Industrial Relations and Labour Legislations

MBA 09 HR 03 INDUSTRIAL RELATIONS AND LABOUR LEGISLATIONS

COURSE NOTES

P.MOHANRAJ,
Assistant Professor, Dept. of Management Studies,
Chettinad College of Engineering & Technology, Karur, Tamilnadu.
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UNIT: I

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Introduction on Industrial relations and theories

Industrial relations: The term industrial relations have been described as relationship between
management and employees or among employees and their organizations that characterize or

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grow out of employment. - Dale Yoder.
The term industrial relations denotes such matters as freedom of association and the
right to organize, the applications of the principle of the right to organize and right of collective
bargaining, of conciliation and arbitration proceedings, and the machinery for co-operation
between the authorities and the occupational organisation at various levels of the country. – The
International Labour organisation.

IRs deal with either the relationship between the state and employers’ and workers’
organisations or the relation between the occupational organisations themselves, - ILO

Objectives of Industrial relations:

1. Facilitate production and productivity
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2. Safeguard the rights and interests of both labour and management by securing their co-
operation.
3. Achieve sound, harmonious and mutually beneficial labour management relations.
4. Bring about socialization of industries.
5. Avoid unhealthy atmosphere in the industry
6. Protect and improve the interest of both the labour and management
7. Minimizing employee turnover and absenteeism
8. Uplift the economic status of workers
9. Establish Government control over industries which are running in loss, etc.,
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10. Encourage and develop trade unions in order to improve worker’s strength
11. To maintain congenial relations between EE & ER
12. To regulate the production by minimizing industrial conflict through state control
13. To provide an opportunity to the workers to participate on Decision making.
14. To maintain industrial democracy

Factors affecting industrial relations

1. Industrial factors: State policy, labour laws, Voluntary codes, Collective bargaining
agreements, Labour unions, Employer’s organisation.

P.MOHANRAJ, Assistant Professor, Dept. of MBA, Chettinad College of Engineering & Technology, Karur, Tamilnadu.
Industrial Relations and Labour Legislations

2. Economic factors: Economic organisations (Socialist, Communist, Capitalist), Type of

ownership, nature & Composition of workforce, the sources of labour supply, labour
market status, disparity of wages, level of unemployment, economic cycle.
3. Social factors: Social group (Caste), Social status (H/L), Social values/ norms etc.
4. Technological factors: Work methods, type of technology used, rate of technological
change, R&D activities, etc.,
5. Psychological factors: Owner’ attitude, perception of workforce, workers’ attitude towards
work, their motivation, morale, interest, alienation, dissatisfaction and boredom.
6. Political factors: Political institutions, system of Govt., political philosophy, attitude of

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Govt., Ruling elite and opposition towards labour problems.
7. Enterprise related factors: Style of mgmt., its philosophy and value system,
organisational climate, organisational health, extent of competition, adaptability of
change and other HR policies.
8. Global factors: International relations, Global conflicts, International trade & Labour

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agreements, etc.,

Industrial relations theories

I.Dunplo’s system theory of IRs: John Dunlop (1950), Industrial relations system as a
subsystem of society, subject to three environmental constraints – the markets, distribution of
power in society and technology.
- Each sub system closely affects the other and is collectively responsible for
certain results.
- IRs is the system which determines the rules of the workplace.
- In nutshell, an industrial relations system at any time is comprised of certain
actors, certain contexts and ideology which binds the IRs system together and a
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body of rules to govern the actors at the work place and workers’ community.
- Actors: Employers, Labour unions and the Government.
- Environmental Context: Comprised of technology, market constraints & power
relations.
- Ideology: Set of ideas and beliefs – help to integrate the system together as an
entity.
- Rules – A body of rules are framed to Govern the actors at the workplace
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Ideology Certain actors

Certain context

P.MOHANRAJ, Assistant Professor, Dept. of MBA, Chettinad College of Engineering & Technology, Karur, Tamilnadu.
Industrial Relations and Labour Legislations

Dunlop’s model identifies 3 key factors

1. Environmental/ external economic, technological, political, legal and social forces that
impact employment relationships.
2. Integration of the key actors
3. Rules that are derived that govern the employment relationship
Mathematically expressed as
IR= f (a,t,m,p,i), where a-actors, t-technology, m- market context, p- power context,
i- ideological context.
In the system theory of Dunlop, the actors are bound together by a set of common ideas,

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perceiving the set of role for each other and interacting to fabricate rules and verdicts at the
workplace.

Criticism: 1.Has certain ambiguities, 2.Omits behavioural variables (Motivation, Perceptions &
attitudes), 3.Focus only on disagreements & disputes.

II. Pluralist theory of Flanders

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In pluralism, the organisation is perceived as being made up of powerful and divergent
sub groups, each with its own legitimate loyalties and with its own set of objectives and leaders.
In particular, the two predominant subgroups in the pluralistic perspective are the management
and the trade unions.

Conflict is inherent in the industrial system, he advocated collective bargaining as a method of

conflict resolution. Therefore CB is vital to the IRs system, must have a rule to have collective
bargaining system.
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Mathematically, r = f (b) / r = f (c), where r = rules governing IRs, b= Collective bargaining, C=
Conflict resolution through CB.

