per thousand employees in Indian Railways
(719.49) were less than that of manufacturing sector (1,382) in
the year 1960. During 1966, no single man-day was lost in
Indian Railways, while the mandays 10stlper thousand workers
was 2,258 in plantations, 2,041 in manufacturing sector, 645 in
coal mining and 625 in mining. During 1970, the number of
mandays lost per thousand employees in Indian Railways
(245.28) was less than that of manufacturing (3,329), mining
(1,375), coal mining (1,191) and plantations (317). During 1971
to 1973 also, this figure in Indian Railways (varied between
34.66 and 233.72) was less than that of manufacturing (varied
between 2,328 and 3,231), mining (varied between 1,675 and
2,293), coal mining (varied between 1,639 and 2,502) and
plantations (varied between 476 and 2,116).
Table
Mandays Lost Per Thousand Workers Employed in Indian
Railways and In Different Sectors due to Industrial
Disputes

Plantation
Year Manufacturing Mining Coal Mining Railways
Indian
1957 1,181 1,562 1,522 403 NA
1960 1,382 360 325 174 719.49
1966 2,041 625 645 2,258 -
1970 3,329 1,375 1,191 317 245.28
1973 2,971 2,079 1,897 476 233.72
1974 4,505 1,029 1,465 3,380 10,560.89
1977 3,761 2,406 N.A. NA 0.92
1979 N.A. N.A. N.A. NA 10.63
1980 N.A. N.A. N.A. NA 1,469.27
1983.84 N.A. N.A. N.A. NA 0.24

But during 1974, this figure was highest in Indian Railways (l0,
560.89) compared to that of manufacturing (4,505), plantations
(3,380), coal mining (1,465) and mining (1,029), which was due
to organization of all India strike in May 1974 in the Railways.
However, this figure was too less in Indian Railways (varied
between only 0.02 and 32.31) compared to that of manufactur-
ing (varied between 2,261 and 4,072) and mining (varied
between 272 and 2,406) during 1975 to 1978. Thus, this analysis
reveals that the incidence of strikes was very low in Indian
Railways (except in the year 1974) compared to the other sector,
viz., manufacturing, mining, coalmining and plantations.

159
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 34:
INDUSTRIAL DISPUTES ACT 1947
Learning Objective
The study of this lesson will help you understand:
• Objects of Industrial Disputes Act, 1947.
The Industrial Disputes Act, 1947
Introduction
Trade had been an important incident of society. It catered the
need of people of the society in various ways. Even prior to
1947, trade had been enormously developed in the country.
There were disputes between the agencies devoted to trade as
such. The British people at the helm of administration and
legislation both gave an enactment named as the Trade Dis-
putes Act 1929. This Act remained in force till year 1947.
Certain short -comings were witnessed in the Act of 1929 in
due course of time. The provision to institute a proceeding
under that Act for settlement of dispute either by making a
reference to Board of Conciliation or to Court of inquiry, so as
to bind the parties to dispute and thereby giving a finality of
the matter between them. This defect was although removed by
incorporating Rule 81-A of Defense of India Rules whereby
such disputes were to be referred to an Adjudicator. It was not
sufficient as it short lived for six months more after 1st
October. 1946, where after a permanent arrangement was
sought. Consequently Industrial Disputes Act. 1947 was
enacted.
The Act of 1947 contains most of the essential principles of
Rule 81-A of Defense of India Rules. There were two new
institutions imported in the Act, one was the Works Commit-
tee consisting of representatives of em-ployers and workmen
exceeding a strength of 100. The other were Tribu-nals.
Reference of disputes to Industrial Tribunal on the application
of both parties or by appropriate governments, the award of
Tribunals was to be enforced within a period not exceeding one
year. This Act of 1947 has also undergone several amendments.
Several amendments were made in the Act from time to time.
At present there are seven chapters devoted to various matters
regarding industrial Disputes. There are various authorities
under the Act including Board and Tribunal Labour Courts to
look after such disputes. Procedures, powers and duties of
authorities have been defined so as to implement the provi-
sions of the Act. Certain prohibitions have been imposed on
the strikes and lockouts and even financial assistance given to
such strikes and lockouts were prohibited. The provisions
relating to above matters are mentioned I to V.
Constitution of authorities, Labour Courts and Tribunals
along with duties and pavers of such authority have been
mentioned in Chapters I to V. Prohibitions imposed on strikes,
lock outs, their financiers are dealt in the aforesaid chapters.
Procedure to implement the provisions of Act are included in
the Act.
160
Chapters V-A to V-C deal with lay-off and retrenchment of
employees. There are also special provisions regarding closure in
certain establish-ments, bar on unfair labour practice. Contra-
vention of these provisions was made penal. Chapter VI deals
with specific penalties for various kinds of breaches and
contravention of provisions of the Act.
Chapter VII being the last one deals with miscellaneous matters
special feature of which are rule making powers and its delega-
tion.
There are five schedules attached to the Act. The First Schedule
deals with industries to be declared as public utility service, the
second schedule specifies matters within jurisdiction of labour
interests, the third one with matters within jurisdiction of
Industrial Tribunals. The fourth one is regarding conditions of
services for purposes of Sec. 9-A and fifth schedule is meant for
matters connected with Sec. 2.
In this way it is a self-contained Act and caters the need of
industries, its employees, employers and the workmen. It is a
progressive legislation for welfare of public.
Object of Industrial Disputes Act, 1947
The object of the Industrial Disputes Act is to improve the
service conditions of industrial labour so as to provide for
them the ordinary amenities of life and by the process, to bring
about industrial peace which would in its turn accelerate
productive activity of the country resulting in its prosperity. The
prosperity of the country in its turn, helps to improve the
conditions of labour. The Act is not intended only to make
provision for investigation and settlement of industrial
disputes but also to serve industrial peace so that it may result
in more production and improve the national economy. In the
present socio-political economic system it is intended to achieve
co-operation between the capitals and labour which has been
deemed to be essential for maintenance of increased production
and industrial peace. The Act provides to ensure fair terms to
workman and to prevent disputes between the employer and
the employees so that the large interest of the public may not
suffer. The provisions of the act have to be interpreted in a
manner which advances the object of the legislature contem-
plated in the statement of object and reasons. While
interpreting different provisions of the Act, attempt should be
made to avoid industrial unrest to ensure, industrial peace and
to provide machinery to secure that end. Conciliation is most
important and desirable way to secure that end. In dealing with
industrial disputes the Courts have always, emphasized doctrine
of social justice, which is founded -on basic ideal of socio-
economic equality as enshrined in the preamble of our
Constitution. While construing the provisions of the Act, the
Courts have to give them a construction which should help in
achieving the object of the act.
The priciple objects of this Act are as follows: 2. Granting a wage increase to workmen at crucial periods of

