Significance, Features of Collective Barganing

Industrial disputes between the employee and employer can also be settled by
discussion and negotiation between these two parties in order to arrive at a
decision. This is also commonly known as collective bargaining as both the
parties eventually agree to follow a decision that they arrive at after a lot of
negotiation and discussion.

According to Beach, “Collective Bargaining is concerned with the relations

between unions reporting employees and employers (or their representatives). It
involves the process of union organization of employees, negotiations
administration and interpretation of collective agreements concerning wages,
hours of work and other conditions of employees arguing in concerted economic
actions dispute settlement procedures”.

According to Flippo, “Collective Bargaining is a process in which the

representatives of a labor organization and the representatives of business
organization meet and attempt to negotiate a contract or agreement, which
specifies the nature of employee-employer union relationship”.

“Collective Bargaining is a mode of fixing the terms of employment by means of

bargaining between organized body of employees and an employer or
association of employees acting usually through authorized agents. The essence
of Collective Bargaining is bargaining between interested parties and not from
outside parties”.

According to an ILO Manual in 1960, the Collective Bargaining is defined

as:

“Negotiations about working conditions and terms of employment between an

employer, a group of employees or one or more employers organization on the

It is also asserted that “the terms of agreement serve as a code defining the
rights and obligations of each party in their employment relations with one
another, if fixes large number of detailed conditions of employees and during its
validity none of the matters it deals with, internal circumstances give grounds for
a dispute counseling and individual workers”.

Collective Bargaining Involves:

(i) Negotiations

(ii) Drafting

(iii) Administration

(iv) Interpretation of documents written by employers, employees and the union

representatives

(v) Organizational Trade Unions with open mind.

Forms of Collective Bargaining:

The working of collective bargaining assumes various forms. In the first place,
bargaining may be between the single employer and the single union, this is
known as single plant bargaining. This form prevails in the United States as well
as in India.

Secondly, the bargaining may be between a single firm having several plants and
workers employed in all those plants. This form is called multiple plants
bargaining where workers bargain with the common employer through different
unions.

Thirdly, instead of a separate union bargaining with separate employer, all the
unions belonging to the same industry bargain through their federation with the
employer’s federation of that industry. This is known as multiple employer
bargaining which is possible both at the local and regional levels. Instances in
India of this industry-wide bargaining are found in the textile industry.

The common malady of union rivalry, small firms and existence of several
political parties has given rise to a small unit of collective bargaining. It has
produced higher labour cost, lack of appreciation, absence of sympathy and
economic inefficiency in the realm of industrial relationships. An industry-wide
bargaining can be favourable to the economic and social interests of both the
employers and employees.

Essential Pre-Requisites for Collective Bargaining:

Effective collective bargaining requires the following prerequisites:

(i) Existence of a strong representative trade union in the industry that believes
in constitutional means for settling the disputes.

(ii) Existence of a fact-finding approach and willingness to use new methods and
tools for the solution of industrial problems. The negotiation should be based on
facts and figures and both the parties should adopt constructive approach.

(iii) Existence of strong and enlightened management which can integrate the
different parties, i.e., employees, owners, consumers and society or Government.

(iv) Agreement on basic objectives of the organisation between the employer

and the employees and on mutual rights and liabilities should be there.

(v) In order that collective bargaining functions properly, unfair labour practices
must be avoided by both the parties.

(vi) Proper records for the problem should be maintained.

(vii) Collective bargaining should be best conducted at plant level. It means if

there are more than one plant of the firm, the local management should be
delegated proper authority to negotiate with the local trade union.
(viii) There must be change in the attitude of employers and employees. They
should realise that differences can be resolved peacefully on negotiating table
without the assistance of third party.

(ix) No party should take rigid attitude. They should enter into negotiation with a
view to reaching an agreement.

(x) When agreement is reached after negotiations, it must be in writing

incorporating all term of the contract.

It may be emphasised here that the institution of collective bargaining

represents a fair and democratic attempt at resolving mutual disputes. Wherever
it becomes the normal mode of setting outstanding issues, industrial unrest with
all its unpleasant consequences is minimised.

Main Features of Collective Bargaining:

Some of the salient features of collective bargaining are:

1. It is a Group Action:

Collective bargaining is a group action as opposed to individual action. Both the

parties of settlement are represented by their groups. Employer is represented
by its delegates and, on the other side; employees are represented by their
trade union.

2. It is a Continuous Process:

Collective bargaining is a continuous process and does not end with one
agreement. It provides a mechanism for continuing and organised relationship
between management and trade union. It is a process that goes on for 365 days
of the year.

3. It is a Bipartite Process:

Collective bargaining is a two party process. Both the parties—employers and

employees— collectively take some action. There is no intervention of any third
party. It is mutual given-and-take rather than take-it-or-leave-it method of
arriving at the settlement of a dispute.

4. It is a Process:

Collective bargaining is a process in the sense that it consists of a number of

steps. The starting point is the presentation of charter of demands by the
workers and the last step is the 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.

5. It is Flexible and Mobile and not Fixed or Static:

It has fluidity. There is no hard and fast rule for reaching an agreement. There is
ample scope for compromise. A spirit of give-and-take works unless final
agreement acceptable to both the parties is reached.

6. It is Industrial Democracy at Work:

Collective bargaining is based on the principle of industrial democracy where the

labour union represents the workers in negotiations with the employer or
employers. Industrial democracy is the government of labour with the consent of
the governed—the workers. The principle of arbitrary unilateralism has given
way to that of self-government in industry. Actually, collective bargaining is not a
mere signing of an agreement granting seniority, vacations and wage increase,
by sitting around a table.

7. It is Dynamic:

It is relatively a new concept, and is growing, expanding and changing. In the

past, it used to be emotional, turbulent and sentimental, but now it is scientific,
factual and systematic.

8. It is a Complementary and not a Competitive Process:

Collective bargaining is not a competitive process i.e., labour and management

do not coopt while negotiating for the same object. It is essentially a
complementary process i.e., each party needs something which the other party
has, namely, labour can put greater productive effort and management has the
capacity to pay for that effort and to organise and guide it for achieving the
enterprise’s objectives.

The behavioural scientists have made a good distinction between “distributive

bargaining” and “integrative bargaining”. The former is the process of dividing
up the cake which represents what has been produced by the joint efforts of
management and labour.

In this process, if one party wins something, the other party, to continue the
metaphor of the cake, has a relatively smaller size of the cake. So it is a win-lose’
relationship. The integrative bargaining, on the other hand, is the process where
both the parties can win—each party contributing something for the benefit of
the other party.

9. It is an Art:

Collective bargaining is an art, an advanced form of human relations.

Means of Collective Bargaining:

Generally, there are four important methods of collective bargaining, namely,

negotiation, mediation, conciliation and arbitration for the settlement of trade
disputes. In this context R.F. Hoxie said that arbitration is often provided for in
collective bargaining under certain contingencies and for certain purposes,
especially when the parties cannot reach agreement, and in the interpretation of
an agreement through negotiation.
Conciliation is a term often applied to the art of collective bargaining, a term
often applied to the action of the public board which attempts to induce
collective bargaining.

Mediation is the intervention usually uninvited, of some outside person of body

with a view of getting conciliation or to force a settlement, compulsory
arbitration is extreme mediation. All these things are aids or supplement to
collective bargaining where it breaks down. They represent the intervention of
outside parties.

Constituents of Collective Bargaining:

There are three distinct steps in the process of collective bargaining:

(1) The creation of the trade agreement,

(2) The interpretation of the agreement, and

(3) The enforcement of the agreement.

Each of these steps has its particular character and aim, and therefore, each
requires a special kind of intellectual and moral activity and machinery.

1. The Creation of the Trade Agreement:

In negotiating the contract, a union and management present their demands to

each other, compromise their differences, and agree on the conditions under
which the workers are to be employed for the duration of the contract. The
coverage of collective bargaining is very uneven; in some industries almost all
the workers are under agreement, while in others only a small portion of the
employees of the firms are covered by the agreement.

The negotiating process is the part of collective bargaining more likely to make
headline news and attract public attention; wage increases are announced,
ominous predictions about price increase are reduction in employment are
made.

2. The Interpretation of the Agreement:

The administrative process is the day-to-day application of the provisions of the

contract to the work situation. At the time of writing the contract, it is impossible
to foresee all the special problems which will arise in applying its provisions.
Sometimes, it is a matter of differing interpretations of specific clause in the
contract, sometimes; it is a question of whether the dispute is even covered by
the contract. Nevertheless, each case must somehow be settled. The spirit of the
contract should not be violated.

