Compensation

and Rewards
Management

BLOCK 4
EMPLOYER –EMPLOYEE
RELATIONS

215
Performance and
Compensation
BLOCK 4 EMPLOYER –EMPLOYEE
Management RELATIONS
The importance of creating and maintaining a harmonious workplace
atmosphere cannot be overstated. Conflict and grievance are an unavoidable
feature of any organisation. HR managers are responsible for designing
employee empowerment initiatives, handling grievances, managing
discipline, and dealing with unions in order to create a pleasant working
environment.

In three units, this block addresses all of these aspects of employer-employee

relations.

Unit 12: Employee Empowerment

Unit 13: Grievance Handling and Discipline Management Procedures
Unit 14: Unions And Associations

216
 Employee
IndustrialEmpowerment
Democracy
UNIT 12 EMPLOYEE EMPOWERMENT
Objectives
After completion of the unit, you should be able to:

 understand the concept of employee empowerment;

 understand what empowerment is;
 understand Quality Circles;
 understand workers‟ participation in management;
 discuss forms and levels of participation; and
 describe workers‟participation in management in different countries.

Structure
12.1 Introduction
12.2 Empowerment
12.3 Quality Circle
12.4 Workers‟ Participation in Management
12.5 Workers‟ Participation in Management in India
12.6 Forms of Workers‟ Participation in Management in Different
Countries
12.7 Evaluation of Workers‟ Participation in Management
12.8 Measures for Effective Workers‟ Participation in Management
12.9 Case Study
12.10 Summary
12.11 Self-Assessment Questions
12.12 Further Readings

12.1 INTRODUCTION
Traditional management system is based upon “span of control” and “chain
of command” and “direction and supervision”. Such a system leads to
dehumanised workplaces repetitive, boring, frustrating and alienated
employees. Larger organisations block individual growth, their self-
development and self-identity. Such a situation leads to apathy and waste of
human activities and dysfunctional practices like; restrictive, wasteful and
destructive functioning. In the words of Clearance Francis, Chairman of
General Food Corporation - “You can buy a man‟s time, you can buy a
man‟s physical presence at a given place, you can even buy a measured
number of skilled muscular motion per day or per hour. But you cannot buy
enthusiasm, initiative, loyalty; you cannot buy devotion of hearts, minds and
souls, you have to earn all these things.”
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Employer – New crop of employees, young, intelligent, enthusiastic and ambitious is not
Employee in a position to tolerate such suffocating atmosphere. They are
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knowledgeable workers, they need information, they need participation, and
they need autonomy, challenge and want to contribute. It will be difficult to
hold such employees in traditional organisations. Organisation‟s greatest
asset is its human resources which are least used. An empowering
organisation is required to meet these requirements by adopting the elements
Industrial Democracy. Elements of industrial democracy which are discussed
in this unit are empowerment, quality circle and worker‟s participation in
management.

Contribution of Behavioural Science

According to Maslow, after satisfaction of physiological and safety needs, a
person needs social/affiliation, ego needs satisfaction and self-actualisation.
Douglas McGregor‟s theory “Y” stipulates that a person needs positive
atmosphere, conducive work-culture and encouraging work-ethos to unfold
his potential. Herzberg‟s two- factor theory clearly states that hygiene factors
do not motivate. For motivation another set of factors like autonomy,
challenge, variety, etc. are required. Adam‟s Equity theory talks of parity and
non-discrimination as factors of motivation. The “relatedness” in Alderger‟s
ERG theory clearly says that workers want to relate themselves socially to
get motivated. McClelland‟s need theory has “power”, “achievement” and
“affiliation” as dominant factors for motivation.

Participative management is focussed more on achieving commitment by

providing for all the above mentioned motivational needs than simply
extending decision making power to the employees. It requires a change in
culture, which may include a series of items ranging from access to
information, involvement in decision-making, sharing ownership and
redistribution of rewards, etc. In other words, it amounts to devolution of
power to work place. Power should be used to get work done than to stand
over others. It has a motivational constituent and it has to be used as a
managerial strategy to strengthen employees‟feeling of self-determination or
self-efficacy. In fact, participation is a process of enhancing the feeling of
self-efficacy among employees through identification of conditions that
overcome powerlessness and foster empowerment.

To enable the best in a man to come out, it is necessary for him to know why
he is going certain things and not others and participation is a quest towards
that end. He seeks meaning in his work and place in the organisation and that
he finds in participation and not in traditional management.

12.2 EMPOWERMENT
Empowerment is the process of passing authority and responsibility to
individuals at lower levels in the organisational hierarchy (Well ins et al.,
1991). To achieve empowerment, managers must be sure that employees at
the lowest hierarchi levels have the right mix of information (about process,
quality, customer feedback and events), knowledge (of the work, the business
218 and the total work system), power (to act and make decisions about the
aspects of work) and rewards (tied to business result and growth in the Employee
capability and contribution), to work autonomously or independently of Empowerment

management control and direction (Lawler, 1992; Lawler, 1994; and Lawler
et al., 1989). The advantages of an empowerment or involvement are said to
include higher quality products and services, less absenteeism, lower
turnover, better decision-making and better problem solving which, in turn,
result in greater organisational effectiveness (Dennison, 1984). However, the
question of how much will be empowerment, remains a paradox to be
addressed by managerial judgement (Carnall, 1982).

Characteristics of Empowered Organisation

Companies with a high level of job autonomy usually have the following
characteristics (Finegan, 1993):

 They invest a lot of time and effort in hiring, to make sure new recruits
can handle workplace freedom.Their organisational hierarchy is flat.
 They set loose guidelines, so workers know their decision-making
parameters.
 Accountability is paramount-results matter more than process.
 High quality performance is always expected.
 Openness and strong communication encouraged.
 Employee satisfaction is the core value.

Guidelines for introducing Empowerment

 Understanding why the organisation is making the change and what it
wants to achieve.
 Selecting strong leaders to head the change.
 Involving people in planning how to introduce empowerment.
 Creating transition project teams to test and coordinate efforts and
communicate results.
 Providing training in new skills and behaviours.
 Establishing symbols of change.
 Acknowledging and rewarding achievements.

Benefits of Empowerment
Empowerment benefits the organisation itself by creating an environment
which encourages proactively problem-solving, accepting challenge,
innovation, continuous improvement, optimum utilisation of employees, a
high degree of employee motivation and enhancement of business
performance.

