1

SHREE GROUP OF INSTITUTES, INDORE

MBA III SEM HR- SPECIALIZATION (INDUSTRIAL
RELATIONS AND LEGISLATIONS)

UNIT- I
INTRODUCTION TO IR

Industrial relations (IR) is the system of rules, procedures, and

communication channels that govern how employees and unions work
together to: Determine conditions of employment and rewards for
effort, Protect the interests of employees and employers, Regulate
how employers treat employees, Improve working and living
conditions for employees, and Maintain industrial peace

Industrial Relations Code, 2020

This code was created by consolidating the Trade Unions Act of
1926, the Industrial Employment (Standing Orders) Act of 1946,
and the Industrial Disputes Act of 1947.
Industrial Disputes Act, 1947
This act aims to resolve conflicts in industries through conciliation,
arbitration, and adjudication.
Minimum Wages Act, 1948
This act requires contractors to pay their workers a minimum wage
and double wages for overtime work.
Factories Act, 1948
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This act regulates working conditions in factories, including health,
safety, and welfare.
Employees' Provident Fund and Miscellaneous Provisions Act, 1952
This act requires establishments with more than 20 employees to
have a provident fund.
Child Labour Prohibition and Regulation Act, 1986
This act prohibits children under 14 from working in dangerous or
hazardous jobs.

Other laws related to industrial relations include:

● Employment State Insurance Act, 1948

● Bonded Labour System (Abolition) Act, 1976
● Contract Labour (Regulation and Abolition) Act, 1970
● Payment of Wages Act, 1936
● Payment of Bonus Act, 1965
● Employees' State Insurance Act, 1948
● Payment of Gratuity Act, 1972
● Employee's Compensation Act, 1923

Historical Perspective on Industrial Relations

Industrial relations as a concept emerged during the Industrial

Revolution in the 18th and 19th centuries. The shift from agrarian
economies to industrial economies led to significant changes in
employment patterns, working conditions, and employer-employee
relations.

Key Phases in the Development of Industrial Relations

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1. Pre-Industrial Revolution Era:
● Informal work settings with small-scale industries and
personal employer-employee relationships.
● Absence of formal labor laws or trade unions.
2. Industrial Revolution (18th-19th Century):
● Introduction of factories and mass production.
● Poor working conditions, long hours, and low wages led to
labor unrest.
● Emergence of trade unions to protect workers' rights.
3. Early 20th Century:
● Global recognition of the need for labor laws and
regulations.
● Establishment of International Labour Organization (ILO) in
1919 to promote fair labor standards globally.
● Formalization of industrial dispute mechanisms.

Industrial Relations in India: Historical Perspective

The evolution of IR in India is rooted in its colonial past, shaped by

economic transitions and social movements.

Pre-Independence Period (Before 1947)

1. Colonial Industrial Development:

● Growth of industries like textiles, jute, and mining during
British rule.
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● Harsh working conditions and minimal wages led to labor
unrest.
● Strikes and protests became common.
2. Rise of Trade Unions:
● The formation of the All India Trade Union Congress
(AITUC) in 1920 marked the formal beginning of trade
unionism in India.
● Influential leaders like Mahatma Gandhi and B.R.
Ambedkar emphasized workers' rights and fair labor
practices.
3. Legislative Interventions:
● Introduction of labor laws like the Factories Act, 1881, and
Trade Disputes Act, 1929 to address workplace issues and
disputes.
● Limited scope and enforcement due to colonial priorities
favoring industrialists.

Scope of Industrial Relations

Industrial relations cover the complex interplay between the

workforce, employers, and regulatory frameworks in the workplace.

Core Areas of Scope:

1. Employee-Employer Relations: Managing workplace dynamics

to ensure mutual respect and productivity.
2. Trade Unionism: Organizing workers for collective bargaining
and rights advocacy.
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3. Conflict Management: Preventing and resolving disputes, strikes,
and lockouts.
4. Legislation Compliance: Ensuring adherence to labor laws and
workplace policies.
5. Welfare and Development: Promoting fair wages, benefits, and
working conditions.

Objectives of Industrial Relations

1. Promote Industrial Peace: Prevent and resolve conflicts between

employees and employers.
2. Enhance Productivity: Foster a cooperative environment to
improve efficiency and output.
3. Protect Workers’ Rights: Ensure fair treatment, equitable wages,
and safe working conditions.
4. Encourage Participation: Empower workers to contribute to
decision-making processes.
5. Maintain Legal Compliance: Align organizational practices with
labor laws.

Importance of Industrial Relations

1. Economic Stability: A harmonious workplace boosts productivity

and contributes to national economic growth.
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2. Social Justice: Ensures equitable treatment and reduces
exploitation.
3. Conflict Reduction: Effective IR practices minimize industrial
disputes and unrest.
4. Employee Morale: Promotes job satisfaction and loyalty among
workers.
5. Adaptability: Helps organizations navigate economic changes
and technological advancements.

Factors Affecting Industrial Relations

Several internal and external factors shape the dynamics of IR in an

organization:
1. Economic Factors:
● Wage levels, cost of living, and unemployment rates.
● Industrial growth and economic policies.
2. Social and Cultural Factors:
● Workforce diversity, social norms, and cultural values.
● Education and skill levels of employees.
3. Technological Factors:
● Automation and innovation affecting job security.
● Training and reskilling demands.
4. Political Factors:
● Influence of political ideologies on trade unions and
policies.
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● Government labor laws and interventions.
5. Managerial Practices:
● Leadership styles, communication, and decision-making
processes.
● Approaches to worker engagement and conflict resolution.
6. Global Influences:
● Globalization and multinational corporations introducing
new IR challenges.
● International labor standards and practices.

Approaches to Industrial Relations

Industrial relations (IR) involve various theoretical perspectives that

help analyze and manage the complex interactions among employees,
employers, and other stakeholders. Each approach provides a distinct
lens to understand workplace dynamics, conflicts, and cooperation.

1. The Unitary Approach

The unitary approach views the organization as a unified entity where

all stakeholders share common goals, values, and interests. It
emphasizes harmony and cooperation over conflict.

Key Features:

● The organization is seen as a single cohesive entity.

● Management is considered the sole authority, with a focus on
strong leadership.
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● Conflicts are viewed as abnormal, arising from poor
communication or individual grievances.
● Trade unions are perceived as unnecessary or disruptive.

2. The Pluralist Approach

The pluralist approach recognizes that organizations are composed of

diverse groups with differing interests, leading to potential conflicts. It
emphasizes balancing these interests through negotiation and
collective bargaining.

Key Features:

● Recognizes the legitimacy of trade unions and collective

bargaining.
● Conflicts are seen as natural and inevitable in a workplace.
● The role of management is to mediate and resolve conflicts
through fair processes.
● Encourages institutional mechanisms like labor laws, tribunals,
and agreements.

3. The Marxist (Radical) Approach

The Marxist approach views industrial relations through the lens of

class conflict. It focuses on the inherent power struggle between
capital (employers) and labor (employees) within the capitalist
system.

Key Features:

● Emphasizes the exploitation of labor by capital owners for profit.

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● Conflicts are seen as inevitable and systemic, driven by the
unequal distribution of power and resources.
● Trade unions are considered tools for workers to challenge
employer dominance.
● Advocates for structural changes and workers' control of
industries.

4. The Systems Approach

Proposed by John T. Dunlop, the systems approach views industrial

relations as a subsystem of society, influenced by economic, political,
and social factors.

Key Features:

● Focuses on the interaction of three main actors: employers,

employees, and the government.
● Emphasizes the role of rules and regulations in shaping IR.
● Considers external factors like technology, market conditions,
and legal frameworks.
● Aims for stability and balance through effective rule-making and
enforcement.

5. The Human Relations Approach

The human relations approach highlights the psychological and social

aspects of work. It emphasizes improving workplace relations through
employee satisfaction and well-being.

Key Features:
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● Focuses on motivation, communication, and interpersonal
relationships.
● Recognizes the importance of teamwork and participative
management.
● Stresses the need for creating a positive work environment to
minimize disputes.

6. The Gandhian Approach

Rooted in Mahatma Gandhi's philosophy, the Gandhian approach

emphasizes non-violence, mutual respect, and moral values in
industrial relations.

Key Features:

● Advocates for peaceful resolution of disputes through dialogue

and negotiation.
● Emphasizes trusteeship, where employers act as trustees of
workers' welfare.
● Encourages workers to focus on duties as much as rights.

7. The Psychological Approach

The psychological approach examines industrial relations through the

lens of human behavior, attitudes, and perceptions.

Key Features:

● Focuses on understanding individual and group behavior in the

workplace.
● Emphasizes improving morale, motivation, and job satisfaction.
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● Advocates for behavioral interventions and conflict management
training.

8. The Sociological Approach

The sociological approach considers industrial relations as part of the

broader social system, influenced by societal norms, values, and
institutions.

Key Features:

● Examines the influence of societal changes, cultural values, and

social structures.
● Focuses on how industrial relations impact and are impacted by
societal inequalities.
● Considers the role of social institutions like families and
communities.

Industrial Relations: Code of Discipline

The Code of Discipline in industrial relations is a set of principles and

guidelines voluntarily adopted by employers and employees to
promote harmonious workplace relations, prevent disputes, and ensure
industrial peace. It emphasizes mutual respect, accountability, and
compliance with rules without resorting to coercive measures.

Objectives of the Code of Discipline

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1. To ensure the smooth functioning of industry by fostering a
disciplined environment.
2. To prevent industrial disputes and encourage peaceful resolution
of conflicts.
3. To promote mutual respect and trust among employers,
employees, and unions.
4. To ensure compliance with agreements, settlements, and awards.
5. To improve overall productivity and worker morale.
6.

Government Policies Relating to Labor

Government labor policies are designed to regulate and improve the

working conditions, rights, and welfare of workers while fostering
economic growth and industrial harmony. These policies ensure
compliance with labor laws, promote social justice, and adapt to the
changing dynamics of the labor market.

Objectives of Labor Policies

1. Protect Workers’ Rights: Safeguard against exploitation and

ensure equitable treatment.
2. Promote Social Security: Provide benefits like pensions,
insurance, and healthcare.
3. Foster Industrial Harmony: Resolve disputes and maintain
industrial peace.
4. Encourage Employment: Generate job opportunities and reduce
unemployment.
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5. Regulate Working Conditions: Ensure safety, fair wages, and
humane work hours.
6.

Key Areas of Government Labor Policies

Government labor policies in India are comprehensive and cover

several areas:

1. Wage Regulation

● Objective: Ensure fair remuneration for all workers.

● Policies:
● Minimum Wages Act, 1948: Mandates the minimum wages
for different categories of workers.
● Payment of Wages Act, 1936: Ensures timely and full
payment of wages.
● Equal Remuneration Act, 1976: Mandates equal pay for
equal work irrespective of gender.

2. Social Security

● Objective: Provide financial stability and welfare for workers and

their families.
● Policies:
● Employees' Provident Fund Act, 1952: Offers retirement savings
and financial security.
● Employees' State Insurance Act, 1948: Provides medical care and
cash benefits during sickness, maternity, or injury.
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● Maternity Benefit Act, 1961: Grants maternity leave and benefits
to female employees.

