INDUSTRIAL RELATION

Introduction to Employee Relations

Definition:
Employee relations refers to the relation between the employer and the
employees in the industry.
Analysis of the employment relationship:

The state
Product
market
Management
Collective
bargaining
Employees
/Unions
Labour
market
Price effort
equity
Cost
discipline
Industrial and Employee Relations
Employee relationship is not just defined by the employment contract
between the employee and the employer.
As per the employment contract, the employee agrees to work for a certain
number of hours doing certain things at a certain agreed upon rate.
However,there are many intangibles in this give-and-take relationship.The
employees surrender some part of their autonomy and decision making to
the employer and the employer gives them job satisfaction,social standing.
According to Barbash(1989),the relationship is given shape by:
1. Conditions in the product market
2. Conditions in the labour or employment market


3. Relationship between the price of labour and performan
4. Permanent system of negotiations as laid out through the laws of the state.
Thus,employee relations concern the relationship of employees with
the organization and with each other.
It includes the processes of developing,implementing,administering
and analysing the employer-employee relationship.
How focus has shifted from IR to employee relations is shown in
table:



Aspect Traditional
agriculture
Early/Traditional
Industry
Post-industrial
Service/High Tech
Wealth Land Money Mind/
Information/
Technology
Skill/effort Brawn/muscle Machine-tending Brain/mind,
attitude and
ability
matter,not just
skill
Management
style
Autocratic Paternalistic Democratic
Employment
context
Master-servant Employer-
employee
Partners
Relationship One-sided
dependence
Interdependence Mutuality and
independence
Communication Top-down Two way Transparent
Continue..
Motivation Fear Favour Fairness, just
and equitable
Performance
appraisal
Information
confidential,
informal
boss/supervisor
controlled
Formal, one way Formal, open,
participative
appraisals
Control Direction and
control
Inducement Consensus/
commitment
Origin and growth of labour relations
In the late eighteenth century, the industrial revolution in the western world
left a great impact on India too. There were Acts which came into force such
as Fatal Accident Act,1855 and Workmens Breach of Contract
Act,1875;nevertheless these acts were serving the interest of the employers
only.
Some of the early acts which were instrumental in changing the face of the
labour relations in India were the Factories Act,1948;The Payment wages
Act,1936,Industrial Employment (Standing Orders)Act,1946 etc.
Objectives of labour relations
Labour relations are primarily designed for the following functions:
To provide constructive criticism of the management.


To increase the productivity of the workers through reducing the labour
turnover and frequent absenteeism
To safeguard the interest of workers and the management through mutual
understanding and relationship
To try and avoid industrial disputes, so as to develop a healthy work
environment.
To protect workers against harmful effects on their health and safety
through enactment of the different acts.
To secure and improve living standards and economic status of workers.

Labour Laws
Definition:
Labour law is the set of techniques and practices for intervention into
particular kinds of markets,specifically,markets that will reach sub-optimum
results without such interventions, because individuated actors cannot
overcome collective action problems.
Under the constitution of india,labour is a subject in the concurrent list
where both the central and state government can enact legislations.
As a result, a large number of labour laws have been enacted catering to
different aspects of labour,namely,occupational health,safety,employment ,
provision for payment of bonus,regulating the working conditions of certain
specific categories of workmem such as plantation labour,beedi worker etc.


Checklist of labour laws of india
Laws Related to IR
1. The Trade Union Act,1926;The Trade Unions(Amendments)Act,2001
2. The Industrial Employment(Standing Orders)Act,1946;The Industrial
Employment(Standing Orders)Rules,1946.
3. The Industrial Disputes Act,1947
Laws Related to Wages
1. The Payment of Wages Act,1936;The Payment of Wages Rules,1937;The
Payment of Wages(Amendment)Act,2005
2. The Minimum Wages Act,1948;The Minimum Wages(Central)Ruels,1950
3. The Payment of Bonus Act,1965;The payment of bonus Rules,1975
Continued...
Laws Related to Working Hours,Conditions of Services and Employment
1. The Factories Act,1948
2. The Plantation Labour Act,1951
3. The Mines Act,1952
4. The Beedi & Cigar Workers(Conditions of Employment)Act,1966
5. The Contract Labour(Regulation & Abolition)Act,1970
6. The Dock Workers(Safety,Health & Welfare)Act,1986
Laws Related to Equality and Empowerment of women
1. The Maternity Benefit Act,1961
2. The Equal Remuneration Act,1976

Continued...
Laws Related to deprived and Disadvantaged Sections of the Society
1. The Bonded Labour System (Abolition)Act,1976
2. The Child Labour(Prohibition & Regulation)Act,1986;The Children(Pledging
of Labour)Act,1933
Laws Related to Social Security
1. The Workmens Compensation Act,1923;The Workmens
Compensation(Amendment)Act,2000
2. The Employees State Insurance Act,1948
3. The Payment of Gratuity Act,1972

Industrial Disputes Act,1947
Definition:
Industrial dispute refers to a conflict or difference of opinion between
management and workers on the terms of employment and other working
conditions.
The purpose of the Industrial Disputes Act is to safeguard the interest of the
labour and management, maintain harmonious relations and thus avoid
conflict and strike.
Its objectives:
To safeguard the interest of the labour and the management by securing the
highest level of mutual understanding and goodwill among all those
sections in the industry which participate in the process of production.