For employees, empowerment provides a sense of high self-esteem, high

degree of involvement and participation, a learning environment opportunity
for personal growth and development and a greater sense of achievement.
Replacing the „fear and greed‟ hierarchy with network of empowered 219
Employer – workers creates benefits like; faster responses, loyal customers, high quality-
Employee lower costs, greater productivity and employee orientation (Carter, 2000).
Relations

Empowerment is an important process in the organisation to foster the

decision- making, issues and to motivate the employees who get immense job
satisfaction. In the contemporary business environment, empowerment is
essential to be more competitive and productive. In most of the organisations,
empowerment is not practised in true spirit because of the absence of a
positive organisational culture that believes in trust, transparency and
employee development. Inspite of a lot of discussion and approval on
empowering employees, in reality it has not been implemented in the true
sense in Indian Corporations. In most of the organisations, the senior
management have preached the relevance of empowerment, but unfortunately
very few of them have actually empowered people. The HR professionals
need to initiate work culture in influencing the organisation to make the step-
down method a success.

Empowerment is catching on among Indian managers. Companies as diverse

as Titan, Reliance, ABB, Tata Information Systems (TISL), GE Plastics India
and Philips are empowering employees-both frontline, as well as production
staff. Wipro Corporation has 29 such teams and their number is expected to
go upto 130. Wipro Infotech, on the other hand, has 10 such teams and the
plan is to hike them to around 45 to 50. At Reliance, divisional heads run
their divisions like; managing directors run their companies.

Activity A: Is your present organisation practicing the concept of

empowerment? If yes, write down its operations.

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

...........................................................................................................................

12.3 QUALITY CIRCLE

There are various forms and styles of participative management. One of them
which is widely applied and practised is „Quality circles‟. The „quality circle‟
concept first originated in USA which was very successfully applied in Japan
afterwards. This technique boosted the Japanese firms to endeavour for high
quality products at low costs.

Let us look at the organization of Quality Circle technique. Basically it

consists of a group organization of eight to ten employees who meet each
other during a meeting which is held one in a week, fortnight or month
depending upon the problems and their frequency of generation. These
members discuss various problems related to quality. They recommend
alternative solutions to solve the problems by investigating the causes.
220
Depending upon the recommendations, corrections are made. Corrections are Employee
checked and then accepted as a norm if the solution works. They generally Empowerment

hold their meeting in the organisation premises. They are generally given a
room where they can meet and think and come out with solution to problems.
These employees basically have a shared area of responsibilities. This leads
to a good participative environment and greater acceptability of decisions.
Since the employees are not very good at analysing and decision making, the
part of quality making, the part of quality circle includes teaching employees
group communication skills, quality strategies and measurement and problem
analysis techniques.

12.4 WORKERS’ PARTICIPATION IN

MANAGEMENT
Workers‟ participation in management is a highly complex concept. The
notion that workers should participate in the management of enterprises
which employ them is not a new concept. It has apparently existed since the
beginning of the industrial revolution. However, its importance increased
gradually over a period of years due to the growth of large-scale enterprises,
increase in work-force, paternalistic philosophy and practice of informal
consultation. Moreover, the growth of professionalism in industry, advent of
democracy, and development of the principle of social justice, transformation
of traditional labour management relations have added new dimensions to the
concept of participative management. The philosophy underlying workers‟
participation stresses: (i) democratic participation in decision-making; (ii)
maximum employer-employee collaboration; (iii) minimum state
intervention; (iv) realisation of a greater measure of social justice; (v) greater
industrial efficiency; and (vi) higher level of organisational health and
effectiveness.

It has been varyingly understood and practised as a system of joint

consultation in industry; as a form of labour management cooperation; as a
recognition of the principle of co-partnership, and as an instrument of
industrial democracy. Consequently, participation has assumed different
forms, varying from mere voluntary sharing of information by management
with the workers to formal participation by the
latter in actual decision-making process of management. Workers‟
participation in management is mental and emotional involvement in group
situation which encourages workers to contribute to group goals and share
responsibility. Participation has three ideas:

i) First, participation means mental and emotional involvement, rather than

mere muscular activity. A person‟s self is involved rather than his body.
It is more psychological than physical.

ii) Second idea in participation is that it motivates persons to contribute to

achievement of organisational goals by creative suggestions and
initiatives.

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Employer – iii) Third area is that it encourages people to accept responsibility. They are
Employee ready to work with the manager, instead of against him.
Relations

To put it briefly, it is team working together for a common purpose, it is a

notion of industrial democracy. Workers have greater say over their work
situation.

Objectives of Workers’ Participation in Management

The objectives of workers‟ participation in management are as follows:

i) To raise level of motivation of workers by closer involvement.

ii) To provide opportunity for expression and to provide a sense of
importance to workers.
iii) To develop ties of understanding leading to better effort and harmony.
iv) To act on a device to counter-balance powers of managers.
v) To act on a panacea for solving industrial relation problems.

Elements of Participation
The term “participation” has different meanings for different purposes in
different situations. McGregor is of the view that participation is one of the
most misunderstood idea that has emerged from the field of human relations.
Keith Davis has defined the term “participation” as the mental and emotional
involvement of a person in a group situation which encourages him to
contribute to group goals and share responsibilities in them. This definition
envisages three important elements in participation. Firstly, it means mental
and emotional involvement rather than mere physical activity; secondly,
participation must motivate a person to contribute to a specific situation to
invest his own resources, such as initiative, knowledge, creativity and
ingenuity in the objectives of the organisation; and thirdly, it encourages
people to share responsibility for a decision or activity. Sharing of
responsibility commits people to ensure the success of the decision or
activity.

Forms of Participation
Different forms of participation are discussed below:

Collective Bargaining: Collective bargaining results in collective

agreements which lay down certain rules and conditions of service in an
establishment. Such agreements are normally binding on the parties.
Theoretically, collective bargaining is based on the principle of balance of
power, but, in actual practice, each party tries to outbid the other and get
maximum advantage by using, if necessary, threats and counterthreats like;
strikes, lockouts and other direct actions. Joint consultation, on the other
hand, is a particular technique which is intended to achieve a greater degree
of harmony and cooperation by emphasising matters of common interest.
Workers prefer to use the instrument of collective bargaining rather than ask
for a share in management. Workers‟ participation in the U.S.A has been
ensured almost exclusively by means of collective agreements and their
222
application and interpretation rather than by way of labour representation in Employee
management. Empowerment

Works Councils: These are exclusive bodies of employees, assigned with

different functions in the management of an enterprise. In West Germany, the
works councils have various decision-making functions. In some countries,
their role is limited only to receiving information about the enterprise. In
Yugoslavia, these councils have wider decision-making powers in an
enterprise like; appointment, promotion, salary fixation and also major
investment decisions.

Joint Management Councils and Committees: Mainly these bodies are

consultative and advisory, with decision-making being left to the top
management. This system of participation is prevalent in many countries,
including Britain and India. As they are consultative and advisory, neither the
managements nor the workers take them seriously.