3. Employment Generation

● Objective: Reduce unemployment and promote inclusive growth.

● Policies:
● Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA), 2005: Guarantees 100 days of employment to
rural households.
● Skill India Mission: Provides skill development programs to
enhance employability.
● National Career Service (NCS): Connects job seekers with
employers through an online portal.

4. Industrial Relations

● Objective: Foster cooperation between workers and employers.

● Policies:
● Industrial Disputes Act, 1947: Provides a framework for
resolving industrial disputes through conciliation, arbitration, and
adjudication.
● Code on Industrial Relations, 2020: Simplifies and consolidates
laws related to trade unions, disputes, and standing orders.

5. Women and Child Welfare

● Objective: Protect vulnerable groups in the labor market.

● Policies:
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● Child Labour (Prohibition and Regulation) Act, 1986: Prohibits
child labor in hazardous industries.
● Sexual Harassment of Women at Workplace (Prevention,
Prohibition, and Redressal) Act, 2013: Addresses workplace
harassment.
● Crèche Facility under Factories Act, 1948: Mandates childcare
facilities for working mothers.

6. Health and Safety

● Objective: Ensure a safe and healthy work environment.

● Policies:
● Factories Act, 1948: Regulates working hours, safety measures,
and health conditions in factories.
● Occupational Safety, Health and Working Conditions Code,
2020: Consolidates laws related to workplace safety, health, and
welfare.

7. Labor Law Reforms

● Objective: Simplify compliance and enhance ease of doing

business.
● Policies:
● The government consolidated 29 labor laws into four labor
codes:
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1. Code on Wages, 2019: Streamlines wage regulation
laws.
2. Industrial Relations Code, 2020: Simplifies dispute
resolution.
3. Code on Social Security, 2020: Expands social security
benefits.
4. Occupational Safety, Health and Working Conditions
Code, 2020:
5. Enhances workplace safety standards.

8. Special Initiatives for Informal Sector

● Objective: Address the needs of workers in unorganized sectors.

● Policies:
● Unorganized Workers' Social Security Act, 2008: Provides
benefits to workers in the informal economy.
● E-Shram Portal: National database for unorganized workers to
facilitate access to welfare schemes.

International Labour Organization (ILO) and Its Influence on Legal

Enactments in India

The International Labour Organization (ILO) is a United Nations

agency that promotes social justice, decent work, and internationally
recognized labor rights. Since its inception in 1919, the ILO has
played a crucial role in shaping labor policies and legal frameworks
globally, including in India. As a founding member of the ILO, India
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has incorporated many of its conventions and recommendations into
its labor laws and policies.

Objectives of the ILO

1. Promote decent work opportunities and improve working

conditions.
2. Uphold social justice and eliminate labor exploitation.
3. Encourage member nations to implement labor standards through
conventions and recommendations.
4. Foster dialogue between governments, employers, and workers.

ILO's Influence on Indian Legal Enactments

The ILO has significantly influenced India's labor legislation,

particularly in the areas of wages, social security, working conditions,
and workers' rights. India has ratified 47 ILO conventions, of which
39 are in force as of now. The influence of the ILO is evident in the
following areas:

1. Fundamental Rights of Workers

India has adopted the ILO Declaration on Fundamental Principles and

Rights at Work (1998), which includes:
● Freedom of association and collective bargaining.
● Elimination of forced labor, child labor, and discrimination.

These principles are embedded in:

● Trade Unions Act, 1926: Promotes the right to form and operate
trade unions.
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● Bonded Labour System (Abolition) Act, 1976: Prohibits bonded
labor practices.
● Equal Remuneration Act, 1976: Ensures equal pay for men and
women.

2. Regulation of Working Conditions

The ILO has influenced laws related to working hours, rest periods,
and workplace safety:
● Factories Act, 1948: Inspired by ILO conventions on working
hours and safety standards.
● Occupational Safety, Health, and Working Conditions Code,
2020: Aligns with ILO guidelines on workplace health and
safety.

3. Wages and Social Security

ILO conventions have guided the development of wage policies and

social security systems in India:
● Minimum Wages Act, 1948: Aligns with ILO Convention No.
131 on minimum wage fixation.
● Code on Social Security, 2020: Draws from ILO conventions on
social security and welfare benefits.

4. Prohibition of Child Labor

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India's commitment to the ILO's conventions on child labor is evident
in:
● Child Labour (Prohibition and Regulation) Act, 1986:
Implements ILO Convention No. 182 on the worst forms of child
labor.
● Right to Education Act, 2009: Aligns with ILO’s emphasis on
eliminating child labor by ensuring compulsory education.

5. Equal Opportunity and Non-Discrimination

ILO conventions promote gender equality and non-discrimination in

employment:
● Maternity Benefit Act, 1961: Reflects ILO Convention No. 183
on maternity protection.
● Equal Remuneration Act, 1976: Supports ILO Convention No.
100 on equal pay for equal work.

6. Industrial Relations and Dispute Resolution

ILO conventions have influenced laws governing industrial peace and

dispute resolution:
● Industrial Disputes Act, 1947: Aligns with ILO standards on
grievance redressal and collective bargaining.
● Code on Industrial Relations, 2020: Consolidates and simplifies
labor laws in line with ILO recommendations.
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UNIT - II
COLLECTIVE BARGAINING & NEGOTIATION

Collective bargaining is a process where trade unions and employers

negotiate to establish fair working conditions and wages for
employees. It's a fundamental right and a key part of industrial
relations.

What Is Collective Bargaining?

The term “collective bargaining” refers to the negotiation of
employment terms between an employer and a group of workers.
Employees are normally represented by a labor union during
collective bargaining.

The terms negotiated during collective bargaining can include

working conditions, salaries and compensation, working hours, and
benefits. The goal is to come up with a collective bargaining
agreement through a written contract. According to the International
Labour Organization, collective bargaining is a fundamental right for
all employees.
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Purpose
Collective bargaining is a way to establish a collective agreement
that regulates the terms and conditions of employment. This
includes issues like pay, working time, training, occupational health
and safety, and equal treatment.
Process
Collective bargaining involves the exchange of proposals and ideas
between the union and employer, and typically ends with a written
agreement.
When it happens
Collective bargaining can happen when an existing contract is
about to expire, or to negotiate a first contract after forming a new
bargaining unit.
Importance
Collective bargaining can help build bridges and resolve
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differences between employers and employees, minimizing the
need for outside intervention.
Principles
Both the union and employer should have faith in each other, have
positive views of the process, and adhere to all applicable laws.

Collective Bargaining Steps

Collective bargaining can be an intense process that can be stressful
and difficult for all parties involved. It often involves a lot of back-
and-forth, with offers and counteroffers. But the end goal is to reach
an agreement.

The process goes through a number of stages. These steps can be

summed up as follows:

Identifying the issues and preparing the demands: This may

include a list of grievances, such as abusive management
practices or low salaries.
Negotiating: The union will hire a team of professional
negotiators to reach an agreement with the employer. The
employer will also hire negotiators, and the two teams will
continue to meet until they find a satisfactory agreement.
Coming to a tentative agreement: Once an agreement is
reached, both teams of negotiators will submit the agreement to
their constituents. At this time, any last-minute issues will be
raised as the details are hammered out.
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Accepting and ratifying the agreement: The agreement will be
submitted to union members, who will have the opportunity to
vote for or against the new contract.
Administering the agreement: After an agreement is finalized,
workers and shop stewards will continue monitoring to ensure
that the company is abiding by its obligations.

The success of collective bargaining in the context of industrial

relations is influenced by several essential conditions. These
conditions create a conducive environment for meaningful dialogue
and effective resolution of issues. Below are the key factors:

1. Strong and Representative Unions

● Unions should be well-organized, representative of the majority

of the workforce, and capable of articulating the needs and
interests of employees effectively.
● Fragmented or weak unions reduce the impact and legitimacy of
collective bargaining.

2. Cooperative Employer Attitude

● Employers must recognize unions as legitimate representatives of

the employees.
● They should be open to dialogue, demonstrate a willingness to
negotiate, and avoid a confrontational approach.

3. Mutual Trust and Respect

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● Trust and respect between management and labor representatives
are crucial for meaningful discussions.
● Suspicion, hostility, or a history of conflicts can undermine the
process.

4. Skilled Negotiators

● Both parties should have experienced and skilled negotiators who

understand labor laws, organizational policies, and economic
realities.
● Effective negotiation skills help in reaching agreements faster
and avoiding unnecessary disputes.

5. Clear Communication

● Open, transparent, and consistent communication ensures that

both sides understand each other’s positions, limitations, and
goals.
● Miscommunication or lack of clarity can lead to
misunderstandings and prolonged disputes.

6. Legal and Institutional Framework

● A well-defined legal structure that supports collective bargaining

(e.g., labor laws, grievance mechanisms, and mediation bodies) is
essential.
● Laws should protect the rights of both employees and employers
while enforcing agreed-upon terms.

7. Shared Willingness to Resolve Issues

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● Both parties must approach negotiations with a problem-solving
attitude, aiming for win-win outcomes rather than imposing
unilateral demands.

8. Effective Dispute Resolution Mechanisms

● Mechanisms for handling disputes (e.g., mediation, arbitration)

should be in place to address deadlocks or disagreements during
the process.

Function of Collective bargaining

1. Negotiation of Employment Terms

● Establishes terms and conditions of employment, such as wages,

working hours, benefits, job security, and workplace safety.
● Ensures that agreements are mutually acceptable to both
employees and employers.

2. Conflict Resolution

● Provides a structured mechanism for resolving disputes and

grievances between workers and management.
● Reduces the likelihood of industrial actions like strikes or
lockouts by encouraging dialogue and compromise.

3. Promotion of Industrial Harmony

● Encourages cooperation and understanding between employers

and employees, fostering a stable work environment.
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● Minimizes misunderstandings and builds trust through open
communication.

4. Protection of Workers’ Rights

● Safeguards employees from arbitrary decisions, unfair labor

practices, and exploitation.
● Ensures compliance with labor laws and promotes equitable
treatment of workers.

5. Mechanism for Workplace Democracy

● Enables workers to have a voice in decision-making processes

related to workplace policies and conditions.
● Strengthens employee representation through unions or worker
committees.

6. Stabilization of Labor Relations

● Establishes clear rules and standards that both parties agree to

follow, reducing uncertainty and fostering predictability.
● Helps in maintaining consistency across industries and sectors.

7. Improvement of Working Conditions

● Drives initiatives for safer, healthier, and more conducive work

environments.
● Encourages the adoption of policies that benefit both employees
(e.g., flexible working hours) and employers (e.g., enhanced
productivity).
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Importance of Collective Bargaining

1. Ensures Fair Employment Terms

● Negotiates wages, working hours, benefits, and job security,

ensuring employees receive equitable treatment.
● Prevents exploitation by giving workers a unified voice in
determining their employment conditions.

2. Protects Workers’ Rights

● Acts as a safeguard against arbitrary or discriminatory actions by

employers.
● Provides a structured platform for addressing grievances and
resolving disputes.

3. Promotes Industrial Harmony

● Encourages dialogue and compromise between workers and

employers, reducing tensions and conflicts.
● Minimizes the likelihood of strikes, lockouts, or other industrial
actions, fostering a stable work environment.