3. Enforcement of the Agreement:

Proper and timely enforcement of the contract is very essential for the success of
collective bargaining. If a contract is enforced in such way that it reduces or
nullifies the benefits expected by the parties, it will defeat basic purpose of
collective bargaining. It may give rise to fresh industrial disputes. Hence, in the
enforcement of the contract the spirit of the contract should not be violated.

However, new contracts may be written to meet the problems involved in the
previous contract. Furthermore, as day-to-day problems are solved, they set
precedents for handling similar problems in future. Such precedents are almost
as important as the contract in controlling the working conditions. In short,
collective bargaining is not an on-and-off relationship that is kept in cold storage
except when new contracts are drafted.

Theories, Importance, Hindrance of Collective

Bargaining
Theories of Collective Bargaining:

There are three important concepts on collective bargaining which have been
discussed as follows:

1. The Marketing Concept and the Agreement as a Contract:

The marketing concept views collective bargaining as a contract for the sale of
labour. It is a market or exchange relationship and is justified on the ground that
it gives assurance of voice on the part of the organised workers in the matter of
sale. The same objective rules which apply to the construction of all commercial
contracts are invoked since the union-management relationship is concerned as
a commercial one.

According to this theory, employees sell their individual labour only on terms
collectively determined on the basis of contract which has been made through
the process of collective bargaining.

The uncertainty of trade cycles, the spirit of mass production and competition for
jobs make bargain a necessity. The trade union’s collective action provided
strength to the individual labourer.

It enabled him to resist the pressure of circumstances in which he was placed

and to face an unbalanced and disadvantageous situation created by the
employer. The object of trade union policy through all the maze of conflicting
and obscure regulations has been to give to each individual worker something of
the indispensability of labour as a whole.

It cannot be said whether the workers attained a bargaining equality with

employers. But, collective bargaining had given a new- relationship under which
it is difficult for the employer to dispense without facing the relatively bigger
collective strength.

2. The Governmental Concept and the Agreement as Law:

The Governmental Concept views collective bargaining as a constitutional
system in industry. It is a political relationship. The union shares sovereignty with
management over the workers and, as their representative, uses that power in
their interests. The application of the agreement is governed by a weighing of
the relation of the provisions of the agreement to the needs and ethics of the
particular case.

The contract is viewed as a constitution, written by the point conference of union

and management representative in the form of a compromise or trade
agreement. The agreement lays down the machinery for making executing and
interpreting the laws for the industry. The right of initiative is circumscribed
within a framework of legislation.

Whenever, management fails to conform to the agreement of constitutional

requirements, judicial machinery is provided by the grievance procedure and
arbitration.

This creates a joint Industrial Government where the union share sovereignty
with management over the workers and defend their group affairs and joint
autonomy from external interference.

3. The Industrial Relations (Managerial) Concept as Jointly

Decided Directives:

The industrial relations concept views collective bargaining as a system of

industrial governance. It is a functional relationship. Group Government
substitutes the State Government. The union representative gets a hand in the
managerial role. Discussions take place in good faith and agreements are arrived
at. The union joins with company officials in reaching decisions on matters in
which both have vital interests. Thus, union representatives and the
management meet each other to arrive at a mutual agreement which they
cannot do alone.

To some extent, these approaches represent stage of development of the

bargaining process itself. Early negotiations were a matter of simple contracting
for the terms of sale of labour. Developments of the latter period led to the
emergence of the Government theory. The industrial relations approach can be
traced to the Industrial Disputes Act of 1947 in our country, which established a
legal basis for union participation in the management.

Importance of Collective Bargaining:

The collective bargaining advances the mutual understanding between the two
parties i.e., employees and employers.

The role of collective bargaining may be evaluated from the following point of
view:

(1) From Management Point of View:

The main object of the organisation is to get the work done by the employees at
work at minimum cost and thus earn a high rate of profits. Maximum utilization
of workers is a must for the effective management. For this purpose co-operation
is required from the side of the employees and collective bargaining is a device
to get and promote co-operation. The labour disputes are mostly attributable to
certain direct or indirect causes and based on rumors, and misconceptions.
Collective bargaining is the best remedial measure for maintaining the cordial
relations.

(2) From Labour and Trade Union Point of View:

Labour has poor bargaining power. Individually a worker has no existence

because labour is perishable and therefore, the employers succeed in exploiting
the labourers.

The working class in united form becomes a power to protect its interests against
the exploitation of the employers through the process of collective bargaining.

The collective bargaining imposes certain restrictions upon the employer.

Unilateral action is prevented. All employees are treated on equal footings. The
conditions of employment and rates of wages as specified in the agreement can
be changed only through negotiations with labour. Employer is not free to make
and enforce decisions at his will.

Collective bargaining can be made only through the trade unions. Trade unions
are the bargaining agents for the workers. The main function of the trade unions
is to protect the economic and non- economic interests of workers through
constructive programmes and collective bargaining is one of the devices to
attain that objective through negotiations with the employers, Trade unions may
negotiate with the employer for better employment opportunities and job
security through collective bargaining.

(3) From Government Point of View:

Government is also concerned with the process of collective bargaining.

Government passes and implements several labour legislations and desires it to
be implemented in their true sense. If any person violates the rules and laws, it
enforces them by force.

Collective bargaining prevents the Government from using the force because an
amicable agreement can be reached between employer and employees for
implementing the legislative provisions. Labour problems shall be minimised
through collective bargaining and industrial peace shall be promoted in the
country without any force.

Collective bargaining is a peaceful settlement of any dispute between worker

and employers and therefore it promotes industrial peace and higher
productivity resulting an increase in the Gross National Product or the national
income of the country.

Main Hindrances for Collective Bargaining:

The main objective of developing collective bargaining technique is to improve

the workers-management relations and thus maintain peace in industries. The
technique has developed in India only after India got independence and got
momentum since then.

The success of collective bargaining lies in the attitude of both management and
workers which is actually not consistent with the spirit of collective bargaining in
India. There are certain problems which hinder the growth of collective
bargaining in India.

The following factors or activities act as hindrances to effective collective

bargaining:

(1) Competitive Process:

Collective bargaining is generally becoming a competitive process, i.e., labour

and management compete each other at negotiation table. A situation arises
where the attainment of one party’s goal appears to be in conflict with the basic
objectives of the other party.

(2) Not Well-Equipped:

Both the parties—management and workers—come to the negotiation table

without doing their homework. Both the parties start negotiations without being
fully equipped with the information, which can easily be collected from
company’s records. To start with, there is often a kind of ritual, that of charges
and counter charges, generally initiated by the trade union representatives. In
the absence of requisite information, nothing concrete is achieved.

(3) Time to Protest:

The immediate objective of the workers’ representatives is always some kind of

monetary or other gains, accrue when the economy is buoyant and the employer
has capacity to pay. But in a period of recession, when demand of the product
and the profits are falling, it is very difficult for the employer to meet the
demands of the workers, he might even resort to retrenchment or even closure
collective bargaining is no answer to such a situation.

(4) Where Prices are Fixed by the Government:

In industries, where the prices of products are fixed by the Government, it

becomes very difficult for the employer to meet the demands of workers which
would inevitably lead to a rise in cost of the products produced. Whereas the
supply price to the consumers cannot be increased. It will either reduce the
profits of the firm or increase the loss. In other words, it will lead to closure of the
works, which again is not in the interest of the workers.

(5) Outside Leadership:

Most of the Indian trade unions are led by outsiders who are not the employees
of the concerned organisations. Leader’s interests are not necessarily to be
identical with that of the workers. Even when his bonafides are beyond doubt,
between him and the workers he leads, there cannot be the degree of
understanding and communication as would enable him to speak on behalf of
the workers with full confidence. Briefly, in the present situation, without strong
political backing, a workers’ organisation cannot often bargain successfully with
a strong employer.

(6) Multiplicity of Trade Unions:

One great weakness of collective bargaining is the multiplicity of trade unions. In

a multiple trade union situation, even a well recognised, union with long
standing, stable and generally positive relationship with the management,
adopts a militant attitude as its deliberate strategy.

In Indian situation, inter-union rivalries are also present. Even if the unions
combine, as at times they do for the purpose of bargaining with the employer
they make conflicting demands, which actually confuse employer and the
employees.

(7) Appointment of Low-Status Executive:

One of the weaknesses of collective bargaining in India is that the management

deputes a low-status executive for bargaining with the employees. Such
executive has no authority to commit anything on behalf of the management. It
clearly indicates that the management is not at all serious and the union leaders
adopt other ways of settling disputes.

(8) Statutory Provisions:

The constraints are also imposed by the regulatory and participative provisions
as contained in the Payment of Wages Act, the Minimum Wages Act, and
Payment of Bonus Act etc. Such provisions are statutory and are not negotiable.