Board Representation: The role of a worker representative in the board of

directors is essentially one of negotiating the worker‟s interest with the other
members of the board. At times, this may result in tension and friction inside
the board room. The effectiveness of workers‟ representative at the board
depend upon his ability to participate in decision-making, his knowledge of
the company affairs, his educational background, his level of understanding
and also on the number of worker representatives in the Board.

Workers Ownership of Enterprise: Social self-management in Yugoslavia is

an example of complete control of management by workers through an
elected board and workers council. Even in such a system, there exist two
distinct managerial and operative functions with different sets of persons to
perform them. Though workers have the option to influence all the decisions
taken at the top level, in actual practice, the board and the top management
team assume a fairly independent role in taking major policy decisions for the
enterprises, especially in economic matters.

Pre-requisites for Effetive Participation

The pre-requisites for the success of any scheme of participative management
are the following:

 Firstly, there should be a strong, democratic and representative unionism

for the success of participative management.

 Secondly, there should be mutually-agreed and clearly-formulated

objectives for participation to succeed.

 Thirdly, there should be a feeling of participation at all levels.

 Fourthly, there should be effective consultation of the workers by the

management.
 Fifthly, both the management and the workers must have full faith in the
soundness of the philosophy underlying the concept of labour
participation.
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Employer –  Sixthly, till the participative structure is fully accepted by the parties,
Employee legislative support is necessary to ensure that rights of each other are
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recognised and protected.

 Seventhly, education and training make a significant contribution to the

purposeful working of participative management.

 Lastly, forums of participation, areas of participation and guidelines for

implementation of decisions should be specific and there should be
prompt follow-up action and feedback.

Activity B: a) Is your organisation covered by any scheme of participation?

If yes, are they successful?

…………………………………………………………………………….

…………………………………………………………………………….

…………………………………………………………………………….

…………………………………………………………………………….

b) If success level has not been high, what are the reasons?

…………………………………………………………………………….

…………………………………………………………………………….

…………………………………………………………………………….

…………………………………………………………………………….

Effects of Participative Decision-making (PDM)

Following Figure 1 traces the mechanisms through which participative
decision- making affects employee behaviour and attitudes and, in turn,
organisationa1 results.

The Figure 1 suggests that participation improves both employee ability and
motivation. Ability is improved primarily through communication and
information sharing, which results in more informed employees who are
better able to contribute creative ides to the success of the enterprise.
Motivation is improved in part because employees tend to set higher goals
participatively than management does unilaterally and in past because the
process causes individuals to become ego involved, and committed and to
exert pressure on themselves and their co-workers to ensure that their
decisions are sound and their goals are met. The act of participating can also
increase employees‟ sense of trust and control, which may lower their
resistance to new ways of doing things. On the attitudinal side, some find that
participation (like job enrichment) meets their needs for challenge and
accomplishment (growth), causing satisfaction.

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 Figure 1: Mechanisms of PDM Employee
Empowerment
Participating Intervening Mechanisms Effects
Cause

Source: E.A. Locke and D.M. Schweiger

12.5 WORKERS’ PARTICIPATION IN

MANAGEMENT IN INDIA
In our country, the concept of workers‟ participation in management is
comparatively of recent origin even though there were a few instances of
informal joint consultation as early as in 1920‟s in the Government Printing
Press, Tata Iron and Steel Company, Jamshedpur, Indian Aluminium Works,
Belur and in the Railways. The Delhi Cloth and General Mills Ltd. also
introduced workers participation in management in 1938 by having an
elected representative of workers on the Board of Directors of the Mills. The
element of participation was also evident in the Permanent Arbitration Board
at Ahmedabad, where representatives of the Millowners‟Association and the
Textile Labour Association settled many disputes through voluntary
arbitration. The Royal Commission on Labour (1929-31) recommended the
formation of works committees, “which can play a useful part in the Indian
industrial system”. It also suggested the establishment of a joint machinery to
deal with the more general questions, and to act as an advisory appellate body
in respect of disputes which are confined to one establishment. The
recommendations of the Commission bore fruit with the provision of formal
statutory machinery under the Bombay Industrial Relations Act, 1946, and
the Industrial Disputes Act, 1947. The B.I.R. Act, which applies to the textile
industry in Maharashtra and Gujarat, provides for the setting up of join
committees only in units which have a representative union. The U.P.
Industrial Disputes Act, 1947 provides for the formation of works councils in
State government undertakings, employing 100 or more workmen. The 225
Employer – Government of Gujarat by the B.I.R. (Gujarat Amendment) Act, 1972 have
Employee made it compulsory for industrial establishments employing 500 or more
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workmen to set up joint management councils.

Participation/Consultation at the Company and Shopfloor Levels in

India
Since Independence, various schemes have been formulated to provide for
employee participation/consultation at the company and shopfloor levels.
Some of these are discussed below.

1947: Works Committees: The Industrial Disputes Act, 1947 provides for
limited participation of elected representatives of workers in bipartite works
committees with a view to promoting measures for securing and preserving
amity and good relations between employers and workers. Some committees
like the canteen and safety committees are statutory. The functioning of the
committees are, however, not satisfactory due to the lack of clarity about
their scope and functions and conflict between the elected representatives of
the works committees and the trade unions operating in the enterprises.

1958: Joint Management Councils: The Industrial Policy Resolution, 1956

reiterated that, „in a socialist democracy labour is a partner in the common
task of development and should participate in it with enthusiasm. There
should be joint consultation and workers and technicians should, wherever
possible, be associated progressively in management.‟Accordingly, in1958,
Joint Management Councils (JMCs) were introduced. They were supposed to
be responsible for welfare, safety, vocational training, preparation of holiday
schedules, etc. They were also to be consulted on matters relating to changes
in work practices, amendment or formulation of standing orders,
rationalisation, productivity, etc. They did not receive much support from
unions or management and the apparent similarity in the scope and functions
of JMCs and works committees resulted in a multiplicity of bipartite
consultative bodies.

1970: Employee Director in Nationalised Bank: Following the

nationalisation of banks in 1969, the government required all nationalised
banks to appoint employee directors to their boards, one representing the
workmen and the other representing the officers. The scheme entailed the
verification of trade union membership, an identification of the representative
union. The tenure of an employee director was to be three years, though
union membership verification need not occur even once in a decade.

In parallel, the government also began appointing labour representatives to

the boards of several public enterprises; but these representatives had no
direct link with the enterprise in organising the union at the local level and
were drawn from among the national leadership or on the basis of some other
elusive criterion. There was no clarity about the role and function of worker
directors.