4. Strengthens Workplace Democracy

● Gives employees a say in decisions that affect their work life,

enhancing their sense of inclusion and empowerment.
● Balances the power dynamics between management and workers.

5. Facilitates Conflict Resolution

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● Provides a formal mechanism to address disagreements, reducing
the need for confrontational or adversarial approaches.
● Encourages collaborative problem-solving, benefiting both
parties.

Collective bargaining is a cornerstone of modern labor relations,

playing a crucial role in maintaining fairness, stability, and mutual
benefit in the workplace. Here’s why it is important:

1. Ensures Fair Employment Terms

● Negotiates wages, working hours, benefits, and job security,

ensuring employees receive equitable treatment.
● Prevents exploitation by giving workers a unified voice in
determining their employment conditions.

2. Protects Workers’ Rights

● Acts as a safeguard against arbitrary or discriminatory actions by

employers.
● Provides a structured platform for addressing grievances and
resolving disputes.

3. Promotes Industrial Harmony

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● Encourages dialogue and compromise between workers and
employers, reducing tensions and conflicts.
● Minimizes the likelihood of strikes, lockouts, or other industrial
actions, fostering a stable work environment.

4. Strengthens Workplace Democracy

● Gives employees a say in decisions that affect their work life,

enhancing their sense of inclusion and empowerment.
● Balances the power dynamics between management and workers.

5. Facilitates Conflict Resolution

● Provides a formal mechanism to address disagreements, reducing

the need for confrontational or adversarial approaches.
● Encourages collaborative problem-solving, benefiting both
parties.

6. Improves Working Conditions

● Drives improvements in health, safety, and overall work

environments, leading to better employee satisfaction and
productivity.
● Advocates for policies that enhance work-life balance and well-
being.

Process of Collective Bargaining

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1. Preparation

● Both parties (employers and employees/unions) prepare for

negotiations by:
○ Identifying key issues (e.g., wages, benefits, working
conditions).
○ Gathering data, such as market trends, organizational
financials, and past agreements.
○ Formulating objectives and strategies for the negotiation.

2. Presentation of Demands

● The union presents its demands or proposals to the employer.

● Employers may also present their expectations or counter-
demands.

3. Negotiation

● Both parties discuss and negotiate the proposals in good faith.

● This involves compromise, persuasion, and discussions to resolve
conflicting interests.
● Skilled negotiators play a crucial role at this stage.

4. Agreement

● Once consensus is reached, the terms are drafted into a collective

bargaining agreement (CBA).
● This agreement is reviewed and approved by both parties, often
requiring union member ratification.

Process of Collective Bargaining

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The process of collective bargaining typically unfolds in several
stages to ensure effective negotiation and agreement:

1. Preparation

● Both parties (employers and employees/unions) prepare for

negotiations by:
○ Identifying key issues (e.g., wages, benefits, working
conditions).
○ Gathering data, such as market trends, organizational
financials, and past agreements.
○ Formulating objectives and strategies for the negotiation.

2. Presentation of Demands

● The union presents its demands or proposals to the employer.

● Employers may also present their expectations or counter-
demands.

3. Negotiation

● Both parties discuss and negotiate the proposals in good faith.

● This involves compromise, persuasion, and discussions to resolve
conflicting interests.
● Skilled negotiators play a crucial role at this stage.

4. Agreement
 32
● Once consensus is reached, the terms are drafted into a collective
bargaining agreement (CBA).
● This agreement is reviewed and approved by both parties, often
requiring union member ratification.

5. Implementation

● The agreed terms are implemented, becoming binding for both

parties.
● Employers and employees follow the provisions of the CBA.

6. Monitoring and Renegotiation

● The agreement is monitored to ensure compliance.

● Renegotiations are initiated when the agreement expires or new
issues arise.

Prerequisites of Collective Bargaining

1. Strong and Representative Union

● The union must represent the majority of employees and have the
confidence of its members.
● Weak or fragmented unions undermine the negotiation process.
2. Cooperative Employer
● Employers must acknowledge the union’s legitimacy and
approach negotiations with a willingness to compromise.
● A confrontational attitude can derail the process.
3. Legal Framework
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● Supportive labor laws and institutional mechanisms (e.g.,
mediation, arbitration) are necessary to enforce fair practices.
● Both parties should understand their legal rights and
responsibilities.
4. Mutual Trust and Respect
● A relationship based on trust, respect, and transparency fosters
constructive negotiations.
● Previous positive experiences strengthen trust between parties.
5. Skilled Negotiators
● Both parties should have experienced negotiators who understand
labor issues, organizational dynamics, and negotiation tactics.
● Poor negotiation skills can lead to impasses or suboptimal
outcomes.

Process of Collective Bargaining

The process of collective bargaining typically unfolds in several
stages to ensure effective negotiation and agreement:

1. Preparation
● Both parties (employers and employees/unions) prepare for
negotiations by:
○ Identifying key issues (e.g., wages, benefits, working
conditions).
○ Gathering data, such as market trends, organizational
financials, and past agreements.
○ Formulating objectives and strategies for the negotiation.
2. Presentation of Demands
 34
● The union presents its demands or proposals to the employer.
● Employers may also present their expectations or counter-
demands.
3. Negotiation
● Both parties discuss and negotiate the proposals in good faith.
● This involves compromise, persuasion, and discussions to resolve
conflicting interests.
● Skilled negotiators play a crucial role at this stage.
4. Agreement
● Once consensus is reached, the terms are drafted into a collective
bargaining agreement (CBA).
● This agreement is reviewed and approved by both parties, often
requiring union member ratification.
5. Implementation
● The agreed terms are implemented, becoming binding for both
parties.
● Employers and employees follow the provisions of the CBA.
6. Monitoring and Renegotiation
● The agreement is monitored to ensure compliance.
● Renegotiations are initiated when the agreement expires or new
issues arise.

Prerequisites of Collective Bargaining

Certain conditions must be met for collective bargaining to be
effective and successful:
 35

1. Strong and Representative Union

● The union must represent the majority of employees and have the
confidence of its members.
● Weak or fragmented unions undermine the negotiation process.
2. Cooperative Employer
● Employers must acknowledge the union’s legitimacy and
approach negotiations with a willingness to compromise.
● A confrontational attitude can derail the process.
3. Legal Framework
● Supportive labor laws and institutional mechanisms (e.g.,
mediation, arbitration) are necessary to enforce fair practices.
● Both parties should understand their legal rights and
responsibilities.
4. Mutual Trust and Respect
● A relationship based on trust, respect, and transparency fosters
constructive negotiations.
● Previous positive experiences strengthen trust between parties.
5. Skilled Negotiators
● Both parties should have experienced negotiators who understand
labor issues, organizational dynamics, and negotiation tactics.
● Poor negotiation skills can lead to impasses or suboptimal
outcomes.
6. Economic Stability
 36
● Bargaining must consider the financial realities of the
organization and industry.
● Unrealistic demands or proposals hinder agreement.
9. Effective Communication
● Open and transparent communication ensures both parties
understand each other's positions.
● Miscommunication or lack of clarity can lead to disputes.

Implementation and Administration of Collective Bargaining

Agreements
The success of a collective bargaining agreement (CBA) depends not
only on its negotiation but also on its effective implementation and
administration. Below is a detailed overview of the key steps and
considerations for ensuring agreements are properly executed and
managed.

1. Communication of Agreement
● Dissemination of Terms: Both parties must ensure that the
agreement's terms are clearly communicated to all stakeholders,
including employees, supervisors, and management.
● Training: Supervisors and managers may need training to
understand their roles in enforcing the agreement.
● Transparency: Open communication helps prevent
misunderstandings and fosters trust.

2. Formal Documentation
 37
● The agreement should be documented in clear, concise, and
legally enforceable language.
● Copies should be provided to all relevant parties, including union
representatives and employees.

3. Establishing Roles and Responsibilities

● Management Responsibilities: Ensure that organizational
policies align with the agreement's terms and provide the
necessary resources for implementation.
● Union Responsibilities: Monitor compliance and act as a liaison
between employees and management.
● Joint Committees: In some cases, joint labor-management
committees may be established to oversee specific aspects of the
agreement, such as grievance handling or workplace safety.

4. Policy and Procedure Alignment

● Workplace policies and procedures should be reviewed and
adjusted to comply with the terms of the agreement.
● Inconsistent or conflicting practices should be eliminated.

5. Compliance Monitoring
● Both parties must ensure that the agreement is being followed:
○ For Management: Adhering to wage scales, benefits, safety
standards, and other agreed-upon terms.
○ For Employees: Following agreed-upon work rules and
performance standards.
● Regular audits or reviews may be conducted to assess
compliance.

6. Grievance Handling
 38
● Grievance Procedures: The agreement typically outlines a
process for addressing employee complaints or disputes
regarding its implementation.
● Fair Resolution: Both parties must address grievances promptly
and equitably to maintain trust and prevent escalation.

8. Employee Involvement
● Employees should be encouraged to report non-compliance
issues or suggest improvements for future agreements.
● Active participation ensures the agreement remains relevant and
effective.

Types of Negotiations in Collective Bargaining

In the context of collective bargaining, negotiations can take on
various forms depending on the objectives, attitudes, and strategies of
the parties involved. Among these, a problem-solving attitude plays
a significant role in fostering constructive and mutually beneficial
outcomes. Below are the primary types of negotiations:

1. Distributive Negotiation
● Description: Often referred to as "win-lose" bargaining, this type
involves dividing a fixed amount of resources, where one party's
gain is perceived as the other's loss.
● Example: Negotiating wage increases where higher wages for
employees might reduce profits for the employer.
● Challenges: Can lead to adversarial relationships and a lack of
long-term cooperation.
 39
2. Integrative Negotiation (Problem-Solving Attitude)
● Description: Also known as "win-win" bargaining, this type
focuses on finding creative solutions that satisfy the interests of
both parties.
● Approach:
○ Emphasizes collaboration and mutual respect.
○ Encourages exploring underlying interests rather than fixed
positions.
● Example: Employees may prioritize flexible working conditions,
while employers prioritize productivity. A compromise could
involve hybrid work models.
● Benefits: Builds trust, strengthens relationships, and encourages
long-term partnerships.

3. Concessionary Negotiation
● Description: Involves one or both parties making concessions to
reach an agreement, often in response to financial challenges or
external pressures.
● Example: During economic downturns, unions may agree to
temporary wage freezes in exchange for job security.
● Challenges: Requires trust and good faith to avoid long-term
dissatisfaction.

4. Cooperative Negotiation
● Description: Focuses on cooperation rather than competition,
with both parties working toward shared goals.
● Example: Negotiating workplace safety standards that benefit
both employees and employers by reducing accidents and
associated costs.
 40
● Benefits: Encourages a partnership mindset and promotes
industrial harmony.

5. Positional Negotiation
● Description: Parties take fixed stances and focus on defending
their positions rather than addressing underlying interests.
● Example: Unions demanding a 10% wage increase without
flexibility, while management insists on a 5% cap.
● Challenges: Can lead to impasses and strained relationships if
neither party is willing to compromise.