MANAGEMENT OF INDUSTRIAL RELATIONS

1. The promotion of measures to secure cordial relations trade union organization with a view to undermine the
between labour and management. efforts of the trade union.
2. Investigation and settlement of industrial diputes(for 3. To establish an employer’s sponsored trade union.
which machinery is provided). 4. To encourage or discourage membership in any TU by
1. Prevention of illegal strikes and lockouts. discriminating against any workman.
2. Provision of relief in matters of lay-off and retrenchment. 5. To discourge or dimiss workmen by way of victimization
due to the exercise of the employer’s rights, by falsely
Several authorities are named for purpose of investigation and
implicating a workman in a criminal case for misconduct of
settlement of diputes. They are:
a minor or a technical nature etc.
1. Works committees
By Workmen or Trade Union
2. Conciliation officers
1. To force workmen to become members of a trade union
3. Board of conciliation
2. For a recognized union to bargain collectively in good faith
4. Court of enquiry
with the employer.
5. Arbitration (voluntary)
3. To stage, encourage, coerce actions such as wilful go-slow,
6. Labour courts and to stage demonstration at the residence of the
7. Industrial tribunals employers or management staff members.
8. National tribunals
The Second Schedule (of the Industrial Disputes Act,
1947)
Matters within the Jurisdiction of the Labour Courts
1. The propriety or legality of an order passed by an employer
under the standing orders.
2. The application and interpretation of standing orders.
3. Discharge or dismissal of workmen including reinstatement
of, or grant of relief to, workmen wrongfully dimissed.
4. Withdrawal of any customary concession or privilege.
5. Illegality or otherwise of a strike or lockout and
6. All matters other than those specified in the third schedule.
The Third Schedule
Matters within the Jurisdiction of Industrial Tribunals
1. Wages, including the period and the mode of payment
2. Compensatory and other allowances
3. Hours of work and rest intervals
4. Leave with wages and holidays
5. Bonus, profit-sharing, provident fund and gratuity
6. Shift working otherwise than in accordance with Standing
Orders
7. Classification by grades
8. Rules of discipline
9. Rationalisation
10. Retrenchment of workmen and cloure of establishment
11. Any other matter that may be prescribed.
Some of the Unfair Labour Practices Listed by the Industrial
Amendment Bill, 1982
By Employer
1. Threatening workmen with discharge or dismissal if they
join a trade union (TU) or threatening a closure or lockout
if a trade union is organized.