1975: Amendment to the Constitution and the Workers’ Participation:

In 1975 the Constitution was amended and Section 43A inserted in the
Directive Principles of the Constitution. The section provided that, „The State
226
shall take steps by suitable legislation or in any other way to secure the Employee
participation of workers in the management of undertakings, establishments Empowerment

or other organisations engaged in any industry.” Accordingly, the Scheme of

Workers‟ Participation in Management at the shopfloor and plant levels in
manufacturing mining industries employing 500 or more workers was
notified in 1975. Shopfloor and plant level councils were assigned specific
functions relating to production and productivity, management of waste,
reduction of absenteeism, safety, maximising machine and manpower
utilisation, etc.

1977: Scheme of Workers’Participation in Management: Another

scheme, broadly similar to the 1975 scheme, was introduced in 1977 and
extended to commercial and service organisations with 100 or more
employees. Both schemes evoked some enthusiasm initially during the
Emergency, but with held soon after the lifting of the Emergency and the
change in government in 1977. In 1978, the new government constituted a
special tripartite committee on workers‟ participation in management which
recommended a three-tier participation at the levels of the board, plant and
shopfloor. But the government did not last long enough to implement the
recommendations.

The 1983 Scheme: In 1983, another new scheme was introduced and made
applicable to all central public sector enterprises, except where specifically
exempted, and a standing tripartite committee was set up by the Ministry of
Labour to facilitate review and corrective measures. Implementation of the
scheme was left to the administrative ministries concerned. Barely half of the
central public sector enterprises introduced the scheme over the next decade,
and several of these atrophied subsequently.

Workers’ Share in Equity, 1985: The 1985-86 Union Budget made

provisions for offering stock options to employees up to a total of at least 5
per cent of the total shares. This was intended to enhance workers‟
participation in management.

The 1990 Bill: The government‟s discontentment with the implementation of

voluntary efforts resulted in the convening of a national seminar and the
subsequent introduction of a bill in the Rajya Sabha in 1990 to introduce
workers‟ participation at all three levels board, plant and shopfloor - through
legislation. The bill is still (September 2000) to be taken up for discussion.

The Second National Commission on labour 2002 has recommended, “The

time has come to legislatively provide for a scheme of workers participation
in management. It may be initially applicable to all establishments employing
300 or more persons. For the smaller establishments, a non-statutory scheme
may be provided.” This was followed by the government intention to pass a
law that makes it mandatory for companies to go for workers participation
and reserve some seats for worker‟s representatives.

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Employer –
Employee
12.6 FORMS OF WORKERS’ PARTICIPATION
Relations IN MANAGEMENT IN DIFFERENT
COUNTRIES
A) Germany: The concept of co-determination („Mitbestimmung‟) in
Germany, in its formal sense, had its origin as early as in 1835 when
Prof. Van Mohl, national economist, advocated for the association of
worker representatives in industry as their spokesmen. Voluntary works
councils were set-up in Germany in four printing works way back in
1850. In 1933, Hitler banned all trade organisations and replaced them
with “Workers Front”. The present system of co-determination had its
real origin when the trade unions were revived after the Second World
War. The trade union demand for parity co-determination led to the
passing of Co-Determination Act of 1951. It introduced co-determination
on the basis of parity restricting it to coal and steel industry.
Subsequently, in 1952 the Works Constitution Law was passed making it
applicable to all industries. This law gave certain co-determination rights
to the works councils. The Works constitution Law was modified in
1972 which further extended the co-determination rights of the works
councils to various personnel and economic matters. Thus, the parity
determination in iron and steel industry was governed by the Co-
determination Law of 1951 and 1956 and in other industries Works
Constitution Laws of 1952 and 1972. It became a matter of debate till
1975 whether co-determination should be extended to all industries and,
if so, in what form. However, in April, 1976, all the parties concerned
came to an agreement and a new law was passed extending co-
determination to all industries. The law came into force in July, 1976.
Now co-determination has taken deep roots in the former Federal
Republic of Germany and has become a way of life. Under German law,
each company has a two tier board system consisting of a supervisory
board and a management board (Figure 2).

Figure 2: Co-determination in German Companies

GENERAL MEETING
Exclusive body of shareholders

SUPERVISORY BOARD
Consisting of parity representation of shareholders‟
representatives and workers‟ representatives

BOARD OF MANAGEMENT
WORKS COUNCIL

Exclusive body of employees

i) General Meeting: It is an annual meeting of all shareholders where all

matters pertaining to capital, stock, liquidation, election to the
supervisory board, annual balance sheet, and so on are discussed.
Members of the supervisory board are elected by the shareholders‟
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 general meeting or appointed by certain shareholders or a class of Employee
shareholders. Empowerment

ii) Supervisory Board: It consists of employees‟ and shareholders‟

representatives.The workers‟ representatives on the supervisory board
are elected by the employees of the company through a system of
“electoral panels”. Thenumber of members may range from a minimum
of 3 to a maximum of 20 depending on the size of the enterprise.

Supervisory boards with 20 members are prescribed for companies

employing more than 20,000 workers. The chairman of the supervisory
board is elected by the shareholders‟ representatives. It is stipulated that
at least 2 members representing the workers on the supervisory board
should be from the plant itself, representing on each from the blue-collar
and white-collar workers. Among the remaining workers, trade union
executives from outside may also be elected. The supervisory board
appoints and controls management board and approves decisions of
major importance as provided by the byelaws of the company concerned.
Supervisory Board, normally meets four or five times a year. The board
gives decisions on important matters such as the closure of plants, the
opening of new plants, large investments, and major changes of product.

iii) Board of Management: It normally comprises 3 directors representing

technical, financial and labour. Its members are full-time and are not
allowed to sit on the supervisory board. Its main responsibility is the day-
to-day operations of the enterprise. One of the directors on the board
represents labour. His functions usually comprise personnel
administration and personnel planning as well as social matters. His
strength on the board of management is derived from the support he has
of the works council and the workers‟ representatives on the supervisory
board. Though the management board usually makes the major policy
decisions on such things as mergers, takeovers, closure of plants,
increases of capital and overall manpower planning, the supervisory
board has to formally approve such decisions.

iv) Works Council: The works council is not a management body like the
supervisory board or the board of management. It is not a joint body. Its
representatives are elected by secret ballot by the entire work-force, both
unionised and non-unionised. The constitution and functions of a works
council are governed by the Works constitution Act. Under this Act,
every plant employing more than five employees is required to elect a
works council through ballot. In firms with several establishments, a
central council has to be established. All employees with one year of
service are eligible to vote. The number of representatives on the council
may vary from 1 to 35 depending upon the size of the plant. The
workers‟ representatives are elected for a period of three years. The
members of works council need not be members of a trade union. The
council elects a chairman and a deputy chairman from along the
members. In most cases, the chairman of the works council is also a
member of the supervisory board. The works council represents workers‟
interest whether they are members of a trade union or not. The employers 229
Employer – and works council members work together in trust and mutual
Employee understanding within the framework of existing collective agreements.
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As per law, works council members work together in trust and mutual
understanding within the framework of existing collective agreements.
As per law, works councils have to refrain from taking certain militant
measures. It has no right to call a strike. The employer and works council
meet once in a month to hold discussion and settle disputes.