6. Principled Negotiation
● Description: A structured approach that focuses on:
○ Separating people from the problem.
○ Focusing on interests, not positions.
○ Generating multiple options before deciding.
○ Using objective criteria to evaluate options.
● Example: Negotiating health benefits by comparing industry
standards rather than arbitrary demands.
● Benefits: Encourages fair and rational decision-making.

7. Composite or Mixed Negotiation

● Description: Combines elements of different types of
negotiations depending on the situation.
● Example: Starting with distributive negotiation for wages and
shifting to integrative negotiation for workplace policies.
● Benefits: Provides flexibility to address complex issues
effectively.

8. Problem-Solving Attitude in Negotiations

● Core Principles:
 41
○ Focus on shared interests and long-term relationships.
○ Be open to alternative solutions and creative compromises.
○ Maintain mutual respect and trust throughout the process.
● Outcome: Encourages collaboration, minimizes conflict, and
results in agreements that benefit both parties.
Techniques of negotiation
Negotiation is a process where two or more parties with different
interests seek to reach a mutually acceptable agreement. To be
successful, negotiators need to employ effective techniques that
enhance communication, foster cooperation, and facilitate finding
solutions. Here are some widely used techniques in negotiation:

1. Active Listening
● Description: Actively listening to the other party’s concerns,
needs, and interests without interrupting.
● How it works: Helps to understand the other party's position and
build rapport. It can also reveal underlying interests that could
lead to a more satisfying agreement for both sides.
● Benefits: Builds trust, reduces misunderstandings, and makes the
other party feel valued.
Description: Presenting information in a way that emphasizes the
positive aspects or aligns with the other party’s interests.
How it works: You "frame" the issue in a manner that influences the
perception of the situation, such as presenting a wage increase in
terms of long-term financial stability for the company rather than just
higher costs.
 42
Benefits: Influences the mindset of the other party and can guide the
negotiation towards desired outcomes.

3. Anchoring
● Description: Establishing an initial offer or starting point that
sets the tone for the negotiation.
● How it works: By making the first offer (anchor), you can
influence the negotiation range, and the other party may adjust
their expectations based on this starting point.
● Benefits: Gives you a psychological advantage in negotiations,
as people often focus on the first number they hear (the anchor).

4. BATNA (Best Alternative to a Negotiated Agreement)

● Description: Knowing your best alternative option if the

negotiation fails (your fallback plan).
● How it works: When you understand your BATNA, you are
more confident and can avoid accepting an agreement that
doesn't meet your minimum criteria.
● Benefits: Strengthens your position in negotiations, as you have a
solid backup if an agreement can't be reached.

5. Concessions and Trade-offs

● Description: Offering something in return for receiving
something in exchange.
● How it works: If one party needs to make a concession (e.g.,
agreeing to a lower wage increase), they can request something
else in return (e.g., better benefits or more vacation time).
● Benefits: Builds trust and creates the opportunity for both parties
to feel they have gained something in the negotiation.
 43
Process Of Negotiation

● Preparation: Gather information and discuss plans with other

parties.
● Defining ground rules: Articulate your position and reasons
behind it so both parties understand each other's needs and
expectations.
● Clarification and justification: Explain, clarify, and justify
your original position or demands.
● Bargaining and problem solving: Both parties begin a give-
and-take process, suggesting different offers to the problem.
● Closure and implementation: Formulate the agreement and
execute it.
 44
10 Essential Negotiation Skills

Mastering Negotiation Skills is crucial for success in various aspects of

life. This section covers 10 essential Negotiation Skills that will help
you handle discussions effectively and achieve mutually beneficial
outcomes. Let's explore these key skills.

1) Active Listening
Active listening is one of the fundamental Negotiation Skills that
involves fully engaging with the speaker and understanding their
perspective. It requires giving undivided attention, observing non-
verbal cues, and empathetically comprehending the underlying
message. By actively listening, Negotiators can uncover important
information, identify interests, and establish rapport with the other
 45
party. This Negotiation Skills allows them to respond effectively and
tailor your proposals to meet their specific needs.

2) Effective Communication
Effective communication is paramount in negotiations. It involves
expressing thoughts, ideas, and proposals clearly and concisely. Clear
communication minimises misunderstandings and fosters trust and
understanding between parties. By articulating their perspectives,
actively listening, and using appropriate language, Negotiators can
convey their ideas persuasively and promote mutual comprehension.

3) Preparation and Research

Preparation and research are key components of successful
negotiations. Understanding the negotiation context, the other party’s
interests and relevant market conditions empowers the Negotiators to
make informed decisions. By conducting comprehensive research,
gathering pertinent information, and anticipating potential challenges,
you can develop effective Negotiation Techniques and leverage your
knowledge to achieve favourable outcomes.

4) Problem Solving
Effective Negotiators possess strong problem-solving skills, enabling
them to identify creative and mutually beneficial solutions. Problem-
solving involves analysing complex issues, thinking critically, and
 46
exploring various alternatives. By adopting a collaborative approach
and seeking innovative solutions, Negotiators can overcome obstacles
and find resolutions that meet the needs of all parties.

5) Emotional Intelligence
Emotional intelligence plays a vital role in negotiations. It refers to the
ability to recognise, understand, and manage emotions—both in oneself
and others. Negotiators can navigate sensitive situations with greater
sensitivity and effectiveness by being aware of emotions and employing
empathy. Emotional intelligence facilitates building rapport, diffusing
conflicts, and finding common ground.

6) Flexibility and Adaptability

Flexibility and adaptability are essential Negotiation Skills, particularly
in dynamic and ever-changing environments. Being open to different
perspectives, ideas, and approaches allows Negotiators to adjust their
strategies based on new information and changing circumstances. By
remaining flexible, Negotiators can find innovative solutions and reach
agreements that accommodate the evolving needs and priorities of all
parties involved.

7) Assertiveness
Assertiveness is the ability to express thoughts, needs, and boundaries
confidently while respecting the rights and opinions of others. It allows
 47
Negotiators to advocate for their interests effectively without being
aggressive or overly submissive. Assertiveness promotes mutual
respect, encourages constructive dialogue, and facilitates the
negotiation process.

8) Patience and Persistence

Negotiations can often be time-consuming and challenging. Patience
and persistence are vital qualities for Negotiators. Patience allows for
thoroughly exploring options, understanding different perspectives, and
promoting collaboration. Persistence helps Negotiators navigate
setbacks, overcome obstacles, and work towards achieving mutually
beneficial outcomes.

9) Decision-making
Good Negotiators can make choices quickly and don’t get stuck
overthinking. If you take too long to decide, you might end up just
agreeing to anything to end the stress. Being clear and firm helps keep
things moving smoothly. Quick decisions also show confidence and
decisiveness. Effective decision-making ensures that negotiations stay
on track and reach a timely conclusion.

10) Integrity
Integrity in negotiation also means being consistent and reliable. It’s
about making sure you’re someone others can count on to be fair and to
 48
stick to the rules. When you’re known for your integrity, people are
more likely to trust you and feel comfortable making deals with you.
It’s not just about the current negotiation; it’s about building a
reputation that will last and benefit you in the long run.

Worker’s Participation in Management

1. The Complexity of Technology and Organization

Technology and organizations today are so complex that specialized

work roles are required, making it difficult for people to participate
successfully if they go very far beyond their particular environment.

This means that low-level workers can participate successfully in

operating matters, but they usually have difficulty in participating in
policy matters.
 49
2. Workers Incompetence

Another difficulty arises when workers make proposals in areas where

they are not competent.

Then, when their idea is rejected, they refuse to support whatever

course of action was adopted and soon become alienated.

A related problem is that some workers expect to be consulted on

every issuer, even those to which they cannot contribute.

When they are not consulted, they become resentful and

uncooperative.

3. More Emphasis on Procedures than Philosophy

It is seen that practitioners become lost in the procedures of

participation while overlooking its guiding philosophy.

In fact, participation philosophy requires a sense of involvement and

self-efficiency in the minds of employees.

4. Means of Manipulation

A serious drawback with worker’s participation is that it can be

used to manipulate employees.

This manipulation is not necessarily by management.

It may be manipulation by the union or by experts who are skilled in

group dynamics.
 50
5. Lack of Initiative

Employees lack initiative, expertise, and self-confidence in

participating in managerial decision-making.

6. Unwillingness

The unwillingness of the employers to share power with the worker’s

representatives is also a serious problem.

Workers also remain disinterested.

7. Indifferent Attitude of Government

The perfunctory attitude of the government towards WPM also acts as

a stumbling block in the promotion of participative management.

UNIT-III
TRADE UNION
 51

What is a Trade Union?

• Definition: An organization of workers or employees formed mainly

to Most read 3 Negotiate with the employers on various employment
related issues Improve the terms and conditions at their workplace
Enhance their status in society In most countries, there are laws
governing the formation, membership and administration of trade
unions.

Trade unions:

● negotiate agreements with employers on pay and conditions

● discuss major changes to the workplace such as large scale redundancy
● discuss members' concerns with employers
● accompany members in disciplinary and grievance meetings
● provide members with legal and financial advice
● provide education facilities and certain consumer benefits such as discounted
insurance
 52

ORIGIN & GROWTH OF TRADE UNION MOVEMENT

Industrialization brought about new economic and social order in
societies. TU emerged as a result of industrialization in new social
order First workers' union in India under the leadership of Mr
Lokhande was developed in 1890 Most read 3 Most read Beginning of
labor movement in the modern sense started after the outbreak of
World War I Economic. Political and social conditions influenced the
growth of trade union movement in India. Establishment of ILO
helped the formation of TUs in the country In 1920 AITUC(All India
Trade Union Congress) was formed- the 1ª All India trade union
World War II brought splits in AITUC. Efforts of Indian National
Congress resulted in the formation of INTUC( Indian National Trade
Union Congress) Socialists separated from AITUC formed HMS(Hind
Mazdoor Sabha) in 1948 Some other unions were also formed. They
were BMS (Bhartiya Majdoor Sangh) in 1955, HMP(Hind Majdoor
Panchayat) in 1965, CITU(Centre of Indian Trade Union) in 1970

PRINCIPLE OF TRADE UNION

. UNITY: Unity is strength
2. EQUALITY: Workers must not be Most read discriminated wrt
caste, creed, sex etc. Each worker should get equal pay for equal
work.
3. SECURITY: Security of their employment and their families must
be safeguarded.