161

LESSON 35:
EVOLUTION AND NATURE OF
PARTICIPATION, PREREQUISITES
CHAPTER 7 : WORKERS PARTICIPATION
FOR SUCCESSFUL PARTICIPATION
Learning Objective
MANAGEMENT OF INDUSTRIAL RELATIONS
The study of this lesson will help you understand:
• Nature of workers’ Participation in Management.
• Conditions for successful working of WPM.
Workers’ Participation In Management
The concept of workers’ participation in management is
considered as a mechanism where workers have a say in the
decision-making process of an enterprise.
Definition
The concept of workers’ participation in management crystal-
lizes the concept of Industrial Democracy, and indicates an
attempt on the part of an employer to build employees into a
team which work towards the realization of a common
objective.
According to 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 in them.”
Within the orbit of this definition, a continuum, of men
management relationship tan be conceived:
Workers’ Control à Joint Management à Joint Consultation
Work Place Consultation à 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.
“Workers’ participation in management is a resounding phrase,
bringing the past and the future. It echoes the millennial vision
of nineteenth century thinkers while heralding the evolution of
new forms of industrial organization under twentieth century
pressures. The word ‘workers’ participation’ is plentifully
supplied with ideas, institutions and opinions.” “There are two
basic ideas in the concept of workers’ participation in manage-
ment: there are two groups of people in an undertaking
(managers and workers) and that there are two separate sets of
functions to be performed (managerial and operative). Manage-
rial functions are essentially those concerned with planning,
organizing, motivating, and controlling, in contrast with
“doing” or “operative” work.
Mamoria defines it as a system of communication and consul-
tation 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..
Summary of the Definitions
a. The participation results from practices, which increase the
scope for employee’s share of influence in decision—
making at different tiers of the orgiansational hierarchy with
concomitant assumption of responsibility.
162
UNIT III
MANAGEMENT OF INDUSTRIAL
RELATIONS
b. The participation has to be at different levels of
management: (i) at the shop level, (ii) at the department
level, and (iii) at the top level. The decision--making at these
different levels would assume different patterns in regard to
policy formulation and execution.
c. The participation incorporates the willing acceptance of
responsibilities by body of workers. As they become party
to the decision-making, the workers have to commit
themselves to ensuring their implementation.
d. The participation is conducted through the mechanism of
forums and practices which provide for association of
workers’ representatives.
e. The broad goal of participation is to change basically the
organizational aspect of production and transfer the
management function entirely to the workers so that
management becomes “Auto management.”
Formal Vs. Informal
The forms of Workers’ Participation in Management depend
on the differences in the levels of management, the subject-
matter of participation, the strength of the union and the
pattern of industrial relations. The important forms in which
workers could participate in management are collective bargain-
ing, joint decision-making, consultation and information
sharing. They may take the form of formal organizations like
Works Committees, Joint Management Councils or an informal
system, for instance, a supervisor consulting a worker before
taking any decision in which the latter is interested.
Different Views
The scope, extent and the successful working of the participa-
tive management depends to a great extent on the objectives
and the three important factors of the system of industrial
relations, viz., the employee, the employer and the government.
The objectives as viewed by these three parties contradict with
each other in India. The workers expect that Workers’ Participa-
tion in Management schemes will lead to the achievement
security of employment, better wages, bonus etc. The
employer’s interest is in the maximization of profit through
increased production and minimization of expenditure. The
government expects the scheme to bring about closer associa-
tion between labour and management and industrial peace.
Viramani viewed that it is this variance in the objective of
participation as perceived by the three sectors that is responsible
for the unsuccessful functioning of schemes of participative
management.
Objectives of Workers’ Participation in
Management
The main objectives of Workers’ Participation in Management
include:
i. To promote increased productivity for the advantage of the
organisation, workers and society at large;
ii. To provide a better understanding to employees about their
role and place in the process of attainment of
organisational goals;
iii. To satisfy the workers’ social and esteem needs; and
iv. To strengthen labour management co-operation and thus
maintaining industrial peace and harmony.
v. To develop social education for effective solidarity among
the working community and for tapping latent human
resources.
vi. An ideological point of view to develop self-management
in industry.
vii. An instrument for improving efficiency of the company and
establishing harmonious industrial relations.
viii.To build the most dynamic human resource.
ix. To build the nation through entrepreneurship and
economic development.
Participation and Motivation
Participation provides greater autonomy for subordinates and
often leads to increasing motivation for:
a. Participation permits a more balanced interaction pattern
and, therefore, results in less resistance to innovation.
b. It permits members of the group to unfreeze their
attitudes and engage in catharsis.
c. It permits leaders to reinforce their position. They enhance
their status both by taking a leading part in making the
decision and through inducing group members to abide by
it.
d. It enables the subordinate to feel that an exchange
relationship has been set up since the boss listens to his
problems and permits them to be corrected.
e. It may permit the subordinate to feel that doing the job
well provides him an opportunity to demonstrate skills
which he values high, i.e., it provides him an opportunity
for achievement from work..
f. It subjects the individual to certain group pressures to
Implement the decision which the group participated in
making it.
Essential Conditions for successful
Working of WPM
The success of workers portion in management depends upon
the following conditions:
1. The attitude and outlook of the parties should be
enlightened and impartial so that a free and frank exchange
of thoughts and opinions could be possible. Where a right
kind of attitude exists and proper atmosphere prevails the
process of participation is greatly stimulated.
2. Both parties should have a genuine faith in the system and
in each other and be willing to work together. The
management must give the participating institution its
rightful place in the managerial organization of the
undertaking and implementing the policies of the
undertaking. The labour, on the other hand, must also
whole-heartedly co-operate with the management through
its trade unions. The foremen and supervisory cadre must
also lend their full support so that the accepted policies
MANAGEMENT OF INDUSTRIAL RELATIONS
could be implemented without any also lend their full
support so that the accepted policies could be implemented
without any resentment on either side.
3. The experiment of labour participation in management
must be given a wide db; in order that the idea of
participation is ingrained in the minds of those who are to
implement the scheme. Lectures, discussions, film shows,
conferences, seminars and other methods of propaganda
may be fruitfully employed to create enthusiasm about the
scheme among the management as well as the workers.
4. Participation should be real. The issues related to increase in
production and productivity, evaluation of costs,
development of personnel, expansion of markets also be
brought under the jurisdiction of the participating bodies.
These bodies should meet frequently and their decisions
should be timely implemented and strictly adhered to.
5. Objectives to be achieved should not be unrealistically high,
vague or ambitious but practicable of achievement and clear
to all.
6. Form, coverage, extent and level of participation should
grow in response to specific environment, capacity and
interest of the parties concerned.
7. Participation must work as complementary body to help
collective bargaining, which creates conditions of work and
also creates legal relations.
8. Institutional participation should be discouraged but such
participation should be encourage through changes in
leadership styles, communication process, and inter-
personal and inter-group relations.
9. There should be a strong trade union, which has learnt the
virtues of unit and self-reliance so that they may effectively
take part in collective bargaining or participation.
10. Multiple unions in one enterprise should be restricted by
legislative measures. Similarly, there should be no
multiplicity and duplicacy of bipartite consultative
machinery at the plant level.
11. A peaceful atmosphere should be there wherein there are no
strikes and lockouts, for their presence ruins the employees,
harms the interest of the society, and puts the employees to
financial losses.
12. Authority should be centralized through democratic
management process. The participation should be at the
two or at the most three levels.
13. Programmes for training and education should be
developed comprehensively. For this purpose, “labour is to
be given education not to the head alone, not to the heart
alone, not to the hands alone, but it is dedicated to the
three; to make the workers think, feel and act.” Labour is to
be educated to enable him to think clearly, rationally and
logically; to enable him to feel deeply and emotionally; and
to enable him to act in a responsible way. The management
at different levels also needs to be trained and oriented to
give it a fresh thinking on the issues concerned.
163
 14. Progressive personnel policies should ensure growth of
MANAGEMENT OF INDUSTRIAL RELATIONS

individual workers within industry and proper policies

should exist for selection, promotion, compensation,
rewards and discipline.
15. Management should be prepared to give all information
connected with the working of the industry and labour
should handle that information with full confidence and
responsibility.
16. The workers should become aware of their responsibilities.
The leaders should initiate this in them. Similarly, the top
management should make the lower enhelons to show a
new attitude in the light of the new relationship.
17. The follow-up action on the decisions of the participating
forums should be ensured. The government may also set
up machinery to act as a watchdog for implementing the
scheme.
18. Effective two-way communication is a must for the success
of the programme. The shorter is the time for
communication, the greater is the probability of correct
interpretation.

