MBA4E45: INDUSTRIAL RELATIONS
AND THE LABOUR LAWS
Introduction to Industrial Relations: The Concept of Industrial Relations, Background
to Industrial Relations, Evolution of Industrial Relations in India, The Dynamic Context
of Industrial Relations: Globalization and the National Economy, Responses to
Competitive Pressures, Changes in Employment Practices,
What is IR
• The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and
‘Relations’. “Industry” refers to “any productive activity in which an
individual (or a group of individuals) is (are) engaged”. By “relations” we
mean “the relationships that exist within the industry between the employer
and his workmen.”.
• The term industrial relations explains the relationship between employees
and management which stem directly or indirectly from union-employer
• J.T. Dunlop defines industrial relations as “the complex interrelations among
managers, workers and agencies of the governments”.
• According to Dale Yoder “industrial relations is the process of management dealing
with one or more unions with a view to negotiate and subsequently administer
collective bargaining agreement or labour contract”.
Nature of Industrial Relation
• Industrial relations are concerned with the relationship between
management and workers.
• Industrial relations safeguards the interest of employees.
• Industrial relations are concerned with the system, rules, and
procedures used by unions and employees to determine the reward
for effort and other conditions of employment, safeguard the
interests of the employees and their employer and regulate how
employers treat their employees.
• Industrial relations maintain a balance with employee expectations,
employer associations, trade unions, and other social and economic
institutions of societies.
• Industrial relations help in resolving disputes, conflicts, and
controversies between labour and management.
Objectives Of Industrial Relations
• Maintain industrial democracy based on workforce participation in
management and profits of industry.
• Ensure employee participation in company management by giving
them a voice in policy formulation and decision-making.
• Develop an effective communication channel.
• Protect the interests of both employees and management among all
segments of an industry by ensuring good mutual understanding and
• Improve living and working conditions for employees to maintain
• Bring government authority over the industrial units to help with
operations and protect the employees' livelihoods.
Characteristics of Industrial Relations
• 1. Dynamic and Developing Concept: The concept of “Industrial
Relations” is a dynamic and developing concept. It is described as a
relationship between employers and management of the enterprise
and the employees or among employees and their organizations or
Employers, Employees and their trade unions and the government.
• 2. It is a set of functional: Industrial relations do not constitute a
simple relationship, but they are set functional, inter-dependent
complexities involving various factors or various variables such as
economic, political, social, psychological, legal factors or variables.
• 3. Employee-employers relationship: Without the existence of the
minimum two parties, industrial relationship cannot exist such as:
workers and organization, employers,government
• 4. It is a product: Industrial relations are the product of economic,
social and political system arising out of the employment in the
• 5. Development of healthy labour management: The important
purpose of industrial relations is development of healthy labour-
management or employee-employer relations, maintenance
industrial peace, avoidance of industrial strike, development and
growth of industrial democracy etc.
Participants in Industrial Relations
1. Employer and their Associations: Employer plays an important role
in industrial relations.
• He hires the employees, pays them wages, provides allowances,
regulates the working relations through various rules, regulations,
and laws, and at the same time expects the workers to follow them.
• The bargaining power of the employers is weakened in comparison to
that of trade unions, though they have high bargaining power when
compared to that of employees.
• So, they form associations to equate their bargaining power with the
trade union, and these associations protect the employer by putting
pressure on government and trade unions.
2. Workers and their Associations: Workers plays a crucial role in
• The worker as a whole includes his working age, Educational background,
Social and family background, Psychological traits, Talents, Skills, Culture,
and Attitude toward others’ work.
• Workers form into their associations called “Trade Unions” to get their
• The trade unions work for workers’ economic interests through collective
bargaining by bringing pressure on the management through economic and
Government plays a balancing role in industrial relations.
• The government has its influence on industrial relations through
industrial relations policy, Labour policy, Labour law implementation,
and Acting as a mediator in the process of conciliation and
• The government regulates the behavior of both the employer
association and workers’ organizations.
Importance of Industrial Relation
• Reduction in Industrial Disputes:
• Uninterrupted production:
• Promote Industrial Democracy:
• Avoid Conflicts Between Management And Union:
• Minimises Wastage:
• Economic Growth And Development:
Features of industrial labour in India
• Rural background
• Level of literacy
• Predominance of male workers
• Heterogeneity of workforce
• Lack of unity
• High rate of absenteeism
• Migratory character
Industrial Relations – Types
(i) Labour relations i.e., relations between union- management (also known
as labour management relations);
(ii) Group relations i.e., relations between various groups of workmen i.e.,
workmen, supervisors, technical persons, etc.
(iii) Employer-employee relations i.e., relations between the management
and employees. It denotes all management employer relations except the
union- management relations;
(iv) Community or Public relations i.e., relations between the industry and
Functions of Industrial Relations
• To establish communication between workers and management to
maintain the sound relationship between the two.
• To establish support between managers and employees.
• To ensure the creative contribution of trade unions to avoid industrial
• To safeguard the interests of workers and the management,
• To avoid an unhealthy and unethical atmosphere in an industry.
• To formulate such considerations that may promote understanding,
creativity, and cooperativeness to enhance industrial productivity.
• To ensure better workers’ participation.
Factors affecting industrial Relations
1. Institutional factors
2. Economic factors
3. Social factors
4. Technological factors
5. Psychological factors
6. Political factors
7. Global factors
Approaches / Theories / Models To Industrial Relations OR IR Conflict
1. Psychological approach
• This approach implies that labour and management have conflicts
ingrained in their perception and attitudes. Individuality causes
differences in the perceptions of the parties.
• Conflicts arise when parties interpret each other's behaviour
negatively. The labour's and management's different perspectives and
interpretations of the situation create issues in Industrial Relations.