Objectives of a Trade Union

1.Collective bargaining Represent members to negotiate with
employers, for better wages and conditions of employment
1. Safeguard jobs
-Protect jobs of members
 53
1. Cooperate with employers
-For the benefits of members,resolve
-disputes in a mutually acceptable manner
4. Political activities
- Support pro-union political parties
5. Social activities
-Support members with recreation facilities and benefits for
unemployment, illness, retirement, death

Types of Unions
1. Craft union
-Same craft or occupation
1. General union
-For unskilled workers
1. Staff union
-Non-manual workers
4. Industry union
-Same industry, regardless of skills, occupation or job
4. House union (company or enterprise union)
All members are from the same company regardless of occupation or

Why Workers Join Unions

1. Higher wages and better working conditions
-Collective bargaining with employer
2. Job security
-More secured with collective agreement
3. Social need
-Meet co-workers from other departments or companies
4. Upgrading of skills
-Attend training courses organized by union
5. Peer pressure
 54
- Colleagues are members
6. Self-fulfillment
- Serve other members

OBJECTIVES/IMPORTANCE OF TRADE UNIONS

Wages & salaries Policy matter but differences in implementation, so
comes the role of trade union
Working conditions
safeguarding workers health: Lighting & ventilation, sanitation, rest
rooms, safety equipments (hazards free atmosphere, drinking water,
refreshments, working hours, leave & rest, holidays with pay, job
satisfaction, social security benefits and other welfare measures
Discipline
Protect workers from victimization by management- transfers,
suspensions, dismissals etc
Personal policies
Fighting against improper implementation of personnel policies wrt
recruitment, selection, promotion, transfer, training etc..
Welfare
Solving difficulties of workers through collective bargaining wrt
sanitation, hospitals, quarters, schools, colleges and other basic
amenities
Employer- employee relations
Bureaucratic attitude and unilateral thinking of mgmt may lead to
conflicts Trade unions go for constant negotiations for industrial
democracy and peace.
Negotiating machinery
Based on 'give and take principle', negotiations continue till parties
reach an agreement. Protect interests of workers through collective
bargainiNg
Safeguarding organizational health
 55
Methods evolved for grievance redressal, techniques adopted to
reduce absenteeism and labor turnover. upgrading skills- attend
training courses organized by unions

TRADE UNION ACT (1926)

● It legalizes the formation of trade unions by allowing employees
the right to form and organize unions and also strengthen
bargaining power of workers
● Act aims to provide law for the registration of trade unions and
get it registered under the act
● Permits any seven persons to form a union

OBJECTIVES
● Lay down conditions governing the registration of trade
unions
● Defines obligations of trade unions
● Prescribe rights and liabilities of a registered trade union

STATUS OF A REGISTERED UNION

● It becomes a body corporate
● It gets a common seal
● It can buy and hold movable and immovable property
● It can enter into contracts with others
● It can sue and be sued in its name

MAJOR PROBLEMS FACED BY BTRADE UNIONS IN INDIA

• Outside or political leadership
•Multiplicity of trade unions
• Small size of unions
• Low membership
 56
• Uneven growth
• Poor financial position
• Low level of knowledge of labor legislation

Procedure for registration

The procedure for registration of a trade union is as follows:
Appointment of Registrars
According to section 3 of the Act, the appropriate government shall
appoint a person to be the Registrar of Trade Unions for each state,
and the appropriate government shall also appoint as many additional
registrars as it may deem fit to carry out the purposes of the Act.

In the case of trade union registration, the trade union is in charge of

the entire registration procedure. The appropriate government may
appoint a person to serve as the registrar of trade unions under Section
3 of the Trade Union Act, 1926. The appropriate government, whether
state or central, may also appoint additional and deputy registrars as it
sees fit to exercise and carry out the registrar's powers and duties.
However, such a person will work under the supervision and direction
of the registrar. He may exercise the powers and functions of the
registrar within the limits specified for this purpose.

Mode of Registration
According to section 4 of the Act, any seven or more members of a
Trade Union in accordance with the provisions of the Act may make
an application apply for registration of the trade union. There are two
conditions subsequent to the same, firstly no trade union of workmen
shall be registered unless at least 10% or 100 of the workmen,
whichever is less engaged in the employment of the establishment are
its members on the date of making of its application and secondly no
trade union shall be registered unless on the date of making of
 57
application, minimum seven of its members who are workmen are
employed in the establishment or industry.
Also, such application shall not be deemed to be invalid merely on
the ground that at any time after the date of the application, but before
the registration of the trade union some of the members but not
exceeding half of the total number of persons who made the
application has ceased to be members.

Application for registration According to section 5 of the Act, every

application for the registration of the trade union shall be made to the
Registrar and shall be accompanied by a copy of the rules of the Trade
Union and a statement of the following particulars namely- 1. The
names, occupations and addresses of the members making the
application; 2. The name of the trade union and the address of its head
office, and 3. The titles, names, ages, addresses and occupations of the
office- bearers of the trade union. Where a trade union has been into
existence for more than a year, then a copy of the assets and liabilities
shall also be submitted along with the application for registration.

Provisions to be contained in the rules of a Trade Union

According to section 6 of the Act, a Trade Union shall not be entitled
to registration under the Act unless the executive committee has been
established in accordance with the provisions of the Act and the rules
provide for the following- 1. The name of the trade union; 2. The
whole of the objects for which the trade union has been established; 3.
The whole of the purposes for which the general funds of the trade
union shall be applicable; 4. The maintenance of a list of the members
of the trade union; 5. The admission of ordinary members who shall
be persons actually engaged or employed in an industry with which
the trade union is connected; 6. The conditions under which any
member shall be entitled to any benefit assured by the rules and under
 58
which any fine or forfeiture may be imposed on the members; 7. The
manner in which the rules shall be amended, varied or rescinded; 8.
The manner in which the members of the executive and the other
office bearers of the Trade Union shall be elected and removed;

9. The safe custody of the funds of the trade union, an annual audit, in
such manner, as may be prescribed, of the accounts thereof, and
adequate facilities for the inspection of the account books by the
office bearers and members of the trade union, and;
10. The manner in which the trade union may be dissolved.

Power to call for further particulars and to require alteration of

name
According to section 7 of the Act, the registrar may call for further
information for the purpose of satisfying himself that whether all the
particulars are in accordance with section 5 and 6 of the Act.

In case the trade union applying for registration bears a name identical
to that of an existing trade union and the registrar feels that the name
so resembles that of the other that there are fairs chances of the
persons being misled then the registrar shall ask the trade union
applying to change the name and shall refuse to register the same until
such alteration has been made.

Registration According to section 8 of the Act, if the registrar thinks

that the trade union has complied with all the provisions of the Act, it
shall register the Trade Union by entering in a register all the
particulars in accordance with the provisions of the Act.

Certificate of registration
 59
According to section 9 of the Act, the registrar shall issue a certificate
of registration to the trade union after registration under section 8
which shall be conclusive proof that a trade union has been duly
registered.

Cancellation of registration
According to section 10 of the Act, a certificate of registration of a
trade union may be cancelled or withdrawn or an application of the
trade union to be verified in such manner as may be prescribed; where
the registrar is satisfied that the certificate has been obtained by fraud
or mistake or the trade union has ceased to exist or has willfully and
other notice from the registrar contravened any provisions of the Act
and if the registrar is satisfied that a registered trade union ceases to
have requisite number of members.

The legal status of trade unions

Is a registered trade union a legal person? In light of the provisions of

Section 13 of the Trade Union Act, 1926, the answer may be given in
the affirmative. It is important to remember that the Trade Union Act
only gives legal status, benefits, and rights to registered trade unions.
An unregistered trade union does not get these things. Further, once a
trade union is registered, all communications and notices to the
registered trade union may be addressed to its registered office.

Privileges and immunities of a registered trade union

Registered trade unions are entitled to certain privileges and

immunity. The Trade Unions Act, 1926, grants members and leaders
of registered unions a number of privileges and immunities. The
 60
registered trade unions' immunities or privileges can be explained
under the following headings:

Immunity from civil liability

This immunity is available to all officers and members of a registered

trade union. No civil action is admissible against them for an activity
related to a trade dispute on the grounds that such an act induces some
other person to breach a contract of employment; or it interferes with
some other person's trade, business, or employment. Further, the
inducement should also be legal and not against the law of the land.
There is no protection from threats, violence, or any other illegal
methods.

Immunity from tortious liability

Torts are considered to be civil wrongs. It can be resolved through a

civil court action. It is distinct from breaches of quasi-contracts,
contracts, and trusts, as well as other equitable obligations (e.g.,
trespass, private nuisance, among others). The Trade Unions Act of
1926, however, provides immunity from tort liability in Section 18(2).
The act that seeks immunity or exemption from tort liability must
advance a trade dispute.
If an agent acted without the knowledge of the executive committee
of the trade union; or against the express instructions of the executive
committee, a registered trade union is not liable for the torts
committed by the agent in furtherance of the trade dispute.

● Rights of registered trade unions

● Right of admission
● Right of representation
 61
● Right to spend general funds
● Right to constitute a separate political fund
● Rights granted to it as a legal person
● Right to inspect books
● Right to amalgamate
● Right to change its name
● Duties and liabilities of a registered trade union
● Duty to make provisions in the rules of certain matters
● Duty to constitute executive as required
● Duty to spend general funds as required
● Duty to constitute a separate political fund
● Duty to provide access to books of trade union
● Duty to send notice to the registrar

UNIT- IV
GRIEVANCE PROCEDURE AND DISCIPLINE MANAGEMENT

1. Grievance Overview
 62
A grievance is a formal complaint or dissatisfaction expressed by an
employee regarding work-related issues. It could relate to unfair
treatment, workplace policies, violations of employee rights, or
dissatisfaction with workplace conditions.
Unresolved grievances can negatively impact employee morale,
productivity, and overall industrial relations, leading to dissatisfaction
or even disputes between employees and management.
Example:
If an employee feels their promotion was unfairly denied despite their
performance, it is considered a grievance.

2. Sources of Grievances
The sources of grievances can be classified broadly into the following
categories:
a) Work Environment
● Unsafe or unhealthy working conditions
● Poor maintenance of workplace hygiene
● Insufficient resources or tools
b) Management Policies
● Biased or unfair promotion criteria
● Lack of transparency in decision-making
● Overlapping or unclear policies
c) Interpersonal Relationships
● Conflicts between colleagues
● Bullying, harassment, or discrimination
 63
d) Compensation Issues
● Delays in salary payments
● Inequitable pay structure
● Conflicts over incentives, bonuses, or overtime pay
e) Violation of Employee Rights
● Breach of employment contracts
● Non-compliance with labor laws
● Disrespect or neglect of employee opinions

3. Approaches to Grievance Machinery

Grievance machinery refers to the structured process through which
employee grievances are identified, reported, and resolved within an
organization. Effective grievance machinery ensures timely, fair, and
impartial handling of employee complaints.
Here are the key approaches:
i) Open-Door Policy
● Employees can approach their immediate manager or a senior
official directly to discuss their concerns.
● This is an informal and flexible approach, often preferred for
resolving minor grievances.
ii) Grievance Committees
● A formal committee, often consisting of employee and
management representatives, is set up to resolve grievances.
● The presence of both parties ensures impartiality and
transparency.
 64
iii) Step-Ladder Procedure
● Grievances are resolved in a step-by-step hierarchical manner.
● The grievance is first raised with the immediate supervisor and, if
unresolved, is escalated to higher authorities like department
heads, HR, or top management.
iv) Union-Based Approach
● In unionized organizations, employees can raise grievances
through trade unions.
● The union represents employees during negotiations or grievance
resolution meetings with management.
v) Arbitration
● When grievances cannot be resolved internally, a neutral third-
party arbitrator is appointed to mediate and make a binding
decision.
● This ensures that the matter is resolved impartially.
vi) Legal and Statutory Approaches
● Indian labor laws like the Industrial Disputes Act, 1947 and the
Factories Act, 1948 provide frameworks for grievance redressal.
● Legal mechanisms are often used when grievances involve
violations of labor laws or contracts.