164

LESSON 36:
DEGREE OF INFLUNCE AND INVOLVENT, FORMS
OF PARTICIPATION, AND IMPACT OF PARTICIPATION
Learning Objective
The study of this lesson will help you understand:
• The forms of WPM and their influnce and impact.
Forms of WPM
The forms of Workers’ participation in management vary from
industry to industry and from country to country. The impor-
tant forms are: Labour-Management Consultation and
Co-operation, Joint consultation and Model of Participation
(U.K). Union-Management Co-operation (USA),
Codetermination Scheme (West Germany), joint Management
Plan, Joint Decision-Making Model, Workers’ Control Model,
Self- management or Auto Management Scheme.
Forms of Workers’ Participation in Management are:
i. Works Committee;
ii. Joint Management Councils;
iii. Joint Councils;
iv. Shop Councils; and
v. Unit Councils.
Work Committees
The Industrial Disputes Act, 1949 provides for the setting up
of works committees as a scheme of workers participation in
management which consist of representatives employers and
employees. The Act provides for these bodies in every undertak-
ing 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 recognized union and they are called joint committees.
The workers directly elect their representatives where there is no
union.
Functions: These works committees/joint committees are
consultative bodies. Their functions include discussion of
conditions of work like lighting, ventilation, temperature,
sanitation etc., amenities like water supply for drinking pur-
poses, 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 Presiident, a Secretary and a Joint Secretary. The
MANAGEMENT OF INDUSTRIAL RELATIONS
UNIT 9
President is a nominee of the employer and the Vice-President
is the Workers’ representative. The tenure of these bodies in
two years. The total strength of these bodies should not exceed
20. The employees’ representatives have to be chosen by the
employees.
These committees functioned actively in some organisations like
Tata Iron and steel Company, Indian Aluminium Works at
Belur, and Hindustan Lever. In all these, the managements have
evolved joint committees independently of the statutory
requirements.
Joint Management Councils (JMCs)
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 group (1957) to study the schemes of worker’s participa-
tion in management in countries like U.K., France, Belgium and
Yugoslavia. The report of the study group was considered by
the Indian Labour Conference (ILC) in its 15th session in 1957
and it made certain recommendations:
1. That 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 and government should be set up for
considering the details of workers’ participation in
management schemes. This committee should select the
undertakings where 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 recommenda-
tions of Indian Labour conference, which laid down certain
criteria for selection of 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-organized trade union;
iv. The management and the workers should agree to establish
JMCs.
165
 v. Employers (in case of private sector) should be members
MANAGEMENT OF INDUSTRIAL RELATIONS
of the leading Employers’ organization; and
vi. Trade unions should be affiliated to one of the Central
federations,
It was observed by the sub-committee that if the workers and
employers mutually agree they can set up JMCs even if these
conditions are not met.
The sub-committee also made recommendations regarding
their composition, procedure for nominating workers’ represen-
tatives, the membership of JMCs etc. The details of these
aspects have to be worked out by the parties themselves. A draft
model was drawn up regarding the establishment of JMCs.
The sub-committee was later reconstituted as the “Committee
on Labour-Management Co-operation” to advise on all matters
pertaining to the Scheme.
Criteria for Selecting of Units for Setting
up of JMCs
The sub-committee of the Fifteenth Indian Labour Conference
which selected 48 units for introduction of the scheme of joint
management council’ had laid down the following criteria for
selecting the units:
In private sector, the industries selected were cotton and jute
textiles, engineering, chemica1s, tobacco, paper, cement, mines
and plantations.
In public sector, industries included railway workshops and
yards, posts and telegraphs, ports, shipyards, transport
workshops, mines, printing and electrical undertaking;
i. The undertaking should have a well-established, strong
trade union functioning.
ii. There should be a readiness in the parties between
employers’ and workers’ union to try out experiment in a
spirit of willing cooperation.
iii. The size of the undertaking should be at least 500 workers.
iv. The employer in a private undertaking should be member
of one of the leading employers organization; and similarly
the trade union be related to one of the central federations.
v. The company should have a fair record of industrial
relations.
Functions: The following are the important functions of
JMCs:
i. To be consulted on matters like standing orders,
retrenchment, rationalization, closure, reduction of
operations etc.
ii. To receive information, to discuss and offer suggestions.
iii. To shoulder administrative responsibilities like maintaining
welfare measures, safety measure, training schemes, working
hours, payment of rewards. .
The tripartite committee originally prepared a list of 50
enterprises and later the target was raised to 150 to introduce
JMCs. It was found by 1966 that 124 JMCs were inexistence.
This number dropped to 80 in 1978 and a good number of
these were working. Some of the organizations, which were
successful with experiments of workers’ Participation are Bharat
Heavy Electricals Ltd. (BHEL), Tata Iron and Steel company
166
(TISCO), Indian Aluminum Company and Aluminum
Industries of Kundara, TISCO agreed to establish a compre-
hensive scheme of joint consultation by an agreement with its
units. Under this Scheme a three-tier system of consultation
was setup.
Workers Participation in Management
Scheme of 1975
Government of India on 30th October 1975 announced a
scheme of workers’ participation in management, which
consisted of establishment of Joint Councils and Council as
part of its 20-point economic programme. The scheme
envisages for establishment of joint -councils and shop councils
in manufacturing and mining industries employing 500 or
more employees in public, private and co-operative sectors. I
The scheme contemplated participation of workers in the
decision-making process in the matters relating to production,
productivity, absenteeism, safety measures, general discipline,
working conditions and welfare, and over-all efficiency of the
shop/department.
Important features of this new scheme are:
1. All decisions of a Shop Council as well as of the Joint
Council shall be on the edifice of the “Consensus and not
by process of voting.”
2. It is non-statutory like JMCs and there is a clear-cut function
of these councils.
3. “Consensus and time-bound implementation” are the
tools for arriving at decisions. Thus, the scheme tries to
eliminate the chances of direct interference by outside
elements. The decisions are required to be implemented
within one month.
4. The scheme provides for participation of workers at the
shop floor level; otherwise the framework is not materially
different from that of WCs. and JMCs.
5. It provides for a two-way communication and an exchange
of information between the management and the
workmen.
6. The very change in the nomenclature of the scheme from
‘participation of workers in management’ to that of
‘participation of workers in industry’ makes it more
acceptable to employees as the latter are likely to offset some
of their misgivings and apprehensions caused by the
former.
7. The scheme hits at three principal objectives to which the
reform of industrial democracy is directed, viz., recovery of
individual human rights at the, work place; consolidation
of social and political freedom (to join a particular union of
his own choice without any coercion); and the framing of
new industrial system functionally suitable to the country’s
economy.