The works council plays an important role in workers‟ participation and

in maintaining sound industrial relations. It is the obligation of a
company to provide the works council with necessary facilities to do its
job effectively. The council has the right to decide with the management
certain issues concerning job evaluation, working hours, welfare,
training, recruitment and dismissal, vacations, transfers, location of new
plants, and changes in production methods.

It has co-determination rights, cooperation rights, and rights of

information. It is much closer to the workers, and is the most important
body for co-determination in Germany. Besides formal functions spelt
out in law, it performs scores of informal tasks and these are accepted by
the management. For example, it can propose any scheme considered to
be beneficial to the establishment or the staff. The works council is
responsible to the Works Assembly composed of all workers and
employees of a firm. It meets once in three months, and on that occasion
the works council has to present a report on its activities. The Works
constitution Act emphasises that “the works council and management
shall work together in a spirit of mutual trust” and “shall discuss matters
at issue with an earnest desire to reach agreement and make suggestions
for settling their differences”. No one is allowed to exercise pressure on
the other.

Labour-management relations in the Germany are expressed at two

different levels simultaneously. One at the industry level, between
employers‟organisation and trade unions, and second, at the enterprise
level, between employees and works councils. Employers‟ organisations
insist that these two hierarchies be kept separate. The concept of co-
determination can be fully understood only against the background of the
two distinct levels of industrial relations set-up. At the industry level the
trade unions playa role in collective bargaining functions.

At the enterprise level, both employers and the works councils sit
together the co- determination table.

B) Yugoslavia: Workers‟ self-management in Yugoslavia dates back to

1949 when President Marshal Tito dissented from the Russian authority.
He emphasised the need for the development of a distinctively
Yugoslavian system with a complete departure from that of the
bureaucratic Russian system of state ownership. In fact, the system of
social ownership in Yugoslavia differs from most other socialist
societies. In Yugoslavia, enterprises are owned by society as a whole,
and the management of an enterprise is delegated by society to the
230
 workers‟ collective, those people who work in it and create social wealth. Employee
The basic decisions about a firm, including decisions about the purchase, Empowerment

supplies, and the pricing of products are made within the firm itself
rather than by a centralised federal agency. The trade unions have no
direct role in the management of the enterprise, but they have the right to
submit lists of candidates for election to the workers‟ council. Their
approval is necessary for the council‟s decisions relating to wages and
distribution of the surplus. The trade unions are consulted at a higher
level on legislation in the area of labour. The workers‟ councils are free
to take their own decisions in most of the matters without trade union or
party interference. The main goal of yugoslavia self-management is
defined in preamble of the constitution as the “liberation of work”. The
major institutions under Yugoslavian model are workers‟ council,
management board, director and local people‟s committee.

i) Workers’ Council: The first law of self-management introduced in 1950

provided for a workers‟ council in each enterprise, consisting of 15 to
120 persons, depending on the size of the enterprise. The council
includes the director of the firm as an ex-officio member. They are
elected by the workers‟ and the staff for a term of 3 years. The council is
designed to represent all employees in the decision-making process,
although initially it was a consultative body with limited jurisdiction.
The council is the supreme operative authority in an enterprise, and is
responsible only to the workers‟ collective as a whole. The basic
objective of the council is to formulate a general policy for the
involvement of the workers within the organisation. Its major duties
include adoption of statute, development plans and programmes,
decisions on the basic issues of operational policy, adoption and approval
of financial statements of the enterprise, decisions concerning merger of
the enterprise with other enterprises, supervision of the work of the
management board, and so on.
ii) The Management Board: the management board is the executive organ
of the workers‟ council. It comprises a minimum of five members
elected from among the members of the workers‟ council. The director is
an ex-officio member of the board. At least three-fourths of its members
belong to workers directly engaged in production, or the basic activities
of the undertaking. They continue their normal jobs during the period of
their tenure as members of the board. Its main function is to manage the
enterprise in accordance with the policy laid down by the council. It is
responsible for the efficient running of the enterprise. The board
generally draws up the production plan, determines the internal
organisation of the enterprise and formulates proposals for discussion in
the workers‟ council.

iii) The Director: The role of a director in Yugoslavia system is of crucial

importance. The director of an enterprise is at the apex of the
organisational structure. He is selected for a tenure of four years by the
council and the local people‟s committee. He can also be reappointed. He
is recruited through open competition on the basis of advertisement in
231
Employer – the press and professional publications, and other appropriate channels.
Employee The workers‟ council may remove a director for inefficiency or
Relations
incompetence. The director being the chief executive is responsible for
implementing the decisions of the workers‟ council and the management
board. He has to ensure the profitably management of the enterprise.

iv) The People’s Committee: This committee of the local people has a say in
the appointment of the director as well in the enterprise. They may
provide investment funds for the establishment. In case the enterprise is
unable to pay the statutory minimum wage to its workers, the people‟s
committee takes the responsibility to provide for the difference. This
committee is powerful enough to intervene in the management and to
dissolve the workers‟ management.

The greatest achievement of social self-management in Yugoslavia is

prevention of workers‟ exploitation. It has instituted in the minds of
workers a sense of belongingness to the enterprise. Industrial conflicts
are less as compared to other European countries where there is no self-
management. The social and economic content of self management is the
democratisation of production and social relations. It is the most
comprehensive one operating to date and is a unique example of social
engineering which has produced a web of self-management structures
and procedures.

12.7 EVALUATION OF WORKERS’

PARTICIPATION IN MANAGEMENT
The various schemes of workers‟ participation in management have failed to
live up to the expectations of employers and employees. After reviewing the
literature in the field Zakeer (1980) has provided the reasons for the failure of
the concept in India thus; (i) lack of understanding of the concepts, (ii) rigid
attitude of the employees, (iii) vagueness of the legal definitions, scope and
functions of these bipartite forums, (iv) half-hearted implementation of
decisions arrived at these forums, and (v) the suspicion in the minds of trade
union leaders, that industrial democracy would fragment their authority and
weaken their hold over union members.

12.8 MEASURES FOR EFFECTIVE WORKERS’

PARTICIPATION IN MANAGEMENT
In order to make workers‟ participation in management a success, certain
conditions should be satisfied, which are discussed below.