Views: The pluralistic ideology accepts that an enterprise contains people with different
interests, aims and aspirations. It is, therefore a combination of different interest rather than one
common goals.

III. Human Relations Approach

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Workers are human beings with human emotions, impulses and feelings which arise out
basic needs and drives such as the instinct of security, possession and recognition.

Major focus:

- Work is a group activity. The social world of an individual is primarily around his
work activity.

- The need for recognition, security and sense of belonging is more important in
determining workers’ morale and production than the physical conditions under
which they work.

P.MOHANRAJ, Assistant Professor, Dept. of MBA, Chettinad College of Engineering & Technology, Karur, Tamilnadu.
Industrial Relations and Labour Legislations

- The worker is a person whose attitude and effectiveness are conditioned by

social demands from both inside and outside the workplace.

- Informal groups in workplace exercise strong social control over the work habits
and attitudes of the individual workers.

- HRs approach highlights certain policies and techniques to get better employee
morale, efficiency and job satisfaction.

The integration of people in to a work situation that motivates them to work together

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productively, co-operatively and with economic, psychological and social satisfaction.

IV Gandhian approach to Industrial relations

For regulating the labour and management relations are based on his fundamental

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principles of truth, non-violence and non-possession (Aparigraha). From these principles were
evolved the concepts of non-co operation and trusteeship.

Mgmt. & Labour – Two wheels of moving chariot called industry.

- Gandhiji accepted the workers’ right to go on strike but such right is to be

exercised for just cause in a peaceful and non-violent manner.

- Settling industrial disputes through mutual negotiations and arbitration without

any rancor between the parties.

Conditions for a successful strike:

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1. The cause of strike must be just
2. There should be no strike without a grievance
3. There should be no violence
4. Non-strikers/ black sheep should not be harassed
5. Strike should be the last weapon

V. Marxist approach to IRs

It is mainly concerned with the structure and nature of society and assumes that the
conflict in employer – employee relationship is reflective of the structure of the society.
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- Conflict is inevitable
- IRs are equated with power struggle
- The capitalist would like to purchase labour at the lowest possible price to
maximize profits.
Main focus:
- Weakness & contradiction inherent in the capitalist system – result in revolution
for socialism
- Capitalist and workers would compete to gain ground and establish their
dominance and their constant win-lose struggle.

P.MOHANRAJ, Assistant Professor, Dept. of MBA, Chettinad College of Engineering & Technology, Karur, Tamilnadu.
Industrial Relations and Labour Legislations

- Conflicts are inevitable and trade unions are a natural response of workers to
their exploitation by capitalists.

VI. Socio –Ethical approach to Industrial relations

The IRs could be maintained by sociological based ethical aspects. As good, IRs can be
only maintained when both the labour and mgmt. realize their moral responsibility in
contributing to the said task through mutual co-operation and greatest understanding of each
others problems.

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According to National Commission on Labour studies: IR means, the study group
observed that the goal of L & M relations may be:
- Maximum productivity
- Leading to rapid economic development
- Adequate understanding among employers, workers and Govt.

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- Understanding of role of each
- Willingness among parties to co-operate as partners in the industrial system.

Other important observations:

1. IRs are possible, at what extent the L&M accept the way of life & value system of
modern technology.
2. Creation/ identification of mgmt. problems by labour can lead to employee acceptance of
management’s proposed solutions.

Dimensions/ Functions of Industrial relations

a. Procurement – Recruitment and selection of employees
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b. Development – T &D, performance appraisal & Career planning
c. Compensation – Pay & Fringe benefits
d. Integration – IRs, Motivation & Conflict resolution (WPM, CB, Grievance handling)
e. Maintenance – Health & Safety, Communication & Counselling.
f. Separation – Retirement, Layoff and discharge and out placement
g. Management of statutory and non-statutory welfare services
h. Mgmt. of social security programmes
i. Maintenance of employee records
j. Field study in HRM & IRs
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k. Public relations (Liaison with outside agencies, consultation, HRM experts)

l. Maintenance of close association with the different organisational participants
m. Mgmt. of overall industrial relations system

History/ Evolution of Industrial Relations

The problem of industrial or labour management did not arise when business
organisation were small. These developed only when elaborate organisational structures came
into being during the late 19th century.
P.MOHANRAJ, Assistant Professor, Dept. of MBA, Chettinad College of Engineering & Technology, Karur, Tamilnadu.
Industrial Relations and Labour Legislations

1. Agrarian Economy stage:

 Before this, the property was common and collective asset of the group, but
now it was identified as a personal asset of the land lord.
 The employer- employee relationship was that of the Master- Servant slave
type.
 The slaves were required to do all types of manual and other specialized
work.
 Paid no wages but food, old clothes and a small place to live.

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2. Handicrafts stage
 There was the categories of worker/ employee & employer
 The workers/ Craftsmen owned factors of production, own tools, own home

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etc.,
 Sold their product directly to customers
 Master – student relationship.

3. Cottage or putting-out stage

 At the development of economic system, the craftsmen worked with the
members of their family in their own home and were paid on a piece-work
basis for the work.

4. Factory or the Industrial capitalism stage

 The cottage workers became factory workers, large no. of people worked
under the same roof.
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P.MOHANRAJ, Assistant Professor, Dept. of MBA, Chettinad College of Engineering & Technology, Karur, Tamilnadu.