LESSON 37:
DEGREE OF INFLUNCE AND INVOLVENT,
FORMS OF PARTICIPATION, AND IMPACT OF PARTICIPATION
Learning Objective
The study of this lesson will help you understand:
• The forms of WPM and their influnce and impact.
(iii) Joint Councils
The joint councils are for the whole unit and its membership
remains confined to those who are actually engaged in the
organization. The tenure of the joint councils is for two years.
The Chief Executive of the unit becomes its Chairman.
Workers’ members of the council nominate the Vice Chairman.
The joint council appoints the Secretary. The Secretary is
responsible for discharging the functions of the council.
The joint councils will meet once in four months, but the
periodicity of the meeting varies from unit to unit, it may be
once in a month, quarter etc. The decisions taken at the joint
council meetings are by the process of consensus and the
management shall implement the decisions within one month.
The scheme was implemented by the major units of the central
and State governments. The government enlarged the functions
of the councils in 1976.
(iv) Shop Councils
The shop council represents each department or a shop in an
unit. Each shop council will consist of an equal number of
representatives of employers and workers. The employers’
representatives will be nominated by the management and
must consist of persons from within the unit concerned. The
workers representative will be from among the workers of the
department or shop concerned. The number of members of
each council may be determined by the employers in consulta-
tion with the recognized union. The total number of members,
however, may not generally exceed twelve.
The decisions of the shop council are to be taken .on the basis
of consensus but not by voting. Management has to imple-
ment the decisions within one month. The tenure of the shop
council is for a period of two years. Members of the shop
councils meet at least once in a month. Management nominates
the Chairman at least once in a month. Management nominates
the Chairman of the shop council whereas workers’ members
of the council elect the Vice-chairman of the council.
The number of shop councils to be established in an organiza-
tion are determined by the employer in consultation with the
recognized trade unions/workers of the organization. The
decisions of a shop council, which have a bearing on another
shop, will be referred to joint council for consideration and
approval.
Shop Councils
Main Features
The main features of the scheme of Participative Management
through Shop councils are as follows:
MANAGEMENT OF INDUSTRIAL RELATIONS
i. In every industrial unit employing 500 or more workmen,
the employer shall constitute a Shop Council for each
department or shop or one council for more than one
department or shop, considering the number of workmen
employed in different departments or shops.
ii.
(a) Each council shall consist of an equal number of
representatives of employers and workers.
(b) The employers’ representatives shall be nominated by the
management and must consist of persons from the unit
concerned.
(c) All the representatives of workmen shall be from amongst
the workers actually engaged in the department of the shop
concerned.
(iii) The employer shall decide in consultation with the
recognized union or the various registered trade unions or
with workers, as the case may be, in the manner bets suited
to local conditions, the number of shop councils and
departments to be attached to each council of the
undertaking or establishment.
(iv) The number of members of each council may be
determined by the employer in consultation with the
recognized union, registered unions or workers in the
manner best suited to local conditions obtaining in the
unit; the total number of members may not generally
exceed 12.
(v) All decisions of a shop council shall be on the basis of
consensus and not by process of voting, provided that
either party may refer the unsettled matters to the joint
council for consideration.
(vi) Every decision of a shop council shall be implemented by
the parties concerned within a period of one month unless
otherwise stated in the decision itself and compliance report
shall be submitted to the council.
(vii) Such decision of a shop council which have bearing on
another shop, or the undertaking of establishment as a
whole will be referred to the joint council for consideration
and decision.
(viii) A shop council once formed shall function for a period of
two years. Any member nominated or elected to the council
in the mid-term to fill a casual vacancy shall continue to be a
member of the council for the un expired portion of the
term of the council.
(ix) The council shall meet as frequently as in necessary and that
at least once in a month.
(x) The chairman of the shop council shall be a nominee of the
management the worker members of the council shall elect
a Vice-Chairman from amongst themselves.
167
 Functions of the Shop Councils: The shop councils should
MANAGEMENT OF INDUSTRIAL RELATIONS
in the interest I increasing production, productivity and
overall efficiency of the shop department attend to the
following matters:
i. Assist management in achieving monthly/yearly production
targets.
ii. Improvement of production, productivity and efficiency
including elimination of wastage and optimum utilization
of machine capacity and manpower.
iii. Specially identify areas of low productivity and take
necessary corrective steps at shop level to eliminate relevant
contributing factors.
iv. To study absenteeism in the shop/departments and
recommend steps to reduce them.
v. Safety measures.
vi. Assist in maintaining general discipline in the shop/
department.
vii. Physical conditions of working, such as lighting,
ventilation, noise, dust, etc., and reduction on fatigue.
viii.Welfare measures to be adopted for efficient running of the
shop/department.
ix. Ensure proper flow of adequate two-way communication
between the management and the workers, particularly on
matters relating to production schedules and progress in
achieving the targets.
Joiny Councils
In every industrial unit employing 500 or more workers, there
shall be a Joint Council for the whole unit. The main features
of the scheme of Joint Council may be as follows:
i. Only such persons who are actually engaged in the unit shall
be members of the joint council.
ii. The council shall function for a period of two years.
iii. The Chief Executive of the unit shall be the Chairman of
the joint council and there shall be a Vice-Chairman who
will be nominated by worker- members of the council.
iv. The joint council shall appoint one of the members of the
council as its . Secretary. Necessary facilities for the efficient
discharge of function by the Secretary shall be provided with
the premises of the undertaking/establishment.
v. The term of council once formed shall be for a period of
two years; if, however, a member is nominated in the mid-