2. Sociological approach
• Since the industry is an integral part of society, various sociological
factors, including norms, values, customs and status symbols,
influence the relationships between the parties.
• The social effects of industrialization, such as social mobility and
migration, may cause various social issues, such as family
disintegration, stress, criminality and social and personal disturbance.
• This impacts industry personnel efficiency and productivity, impacting
3. Human relations approach
• This approach emphasises humans as the most important factor in
• Humans have feelings, sentiments, desires, beliefs, attitudes and
characters. For harmonious Industrial Relations, it is necessary to
integrate the requirements of individuals with those of the
4. Gandhian approach
• The foundations of this Industrial Relations approach are the
fundamental values of honesty, nonviolence and non-possession.
• There is an assumption that capital and labour can live in harmony
• Gandhiji emphasises that there can be no conflict of interest
between employees and management if employers follow the
5. Systems approach
• A system is an organised or complex whole, a combination of things
or parts that forms a unitary.
• According to the systems approach, it is hard to address a single
element or phenomenon without considering its interaction with
• This implies that there is always an interaction between the four
fundamental elements, consisting of input, transformation, output
6. Unitarism approach
• There is one source of authority and that is “management". They own and
therefore they control.
• In unitarism employers make there own laws.
• Employers perceives themselves as a provider of job, income and social security.
• they believe that conflict is unnecessary.
• It prevails in large scale of unorganized structure and small scale industries.
• This perspective is based on assumption that an organization is composed of a
group of people under a single unified loyalty structure.
• Conflict is irrational and trade union is avoidable
7. Pluralistic approach
• It is based on the assumption that the organization is composed of
individuals who make up distinct sectional group, each with its own
interest, objectives and leadership.
• This perceptive sees conflict between management and employees as
rational and inevitable.
• Employees can organize themselves in to union to collectively safeguard
• So the pluralist perception is that conflict is necessary but it can be need to
8. Marxism/Radical approach
• It is based on the notion that the production system is privately owned and
motivated by profit.
• Control over production is exercised by managers who are agents of owner.
• Marxist theory believe that class conflict is necessary for social change.
• In a capitalist system conflict is must.
• Marx see the role of trade union in protesting against exploitation.
• The radical approach favours the transformation of trade union into
Background of industrial relation
1. Primitive stage
2. Agrarian economy stage
3. Handicrafts stage
4. Guild system
5. Putting out(domestic system
6. Industrial revolution
First phase of Evolution
• British government bent on imposing penalties and restricting competition
• Later half of 19th century – legislative enactment passed
• Raise of first world war led to socio-economic and political turmoil
• Intense labour unrest as earnings did not met the price rise
• Election of representatives to central and provincial legislature for giving
rise to social enactments
• 1919 – international labour organization
• 1920 – AITUC and several other trade unions emerged
Second phase Evolution
• Emphasis on improvement of working conditions
• Social security legislations
• Trade Disputes act, 1929 – provision for settlement of disputes
• Royal commission on labour (1929-1931) Conducted survey on labour
problems in India
• GOI – worked on legislations and the objective of bringing all the
• Tripartite consultative system adapted
• First tripartite labour conference held at New Delhi under the
chairmanship of Dr.B.R.Ambedkar
• Industrial truce resolution adopted in 1947 at a tripartite conference
• Emphasis on promotion of mutuality of interest between labour, peace and
grant of fair deal to workers
• Foundation of constitutions and labour policies laid down
• Emphasis on state intervention and industrial democracy
• Many legislations enacted
• LPG, globalization and its impact on IR
• Current scenario
Dynamic Context of industrial relations- Changes
(i) Professional Management of Industry.
• Traditionally, industry in India had been managed by persons or families who combined
in themselves the functions of both entrepreneur' and 'manager'.
• Over the last five decades, management has developed as an entirely distinct
profession. The professional manager is trained for the efficient management of industry.
• With the growth of professional managers formally trained in their discipline, a new
phase has started.
(ii) Rise and Disinvestment of Public Sector.
• As a result of Industrial Policy Resolution, 1956 which promised
taking the public sector to 'commanding heights', the State has
participated in the industrial sector of the economy in big way.
• In the process, the State has emerged as the largest employer. No
wonder, it has been looked upon to provide the basic guidelines that
should be adopted by an ideal employer.
• Due to globalization and liberalization of economy, various public
enterprises have been disinvested in the recent years for example,
BALCO, VSNL, ONGC etc., thereby making many employees to opt for
Voluntary Retirement Scheme (VRS).
• Earlier State was considered as major employer but it shall be so no
• longer in the near future. Various jobs have been phased out as
(iii) Foreign Investment in Industry.
• Another important development in the industrial scene is the growing
interest of foreign private investors including multinational corporations
(MNCs) in Indian industries.
• Foreign capital has come to India both in the form of collaboration with
leading domestic industrial houses and in the form of their own subsidiary
• This development has had an impact over labour in so far as these foreign
interests brought with them new management practices for dealing with
(iv) Technological Advancement.
• Both as a result of indigenous research and import of advanced
technology, there has been a transformation of the organized industries
• Since technological advancement and modernization of industry are
associated with cost reduction and increased efficiency, there have been
the problems of
• (a) redundancy of the present employment,
• (b) adjustments of the present work-force to the skill requirements
• (c) Continuous increase in R & D expenditure on process and product As a
result, industrial employment with higher skill content and white-collared
employment in services and professions has emerged.
Hinweis der Redaktion
Industrial democracy means the government-mandated worker participation at various levels of the organization in decisions that affect workers. It is mainly the joint consultations, That pave the way for industrial democracy and cement the relationship between workers and management.