(9) Fresh Demands at the Time of Fresh Agreement:

At the time when the old agreement is near expiry or well before that, workers
representatives come up with fresh demands. Such demands are pressed even
when the industry is running into loss or even during the period of depression. If
management accepts the demand of higher wages and other benefits, it would
prefer to close down the works.

(10) Agreements in Other Industrial Units:

A prosperous industrial unit in the same region may agree with the trade unions
to a substantial increase in wages and other benefits whereas a losing industry
cannot do that. There is always pressure on the losing industries to grant wages
and benefits similar to those granted in other (relatively prosperous) units in the
same region.

Scope, Growth, Issue, Reasons of Collective

Barganing
Scope of Collective Bargaining

Collective bargaining broadly covers subjects and issues entering into the
conditions and terms of employment. It is also concerned with the development
of procedures for settlement of disputes arising between the workers and
management.

A few important issues around which collective bargaining enters in this

developing country are as follows:

“Recognition of the union has been an important issue in the absence of any
compulsory recognition by law. In the under-developed countries in Asia,
however, on account of the tradition concept of management functions and the
immaturity of the industrialist class there is much resistance from the employers
to recognise the status of the unions.”

Bargaining upon wage problems to fight inflation or rising cost of living and to
resist wage cuts during depression has resulted in several amicable agreements.
But, no statistics are available for such amicable settlements. Therefore, Daya,
points out, “It has been customary to view collective bargaining in a pattern of
conflict; the competitively small number of strikes and lock-outs attract more
attention than the many cases of peaceful settlement of differences.”

Another issue on which bargaining takes place is seniority, but in India, it is of

less importance than in western countries. But, in India, lay-off, retrenchment,
dismissal, rationalisation and participation in the union activities have been
important issues for collective bargaining.

Regarding bargaining on hours of work, it has recognized that “in one form or
another subject of working time will continue to play an important part in
collective bargaining; although the crucial battles may be well fought in the
legislative halls.”

Overtime work, holidays, leave for absence and retirement continue to be issues
for bargaining in India, although they are not regarded as crucial.

The union security has also been an issue for collective bargaining, but it could
not acquire much importance in the country, although stray instances are found.
The Tata Workers union bargained with M/s Tata Iron and Steel Co. Ltd.,
Jamshedpur, on certain issues, one of which was union security and in the
resulting agreement some of the union security clauses were also included.

The production norms, technical practices, details of working rules, standards of

performance, allowance of fatigue, hiring and firing, protection of life and limb,
compensation for overtime, hours of work, wage rates and methods of wage
payments, recognition of unions, retrenchment, union security, holidays and
competence of workmen form the subjects of negotiations and agreements
through collective bargaining. Customary practices are evolving procedures to
extend the area of collective bargaining. Collective bargaining has been giving
official sanction to trade experiences and agreements.

Collective bargaining, thus, covers the negotiation, administration,

interpretation, application and enforcement of written agreement between
employers and unions representing their employees setting forth joint
understanding, as to policies and procedures governing wages, rates of pay,
hours of work and other conditions of employment.

The collective bargaining reached has been of three types:

(1) Agreement arrived at after voluntary direct negotiations between the parties
concerned. Its implementation is purely voluntary;

(2) Agreements between the two parties, though voluntary in nature, are
compulsory when registered as settlement before a conciliator; and

(3) Agreement which have legal status negotiated after successful discussion
between the parties when the matter of dispute is under reference to industrial
tribunal/courts.

Many agreements are made voluntarily but compulsory agreements are not
negligible. However, collective bargaining and voluntary agreements are not as
prominent as they are in other industrially advanced countries. The practice of
collective bargaining in India has shown much improvement after the passing of
some legislation like The Industrial Disputes Act 1947 as amended from time to
time. The Bombay Industrial Relations Act 1946 which provided for the rights of
workers for collective bargaining. Since then, a number of collective bargaining
agreements have been entered into.

Issues Involved in Collective Agreements:

A study conducted by the Employer’s Federation of India revealed that out of 109
agreements, ‘wages’ was the most prominent issue in 96 cases (88 percent)
followed by dearness allowance (59 cases) retirement benefits (53 cases), bonus
(50 cases) other issues involved were annual leave, paid holidays, casual leave,
job classification, overtime, incentives, shift allowance, acting allowance, tiffin
allowance, canteen and medical benefits.

A study of various collective agreements entered into in India, certain trends in

collective bargaining are noticeable.

These are:

(i) Most of the agreements are at plant level. However, some industry-level
agreements are also there;

(ii) The scope of agreements has been widening now and now includes matters
relating to bonus, productivity, modernisation, standing orders, voluntary
arbitration, incentive schemes, and job evaluation;

(iii) Long term agreements ranging between 2 to 5 years, are on increase;

(iv) Joint consultation in various forms has been provided for in a number of
agreements; and feasible and effective.
Reasons for the Growth of Collective Bargaining:

(1) Statutory Provisions:

Which have laid down certain principles of negotiations, procedure for collective
agreements and the character of representation of the negotiating parties?

(2) Voluntary Measures:

Such as tripartite conferences, joint consultative boards, and industrial

committees at the industry level have provided an ingenious mechanism for the
promotion of collective bargaining practices.

(3) Several Governments Measures:

Like schemes for workers’ education, labour participation in management, the

evolution of the code of Inter-union Harmony, the code of Efficiency and Welfare,
the Code of Discipline, the formation of Joint Management Councils, Workers
Committees and Shop Councils, and the formulations of grievances redressal
procedure at the plant level— have encouraged the collective bargaining.

(4) Amendments to the Industrial Disputes Act:

The Amendments to the Industrial Disputes Act in 1964 provided for the
termination of an award or a settlement only when a proper notice is given by
the majority of workers. Agreements or settlements which are arrived at by a
process of negotiation on conciliation cannot be terminated by a section of the
workers.

(5) Industrial Truce Resolution:

The Industrial Truce Resolution of 1962 has also influenced the growth of
collective bargaining. It provides that the management and the workers should
strive for constructive cooperation in all possible ways and throws responsibility
on them to resolve their differences through mutual discussion, conciliation and
voluntary arbitration peacefully.

(6) Government Policy to Encourage Collective Bargaining:

Ever since independence, it has been the declared policy of the Central
Government to encourage trade unions development and the settlement of
differences in industry by mutual agreement.

Article 19 of the constitution guarantees for all citizens the right to form
associations or unions, only by reserving to the state powers in the interest of
public order to impose reasonable restrictions on the exercise of this right.

The Industrial policy Resolution of 1956 declared that, “in a socialist democracy
labour is a partner in the common task of development”, thus following out the
resolution of the Lok Sabha of 1954 which set India on the path towards a
“‘socialistic pattern of society.”
Advantages, Disadvantages of Collective
Bargaining
Advantages of Collective Bargaining

Perhaps the biggest advantage of this system is that, by reaching a formal

agreement, both sides come to know exactly what to expect from each other and
are aware of the rights they have. This can decrease the number of conflicts that
happen later on. It also can make operations more efficient.

Employees who enter collective bargaining know they have some degree of
protection from employer retaliation or being let go from the job. If the employer
were dealing with just a handful of individuals, he might be able to afford to lose
them. When he is dealing with the entire workforce, however, operations are at
risk and he no longer can easily turn a deaf ear to what his employees are
saying.

Even though employers might need to back down a little, this strategy gives
them the benefit of being able to deal with just a small number of people at a
time. This is very practical in larger companies where the employer might have
dozens, hundreds or even thousands of workers on his payroll. Working with just
a few representatives also can make the issues at hand seem more personal.

Agreements reached through these negotiations usually cover a period of at

least a few years. People therefore have some consistency in their work
environment and policies. This typically benefits the company’s finance
department because it knows that fewer items related to the budget might
change.

On a broad scale, using this method well can result in more ethical way of doing
business. It promotes ideas such as fairness and equality, for example. These
concepts can spill over into other areas of a person’s life, inspiring better general
behavior towards others.

Disadvantages of Collective Bargaining

A major drawback to using this type of negotiation system is that, even though
everyone gets a say in what happens, ultimately, the majority rules, with only a
few people determining what happens too many. This means that a large
number of people, particularly in the general workforce, can be overshadowed
and feel like their opinion doesn’t really matter. In the worst case scenario, this
can cause severe division and hostility in the group.

Secondly, it always requires at least two parties. Even though the system is
supposed to pull both parties together, during the process of trying to reach an
agreement, people can adopt us-versus-them mentality. When the negotiations
are over, this way of looking at each other can be hard to set aside, and unity in
the company can suffer.