4. Importance of Grievance Handling

Proper grievance handling is crucial for ensuring smooth industrial
relations and employee satisfaction.
a) Maintains Industrial Harmony
 65
Addressing grievances fosters trust and understanding between
employees and management.
b) Improves Employee Morale
Employees feel valued when their issues are heard and resolved
promptly.
c) Prevents Escalation
Timely grievance redressal helps in preventing minor issues from
turning into major disputes.
d) Reduces Employee Turnover
A grievance redressal system ensures employees feel secure and
motivated, reducing attrition rates.
e) Ensures Legal Compliance
Effective grievance handling mechanisms ensure that organizations
adhere to labor laws, avoiding potential legal disputes or penalties.

Grievance, Procedures, and Model Grievance Procedure

1. What is a Grievance? A grievance refers to an employee's

dissatisfaction or complaint related to any aspect of their job, policies,
or work environment. It can range from minor complaints to major
issues. If not addressed in time, it can lead to organizational conflicts.
Example: Salary issues, unfair treatment, unsafe working conditions,
dissatisfaction with management decisions, etc.
 66
2. Importance of Grievances
● Employee morale: Resolving grievances keeps employees happy
and motivated.
● Industrial harmony: Proper grievance resolution improves
relationships between management and workers.
● Productivity: Satisfied employees contribute to increased
productivity.
● Legal compliance: A systematic grievance-handling process
helps organizations avoid legal disputes.

3. Grievance Handling Process Grievance handling is a systematic

approach to addressing employee issues. The steps in this process are:
1. Identify the grievance: Employees report their problems verbally
or in written form.
2. Investigate the problem: Supervisors or HR personnel analyze the
grievance and gather facts.
3. Propose a solution: Based on the analysis, management proposes
a feasible solution.
4. Communicate the decision: The decision is clearly and promptly
conveyed to the employee.
5. Follow-up: Ensure that the decision is implemented effectively
and that the grievance does not recur.

4. Model Grievance Procedure To prevent industrial disputes, a model

grievance procedure is highly beneficial. The All India Organization
of Employers has suggested a standard model grievance procedure
with the following steps:
 67
1. Step 1: Discussion between employee and supervisor
When an employee has a grievance, they report it to their
immediate supervisor. If resolved at this stage, the process ends
here.
2. Step 2: Appeal to the Departmental Head
If unresolved, the employee takes their grievance to the
departmental head, who reviews the issue and tries to resolve it.
3. Step 3: Approach the Grievance Committee
If the grievance remains unresolved, it is referred to the
Grievance Committee, which consists of representatives from
both management and employees.
4. Step 4: Escalation to Higher Management
If the Grievance Committee fails to resolve the issue, it is
escalated to higher management.
5. Step 5: Voluntary Arbitration
If internal processes fail, the matter is referred to a neutral third-
party arbitrator whose decision is final.

5. Tips for Effective Grievance Handling

● Transparency: Policies and procedures should be clear and well-
communicated.
● Training: Supervisors and managers should be trained in
grievance handling.
● Timeliness: Grievances should be resolved promptly to maintain
workplace harmony.
● Documentation: All grievances should be documented for future
reference.
● Neutrality: Decision-making should be unbiased and fair.
 68
Discipline - Causes of Indiscipline :

Discipline
Discipline refers to the orderly conduct of employees in an
organization, adhering to its rules and regulations. It is essential for
maintaining organizational harmony and achieving business
objectives.

Causes of Indiscipline
Indiscipline arises due to several reasons, such as:
1. Poor Leadership: Lack of effective leadership can lead to chaos
and disobedience among employees.
2. Unclear Rules: When organizational rules are not clearly
defined or communicated, employees may unintentionally violate
them.
3. Injustice: Favoritism, unfair treatment, or biased behavior by
management creates resentment and defiance.
4. Poor Working Conditions: Unsafe or unpleasant work
environments can lead to dissatisfaction and rule-breaking.
5. Personal Issues: Financial or personal problems of employees
often affect workplace behavior.
6. Improper Communication: A lack of transparent and two-way
communication can create misunderstandings and frustration.
7. Union Activities: Over-aggressive or politically motivated union
actions can promote indiscipline.

Maintenance of Discipline
 69
To maintain discipline, organizations should follow these steps:
1. Clear Policies: Establish well-defined rules and communicate
them effectively to employees.
2. Training Programs: Educate employees on organizational
values, code of conduct, and behavioral expectations.
3. Fair Treatment: Treat every employee fairly and equally,
ensuring justice in all decisions.
4. Prompt Action: Address any misconduct immediately to prevent
it from escalating.
5. Positive Reinforcement: Encourage and reward disciplined
behavior to create a culture of compliance.

Principles of Natural Justice

Natural justice ensures fairness in decision-making processes. The key
principles include:
1. Nemo Judex in Causa Sua: No one should be a judge in their
own case to avoid bias.
2. Audi Alteram Partem: Hear both sides of the argument before
making a decision.
3. Reasoned Decisions: Decisions must be logical and based on
evidence, with reasons provided for the outcome.
4. Right to Appeal: Employees should have the opportunity to
challenge a decision they believe to be unjust.

Judicial Approach to Discipline

Courts emphasize:
 70
● Adherence to the principles of natural justice.
● Consistency in the application of disciplinary measures.
● Providing employees with the opportunity to explain their actions
before imposing penalties.

Domestic Enquiries
Domestic enquiries are internal investigations conducted by
organizations to examine cases of misconduct. Key steps include:
1. Issuing a Charge Sheet: Notify the employee of the allegations
against them.
2. Conducting an Enquiry: Form a neutral enquiry committee to
investigate the case.
3. Employee Representation: Allow the accused employee to
present their case and be represented.
4. Recording Evidence: Gather and document evidence for a fair
decision.
5. Issuing a Report: The committee submits findings and
recommendations for action.

Disciplinary Procedures
A systematic disciplinary procedure ensures consistency and fairness:
1. Preliminary Investigation: Assess whether there is a valid
reason for initiating action.
2. Issuance of Notice: Inform the employee of the charges and
schedule for enquiry.
3. Conducting the Enquiry: Ensure transparency and adherence to
natural justice principles.
 71
4. Decision Making: Based on enquiry findings, decide the
appropriate disciplinary action.
5. Communication of Decision: Inform the employee about the
decision and any penalties imposed.
6. Right to Appeal: Provide an opportunity for the employee to
challenge the decision.

Approaches to Manage Discipline in Industry

1. Preventive Approach: Focus on creating a positive work
environment and preventing indiscipline through education,
training, and motivation.
2. Corrective Approach: Address violations after they occur,
aiming to rectify behavior through counseling, warnings, or
penalties.
3. Supportive Approach: Engage employees in discussions to
understand their grievances and collaboratively find solutions.

Principles of the Hot Stove Rule

This rule likens discipline to touching a hot stove, emphasizing four
principles:
1. Immediate Action: Just as a burn occurs instantly when
touching a hot stove, disciplinary action should be immediate.
2. Consistency: The stove burns everyone equally, symbolizing
equal treatment for all employees.
3. Warning: The heat of the stove acts as a warning, just as
employees should be made aware of rules beforehand.
 72
4. Impersonality: The stove does not burn out of anger or bias,
highlighting the need for an objective approach to discipline.

UNIT: - V
Industrial Conflicts
 73
Industrial conflict refers to any dispute or disagreement between
employees and employers or among groups of workers within an
organization. It can be categorized into two major perspectives:
1. Artistic Perspective (Unitarism): This emphasizes the mutual
goals and shared objectives of employers and employees. It
considers conflict as a temporary disturbance and focuses on
fostering harmony in workplace relations.
2. Humanist Perspective (Pluralism): This view acknowledges
that conflicts arise naturally due to differing interests among
various stakeholders, such as management and labor unions. It
seeks to balance these differences through negotiation and
collaboration.
Nature of Conflicts: Conflicts in an organization may arise due to
structural, economic, social, or interpersonal issues. These conflicts
often manifest as strikes, work slowdowns, absenteeism, or disputes
over wages, working conditions, or managerial policies.

Causes and Types of Industrial Conflicts:

1. Causes of Conflict:
○ Wage and salary disputes
○ Unfair labor practices
○ Poor working conditions
○ Lack of communication
○ Power struggles between management and labor unions
2. Types of Industrial Conflicts:
○ Strikes: Employees stop working to demand better wages,
conditions, or policies.
○ Lockouts: Employers temporarily close the workplace to
exert pressure on employees.
 74
○ Picketing: Employees demonstrate near the workplace to
protest against management decisions.
○ Gherao: Workers surround managers or employers to press
their demands.

Prevention of Industrial Conflicts:

Preventing industrial conflicts requires proactive measures such as:
● Effective Communication: Ensuring clear and transparent
communication between management and employees to
minimize misunderstandings.
● Training and Development: Offering leadership and team-
building programs to reduce potential disputes.
● Grievance Redressal Mechanisms: Implementing robust
systems for addressing employee grievances promptly.
● Collective Bargaining: Facilitating open discussions between
employers and labor unions to resolve differences amicably.

Industrial Disputes Act of 1947:

This legislation provides a framework for resolving industrial disputes
in India. Key features include:
● Definitions of industrial disputes, strikes, and lockouts.
● Mechanisms for conciliation, arbitration, and adjudication.
● Rules for establishing works committees, labor courts, and
tribunals.
● Guidelines for prohibiting and regulating strikes and lockouts.
 75
Settlement Machinery for Industrial Disputes:
The Industrial Disputes Act provides several mechanisms to resolve
conflicts:
1. Conciliation: Involves a neutral third party to mediate and bring
disputing parties to an agreement.
2. Arbitration: Disputes are referred to an arbitrator whose
decision is binding on both parties.
3. Adjudication: Labor courts or tribunals provide a legal
resolution to disputes.
4. Work Committees: Internal committees are set up within
organizations to resolve minor disputes.

Paradigm Shift: From Industrial Relations to Employee

Relations:
Over the years, there has been a significant shift from focusing on
industrial relations to broader employee relations. This change
emphasizes:
1. Focus: Moving from conflict resolution to creating a
collaborative and inclusive workplace.
2. Employee-Centric Approach: Recognizing employees as key
stakeholders and fostering their engagement and well-being.
3. Cultural Integration: Promoting a positive organizational
culture where employees feel valued and respected.

Employee Relations Management at Work:

Modern employee relations involve strategies to:
 76
● Build trust and cooperation between employees and management.
● Enhance job satisfaction and employee morale.
● Align organizational goals with employee aspirations.
● Manage diversity and inclusion in the workplace.

Future of Employee Relations:

The future of employee relations lies in:
● Technology Integration: Using digital tools for seamless
communication and performance tracking.
● Flexible Work Practices: Adapting to hybrid and remote work
models.
● Sustainability and Ethics: Emphasizing corporate social
responsibility and ethical practices.
● Continuous Learning: Encouraging employees to upskill and
grow within the organization.

UNIT- VI
Industrial Legislations
 77

❖ Factories Act, 1948

Objective: The primary objective of the Factories Act, 1948, is to
ensure the safety, health, and welfare of workers and to provide them
with better working conditions.
Scope: This Act applies to all establishments where 10 or more
workers are employed and power is used. For non-powered
establishments, a minimum of 20 workers is required.