term of the council to fill a casual vacancy, the member
nominated to such a vacancy shall continue in Office for the
remaining period of the term of the council.
vi. The joint council shall meet, at least, once in a quarter.
vii. Every decision of the joint council shall be on the basis of
consensus and not by a process of voting and shall be
binding on employers and workmen and shall be
implemented within one month unless otherwise stated in
the decision itself. -
Functions of Joint Council: The joint council should deal with
matters relating to:
168
i. Optimum production, efficiency and fixation of
productivity norms of man and machine for the unit as a
whole.
ii. Functions of a shop council, which have a bearing on
another shop or the unit as a whole.
iii. Matters emanating from shop councils, which remain
unresolved.
iv. Matters concerning the unit or the plant as a whole, the
respect of production targets; more specifically, task
assigned to a shop council at the shop/ department levels
but relevant to the unit as a whole will be taken up by the
joint council.
v. The development of skills of workmen and adequate
facilities for training.
vi. Awarding of rewards for valuable and creative suggestions
received from the workers.-
vii. The preparation of schedules of working laws and of
holidays.
viii.Optimum use of raw materials and quality of finished
products.
(ix) General health, welfare and safety measures for the unit of
the plant.
(v) Unit Councils
Encouraged by the success of the scheme in manufacturing and
mining units, a new scheme of workers’ participation in
management in commercial and service organization in the
public sector, having large-scale public dealings, was announced
on 5th January, 1977. The Scheme envisaged setting of Unit
Councils in units employing at least 100 persons. The organiza-
tions include hotels, restaurants, hospitals, air, sea, railway and
road transport services, ports and docks, ration shops, school
research institutions, provident fund and pension organiza-
tions, municipal and milk distribution services, trust
organizations, all financial institutions, banks, insurance
companies, post and telegraph offices, Food Corporation, State
Electricity boards, Central Warehousing, State Warehousing
Corporations, 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. .
The scheme provides for unit level councils. These councils are
to eliminate, factors, which hamper operations and improve
methods of operation.
The main functions of the councils include creation of condi-
tions for achieving optimum efficiency, better customer service
in areas where there is direct and immediate contact between the
workers at the operational level and the consumer, higher
productivity, the elimination of pilferage and all forms of
corruption, and the institutions of rewards to be given to those
with proven ability in these areas.
Main Features 0/ the New Scheme: The main features of the
scheme of workers’ participation through unit level councils
would be as follows:
i. A unit level council consisting of the workers and
management of the organization/service may be formed
 generally in each unit, employing 100 or more workers to
discuss day-to-day problems and find solutions; but
wherever necessary a composite council may be formed to
serve more than one unit or a council may be formed
department wise to suit the particular needs of an
organization/service.
ii. Every unit council shall consist of an equal number of
representatives of the management and workers. The actual
number of members should be determined by the
management in consultation with the recognized union,
registered unions or the workers in the manner best suited
to the local conditions obtaining in a unit or an
organization, but their total number may riot exceed 12. It
would be necessary to nominate suitable and experienced
workers from various departments irrespective of their
cadre, affiliation or status, and not trade union functionaries
who may not be actually working in the unit.
iii. The management’s representatives should be nominated by
the management and should consist of persons from the
unit concerned.
iv. The management shall decide in consultation with the
recognized union or the registered unions or the workers as
the case may be in the manner best suited to local
conditions. The number of unit councils and the
departments to be attached to each council of the
organization/service.
v. All decision of a unit council shall be on the basis of
consensus and not by a process of voting, provided that
either party may refer the unsettled matters to the joint
council for consideration.
vi. Every decision of a unit council shall be implemented by
the parties concerned within a month, unless otherwise
stated in the decision itself.
vii. The management shall make suitable arrangement for the
recording and maintenance of minutes of the meetings and
designate one of its representives as - a secretary for this
purpose who shall also report the action taken on the
decisions at subsequent meetings of the council.
viii.Such decisions of a unit council, which have a bearing on
another unit of the organization/service as a whole shall be
referred to the joint council for consideration and decisions.
ix. A unit council once formed shall function for a period of
two years. Any member nominated or elected tot he council
in the mid-term to fill a casual vacancy shall continue to be a
member of the council for the unexpired portion of the
term of the council.
x. The council shall meet as frequently as is necessary but at
least once in a month.
xi. The Chairman of the council shall be a nominee of the
management. The worker members of the council shall elect
a Vice-Chairman from amongst themselves.
Main Functions: The main functions of the United Councils
MANAGEMENT OF INDUSTRIAL RELATIONS
may be:
i. To create conditions for achieving optimum efficiency, better
customer service in areas where there is direct and
immediate contact between workers at the operational level
and the consumer, higher productivity and output including
elimination of wastage and idle time and optimum
utilization of manpower by joint involvement in
improving the work system.
ii. To identify areas of chronically bad, inadequate or inferior
service and to take necessary corrective steps to eliminate the
contributing factors to evolve improved methods of
operation.
iii. To study absenteeism and recommend steps to reduce it.
iv. To eliminate pilferage and all forms of corruption and to
institute a system of rewards for this purpose.
v. The suggest improvements in physical conditions of
working such as lighting, ventilation, dust, noise,
cleanliness, internal layout, setting up of customers’ service
points, etc.
vi. To ensure proper flow of adequate two-way
communication between the management and workers,
particularly about matters relating to the service to be