Collective bargaining can also be costly, both in terms of time and money.
Representatives have to discuss everything twice—once at the small
representative meetings, and again when they relay information to the larger
group. Paying outside arbitrators or other professionals quickly can run up a
fairly big bill, and when someone else is brought in, things often get slower and
more complex because even more people are involved.

Some people point out that these techniques have a tendency to restrict the
power of employers. Employees often see this as a good thing, but from the
company’s perspective, it can make even basic processes difficult. It can make it
a challenge to deal with individual workers, for example.

The goal of the system is always to reach a collaborative agreement, but

sometimes tensions boil over. As a result, one or both parties might feel they
have no choice but to muscle the other side into giving up. Workers might do this
by going on strike, which hurts operations and cuts into profits. Businesses might
do this by staging lockouts, which prevents members’ of the workforce from
doing their jobs and getting paid, negatively effecting income and overall quality
of living.

Lastly, union dues are sometimes an issue. They reduce the amount of take-
home pay a person has, because they usually are deducted right from his
paycheck. When things are good in a company and people don’t feel like they’re
getting anything from paying the dues, they usually become unhappier about the
rates.

The idea of collective bargaining emerged as a result of industrial conflict and

growth of trade union movement and was first given currency in the United
States by Samuel Crompers. In India the first collective bargaining agreement
was conducted in 1920 at the instance of Mahatma Gandhi to regulate labour
management relation between a group of employers and their workers in the
textile industry in Ahmadabad

The Industrial Employment (Standing Orders)

Act 1946,1961
Section 2(g) “Standing orders” means rules relating to matters set out in the
Schedule;

‘Standing Orders’ means rules of conduct for workmen employed in industrial

establishments.

The object of the Act is to require employers in industrial establishments to

formally define conditions of employment under them.
Misconduct, Disciplinary Action, Types of
Punishments, Code of Discipline, Domestic
Enquiry
Disciplinary Enquiry

The disciplinary enquiry is carried out by the disciplinary committee of the

respective establishment in relation to the matters of misconduct of the
employees. Such committee generally comprises of:

1. Workers Representative, such as the member of Trade Union, as

specified underRule 14 (4)(b-a) of the Industrial Employment
(Standing Orders) Central Rules, 1946.
2. Employers Representative, such as the head of the department
where the workman was employed, and
3. An Independent Officer, i.e. an enquiry officer.

An internal hearing, to ascertain the guilt of the workmen of the alleged

misconduct, is conducted by the administrative officer. Domestic Enquiry is
mandatory in order to dismiss an employee; however, it is not necessary for
suspending him by way of punishment.

Administrative Rules for Disciplinary Enquiry

The Principle of Natural Justice

The management of the industrial establishments must satisfy the principles of

natural justice while maintaining a neutral attitude towards the workmen. The
delinquent employee must be apparently informed about the charges levelled
against him and shall be provided with an opportunity to be heard so he can
refute them and establish his innocence. He must be given an occasion to cross-
examine the witnesses in his defence and evidence at the enquiry should be
adduced in his presence. The punishment awarded, if proven guilty, should be in
proportion to the misconduct committed. These principles of natural justice are
specified in Sections 2(b), 5(2), 10A (2) and 13A of The Industrial Employment
(Standing Orders) Act, 1946.
In Union of India vs. T. R. Verma, 1957 AIR 882 (1958 SCR 499), the court
laid down that the principles of natural justice require the charge sheeted
employee shall have an opportunity of adducing the relevant evidence and that
the evidence of the employer should be taken in his presence; he should be
given the opportunity of cross-examining the witnesses examined on behalf of
the management, and that no materials should be relied upon against him
without giving him an opportunity to explain to them. Following the procedure,
the evidence recorded at an enquiry is not open to attack.

Right to Make Representation

A delinquent workman should have a right to represent against the findings

recorded in the enquiry report to the disciplinary authority. The right has been
laid down in the case of Union of India vs. Mohd. Ramzan Khan, 1991 AIR
471, 1990 SCR Supl. (3) 248.

Procedure for a Disciplinary Enquiry

Fig 1: Procedure for a Disciplinary Enquiry

The principle of natural justice clarifies that no man shall be punished or

condemned without giving an opportunity to justify himself. The Industrial
Tribunals, based on this, have laid down the following procedure:

Preliminary Enquiry

In a landmark judgment of Amulya Ratan Mukharjee Vs. Eastern Railway,

(1962) LLJ- 11- 540, Cal- H.C., it observed by the Hon’ble High Court of
Calcutta that:

 “Before making a charge, the Authorities are entitled to have a

preliminary investigation or a “Fact-Finding enquiry” when they
receive a complaint from an employer. This is not considered to
be a formal enquiry at all and in such an enquiry, no rules are
observed.
  There can be ex-parte examination or investigation and ex-parte
report. All this is to enable the authority to apprise themselves of
the real facts and to decide whether the employee should be
charge-sheeted.
 But the departmental enquiry starts from the charge sheet. The
charge sheet must be specific and must set out all the necessary
particulars. It is no excuse to say that the delinquent who had
knowledge of previous proceedings should be taken to have
known all about the charge sheet.”
 Charge Sheet

A charge-sheet essentially contains detailed particulars of the misconduct,

specific charges against the workman and the relevant clauses of the Standing
Order under which the workman is liable to the punished.

In Sur Enamel and Stamping Works (P) Ltd. vs. Their Workmen,1963 SC
1914, the Hon’ble Supreme Court, in an attempt to lay down the procedure for
conducting an enquiry for industrial adjudication, provided that an enquiry
cannot be said to have been properly held unless:

1. the workman proceeded against must be informed clearly of the

charges levelled against him;
2. the witnesses must be examined in the presence of the workman;
3. the workman must be given a fair opportunity to cross-examine
the witnesses including himself if he so wishes; and;
4. the Enquiry Officer must record his findings with reasons in his
report. (see here)

Generally, standing orders provide the manner of serving the charge sheet on
the workman concerned and where it is prescribed the procedure should
invariably be followed. It can be given personally or by post to the delinquent
worker.

Appointment of Enquiry Officer

Saran Motors Pvt. Ltd., New Delhi Vs. Vishwanathan 1964 11.LLJ 139, it
was observed that:

 “Enquiry Officer should be properly and duly authorised by the

competent authority to hold a domestic enquiry into the charges
alleged against an employee. Any person, even an outsider, may
be appointed as an enquiry officer, provided rules or Standing
Orders do not bar such an appointment.
 The Enquiry Officer has the obligation to explain the procedures
of enquiry and chargesheet against the concerned workman.”

Suspension Pending Enquiry

 In the case where a workman who is placed under suspension by

the employer pending investigation or inquiry into complaints or
 charges of misconduct against him, the employer shall pay to
such workman subsistence allowance in accordance with the
provisions ofSection 1O-A of the Industrial Employment (Standing
Order) Act, 1946 which provides:

“Where any workman is suspended by the employer pending inquiry into

complaints or charges or misconduct against him, the employer shall pay to such
workman subsistence allowance:

 at the rate of 50% of the wages which workman was entitled to

immediately preceding the date of such suspension, for the first
90 days of suspension and;
 at the rate of 75% of such wages for the remaining period of
suspension if the delay in the completion of disciplinary
proceedings against such workman is not directly attributable to
the conduct of such workman.”

Explanation by Employee

After a charge sheet has been served on the accused workman, he may send his
explanation cum reply in this manner:

1. admitting the charges and pleading for mercy.

2. denying the charges in totality.
3. requesting for more time to submit the explanation.

Notice of Enquiry

On receipt of the charge sheet, the employee sends his reply to the Authority. If
the Authority found the reply to be unsatisfactory, he may get a show cause
notice from the Authority. This procedure is applied in the case of Associated
Cement Co. Ltd vs. Their workmen and Other 1964 65 26 FJR 289
SC. which further states that:

“The workman should be given due intimation of the date on which the enquiry is
to be held so that he has an opportunity to prepare his defence at the enquiry.”

Supply of relevant materials

Management may ask for any document in proof of charge. So, according to the

principles of natural Justice, such copies of those documents should be supplied

to the delinquent workman. A workman who is to answer to charge must not only
know the accusation but also the testimony by which the accusation is supported
as enumerated in the case of Meenglass Tea Estate vs. workmen, 1963 11,
L.L.J, 392 (S.C.)
Examination of Witnesses

There is no provision of law under which the Enquiring officers holding domestic
enquiries can compel the attendance of witnesses as under the Codes of Civil
Procedure or Criminal Procedure.