Managerial attitude: There is an urgent need to offer training and education

to workers and employees to make the participative culture a success. The
employers should be willing to share information and shed a portion of their
hard-earned authority in favour of workers. Workers are uninformed and lack
experience. The employers therefore must make conscious efforts to bring
them up to a certain level before drawing them to the negotiating table. To
232 earn their respect and trust, management must involve workers by: (1)
identifying a clear cut agenda where the roles of participants are clearly Employee
defined, (2) developing guidelines for decision-making by the joint Empowerment

management councils, (3) defining the roles of office bearers as against trade
unions, (4) Keeping employees informed of all decisions arrived at, their
implementation and the outcomes, and (5) evaluating the progress of joint
councils from time to time.

Union co-operation: The workers participation scheme, to be effective, must

be based on mutual trust and confidence between unions and management.
Unions must believe that participative forums are not meant to cut their roots.
To this end, management must try to define the boundaries clearly. To be
fair, they must give due representation to members from the recognised union
without playing favourites. In a multiple union situation, this issue assumes
added significance in that the employer can influence the election of
representatives to the participative forums by aligning with their own „yes
men‟ from the ranks and file Not all unions agree now to the election of
representatives through secret ballot (INTUC opposes this; HMS, CITU,
AITUC support the move).

Meaning participation: If participation relates to only tea, towels and toilets

as the Indian experience clearly shows - it does not serve any purpose. To be
useful, participation should cover a wide range of issues where workers can
openly represent their cases and seek quick solutions on the spot. Further, the
participative forums should not be mere consultative and advisory bodies,
dealing with peripheral, insignificant, routine issues relating to labour
welfare. Workers must have a real „say‟ in all important work-related matters
including grievance handling and then only they begin to participate in these
participative bodies with zeal and enthusiasm.

Workers’ attitudes: Workers must have complete faith in the efficiency of

the system. To encourage a participative culture among workers, seminars,
conferences, workshops must be held highlighting the usefulness of
participation. Workers must have a sense of job security and freedom from
reprisals resulting from their participation. The overall working environment
must be congenial enough to inspire the workers to give their best to the
organisation.

12.9 CASE STUDY: WORKERS’

PARTICIPATION IN MANAGEMENT IN
TISCO
In some of the organisations, the scheme of workers‟ participation in
management (WPM) has proved to be a „hit‟. Let us briefly examine the
experience of TISCO.
In 1982 TISCO celebrated the first silver jubilee of workers participation
scheme. Right from inception TISCO firmly believed in achieving success
through employee involvement and participation in organisational work. To
regulate employer-employee relations, two forums are consistently put to use;
i.e., wage related issues through collective bargaining forum and safety,
welfare, working conditions, cost saving efforts, etc., through participative 233
Employer – forum. Since 1957, WPM at TISCO has been funtioning at three levels: Joint
Employee Departmental Council (JDC), Joint Worker Councils (JWC), and Joint
Relations
Consultative Council. There are over 40 joint-departmental councils
operating at the base level - one to discuss production and productivity
related issues and another to discuss safety and welfare matters. The Joint
Worker Councils review the working of JDCs and JWCs, at periodic
intervals. These councils consist of representatives of labour and
management in equal number. WPM has succeeded in TISCO because the
management stood behind the scheme firmly right from the beginning.
The presence of single, strong union has also created a congenial atmosphere
for improving relations between labour and management greatly.
Management has created special task forces to oversee that the councils‟
functions do not overlap. Special training is being offered to prepare workers
for participative „give and take‟ sessions. Spurred by these encouraging
initiatives, workers have also come out with highly useful, cost-saving
suggestions arrived at improving overall productivity from time to time.
Generally over 70 per cent of these suggestions are actually implemented
with great success!

12.10 SUMMARY
In this unit, we have tried to discuss the importance of industrial democracy.
It has different forms such as empowerment, quality circle, workers‟
participation in management etc. We have touched upon the organisation,
function and benefits of all these schemes of industrial democracy. Also,
workers‟ participation in management in Germany, Yugoslavia, as well as in
India have been discussed.

12.11 SELF-ASSESSMENT QUESTIONS

1) What is the rationale for industrial democracy?
2) Review the schemes of industrial democracy.
3) Discuss the function of quality circle to achieve democracy at workplace,
citing suitable examples.
4) What are the levels and forms of workers‟ participation in management?
5) Compare the forms of workers‟ participation in management in Germany
and Yugoslavia.

12.12 FURTHER READINGS

Industrial Labour Office, Workers’ Participation in Decisions Within
Undertakings, Geneva, 1983.
Thakur, C.P. and K.C. Sethi (ed.), Industrial Democracy: Some Issues and
Experiences, Shri Ram Centre for Industrial Relations and Human Resources,
New Delhi, 1973.
Virmani, B.R., „Workers Participation in Management: A New Perspective‟,
Indian Journal of Industrial Relations, Vol. 13, 1978.

234
 Grievance
UNIT 13 GRIEVANCE HANDLING AND Handling and
Discipline
DISCIPLINE MANAGEMENT Management
Procedures
PROCEDURES

Objectives
After completion of the unit, you should be able to:

 understand the importance of grievance handling in an organisation;

 describe the concept of irrespective grievance-handling;
 discuss the importance of personal & family oriented grievances;
 understand the concept of Discipline Management; and
 describe the discipline management processes.

Structure
13.1 Introduction
13.2 Dissatisfaction, Complaint and Grievance
13.3 Forms of Grievance
13.4 Causes of Grievance
13.5 Effects of Grievance
13.6 The Discovery of Grievance
13.7 Grievance Handling Procedure
13.8 Grievance Management in Indian Industry
13.9 Concept and Meaning of Discipline
13.10 Indiscipline
13.11 Purpose and Objectives of Disciplinary Action
13.12 Disciplinary Action Procedure
13.13 Legal Provisions Relating to Discharge or Dismissal
(Under Industrial Disputes Act, 1947)
13.14 Summary
13.15 Self Assessment Questions
13.16 Further Readings

Appendix 1. Model Grievance Procedure

13.1 INTRODUCTION
In their working life, employees do get dissatisfied with various aspects of
working may be with the attitude of the manager, policy of the company,
working conditions, or behaviour of colleagues. Employers try to ignore or
suppress grievances. But they cannot be suppressed for long. Grievance acts
235
Employer – as rust which corrodes the very fabric of organisation. An aggrieved
Employee employee is a potent source of indiscipline and bad- working. According to
Relations
Julius, a grievance is “any discontent or dissatisfaction, whether expressed or
not, whether valid or not, arising out of anything connected with the company
which an employee thinks, believes or, even feels to be unfair, unjust or
inequitable.”

13.2 DISSATISFACTION, COMPLAINT AND

GRIEVANCE
To understand what a grievance is, you must clearly be able to distinguish
between dissatisfaction, complaint and grievance. Torrington (1987) provides
us with a useful categorisation in this regard:

 Dissatisfaction: Anything disturbs an employee, whether or not the

unrest is expressed in words.