To avoid industrial conflict or strike and develop harmonious relations,
which are an essential factor in the productivity of workers and the
industrial progress of a country.
To raise productivity to a higher level in an era of full employment by
lessening the tendency to high turnover and frequency absenteeism.
To eliminate or minimize the number of strikes, lockouts and gheraos by
providing reasonable wages, improved living and working conditions and
fringe benefits.
To improve the economic conditions of workers in the existing state of
industrial management and political government.
The Apprentice Act,1961
The main purpose of the Apprentice Act is to provide practical training to
technically qualified persons in various trades.The objective is promotion of
new skilled manpower.

The scheme is also extended to engineers and diploma holders. The period
of apprenticeship is determined by the National Council.
The apprenticeship expires on the expiry of the period or on the application
by either party to the contract to the apprenticeship advisor.
The apprentice should be of minimum age of 14 years and should satisfy the
standard of education and physical fitness as prescribed.
The employer needs to provide the required training in the particular trade.
In the event of any injury arising out of job, the employer is liable to pay the
compensation, as per the schedule indicated in the Workmens
Compensation Act,1923.
The Minimum Wages Act,1948
The Minimum Wages Act aims at making provision for statutory fixation of
minimum rates of wages in certain employment.
The review of the minimum wages is done by the appropriate government
as it may deem fit.

These could be fixed for different wage periods such as-by the hour, by the
day or by the month too.
Normal working hour prescribed under the Act is nine hours. Non-
adherence on the side of the employer is liable to be charged penalty.
It includes all remuneration being expressed in terms of money including
HRA,but does not include the value of house accomodation,any other
amenity or service, travelling allowance.
It applies to any person who directly or through another person employs
one or more employees. The beneficiaries include any person who is
employed for hire/reward to do any work.
The Payment of Wages Act,1936
The Payment of Wages Act is meant to regulate the payment of wages to
employees from certain industries not getting very high wages.
It is done to safeguard their interest and it provides against irregularities in
payment of wages,withholding wages,delay in paying the wages and making
unreasonable deductions out of the wages.
It refers to all remuneration(whether by way of salary allowances or other
wise) expressed in terms of money or capable of being so expressed which
would if the terms of employment express or implied are fulfilled be
payable to a person employed in respect of their employment or of work
done in such employment.
It includes payments on account of overtime,holidays, leave, production,
attendance bonus etc.Even if an employee is terminated,the same needs to
be paid.
It does not include bonus,value of house accomodation, travelling
allowance,PF, gratuity.

Regular and timely payment of wages is must-7 to 10 days within the last
day of the wage period.
The written authorization of the employee is necessary for payment by
cheque/credit to the bank account.
In case of termination of employment,the wages must be paid before the
expiry of the second day of working from the day of termination.
Non-adherence would lead to penalty having to be paid by the employer.
The Payment of Bonus Act,1965
The Payment of Bonus Act provides for the payment of bonus to persons
employed in certain establishments on the basis of profits or on the basis of
production or productivity.
It applies to every factory which employs 20 or more persons on any day
during the accounting year.
It includes all remuneration, other than overtime, DA and retention
allowance; it does not include gratuity,commissions,incentives,travelling
allowance and value of house accommodation.
Bonus must be paid in cash and within a period of eight months from the
close of the accounting year.
The Factories Act,1948
The Factories Act,1948 regulates the working conditions in factories in
terms of health, safety and welfare of employees.
The Act prescribes 48 hours per week for adult workers, prohibits the
employment of children under 14 years in any factory and makes some
special provisions for children and women. It also makes provision for
annual leave with wages.
In case of non-adherence to the Act, a penalty would be levied on the
employer. It refers to any premises where 10or more workers are working
on any day of the preceding 12 months.