Further, some general rules for examination of the witness are mentioned in the
judgment of Tata Engineering and Locomotive Co. Ltd. vs. S.C. Prasad,
(1969) 11 L.L.J. 799 (S.C.)

It was observed by the Hon’ble Supreme Court that:

 “If the allegations mentioned in the charge sheet are denied by

the workman in the domestic enquiry proceedings, the onus for
proving those allegations will be upon the shoulders of the
management and;
 the witnesses, called by the Management, must be allowed to be
cross examined by the workman and;
 the workman must also be given a reasonable opportunity to
examine himself and can add any further pieces of evidence that
he might choose in support of his plea.”

Report of Enquiry Officer

 Once the employer and the workman have been heard, the
Officer is required to prepare a reasoned enquiry report which
contained every findings in the enquiry and submit it with the
Authority.
 Lastly, it is the duty of an enquiry officer to send the Report to
the Accused.

Any act or omission of an employee, whether amounts to the misconduct or not,

is to be governed in accordance with the provided list in the Industrial
Establishments (Standing Order) Rules. Although no statute or law specifically
lays down the procedure to conduct the disciplinary enquiry, the various
judgements of the Industrial Tribunals, however, have laid down a basic idea of
the procedure that ought to be followed while conducting such an enquiry. The
prime principle that is to be taken care throughout the procedure of the enquiry
is the principles of the natural justice that shall be ensured at every step and
action to assure the delivery of justice.

Grievance Function in IR: Grievance

Settlement Procedure
Grievance means any type of dissatisfaction or discontentment’s arising out of
factors related to an employee’s job which he thinks are unfair. A grievance
arises when an employee feels that something has happened or is happening to
him which he thinks is unfair, unjust or inequitable. In an organization, a
grievance may arise due to several factors such as:
 1. Violation of management’s responsibility such as poor working
conditions
2. Violation of company’s rules and regulations
3. Violation of labor laws
4. Violation of natural rules of justice such as unfair treatment in
promotion, etc.

Various sources of grievance may be categorized under three heads: (i)

management policies, (ii) working conditions, and (iii) personal factors

1.Grievance resulting from management policies include:

 Wage rates
 Leave policy
 Overtime
 Lack of career planning
 Role conflicts
 Lack of regard for collective agreement
 Disparity between skill of worker and job responsibility

2. Grievance resulting from working conditions include:

 Poor safety and bad physical conditions

 Unavailability of tools and proper machinery
 Negative approach to discipline
 Unrealistic targets

3. Grievance resulting from inter-personal factors include

 Poor relationships with team members

 Autocratic leadership style of superiors
 Poor relations with seniors
 Conflicts with peers and colleagues

It is necessary to distinguish a complaint from grievance. A complaint is an

indication of employee dissatisfaction that has not been submitted in written. On
the other hand, a grievance is a complaint that has been put in writing and made
formal.

Grievances are symptoms of conflicts in industry. Therefore, management should

be concerned with both complaints and grievances, because both may be
important indicators of potential problems within the workforce. Without a
grievance procedure, management may be unable to respond to employee
concerns since managers are unaware of them. Therefore, a formal grievance
procedure is a valuable communication tool for the organization.

Grievance Procedure:

Grievance procedure is a Step by step process an employee must follow to get

his or her complaint addressed satisfactorily. In this process, the formal (written)
complaint moves from one level of authority (of the firm and the union) to the
next higher level.

Grievance procedure is a formal communication between an employee and the

management designed for the settlement of a grievance. The grievance
procedures differ from organization to organization.

1. Open door policy

2. Step-ladder policy

Open door policy: Under this policy, the aggrieved employee is free to meet the
top executives of the organization and get his grievances redressed. Such a
policy works well only in small organizations. However, in bigger organizations,
top management executives are usually busy with other concerned matters of
the company. Moreover, it is believed that open door policy is suitable for
executives; operational employees may feel shy to go to top management.

Step ladder policy: Under this policy, the aggrieved employee has to follow a
step by step procedure for getting his grievance redressed. In this procedure,
whenever an employee is confronted with a grievance, he presents his problem
to his immediate supervisor. If the employee is not satisfied with superior’s
decision, then he discusses his grievance with the departmental head. The
departmental head discusses the problem with joint grievance committees to
find a solution. However, if the committee also fails to redress the grievance,
then it may be referred to chief executive. If the chief executive also fails to
redress the grievance, then such a grievance is referred to voluntary arbitration
where the award of arbitrator is binding on both the parties.

How to handle an employee grievance?

1. Establish whether the grievance needs to be resolved formally or

informally.
2. Choose an appropriate manager to deal with the grievance.
3. Carry out a full investigation and gather all relevant evidence,
sending it to the employee in advance of the meeting.
4. Arrange the grievance meeting, inviting the employee and
reminding them of their statutory right to be accompanied.
5. Make sure accurate notes are taken throughout by a person who
is not involved in the case.
6. Give the employee the opportunity to explain the details of their
grievance and what they would like the outcome to be.
7. Adjourn the meeting consider the evidence before making a
decision.
8. Inform the employee in writing of the decision, explaining how
and why the decision was reached.
9. Notify the employee of their right to appeal against the outcome
of the grievance procedure.

GRIEVANCE PROCEDURE IN INDIAN INDUSTRY

The 15th session of Indian Labor Conference held in 1957 emphasized the need
of an established grievance procedure for the country which would be acceptable
to unions as well as to management. In the 16th session of Indian Labor
Conference, a model for grievance procedure was drawn up. This model helps in
creation of grievance machinery. According to it, workers’ representatives are to
be elected for a department or their union is to nominate them. Management has
to specify the persons in each department who are to be approached first and
the departmental heads who are supposed to be approached in the second step.
The Model Grievance Procedure specifies the details of all the steps that are to
be followed while redressing grievances. These steps are:

STEP 1: In the first step the grievance is to be submitted to departmental

representative, who is a representative of management. He has to give his
answer within 48 hours.

STEP 2: If the departmental representative fails to provide a solution, the

aggrieved employee can take his grievance to head of the department, who has
to give his decision within 3 days.

STEP 3: If the aggrieved employee is not satisfied with the decision of

departmental head, he can take the grievance to Grievance Committee. The
Grievance Committee makes its recommendations to the manager within 7 days
in the form of a report. The final decision of the management on the report of
Grievance Committee must be communicated to the aggrieved employee within
three days of the receipt of report. An appeal for revision of final decision can be
made by the worker if he is not satisfied with it. The management must
communicate its decision to the worker within 7 days.

STEP 4: If the grievance still remains unsettled, the case may be referred to
voluntary arbitration.
Settlement Machinery for Industrial Disputes
The definition of Industrial disputes is as follows:

According to Section 2(k) of the Industrial Disputes Act, 1947 “industrial dispute”
is defined as, “Any disputes or differences between employers and employers, or
between employers and workmen, or between workmen and workmen, which is
connected with the employment or non-employment or the terms of employment
or with the conditions of labour, of any person”.

Does this sound very confusing? Let me simplify this for you. Let us understand
that the definition identifies three parties to disputes.

They are:

1. Employers
2. Employees
3. Workmen

In narrow sense industrial dispute means conflict between parties in industrial

establishments. Dictionary meaning of ‘dispute’ is ‘disagreement’, ‘mutual
antagonism as of ideas, interests etc.’ So, industrial dispute is
disagreement/mutual antagonism as of ideas, interests etc. between parties in
industry. In industrial setting parties are invariably workers and management.

In the process of working, workers express their need, expectation, desire for
fulfilment and satisfaction. They want more money i.e., attractive wages,
allowances, monetary incentive which the management may not be agreeable to
pay. Workers demand of better fringe benefits, health benefits but management
may provide less than that of their requirement.

They want recognition, status, power, advancement, higher quality of work life
but management may be reluctant to give. Under such situation, a state of
disagreement/mutual antagonism between workers and management develops
which gives birth to industrial conflict.

So, industrial dispute is a general concept, and this conflict gets the shape of
industrial dispute in a specific dimensional situation. Basically, there is no
difference between ‘industrial conflicts’ and ‘industrial dispute’, variation lies
only in scope and coverage.

Analysis of the provision of the Act reveals the following:

1. Industrial dispute is a dispute or difference:

(i) Between employers and employers, or

(ii) Between employers and workmen or

(iii) Between workmen and workmen.

 2. Industrial dispute is connected with:

(i) Employment or

(ii) Non-employment or

(iii) Terms of employment or

(iv) Conditions of labour of any person

Industrial Disputes have the following characteristics or essentials:

(1) Parties:

Industrial disputes may be among different parties.

Ordinarily, it is among the following parties:

(i) Employers and employers,

(ii) Employers and workmen and

(iii) Workmen and Workmen.