 Complaint: A spoken or written dissatisfaction brought to the attention

of the supervisor or the shop steward.

 Grievance: A complaint that has been formally presented to a

management representative or to a union official.

In addition, there are other definitions of a grievance that distinguish it from

the other two. Few such definitions are:

 A grievance is a formal dispute between an employee and management

on the conditions of employment. (Glueck, 1978)

 Grievances are complaints that have been formally registered in

accordance with the grievance procedure. (Jackson)

 A grievance is any dissatisfaction or feeling of injustice in connection

with one‟s employment situation that is brought to the attention of the
management (Beach 1980).

Therefore, you will see that a grievance is a formal and a relatively drastic
step, compared to dissatisfactions and complains. However, instances where
complaints turn into grievances are not common, since few employees will
question their superior‟s judgement. Further, many people do not initiate
grievances because they fear negative consequence as a result of their
attempt.

Features
If we analyse these definitions of grievance, some noticeable features emerge
clearly:

a) A grievance refers to any form of discontent or dissatisfaction with any

aspect of the organisation.
b) The dissatisfaction must arise out of employment and not due to personal
or family problems.
236
c) The discontent can arise out of real or imaginary reasons. When the Grievance
employee feels that injustice has been done to him, he has a grievance. Handling and
Discipline
The reasons for such a feeling may be valid or invalid, legitimate or Management
irrational, justifiable or ridiculous. Procedures

d) The discontent may be voiced or unvoiced. But it must find expression in

some form. However, discontent per se is not a grievance. Initially, the
employee may complain orally or in writing. If this not looked into
promptly, the employee feels a sense of lack of justice. Now the
discontent grows and takes the shape of a grievance.

e) Broadly speaking, thus, a grievance is traceable to perceived non-

fulfillment of one‟s expectations from the organisation.

13.3 FORMS OF GRIEVANCES

A grievance may take anyone of the following forms:

a) Factual: A factual grievance arises when legitimate needs of employees

remain unfulfilled, e.g., wage hike has been agreed but not implemented
citing various reasons.

b) Imaginary: When an employee‟s dissatisfaction is not because of any

valid reason but because of a wrong perception, wrong attitude or wrong
information he has. Such a situation may create an imaginary grievance.
Though management is not at fault in such instances, still it has to clear
the „fog‟ immediately.

c) Disguised: An employee may have dissatisfaction for reasons that are

unknown to himself. If he/she is under pressure from family, friends,
relatives, neighbours, he/she may reach the work spot with a heavy heart.
If a new recruit gets a new table and almirah this may become an eyesore
to other employees who have not been treated likewise previously.

13.4 CAUSES OF GRIEVANCES

Grievances may occur for a number of reasons:

a) Economic: Wage fixation, overtime, bonus, wage revision, etc.

Employees may feel that they are paid less when compared to others.

b) Work Environment: Poor physical conditions of workplace, tight

production norms, defective tools and equipment, poor quality of
materials, unfair rules, lack of recognition, etc.

c) Supervision: Relates to the attitudes of the supervisor towards the

employee such as perceived notions of bias, favouritism, nepotism, caste
affiliations, regional feelings, etc.
d) Work group: Employee is unable to adjust with his colleagues; suffers
from feelings of neglect, victimisation and becomes an object of ridicule
and humiliation, etc.
237
Employer – e) Miscellaneous: These include issues relating to certain violations in
Employee respect of promotions, safety methods, transfer, disciplinary rules, fines,
Relations
granting leave, medical facilities, etc.

The Table 1 describes the classification and causes of grievances.

Table 1: Classification and Causes of Grievances

Classification Causes

1) Wage grievances - demand for individual wage

adjustment
- complaint about job classification
- complaint about incentive system
- miscellaneous
2) Supervision - complaint against discipline
/ administration
- complaint against behaviour of
supervisor
- objection to the method of supervision
3) Working conditions - safety and health
- violation of rules and regulations
- miscellaneous
4) Seniority and promotion - loss of seniority and transfers
- calculation/interpretation of seniority
- promotion - denial or delay
- transfer or change of shifts
5) Discipline - discharge/dismissal/layoffs
- alcoholism, absenteeism and accidents
- harshness of punishment and penalty
6) Collective bargaining - violation of contract/award/agreement
- interpretation of contract/ award
/agreement
- settlement of grievances
7) Union management - recognition of union relation
- harassment of union bearers
- soldiering / go-slow tactics

Jackson traces the causes of grievances as arising from the following issues:
 working environment e.g., light, space, heat.
 use of equipment, e.g., tools that have not been properly maintained.
 supervisory practices, e.g., workload allocation.

238
 personality clashes and other inter-employee disputes (work-related or Grievance
otherwise). Handling and
Discipline
 behaviour exhibited by managers or other employees, e.g. allocation of Management
Procedures
„perks‟ such as Sunday overtime working, and harassment, victimisation,
and bullying incidents.
 refused requests, e.g., annual leave, shift changes.
 problems with pay: e.g. late bonus, payments, adjustments to overtime
pay perceived inequalities in treatment: e.g., claims for equal pay,
appeals against performance related pay awards.
 organisational change, e.g., the implementation of revised company
policies or new working practices.

The authors stress that all these causes should be investigated to achieve the
following twin objectives:

 redress the grievances of the complainant.

 initiate remedial steps to prevent recurrence of similar grievances in the
future.
Different aspects of grievance are as follows:

1) Organisational aspects: Organisational structure, policy plans and

procedure.

2) Informational aspects: Ignorance about company rules, regulations,

promotion policies, career prospects, transferability etc.

3) Human aspects: A variety of reasons, the major ones being poor mental
health and attention.

13.5 EFFECTS OF GRIEVANCE

Grievances, if they are not identified and redressed, may affect adversely the
workers, managers and the organisation. The effects are:

1) On production include:

 Low quality of production.

 Low quality of production and productivity.
 Increase in the wastage of material, spoilage/leakage of machinery.
 Increase in the cost of production per unit.

2) On the employees:

 Increases the rate of absenteeism and turnover.

 Reduces the level of commitment, sincerity and punctuality.
 Increases the incidence of accidents.
 Reduces the level of employee morale.
239
Employer – 3) On the managers:
Employee
Relations  Strains the superior-subordinate relations.
 Increases the degree of supervision, control and follow up.
 Increases in discipline cases.

Increase in unrest and thereby machinery to maintain industrial peace.

Beach also refers to several reasons why there should be a formal procedure
to handle grievances:

 All employee complaints and grievances are in actual practice not settled
satisfactorily by the first level supervisor, due to lack of necessary
human relations skills or authority to act.

 It serves as a medium of upward communication, whereby the

management becomes aware of employee frustrations, problems and
expectations.