Key Provisions:
1. Health Provisions (Sections 11-20):
○ Cleanliness: Factories must be kept clean and maintained in
a sanitary condition.
○ Ventilation: Proper ventilation and temperature control are
mandatory.
○ Waste Disposal: Accumulated waste must be disposed of
promptly.
2. Safety Provisions (Sections 21-41):
○ Machinery Safety: Adequate safeguards must be provided
for dangerous machinery.
○ Working at Heights: Safety measures are necessary for work
at high places.
○ Hazardous Processes: Special precautions and training must
be provided for hazardous work.
3. Welfare Provisions (Sections 42-50):
○ Drinking Water: Clean and accessible drinking water must
be available to workers.
○ Canteens: Canteens are mandatory in factories employing
250 or more workers.
○ Restrooms: Suitable restrooms and washing facilities must
be provided.
 78
4. Working Hours (Sections 51-66):
○ The maximum working limit is 48 hours per week and 9
hours per day.
○ Weekly off and overtime wages are mandatory.
5. Employment of Women and Children:
○ Children below the age of 14 are prohibited from working in
factories.
○ Night shifts are restricted for women workers.
6. Inspection and Compliance:
○ Factory Inspectors are appointed to ensure proper
compliance with the laws.

❖ Maternity Benefit Act, 1961

Objective: The purpose of this Act is to provide paid leave and other
benefits to working women during maternity, ensuring their and their
child’s health is protected.
Scope: This Act applies to all establishments employing 10 or more
employees, including factories, mines, and shops.

Key Provisions:
1. Eligibility:
○ Women are eligible for maternity benefits if they have
worked at least 80 days in the last 12 months.
2. Maternity Leave:
○ 26 weeks of paid maternity leave is provided.
○ For women with more than two children, the leave period is
12 weeks.
3. Medical Bonus:
 79
○ Employers must provide a medical bonus of Rs. 3,500 (or
the updated amount) if medical facilities are not provided.
4. Work Restrictions:
○ No hazardous or heavy work is allowed for six weeks after
delivery.
○ Leave is also granted for miscarriage or pregnancy-related
complications.
5. Creche Facilities:
○ Establishments with 50 or more employees must provide
creche facilities.
6. Protection Against Dismissal:
○ It is illegal to dismiss a woman employee during maternity
leave.
○ No salary deduction can occur for claiming maternity
benefits.
7. Penalties for Non-Compliance:
○ Employers violating the law face fines and imprisonment.

Importance in Industrial Relations and HRM:

1. Employee Welfare:
○ Both Acts focus on employee welfare, promoting industrial
harmony.
2. Legal Compliance:
○ HR managers must ensure the implementation of these
provisions to avoid legal trouble.
3. Improved Productivity:
○ A safe and healthy work environment improves
productivity.
4. Attracting and Retaining Talent:
 80
○ Maternity benefits and better working conditions help attract
and retain talented employees.
5. Industrial Peace:
○ Compliance reduces industrial disputes and fosters better
employer-employee relations.

❖ Contract Labour Act, 1970

The Contract Labour (Regulation and Abolition) Act, 1970 is an
important piece of labor legislation in India that aims to regulate the
employment of contract workers and ensure their welfare. Here's a
detailed and comprehensive explanation in Hinglish for your HRM
specialization:

Purpose of the Act

The main purpose of the Contract Labour Act is to regulate the
conditions of work and ensure that contract workers are provided with
proper working conditions, fair wages, and social security benefits. It
seeks to prevent the exploitation of contract workers by their
employers.

Key Provisions of the Act

1. Applicability:
○ The Act applies to establishments that employ 20 or more
workers as contract labor, whether the establishment is in
the private or public sector.
○ It applies to any activity related to manufacturing,
construction, mining, and services where contract labor is
employed.
2. Registration of Establishment:
 81
○ Employers who engage contract labor must register their
establishment under the Act with the appropriate
authorities. This helps in maintaining records and
monitoring compliance.
3. License for Contractors:
○ Contractors who provide contract labor must also obtain a
license from the appropriate authorities before deploying
workers to any establishment.
4. Wages and Payment:
○ The Act ensures that contract laborers are paid at least the
minimum wages fixed by the government.
○ Payment should be made on time and without delay. The
employer must not deduct any amount other than legally
allowed deductions.
5. Health and Safety:
○ The employer is required to maintain safe and healthy
working conditions for the contract laborers.
○ Basic amenities like drinking water, restrooms, and first
aid facilities should be provided.
6. Working Hours:
○ Contract workers are entitled to work under the same
working conditions as regular employees.
○ Their working hours should not exceed the limits set by law
(usually 8 hours per day or 48 hours per week).
7. Abolition of Contract Labour:
○ The government can abolish the employment of contract
labor in certain situations, such as if it’s found to be
exploitative or unnecessary. In such cases, the contractor
may be asked to directly employ the workers.
8. Welfare Measures:
 82
○ The Act requires employers to ensure the welfare of contract
laborers by providing them with facilities like creches for
children, canteens, restrooms, etc. in establishments with
a sufficient number of workers.
9. Social Security:
○ Contract workers are entitled to the same social security
benefits as regular employees, such as provident fund,
gratuity, and insurance, if applicable under the relevant
laws.

Importance for HRM (Human Resource Management)

● Worker Protection: The Contract Labour Act plays a key role in
protecting the rights of temporary or contract workers, ensuring
that they are not exploited or treated unfairly.
● Legal Compliance: For HR professionals, it's crucial to ensure
that their company complies with this law, including the
registration of establishments, obtaining licenses for contractors,
and providing appropriate working conditions.
● Employer’s Responsibility: The Act puts the onus on the
primary employer (the one who hires the contract workers) to
ensure the safety, welfare, and timely payment of wages to
contract workers, creating a more responsible HR management
system.
● Cost Control and Budgeting: Since the Act mandates certain
benefits and protections, HR professionals need to budget for
these costs while hiring contract workers.
● Industrial Relations: Proper implementation of this law helps
maintain good industrial relations by ensuring fairness and
equity in the treatment of contract workers. If ignored, it can lead
to disputes, protests, and even strikes, which can harm an
organization's reputation and productivity.
 83
Challenges and Issues
● Lack of Awareness: Many contract workers and employers are
unaware of their rights and responsibilities under this Act.
● Compliance Issues: Some employers bypass registration, fail to
maintain proper records, or do not provide the necessary welfare
measures.
● Exploitation: In certain sectors, contract workers may still face
exploitation or be denied their legal rights, despite the Act.

❖ Child Labour (Prohibition & Regulation) Act. 1986,

The Child Labour (Prohibition & Regulation) Act, 1986 is a
significant piece of legislation in India aimed at combating child labor
in the country. The Act addresses both the prohibition of child labor in
certain occupations and the regulation of working conditions for
children in others. In the context of Industrial Relations and
Legislations, especially for Human Resource Management (HRM)
specialization in MBA, understanding this Act is crucial because it
directly impacts labor law compliance and organizational
responsibility toward employees, particularly in industries where
children are most vulnerable.
Here’s a detailed explanation of the Act in Hinglish for your MBA
notes:

Child Labour (Prohibition & Regulation) Act, 1986: Overview

This Act is designed to address the issue of child labor in India, where
children are often exploited in various forms of work, particularly in
hazardous conditions. The Act came into force to safeguard children's
 84
rights and promote their welfare by prohibiting their employment in
certain occupations and regulating it in others.

Key Provisions of the Act

1. Prohibition of Child Labour in Hazardous Occupations
(Section 3)
○ Prohibits the employment of children below the age of 14
years in hazardous occupations and processes. This includes
industries like mining, brick kilns, carpet weaving, and
more.
○ Any employer who engages children in such work is subject
to penalties, including imprisonment.
2. Regulation of Employment of Children (Section 4)
○ Children aged between 14 and 18 years are allowed to work
in non-hazardous jobs, but their working hours and
conditions are strictly regulated.
○ These children can only work 6 hours a day, with proper
breaks, and they cannot work during night hours.
○ They should not be engaged in work that could interfere
with their education.
3. Working Conditions (Section 7)
○ Employers are responsible for ensuring that children work in
safe environments, free from exploitation, and without any
health risks.
○ The conditions of work should comply with certain
standards like proper ventilation, sanitation, and safety
measures.
4. Enforcement of the Act (Section 10)
○ The Act grants inspectors the power to visit workplaces and
check if the employment of children is being followed
correctly.
 85
○ The government can take strict action if it finds violations,
including heavy fines and even imprisonment for those
violating the law.
5. Penalties for Violations (Section 14)
○ Employers found guilty of employing children in prohibited
conditions may face penalties, including fines and
imprisonment.
○ Repeated violations attract more severe punishments,
making it clear that the government is serious about tackling
child labor.

Importance for Human Resource Management (HRM)

1. Compliance with Legal Framework:
○ HR professionals must ensure that the organization complies
with labor laws, including the Child Labour Act. This
means no child workers can be employed, especially in
hazardous roles.
○ Organizations need to create policies that align with legal
standards, ensuring that child labor is not a part of the
recruitment process.
2. Ethical Responsibility:
○ HR departments have a moral duty to make sure that their
businesses do not exploit children for labor. The focus
should be on providing safe and fair work conditions for all
employees, regardless of their age.
3. Training and Awareness:
○ It’s essential for HR managers to educate workers about the
law, the risks of child labor, and how they can report
violations. HR should train their staff and management to
avoid any illegal practices that could result in penalties.
4. Internal Audits and Monitoring:
 86
○ Regular audits and checks should be implemented to make
sure that no child labor is being employed within the
organization.
○ HR professionals should also encourage a whistleblowing
culture, where employees can report violations
anonymously.
5. Corporate Social Responsibility (CSR):
○ Companies that follow the guidelines of the Child Labour
(Prohibition & Regulation) Act contribute positively to
society, aligning with the principles of CSR. This enhances
the organization’s image and trust with the public,
stakeholders, and government.

Linking the Act with Industrial Relations

1. Industrial Relations Framework:
○ In industrial relations, the focus is on managing the
relationship between employers, employees, and trade
unions. The Child Labour Act directly affects employer-
employee relations by ensuring that child labor is not a part
of the workforce.
○ Maintaining a child labor-free workplace helps in
maintaining a positive industrial atmosphere, preventing
legal disputes and ensuring smoother relations with trade
unions and labor organizations.
2. Impact on Recruitment Practices:
○ HR professionals must implement policies that ensure only
legal age groups are employed. Recruiting practices should
include verifying the age of employees and ensuring that no
child is exploited in the organization.
3. Welfare of the Workers:
 87
○ Although the primary concern is child labor, the law also
affects how HR deals with worker welfare in general. HR
has to ensure that all workers, regardless of age, work in a
safe and fair environment. The welfare of the workers
should be prioritized.
Industrial Employment (Standing Orders) Act, 1946
The Industrial Employment (Standing Orders) Act, 1946 is a
significant piece of legislation in India aimed at regulating the terms
and conditions of employment in industrial establishments. It is
primarily designed to ensure that both employers and employees are
aware of the rules and procedures that govern their workplace
relationship. Let's break it down in detail for your HRM
specialization.