The Employees Provident Fund Act,1952
The Employees Provident Fund act,1952 was enacted with the main
objective of making some provision for the future of the industrial worker
after he retires or for his dependants in case of his early death.
The schemes of provident fund are meant to encourage the employees to
save a portion from their present earnings for a rainy day.
The objective of the act is to provide for the institution of provident fund,
pension fund and deposit-linked insurance fund for the employees in
factories and other establishments.
The Employee Provident Fund(EPF) applies to most establishments
employing at least 20 employees.The Act continues to be applicable even if
the number of employees fall below 20.
The employers and employees each contribute 12 per cent of the basic
wage and dearness allowance of the employee.
Out of 12 per cent of the employers share of contribution,8.33 per cent is
remitted towards the pension fund. Penalties are levied on the employer for
not adhering to the Act.
Employers can have a PF account with the regional Provident Fund
Commissioners office or have a PF trust of their own.
The Employees State Insurance Act,1948
The Employees State Insurance Act is a piece of social security legislation.
The object of this Act is to secure sickness,maternity,disablement and
medical benefit to the employees and their dependants.
These benefits are secured by financial contribution to the scheme by
employers and employee.
It is basically an insurance scheme,i.e the employees get benefits if they
are sick or disabled. The Employees State Insurance Cooperation(ESIC)
provides health insurance for industrial workers.

Keeping in view the increase in the cost of living index and
recommendations of the parliamentary standing committee on labour,the
corporation increased the wage ceiling limit for coverage of the employees
under the ESI scheme.
This will help the corporation to provide social security net to more and
more employees of the organized sector.
The employers contribute 4.75 per cent of an employees wage,and
employees contribute another 1.75 per cent to the scheme.Non-adherence
would result in employers paying up a penalty.
The Payment of Gratuity Act,1972
The Payment of Gratuity Act provides for the payment of a lump sum
amount to an employee when they leave after five years of service.
It is a retirement benefit such as provident fund or pension.It is the payment
which is intended to help an employee after their retirement.


The general principle underlying gratuity schemes is that by faithful by
faithful service over a long period,the employees are entitled to a certain
amount as retirement benefit.
The gratuity is to be paid in case of superannuation,retirement,resignation,
death or total disablement due to accident or disease.
It includes all emoluments earned by the employee while on duty or on
leave,including DA but does not include bonus,HRA, overtime and any other
allowance.
It applies to every factory ,shop or establishment in which 10 or more
persons are employed on any day of the preceding 12 months.
The employees should have rendered continous service of not less than five
years.In case of death or disablement, the gratuity is paable,even if they
have not completed five years of service.
The gratuity calculation is at the rate of 15 days wages based on the last
drawn rate by the employee for every completed service or a part thereof
exceeding six months.
The maximum gratuity payable under the Act is 3.50 lakhs. In case where
higher benefit of gratuity is available under any gratuity scheme, award of
agreement, the employee will be entitled to higher benefits.
Gratuity received up to 3.50 lakhs is exempt from income tax. In may
2010,the maximum gratuity is now increased to 10 lakhs.
Gratuity paid above that limit is taxable.Non-payment of gratuity payable by
the employer under the Act is punishable.
The Workmens Compensation Act,1923
Workmens Compensation Act deals with compensation for workers who are
injured during the course of duty.
This act was the first piece of legislation towards the social security of
workmen.
The general principle is that workers who suffer an injury in the course of
their employment which results in a disablement should be entitled to
compensation and in the case of fatal accident, their dependant should be
compensated.

The Maternity Benefit Act,1961
The objective of the Maternity Benefit Act is to provide maternity benefit to
women.
The women employee should have worked for at least 80 days in the 12
months immediately preceding the date of her expected delivery.
The maximum period permitted is 12 weeks in all, taken either before or
after childbirth.However,she cannot avail of the benefit six weeks before her
expected delivery.
Women are also entitled to six weeks maternity benefit in case of
miscarriage. This Act is not applicable to those establishments/factories
where Employee State Insurance Act,1948 is applicable.
The employer is required to pay the maternity benefit equal to Basic + DA +
Cash + Allowances + Incentive Bonus for the period of absence to the
women employee.


The women employee is eligible to get maternity benefit for 84 days(ie 12
weeks).Out of the 84 days, the period before delivery should be maximum
42 days.
The dismissal of female employees for absence due to maternity by the
employer is liable to attract a penalty.
The Industrial Employment (Standing Orders Act),1946
The objective of the Industrial Employment Act is to prescribe to employers
in industrial establishments to define with sufficient precision the conditions
of employment under them and to make the said conditions known to
workmen employed by them.
Standing order is nothing, but a codified service conditions, violation of
which may lead to punishment.
Its main purpose is to protect the employee against victimization.Any
industrial establishment employing more than 100 people comes under the
purview of this law.
It takes into account issues such as classification of workmen, hours of
work,holidays,pay days, wage rates, shift working, attendance and late
coming, grant of leave and holidays, closing and opening of sections,
termination of employment,suspension,dismissal,misconduct and means to
redress unfair treatment.
The Act also has provision for subsistence allowance for the workers under
pending suspension enquiry at the rate of 50 per cent of the wages for the
first 90 days of suspension, and at the rate of 75 per cent of wages for the
remaining period.
Any disputes regarding the provisions and interpretation of the standing
order have to be referred to the labour court.