rendered, fixation by targets of output and progress in
achieving these targets.
vii. To recommend and improve safety, health and welfare
measures for an efficient running of the unit.
viii.To discuss any other matters which may have a bearing on
the improvement of performance of the unit for ensuring
better customer service.
Performance Evaluation of the Scheme of Workers’ Participa-
tion in management
Number of public sector units implemented or initiated action
of implementing the joint Councils increased from 472 in 1976
to 545 in 1978. A Committee on workers’ participation in
management and equity was appointed by the Government in
September 1977 to study all the issues relating to participative
management. The committee after its in-depth study suggested
the outline of a comprehensive scheme and came to conclu-
sions on matters like the nature, structure, levels of
participation and their function, which may form part of a
scheme of participative management.
Though this theme was lauded with great fanfare, it has not
been effective in its working owing to the same malady from
which the Joint Management Councils have been suffering, i.e.,
absence of commitment of both employer and employees.
Further, employees feel that this scheme is mostly oriented to
maximization on production/productivity, optimum utiliza-
tion of capacity, better utilization of raw materials etc., without
concerning much about the mean of the unit/plant.
169
MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 38:
LIMITATION OF PARTICIPATION
Learning Objective
The study of this lesson will help you understand:
• The reasons for limited success of WPM.
Reasons for the Limited Success of
Workers’ Participation in Management
Thus, it is felt that the ineffective functioning of various
schemes of participative management has been mostly due to
absence of commitment and lack of interest in the schemes of
participative management on the part of both the parties. But a
study conducted by Prof.Laxminarain reveals that both the trade
unionists and managements covered in the study have much
faith in the potentiality and promise of employers’ participation
in management and a majority of them believe that it would be
successful if proper mechanisms are introduced. Further, both
the employees and manager fully I appreciate the benefits of
participative management such as increase in production/
productivity, better understanding among managers, supervi-
sors and workers and help in strengthening industrial relations.
Further, the trade unionists believe that employees are capable
of being an effective party to participative management as they
are:
a. Generally interested in participation at various level;
b. Desirous of sharing the responsibility; and
c. Competent to effectively participate indecision-making at
various levels.
Despite the positive attitudes of both the parties about the
conceptual framework of participative management, the
arrangements of the participative management in public sector
units are so far failed to deliver the goods. It is felt the existing
system is not conductive due to inherent constraints due to —
i. The inherent conflicts between employees and management;
ii. The general beliefthat the workers are inferior to
management;
iii. The fact that the system is management dominated and due
to; arid
iv. The view that managers are averse to share responsibility.
Further, it is also viewed that the ineffective functioning might
be partly due to certain defects in contextual setting and the
mechanisms of participative management at micro level.
Workers feel that there is no seriousness on the part of
management in making the schemes of participative manage-
ment a success. In view of these defects, the author of the
study suggested that, it is necessary to sell the concept to the
top management more vigorously and to change it with the
responsibility to implement the participative management
schemes in all enterprises. Further, managers’ participation in
management at top level is an important link in the participative
approach down to the line. Additional managers should also
170
share powers with employees to make the participative manage-
ment a success. In this connection, managers in the public sector
would have to be bold enough to take some risks inherent in
the sharing of power. Further, it is felt by the parties concerned
that voluntary nature of participative management schemes is
another reason for their ineffective functioning. In this connec-
tion it is suggested that the Government should take effective
steps in providing necessary infrastructure, in addition to
providing necessary legislative framework for the success of the
participative management.
Public enterprises should provide a lead in making the scheme
of participative management a success to the private sector
industries in the country, with their distinct advantage by
providing training to the employees in production, planning,
techniques, management, decision-making, behavioral skills,
financial area, organizational knowledge etc. This naturally calls
for re-orientation of workers’ education and training
programmes. The managers in public sector should not as the
owners act in private sector industry in sharing authority, views,
information etc., and they have to take employees into confi-
dence since all of them are the partners in the industrial
endeavor of public sector. Thus, the roles to be played by
managers and workers are challenging but not beyond achieve-
ment in making workers participation a successful one.
Various reasons have been assigned for the slow progress and
unsatisfactory working of the scheme. These include:
i. The apathy and even hostility of the employers and the
workers; the former looked upon the bipartite bodies
(Works Committees and JMCs) as substitute of trade
unions, while the latter considered them to be their rivals;
ii. Lack of a proper understanding between employers and
employees of the concept, purposes and benefits of the
scheme;
iii. Progressive employers, who have a long tradition of having
a healthy system of communication and consultation with
their employees, find the bodies to be superfluous;
iv. Workers indirectly participate in management through their
representatives. Their latent abilities and qualities have,
therefore, been largely unutilized;
v. The existence of a number of joint bodies - works
committees, joint management councils, production
committees, suggestion committees, canteen committees,
safety committees, etc., - has caused confusion and a
duplication of effort as well as a waste of time and energy;
vi. The absence of a strong trade union or the existence of
more than one trade union and inter-union rivalry has made
the working of the scheme somewhat difficult;
vii. The absence of a proper education and training in the
principles of human relations, cooperation and
 participation on the part of the workers’ representatives on