Key Objectives:
1. Standardization of Employment Conditions: The Act
mandates the employer to define and standardize the rules,
regulations, and conditions of employment for workers in an
industrial establishment.
2. Workplace Discipline: The Act ensures that there are clear
disciplinary procedures in place.
3. Clarity and Transparency: It provides transparency regarding
the terms of employment, making it easier for workers and
management to avoid confusion or disputes.

Scope and Applicability:

● The Industrial Employment (Standing Orders) Act, 1946
applies to every industrial establishment (factories, mines,
plantations, etc.) with 100 or more workers.
 88
● The law applies to establishments where the workers are
employed on a regular basis for working in a factory, workshop,
or any other similar establishment.

Standing Orders:
● Standing Orders are essentially written rules that outline the
working conditions in the establishment. These include the rules
regarding:
○ Hours of work: Maximum working hours, overtime, etc.
○ Wages: How wages will be paid, calculation of wages, and
deductions.
○ Leave: Rules regarding casual leave, annual leave, sick
leave, and holidays.
○ Termination Procedures: Grounds for dismissal,
resignation, and disciplinary actions.
○ Health & Safety: Provisions related to worker safety,
welfare, and working conditions.

Procedure to be followed:
1. Drafting of Standing Orders: The employer is required to draft
standing orders, which are essentially a written code of conduct
governing the industrial relations within the company.
2. Certification of Standing Orders: Once drafted, these standing
orders must be certified by the Certifying Officer, usually
appointed by the government. If the workers or their union has
any objections, they can raise them before the Certifying Officer.
3. Review of Standing Orders: The standing orders must be
reviewed from time to time and updated to reflect the current
working conditions.
4. Penalty for Non-Compliance: If an employer fails to follow the
prescribed standards or does not have certified standing orders,
 89
they may be penalized. The penalty can be in the form of fines,
and they may also face legal consequences if disputes arise.

Benefits:
1. Security for Workers: Workers have a clear understanding of
their rights, duties, and expectations. This transparency reduces
the chances of disputes or conflicts in the workplace.
2. Dispute Resolution: The presence of clear standing orders helps
resolve conflicts more efficiently by referring to the agreed-upon
guidelines.
3. Improved Productivity: When workers know the rules, they can
focus on their work with reduced chances of being mistreated,
leading to improved morale and productivity.

Important Sections of the Act:

1. Section 1(3): The Act applies to industrial establishments
employing 100 or more workers.
2. Section 3: Deals with the preparation and submission of standing
orders by the employer.
3. Section 4: Defines the conditions that must be covered under the
standing orders, including classification of workers, working
hours, and wage structure.
4. Section 7: Empowers the Certifying Officer to certify the
standing orders, and to modify them in case of disputes.
5. Section 8: Specifies penalties for non-compliance or for violating
the standing orders.

HR Implications:
● As part of Human Resource Management, the Industrial
Employment (Standing Orders) Act, 1946 ensures that the HR
department in any organization adheres to a set of clearly defined
 90
rules and conditions related to employee behavior, wages, leave
policies, and more.
● HR professionals need to regularly update the standing orders,
maintain proper records, and ensure that all employees are aware
of these standing orders to prevent any disputes.

Example:
In a manufacturing company with more than 100 workers, the HR
department would be responsible for creating, updating, and certifying
standing orders. These standing orders would define the specific rules
regarding working hours (e.g., 9 AM to 6 PM with a one-hour lunch
break), overtime payment, and leave policies (e.g., 12 casual leaves
per year). Any worker who does not comply with these standing
orders (e.g., arriving late or violating safety protocols) could face
disciplinary action, such as warnings or even termination, depending
on the nature of the violation.

❖ Industrial Employment (Standing Orders) Act, 1946

The Industrial Employment (Standing Orders) Act, 1946 is a key

piece of legislation in India designed to regulate the conditions of
employment in industrial establishments. It plays a vital role in
industrial relations and is significant for Human Resource
Management (HRM), particularly for MBA students specializing in
HR. Here's a detailed and comprehensive explanation in Hinglish:

Industrial Employment (Standing Orders) Act, 1946

The Industrial Employment (Standing Orders) Act, 1946 was passed
to ensure that employers in industrial establishments provide a clear
set of rules for their workers' rights and duties. It aims to maintain
 91
uniformity and transparency in the terms and conditions of
employment in the industrial sector.

Key Provisions of the Act

1. Applicability (Section 1):
○ The Act applies to industrial establishments (factories,
mines, or plantations) with 100 or more workers.
○ It can also apply to establishments with fewer than 100
workers if the government decides so.
2. Standing Orders (Section 3):
○ The Act requires every employer in such establishments to
define and lay down Standing Orders (written terms and
conditions) related to employment practices.
○ These orders must cover matters like working hours, shifts,
wages, leave policies, termination rules, and disciplinary
procedures.
○ These orders should be displayed at a conspicuous place in
the establishment so that every worker is aware of them.
3. Matters to be Covered (Section 3): The Standing Orders should
cover at least the following matters:
○ Classification of workers (permanent, temporary,
probationary, etc.)
○ Grievance redressal procedure
○ Working hours (shift timings, weekly off, holidays)
○ Payment of wages
○ Leave policies (sick leave, casual leave, earned leave)
○ Termination rules (grounds for dismissal, notice periods)
○ Health and safety measures
4. Certification of Standing Orders (Section 5):
 92
○ After drafting, the standing orders must be submitted to the
certifying officer (usually the Labour Commissioner or an
authority appointed by the state government).
○ The certifying officer examines these orders to ensure
compliance with the Act and other relevant laws.
○ If any standing order is found inconsistent with the law or
unfair to workers, it can be modified.
5. Duration of Standing Orders:
○ The Standing Orders once certified remain in force for a
period of 5 years.
○ After this period, the employer can review and revise the
standing orders, but they must go through the certification
process again.
6. Penalty for Non-Compliance (Section 10):
○ If an employer fails to draft and implement standing orders
as per the provisions of the Act, they can face legal
penalties.
○ Similarly, if an employer fails to adhere to the certified
standing orders, they may be fined.
7. Disciplinary Actions (Section 7):
○ The Act allows employers to introduce disciplinary actions
such as warnings, suspension, or even dismissal, but these
actions must be in alignment with the standing orders.
○ There should be clear guidelines for handling misconduct or
violations.

Importance of Standing Orders in Industrial Relations

● Clarity and Transparency: Standing Orders provide workers
with clarity regarding their rights, duties, and conditions of
employment. This helps in reducing disputes and
misunderstandings.
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● Dispute Resolution: By setting out clear guidelines, the Act
provides a structured way to address grievances and disputes
between workers and management.
● Industrial Harmony: Having a formal set of rules promotes
industrial peace and prevents arbitrary actions from the
employer. This is essential for maintaining good industrial
relations.
● Legal Framework: Standing Orders also protect both the
employer and employee, ensuring that the employment contract
is fair, transparent, and legally compliant.

Human Resource Management Perspective

As an HR manager, it's essential to understand and implement the
Standing Orders in the workplace. The role of HR is to:
● Draft and Review: HR is responsible for drafting, reviewing,
and updating the standing orders as per the changing work
environment and legal requirements.
● Disciplinary Procedures: HR must ensure that all disciplinary
actions taken are in compliance with the established standing
orders to avoid legal complications.
● Training and Awareness: HR should conduct training sessions
for workers to ensure they are aware of the standing orders, their
rights, and responsibilities.
● Conflict Management: Standing orders help HR in handling
disputes effectively by referring to the pre-established rules for
conflict resolution.
❖ Employees State Insurance (ESI) Act, 1948
Introduction: The Employees' State Insurance Act, 1948 is a social
security legislation that provides a comprehensive framework to
ensure protection to employees in case of sickness, maternity,
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disablement, or death due to employment injury. It aims to provide
financial security to employees and their families in such
contingencies.
Key Features of the ESI Act, 1948:
1. Scope of Application:
○ The ESI Act applies to factories and establishments where
10 or more employees are employed (10 or more workers
are compulsory for the Act to be applicable).
○ It covers factories, shops, hotels, restaurants, cinemas, and
other commercial establishments.
2. Employee Contributions:
○ Employees contribute a percentage of their wages to the ESI
fund. This contribution is deducted from the employee's
salary.
○ The employer also contributes an equal amount to the fund.
The total contribution rate is 6.5% of the employee's wages
(1.75% by the employee and 4.75% by the employer).
3. Benefits Provided under ESI:
○ Sickness Benefit: Paid to insured employees who are unable
to work due to illness, providing a percentage of wages.
○ Maternity Benefit: Paid to female employees during
maternity leave, ensuring income security.
○ Disablement Benefit: Provided in case of partial or total
disability due to accident at work.
○ Dependents' Benefit: Paid to dependents in case of death of
an insured person due to employment injury.
○ Medical Benefits: Medical care and treatment provided to
insured employees and their families.
4. ESI Hospitals:
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○ The Act provides for the establishment of ESI hospitals and
dispensaries where insured employees can avail of free
medical treatment.
5. Registration and Compliance:
○ Employers are required to register their establishment with
the Employees' State Insurance Corporation (ESIC) and
ensure regular payment of contributions.

❖ Employee Compensation Act, 2013

Introduction: The Employees Compensation Act, 2013 (earlier
known as the Workmen's Compensation Act, 1923) is designed to
provide compensation to employees or their dependents in case of
injury, death, or occupational diseases arising out of and in the course
of employment.
Key Features of the Employee Compensation Act, 2013:
1. Scope of Application:
○ This Act applies to any establishment where employees are
working under a contract of employment. It applies to all
types of workers in factories, mines, and even transport
workers.
2. Nature of Compensation:
○ Death or Permanent Disablement: If an employee dies or
is permanently disabled due to work-related accidents, their
dependents are entitled to compensation.
○ Temporary Disablement: Compensation is provided for
temporary disability that prevents an employee from
working for a certain period.
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○ Occupational Diseases: In cases where the disease is
caused due to working conditions (such as lung disease in
mining work), employees can claim compensation.
3. Amount of Compensation:
○ The compensation amount is calculated based on the
severity of injury and wages of the worker. For death, the
amount depends on the wages and age of the deceased
employee.
○ For permanent disability, compensation varies depending on
the percentage of disability and monthly wages.
4. Time Limits:
○ Employees or dependents must file for compensation within
2 years from the date of the accident or the date of
knowledge of the accident.
5. Employer’s Liability:
○ The employer is required to compensate the employee for
work-related injuries unless it can be proved that the injury
occurred due to the employee’s own negligence or
intentional misconduct.
6. Insurance for Compensation:
○ The employer is encouraged to insure their liability for
workers' compensation through an insurance company.

Relationship between ESI Act and Employee Compensation

Act:
● Both Acts aim to provide social security to employees in case of
work-related incidents. However, the ESI Act is broader as it
also provides sickness and maternity benefits, while the
Employees Compensation Act focuses mainly on work-related
injuries and fatalities.
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● While the ESI Act covers medical treatment and sickness
benefits, the Employee Compensation Act offers compensation
for injury, death, and occupational diseases.
In practice, if an employee is injured on duty, the compensation will
be governed by the Employee Compensation Act. However, the
medical expenses for treatment, including hospitalization, can be
covered under the ESI Act, assuming the employee is enrolled.