(2) Relation:

Matter of dispute may relate to worker or to employer or to both. Normally, it

relates to an appointment or termination of a person; conditions of employment
or conditions of work.

(3) Forms:

Industrial disputes may manifest themselves in different forms, such as strikes,

lock-outs, Gheraos, go slow tactics, pens down strike, etc.

(4) Oral or Written:

Industrial dispute need not be written. It may be oral.

(5) Real:

It should be real. It should relate to employment of the worker, termination of

employment, terms of employment, conditions of employment, etc. Matters
relating to the personal life of the worker do not constitute industrial dispute.

(6) Substantial Interest:

In matter relating to industrial dispute interest either of the employer or the
worker must be involved.

(7) Related to Industry:

A dispute can be included in industrial dispute when it concerns with industry.

Usually, disputes must belong to an industry which is functioning. Disputes
belonging to an industry that has since been closed down should not be included
in it.

(8) Clarification:

Industrial disputes should relate to matters which are clear. Unless, it is a

transparent case its settlement is not possible. Matters which are clear find
settlement easily. Concerned party can protect its interest when the issue is
crystal clear.

(9) Origin:

Ordinarily, dispute arises when the workers or trade unions put up their demands
before the employer and the latter refuses to consider them.

In short, it can be said that industrial dispute means lack of peace in industry.
When in an industry, requirements of the two parties contradict each other
industrial dispute raises its ugly head.

Conciliation, Arbitration & Adjudication

Some of the major industrial dispute settlement machinery are as follows:

1. Conciliation
2. Court of Inquiry
3. Voluntary Arbitration
4. Adjudication (Compulsory arbitration).

This machinery has been provided under the Industrial Disputes Act, 1947. It, in
fact, provides a legalistic way of setting the disputes. As said above, the goal of
preventive machinery is to create an environment where the disputes do not
arise at all.

Even then if any differences arise, the judicial machinery has been provided to
settle them lest they should result into work stoppages. In this sense, the nature
of this machinery is curative for it aims at curing the aliments.

1. Conciliation:

Conciliation, is a form of mediation. Mediation is the act of making active effort

to bring two conflicting parties to compromise. Mediation, however, differs from
conciliation in that whereas conciliator plays only a passive and indirect role, and
the scope of his functions is provided under the law, the mediator takes active
part and the scope of his activities are not subject to any statutory provisions.
Conciliation is the “practice by which the services of a neutral 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 of agreed solution.”

The Industrial Disputes Act, 1947 provides for conciliation, and can be utilised
either by appointing conciliation officers (permanently or for a limited period) or
by constituting a board of conciliation. This conciliation machinery can take a
note of a dispute or apprehend dispute either on its own or when approached by
either party.

With a view to expediting conciliation proceeding, time-limits have been

prescribed—14 days in the case of conciliation officers and two months in the
case of a board of conciliation, 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 6 months and with continue to be binding until revoked by either party.
The Act prohibits strike and lock-out during the pendency of conciliation
proceedings before a Board and for seven days after the conclusion of such
proceedings.

Conciliation Officer:

The law provides for the appointment of Conciliation Officer by the Government
to conciliate between the parties to the industrial dispute. The Conciliation
Officer is given the powers of a civil court, whereby he is authorised to call the
witness the parties on oath. It should be remembered, however, whereas civil
court cannot go beyond interpreting the laws, the conciliation officer can go
behind the facts and make judgment which will be binding upon the parties.

On receiving information about a dispute, the conciliation officer should give

formal intimation in writing to the parties concerned of his intention to
commence conciliation proceedings from a specified date. He should then start
doing all such things as he thinks fit for the purpose of persuading the parties to
come to fair and amicable settlement of the dispute.

Conciliation is an art where the skill, tact, imagination and even personal
influence of the conciliation officer affect his success. The Industrial Disputes Act,
therefore, does not prescribe any procedure to the followed by him.

The conciliation officer is required to submit his report to the appropriate

government along with the copy of the settlement arrived at in relation to the
dispute or in case conciliation has failed, he has to send a detailed report giving
out the reasons for failure of conciliation.

The report in either case must be submitted within 14 days of the

commencement of conciliation proceedings or earlier. But the time for
submission of the report may be extended by an agreement in writing of all the
parties to the dispute subject to the approval of the conciliation officer.

If an agreement is reached (called the memorandum of settlement), it remains

binding for such period as is agreed upon by the parties, and if no such period is
agreed upon, for a period of six months from the date on which the
memorandum of settlement is signed by the parties to the dispute, and
continues to be binding on the parties after the expiry of the period aforesaid,
until the expiry of two months from the date on which a notice in writing of an
intention to terminate the settlement is given by one of the party or parties to
the settlement.

Board of Conciliation:

In case Conciliation Officer fails to resolve the differences between the parties,
the government has the discretion to appoint a Board of Conciliation. The Board
is tripartite and ad hoc body. It consists of a chairman and two or four other
members.

The chairman is to be an independent person and other members are nominated

in equal number by the parties to the dispute. Conciliation proceedings before a
Board are similar to those that take place before the Conciliation Officer. The
Government has yet another option of referring the dispute to the Court of
Inquiry instead of the Board of Conciliation.

The machinery of the Board is set in motion when a dispute is referred to it. In
other words, the Board does not hold the conciliation proceedings of its own
accord. On the dispute being referred to the Board, it is the duty of the Board to
do all things as it thinks fit for the purpose of inducing the parties to come to a
fair and amicable settlement. The Board must submit its report to the
government within two months of the date on which the dispute was referred to
it. This period can be further extended by the government by two months.

2. Court of Inquiry:

In case of the failure of the conciliation proceedings to settle a dispute, the

government can appoint a Court of Inquiry to enquire into any matter connected
with or relevant to industrial dispute. The court is expected to submit its report
within six months. The court of enquiry may consist of one or more persons to be
decided by the appropriate government.

The court of enquiry is required to submit its report within a period of six months
from the commencement of enquiry. This report is subsequently published by
the government within 30 days of its receipt. Unlike during the period of
conciliation, workers’ right to strike, employers’ right to lockout, and employers’
right to dismiss workmen, etc. remain unaffected during the proceedings in a
court to enquiry.

A court of enquiry is different from a Board of Conciliation. The former aims at

inquiring into and revealing the causes of an industrial dispute. On the other
hand, the latter’s basic objective is to promote the settlement of an industrial
dispute. Thus, a court of enquiry is primarily fact-finding machinery.

3. Voluntary Arbitration:

On failure of conciliation proceedings, the conciliation officer many persuade the

parties to refer the dispute to a voluntary arbitrator. Voluntary arbitration refers
to getting the disputes settled through an independent person chosen by the
parties involved mutually and voluntarily.
In other words, arbitration offers an opportunity for a solution of the dispute
through an arbitrator jointly appointed by the parties to the dispute. The process
of arbitration saves time and money of both the parties which is usually wasted
in case of adjudication.

Voluntary arbitration became popular as a method a settling differences between

workers and management with the advocacy of Mahatma Gandhi, who had
applied it very successfully in the Textile industry of Ahmedabad. However,
voluntary arbitration was lent legal identity only in 1956 when Industrial Disputes
Act, 1947 was amended to include a provision relating to it.

The provision for voluntary arbitration was made because of the lengthy legal
proceedings and formalities and resulting delays involved in adjudication. It may,
however, be noted that arbitrator is not vested with any judicial powers.

He derives his powers to settle the dispute from the agreement that parties have
made between themselves regarding the reference of dispute to the arbitrator.
The arbitrator should submit his award to the government. The government will
then publish it within 30 days of such submission. The award would become
enforceable on the expiry of 30 days of its publication.

Voluntary arbitration is one of the democratic ways for setting industrial

disputes. It is the best method for resolving industrial conflicts and is a close’
supplement to collective bargaining. It not only provides a voluntary method of
settling industrial disputes, but is also a quicker way of settling them.

It is based on the notion of self-government in industrial relations. Furthermore,

it helps to curtail the protracted proceedings attendant on adjudication, connotes
a healthy attitude and a developed outlook; assists in strengthening the trade
union movement and contributes for building up sound and cordial industrial
relations.

4. Adjudication:

The ultimate remedy for the settlement of an industrial dispute is its reference to
adjudication by labour court or tribunals when conciliation machinery fails to
bring about a settlement. Adjudication consists of settling disputes through
intervention by the third party appointed by the government. The law provides
the adjudication to be conducted by the Labour Court, Industrial Tribunal of
National Tribunal.