MANAGEMENT OF INDUSTRIAL RELATIONS

these bodies;
viii.Although the representatives of the central organizations
supported the scheme of national conference and
committee meetings, they have shown inadequate interest in
making their affiliates enthusiastic about it. In undertaking
in which employee-employer relations are not cordial and in
which arrangements for works committees, grievance
redressal procedure, and a procedure for the recognition of a
trade union are absent, the joint management councils
cannot be expected to function satisfactorily;
iv. Delay in implementating the suggestions and
recommendations of these bodies often leads to the
warning of the workers’ interest in such bodies;
x. The joint management councils were created without the
creation of a congenial and constructive climate for them,
which would ensure that each party would trust the other
and would respect its rights. As a result, they were used as a
platform form which, because of mutual distrust and
suspicion, charges and counter-charges were made about
delays in the setting up of the joint management councils,
about apathy and indifference, about the shirking of
responsibility and uncalled for or unnecessary interference in
labour matters by the State, towards workers, which means
the establishment of machinery for setting of grievances of
the workers; which means advance notice and often advance
consultation with workers or their representatives prior to
important management action which may affect them, it
means that workers through their representative can have an
effective voice in their working lives.

171
MANAGEMENT OF INDUSTRIAL RELATIONS

LESSON 39:
CURRENT TRENDS IN PARTICIPATION IN INDIAN INDUSTRIES

Learning Objective 1. There should be mutual trust, faith among all the parties
The study of this lesson will help you understand: concerned.
• The working of WPM in India. 2. There should be progressive management in the enterprise
and should recognize its obligations and responsibilities
Working of Workers’ Participation in
towards workers and trade unions.
Management in India
The highlights of the Indian experience, with regard to workers’ 3. There should be strong, democratic and representative
participation in management is that, the schemes have although union which should represent the cause of workers without
been initiated by the Government. Taking into account the neglecting the management’s interest.
economic, political and wotker/trade union situation in India, 4. There should be closely and mutually formulated, objectives
the Government’s initiative for participative management is for participa-tion by trade unions and management.
justified. The global experience also stands testimony to such 5. All parties concerned to participative management should
initiative. The trade unions in India who have demanded for feel that they should participate at all levels.
nationalisation of industry that culminate in people’s participa-
6. There should be effective communication between workers
tion in the economic activity have been conspicuous by their
and manage-ment and effective consultation of the workers
silence with regard to workers’ participation in the industrial
by the management.
activity.
7. Both the parties should develop a favorable attitude
‘There has been a phenomenal growth in number of units
towards the schemes of participative management.
adopted by JMCs in public sector (augmented from eight in
1958 to 140 in 1976). JMCs in some of the public sector 8. Management and Government should provide training to
undertakings, for example, Bharat Heavy Electricals Limited all the parties concerned to prepare them for participative
have provided an appropriate forum for effective communica- management.
tion, and managements unreservedly furnished all facts and 9. Both the parties of anticipative management should be
information sought for, the unions have responded by conscious of the benefits of the schemes.
moderating their enthusiasm and exercising reasonable restraint
in demanding information, disclosure of which could be
detrimental to the interest of the organisation. Deliberations in
the JMCs are characterised by mutual understanding and a high
level of objectivity in the appreciation of problems without
acrimony or emotionalism.
But the working of the JMCs indicates that they have not been
successful both in private and public sectors. JMC was first
introduced in Hindustan Machine Tools in 1958 among the
public sector units but survived less than one year. The scheme
was also failed in other public sector units like Posts and
Telegraphs, Railways, Hindustan Insecticides, Indian Airlines
Corporation, Air India International and in Fertilizer and
Chemical Corporations.
It is often criticized by different quarters that the scheme of
employee participation in management did not make a headway
though it was initiated With much enthusiasm. The National
Commission on Labour observed that, “mental reservations
which operated against it are same both in the ranks of
management and among the workers”
Suggestions for the Success of Workers’
Participation in Management
The following are the prerequisites for the successful function-
ing of the schemes of workers’ participation in management.
Managements, trade unions and the workers should be
concerned with these prerequisites:

172
 MANAGEMENT OF INDUSTRIAL RELATIONS
LESSON 40:
CASE STUDY

Case: South Indian Bank

South Indian bank was instituted in 1950. Most of the
employees joined as clerks with matriculation qualification in
1950s and in 1960s became the branch managers and regional
managers by 1988. Thus, most of the managers of the bank
either matriculates or graduates. These managers have been
performing various functions including marketing functions of
the bank like purchasing of deposits and selling of advances.
Top management of the bank had decided to employ candi-
dates with MBA (marketing) qualification as marketing
executives in 1986. The managers of the bank protested against
the managements decisions saying they could perform, with
their long experience, the marketing functions more efficiently
than MBAs. But the top management ignored the opposition
of the managers and employed MBA (marketing) candidates as
Marketing Executives. MBAs joined the bank in 1987 and
assured the responsibilities of purchasing deposits, selling
advances and recovery of advances.
The performance of the bank was poor during 1987 and 1988
especially in areas like deposit mobilization (by 30%) sanction-
ing advances(by 20%) and recovery of advances (by 40%). The
personal department, besides other departments of the bank,
was asked to find out the reasons for the declining performance.
The newly employed Marketing Exexcutives felt that the old
managers would not accept the new ideas proposed by them,
whereas the old managers opened that the Marketing Execu-
tives, thought very high of themselves and did not allow
themselves to share others’ experience and ideas. Both felt that
there were no special interactions between the two groups.
Questions
1. Do you think that the performance of the Marketing
Executives has fallen?
2. What is the problem in this case?
3. What do you recommend to solve the problem?

173