A dispute can be referred to adjudication if hot the employer and the recognised
union agree to do so. A dispute can also be referred to adjudication by the
Government even if there is no consent of the parties in which case it is called
‘compulsory adjudication’. As mentioned above, the dispute can be referred to
three types of tribunals depending on the nature and facts of dispute in
questions.

These include:

(a) Labour courts,

(b) Industrial tribunals, and

(c) National tribunals.

The procedure, powers, and provisions regarding commencement of award and

period of operation of award of these three bodies are similar. The first two
bodies can be set up either by State or Central Government but the national
tribunal can be constituted by the Central Government only, when it thinks that
the adjudication of a dispute is of national importance. These three bodies are
into hierarchical in nature. It is the Government’s prerogative to refer a dispute
to any of these bodies depending on the nature of dispute.

(а) Labour Court:

A labour court consists of one person only, who is normally a sitting or an ex-
judge of a High Court. It may be constituted by the appropriate Government for
adjudication of disputes which are mentioned in the second schedule of the Act.

The issues referred to a labour court may include:

(i) The propriety or legality of an order passed by an employer under the

Standing Orders.

(ii) The application and interpretation of Standing Orders.

(iii) Discharge and dismissal of workmen and grant of relief to them.

(iv) Withdrawal of any statutory concession or privilege.

(v) Illegality or otherwise of any strike or lockout.

(vi) All matters not specified in the third schedule of Industrial Disputes Act,
1947. (It deals with the jurisdiction of Industrial Tribunals).

(b) Industrial Tribunal:

Like a labour court, an industrial tribunal is also a one-man body. The matters
which fall within the jurisdiction of industrial tribunals are as mentioned in the
second schedule or the third schedule of the Act. Obviously, industrial tribunals
have wider jurisdiction than the labour courts.

Moreover an industrial tribunal, in addition to the presiding officer, can have two
assessors to advise him in the proceedings; the appropriate Government is
empowered to appoint the assessors.

The Industrial Tribunal may be referred the following issues:

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 the standing
orders.
7. Rule of discipline.
8. Rationalisation.
9. Retrenchment.
10. Any other matter that may be prescribed.

(c) National Tribunal:

The Central Government may constitute a national tribunal for adjudication of

disputes as mentioned in the second and third schedules of the Act or any other
matter not mentioned therein provided in its opinion the industrial dispute
involves “questions of national importance” or “the industrial dispute is of such a
nature that undertakings established in more than one state are likely to be
affected by such a dispute”.

The Central Government may appoint two assessors to assist the national
tribunal. The award of the tribunal is to be submitted to the Central Government
which has the power to modify or reject it if it considers it necessary in public
interest

It should be noted that every award of a Labour Court, Industrial Tribunal or

National Tribunal must be published by the appropriate Government within 30
days from the date of its receipt. Unless declared otherwise by the appropriate
government, every award shall come into force on the expiry of 30 days from the
date of its publication and shall remain in operation for a period of one year
thereafter.

Objectives, Employee Participation

Participative management is a tool that is used to motivate the employees.
When subordinates are involved in decision-making at all levels it is known as
participation. According to New-storm and Davis, ‘participation is the mental and
emotional involvement of people in group situations that encourages them to
contribute to group goals and share responsibility for them’.

Objectives

1. Participation involves mental as well as emotional involvement of

the employees.
2. It instills teamwork among the employees.
3. It is a motivational technique.
4. An employee can identify his own strengths as well as
weaknesses.
5. It is an all-pervasive function.
6. Employees become better through contribution in the decision-
making process.
The participation of workers can be applied under various methods, such as
participation at board level, through work committees and quality circles.

Whatever be the nature, participation can give the following significant

results:

1. Participation tends to improve motivation because employees

feel more involved and committed to the organizational tasks.
2. Their self-esteem, job satisfaction, and cooperation with the
higher authorities also improve.
3. Participation can reduce stress and conflict among the
employees.
4. Employee turnover and absenteeism may reduce when
employees realize that they are a part of the organization.
5. It can boost up the morale of the employees.
6. The values and dignity of employees are protected through
participation.
7. The mental and physical health of employees can be improved by
minimizing the effect of alienation at work place.
8. It is a democratic process in contradiction to authoritarian
organization.
9. A sense of self-respect can be inculcated among every
employee.10. Finally, the act of participation in itself establishes
better communication, as employees mutually discuss all
problems.

Advantages of Employee Participation

Advantages

Motivation: Participation creates a positive work environment. Employees may

have the chance to show creativity and analytical ability. These opportunities
make them more motivated.

Increases Goodwill: Participation helps to build a good relationship between

management and employees. It increases employee’s efficiency and they can
produce quality products and services for the customers. A good working
condition is available at work. All this increases the goodwill of the organization.

Work Enthusiasm: The manager may accept the employee’s idea or not. When
their ideas are accepted they feel proud and become more enthusiastic about
their work. When management does not accept their ideas and shows the logic
behind refusal work enthusiasm will not reduce.

Better operations: Organizations will run better if staffs are more loyal, feel
needed, and wanted. They feel that they are respected, and their opinions count.
If management proactively seeks their input into decision-making, decisions tend
to be better when they can call on a wider range of knowledge, information, and
experience.
Positive work environment: Mangers listen to staff, ask their opinions, and
take them seriously. For these employees consider themselves a part of the
organization. This results in a positive environment in the workplace.

Increases creativity and innovation: Creativity and Motivation are two

important benefits of participative management. By allowing and diverse group
of employees to have input into decisions, the organization benefits from the
synergy that comes from a wider choice of options. When all employees, instead
of just managers or executives, are given the opportunity to participate, the
chances are increased that a valid and unique idea will be suggested.

Accept of Decision: Employees accept any kind of decision without showing an

argument. Because management asks their suggestions and proposal while
making a decision. As they participate in the decision process so workers accept
the decision and work to implement it.

Increase trust: Trust is an important factor in leadership. Participatory

approaches usually mean that decision making is more transparent. That, in
turn, increases the trust of the staff, and the leadership of the manager is
increased. And transparency itself tins an added benefit to this approach.

Effective decision: Decision is the process of selecting the best alternative. For
a single problem, different people may give different solutions, even thousands
of solutions. So participation facilitates the decision process.

Increase capacity & influence of management: Participation creates mutual

faith, understanding, and cooperation. So, employees hardly disagree with the
manager’s decisions. It indicates that the manager can easily influence the
employees to implement various decisions.

Less cost and time: There are a few costs, however, to obtaining participatory
input. A participatory decision is a group decision. So, less time is required to
implement it. And the cost of participation is less than its benefit in case of
successful participation.

Disadvantages

Communication Complexity

More lines of communication and the potential for inconsistent decision making
are disadvantages with employee involvement systems. When more employees
have input and decision-making ability, more communication is necessary to
make certain that decisions are consistent across the organization. This
consistency is critical to brand recognition and consistency. Managers may have
a hard time monitoring decisions and activities with employee involvement to
protect against negative consequences and to restrict the potential for chaos.

Manager-Employee Boundary

One potential challenge of encouraging employee involvement is the risk that

the line of distinction between the management level and employee level
becomes blurred. Though managers may value employee involvement, a
disciplined structure with clear reporting lines have long been vital to stability in
organizations. Allowing employees to share ideas and make decisions without
having them push the envelope and try to take on responsibilities that are
reserved for management levels is a real risk.

Employee Participation in India

Workers’ Participation in Management After Independence:

In fact, the first major step in the direction of workers’ participation in

management in India was the enactment of the Industrial Disputes Act, 1947
with the dual purpose of prevention and settlement of industrial disputes. The
Industrial Policy Resolution, 1948 advocated WPM by suggesting that labour
should be in all matters concerning industrial production. Article 43 A of the
Constitution of India has provided for WPM in these words:

“The State shall take steps, by suitable legislation, or in any other way, to secure
the participation of workers in management of undertakings, establishments or
other organisations engaged in an industry”.

The First Five-Year Plan and the successive plans emphasised the need for
workers’ participation in management. For example, the Second Five-Year Plan’
stressed the need for WPM in the following words:

“It is necessary in this context that the worker should be made to feel that in his
own way he is helping build a progressive state. The creation of industrial
democracy, therefore, is a prerequisite for the establishment of a socialist
society”.

The Government of India set up a ‘Study Group on Workers’ Participation in

Management’, in 1956, consisting of representatives of the government,
employers, and workers to examine the system of WPM in the UK, Sweden,
France, Belgium, West Germany and Yugoslavia and make recommendations for
the Indian case.

The Group submitted its report in May 1957 with the following
recommendations:

1. WPM schemes should be introduced in selected undertakings on

a voluntary basis.
2. A sub-committee consisting of representatives of workers,
employers and government should be set up for considering the
WPM in India.

The above recommendations, among other things, were accepted by 15th Indian
Labour Conference held in July 1957. The Conference appointed a 12 member
sub-committee to look into further details of the scheme. The recommendations
made by the sub-committee were discussed in a “Seminar on Labour-
Management Co-operation” held in New Delhi on January 31 and February 1,
1958. It drew up a “Draft Model Agreement” between labour and management
for the establishment of the Joint Management Councils (JMCs) which would have
the following three sets of functions:

First, to fulfill its functions as an advisory body.

Second, to receive information on certain matters.

Third, to fulfill administrative responsibilities.

Besides, the Seminar on Labour Management Co-operation also took the size of
the Councils, its office bearers, term of office, etc. Thus, the Joint Management
Councils (JMCs) were set up in 1958.

Following the recommendations of the Administrative Reforms Commission, the

Government of India accepted the inclusion of the representatives of workers on
the Board of Directors of public sector undertakings. Following this, the
Nationalised Banks (Management and Miscellaneous Provisions) Scheme 1970
also provided for the appointment of worker director to their Board. One director
was from among employees (who are workmen) and another from among
officers for tenure of 3 years.

Thus up to July 1975, there had been three forms of workers’ participation in
management introduced in India: Works Committees, Joint Management Councils
and Workers-Directors (public sector) on Boards of Directors.

Under the Government of India’s 20-Point Economic Programmes, a new scheme

of shops and plants councils was introduced in 1975 after the emergency was
declared in June 1975. In the following year 1976, the Government of India
amended the constitution to incorporate workers participation in management as
one of the Directive Principles of State Policy.

In June 1977, the Government of India set up a high-powered Expert

Committee on Companies and MRTP Acts under the Chairmanship of
Rajinder Sachar with terms of reference to:

(i) Consider the provisions of the Companies Act and MRTP Act and

(ii) To suggest measures participation in management and share capital of

companies can be brought about. The Sachar Committee submitted its report in
August 1978.

Meanwhile, the Janata Government also set up a “Committee Workers’

Participation Management and Equity” in September 1977 under the
Chairmanship of Ravindra Varma the then Union Minister of Labour The
Committee consisted of 18 members representing Central Organisations of trade
unions and employers and some of the States and professional institutions of
management.

The strength of Committee increased to 21 by nominating three additional

members in January 1978. The terms of reference of the Committee were to
consider, among other things, the need for a statutory scheme for workers’
participation in management. The Committee was also to study and recommend
an outline of a comprehensive scheme of workers participation at different levels
of management in industrial establishments and undertakings

The Committee submitted its report to the Government in March 1979. The
report showed that the majority of the members favoured adoption of a three-
tier system of participation, viz., at the shop, plant and corporate or board levels.
However, the employer of private sector did not favour board or corporate level
participation in management. It also recommended to enact legislation on
workers participation in management covering all undertakings, be public or
private, employing 500 or more workers.

The Government accepted the recommendations made by the 21-Member

Committee on Workers’ Participation in Management and Equity. Based on a
review of the working of the various schemes of workers’ participation in
management and experiences so gamed the Government formulated and
notified a new comprehensive scheme on a voluntary basis for ‘Workers’
Participation in Management’ on 30th December, 1983.

The salient features of the scheme were:

1. The scheme will be non-legislative.

2. It will apply to all central public sector enterprises, expect those
specifically exempted.
3. It envisaged constitution of bipartite forums at shop and plant
levels.
4. The mode of representation of workers representatives was to be
determined by consultation with the concerned unions.
5. A wide range of work related issues were brought within the
ambit of the councils.

However, a host of constraints such as multiplicity of unions, inter-union rivalry,

lack of proper knowledge on the part of workers about the scheme, etc., served
as stumbling blocks in the successful working of the scheme.

Participation of workers in management bill 1990 (Bill No. XXVIII of 1990):

So far, all the schemes pertaining to the workers’ participation in management

have been non-statutory which failed to provide meaningful participation to
workers in management.

To remedy the situation, the Government has, therefore, introduced a

Bill in the Parliament on 25th May 1990 to provide for:

1. Meaningful three-tier participation of workers in management in

all industrial establishments.
2. Formulation of scheme specifying criteria regarding nomination
of representatives from workers.
3. The principle of secret ballot for determining the representation
of workers on the shop floor and establishment level councils.
4. Rules for monitoring the scheme.
 5. Deletion of Section 3 of the Industrial Dispute Act, 1947.
6. Rules for appointment of Inspector.
7. Imprisonment up to 2 years or a fine up to Rs. 20,000 or both for
contravention of the provisions.

Methods of Participation
Participation of workers in decision-making process has resulted in successful
value creation in many organizations. Though the extent to which employees
should participate in organizational decision making is still a matter of debate.
Some say that workers’ union should participate with management as equal
partners while some believe in restricted or bounded participation, that is,
participation of employees or workers to a limited extent. However, there are a
number of ways through which employees can participate in decision-making
process of any organization.

 Participation at the Board Level: Representation of

employees at the board level is known as industrial democracy.
This can play an important role in protecting the interests of
employees. The representative can put all the problems and
issues of the employees in front of management and guide the
board members to invest in employee benefit schemes.
 Participation through Ownership: The other way of ensuring
workers’ participation in organizational decision making is making
them shareholders of the company. Inducing them to buy equity
shares, advancing loans, giving financial assistance to enable
them to buy equity shares are some of the ways to keep them
involved in decision-making.
 Participation through Collective Bargaining: This refers to
the participation of workers through collective agreements and
by deciding and following certain rules and regulations. This is
considered as an ideal way to ensure employee participation in
managerial processes. It should be well controlled otherwise each
party tries to take an advantage of the other.
 Participation through Suggestion Schemes: Encouraging
your employees to come up with unique ideas can work wonders
especially on matters such as cost cutting, waste management,
safety measures, reward system, etc. Developing a full-fledged
procedure can add value to the organizational functions and
create a healthy environment and work culture. For instance,
Satyam is known to have introduced an amazing country-wide
suggestion scheme, the Idea Junction. It receives over 5,000
ideas per year from its employees and company accepts almost
one-fifth of them.
 Participation through Complete Control: This is called the
system of self management where workers union acts as
management. Through elected boards, they acquire full control of
the management. In this style, workers directly deal with all
aspects of management or industrial issues through their
representatives.
  Participation through Job Enrichment: Expanding the job
content and adding additional motivators and rewards to the
existing job profile is a fine way to keep workers involved in
managerial decision-making. Job enrichment offers freedom to
employees to exploit their wisdom and use their judgment while
handling day-to-day business problems.
 Participation through Quality Circles: A quality circle is a
group of five to ten people who are experts in a particular work
area. They meet regularly to identify, analyze and solve the
problems arising in their area of operation. Anyone, from the
organization, who is an expert of that particular field, can become
its member. It is an ideal way to identify the problem areas and
work upon them to improve working conditions of the
organization.

Employees can participate in organizational decision making through various

processes mentioned above. However, there are other ways such as financial
participation, Total Quality Management, participation through empowered
teams and joint committees and councils through which they can contribute their
share in making the organizations a better place to work.

Employee Empowerment
Empowerment is the process of enabling or authorizing an individual to think,
behave, take action, and control work and decision-making in autonomous ways.

Empowerment has become necessary due to the following reasons:

1. Time to respond has become much shorter.

2. First-line employees must make many decisions.
3. An employee feels much more control in their life since authority
is given to individual decision-making.
4. There is great untapped potential among employees, which can
be revealed through empowerment.

Definitions:

1. According to Richard Kathnelson, ’empowerment is the process

coming to feel and behave as if one is in power and to feel as if
they owned the firm’.
2. According to Bowen and Lawler, ’employee empowerment refers
to the management strategies for sharing decision-making
power’.

Employee empowerment can be done by:

1. Seeking opinions from the employees.

2. Facilitating the employees to try their ideas.
3. Encouraging for sharing of resources and information.
 4. Improving the communication skills of the employees.

Importance of Employee Empowerment:

1. The investment in employees can improve productivity, which

can reduce the costs.
2. Individual employees experience a feeling of self-esteem, self-
efficacy and self-confidence.
3. Employee empowerment also helps in making employees more
self-reliant.
4. It allows independent decision-making by the employees.
5. Empowerment of employees helps a firm to assign different
projects to hone the competence of employees.
6. More freedom given to employees can be utilized for taking
judicious decisions.
7. Assigning proper authority can improve the organizational
effectiveness.
8. Independent decision-making can improve self-confidence among
the employees.
9. It can boost up the morale of the employees.
10. The overall efficiency of an organization can be multiplied
due to empowerment of the employees.