 It operates like a pressure release valve on a steam boiler, providing the

employees with an outlet to send out their frustrations, discontents and
grips.

 It also reduces the likelihood of arbitrary action by supervision, since the

supervisors know that the employees are able to protest such behaviour
and make their protests heard by higher manager.

The very fact that employees have a right to be heard and actually heard
helps to improve morale.

13.6 THE DISCOVERY OF GRIEVANCES

Grievances can be uncovered in a number of ways. Gossip and grapevine
offer vital clues about employee grievances. Ripe boxes, open door policies
periodic interviews, exit surveys could also be undertaken to uncover the
mystery surrounding grievances. These methods are discussed below:

a) Observation: A manager / supervisor can usually track the behaviours of

people working under him. If a particular employee is not getting along
with people, spoiling materials due to carelessness or recklessness,
showing indifference to commands, reporting late for work or is
remaining absent - the signals are fairly obvious. Since the supervisor is
close to the scene of action, he can always find out such unusual
behaviours and report promptly.
b) Grievance procedure: A systematic grievance procedure is best means to
highlight employee dissatisfaction at various levels. Management, to this
end, must encourage employees to use it whenever they have anything to
say. In the absence of such a procedure, grievances pile up and burst up
in violent forms at a future date. By that time things might have taken an
ugly shape altogether, impairing cordial relations between labour and
management. If management fails to induce employees to express their

240
 grievances, unions will take over and emerge as powerful bargaining Grievance
representatives. Handling and
Discipline
c) Gripe boxes: A gripe box may be kept at prominent locations in the Management
Procedures
factory for lodging anonymous complaints pertaining to any aspect
relating to work. Since the complaint need not reveal his identity, he can
express his feelings of injustice or discontent frankly and without any
fear of victimisation.
d) Open door policy: This is a kind of walk-in-meeting with the manager
when the employee can express his feelings openly about any work-
related grievance. The manager can cross-check the details of the
complaint through various means at his disposal.
e) Exit interview: Employees usually leave their current jobs due to
dissatisfaction or better prospects outside. If the manager tries sincerely
through an exit interview, he might be able to find out the real reasons
why „X‟ is leaving the organisation. To elicit valuable information, the
manager must encourage the employee to give a correct picture so as to
rectify the mistakes promptly. If the employee is not providing fearless
answers, he may given a questionaire to fill up and post the same after
getting all his dues cleared from the organisation where he is currently
employed.
f) Opinion surveys: Surveys may be conducted periodically to elicit the
opinions of employees about the organisation and its policies.

13.7 GRIEVANCE HANDLING PROCEDURE

As already discussed, there are valid reasons to have the grievances
processed through a machinery or a procedure.

Objectives of a Grievance Handling Procedure

Jackson (2000) lays down the objectives of a grievance handling procedure as
follows:

 To enable the employee to air his/her grievance.

 To clarify the nature of the grievance.
 To obtain, where possible, a speedy resolution to the problem.
 To take appropriate actions and ensure that promises are kept.
 To inform the employee of his or her right to take the grievance to the
next stage of the procedure, in the event of an unsuccessful resolution.

The Benefits of a Grievance Handling Procedure

According to Jackson (2000), further benefits that will accrue to both the
employer and employees are as follows:
 It encourages employees to raise concerns without fear of reprisal.
 It provides a fair and speedy means of dealing with complaints.
 It prevents minor disagreements developing into more serious disputes. 241
Employer –  It saves employers time and money as solutions are found for workplace
Employee problems. It helps to build an organisational climate based on openness
Relations
and trust.

Processing of Grievance
The details of a grievance procedure/machinery may vary from organisation
to organisation. Here, a four phase model (Figure 1) is suggested. The first
and the last stages have universal relevance, irrespective of the differences in
the procedures at the intermediate stages. The four stages of the machinery
are briefly discussed here:

Conciliation/
Arbitration/
Adjudication

Top Union President/

Management General Secretary

Middle Union Office-

Management bearers

Union shop
Supervisor department
representative

Aggrieved
Employee

Figure 1: Grievance Procedure

(Adapted from: C. Pettefer, Effective GrievanceAdministration, California
Management Review, 12(i), Winter 1970, p.18)
The level at which grievance occurs : The best opportunity to redress a
grievance is to resolve it at the level at which it occurs. A worker‟s grievance
should be resolved by his immediate boss, the first line supervisor. The
higher the document rises through the hierarchy, the more difficult it is to
resolve. Bypassing the supervisor would erode his authority. When the
process moves to a higher stage, the aggrieved employee and the supervisor
concerned may shift their focus to save face by proving the other wrong. The
substantive aspect of any of the grievances may thus be relegated and
dysfunctional aspects come to the fore thus making it more difficult to settle
the issue.
In a unionised concern, the first stage of the procedure usually involves three
people: the aggrieved employee, his immediate boss and the union
representative in the shop/ department. It is possible to involve the union in
laying down the framework of the grievance procedure and thereafter restrain
union involvement in the actual process, at least in the first two stages. The
s

242
choice depends on the top management attitude and orientation towards the Grievance
dynamics of union-management relations. Handling and
Discipline
Supervisory role needs to be strengthened, with appropriate training in Management
Procedures
problem- solving skills, grievance handling and counselling so that he can do
much in reducing the number of grievances that get passed to higher stages in
the machinery.

Unrealistic policies and expectations and lack of commitment for equity and
fairplay can cause problems in handling grievances at the lower leval.
Inadequate delegation of authority may also inhabit a supervisor‟s
effectiveness in handling grievances at this level.

Intermediate Stage : If the dispute is not redressed at the supervisor‟s level,

it will usually be referred to the head of the concerned department. It is
important that line management assume prime responsibility for the
settlement of a grievance. Any direct involvement by personnel department
may upset balance in line-staff relations.

At the intermediate level, grievance can be settled with or without union

involvement. Excessive reliance on supervisor at this stage can jeopardise the
interests of the employee and affect the credibility of the procedure.

Organisation
Level: If a grievance is not settled at the intermediate level also, it will be
referred to the top management. Usually, a person of a level not less than
General Manager designated for the purpose will directly handle the issue.
By now, the grievance may acquire some political importance and the top
leadership of the union may also step in formally, if the procedure provides
for it and informally, if the procedure prohibits it. At this level it is very
difficult to reconcile the divergent interests.

Third Party Mediation: If the grievance has not been settled bi-laterally
within the organisation, it goes to a third party for mediation. It could be
conciliation, arbitration or adjudication or the matter may even be referred to
a labour court. At this stage, the parties concerned lose control over the way
the grievance is settled. In case of mediation (conciliation or arbitration) the
mediator has no authority to decide, but in case of labour court or an
adjudicator, the decision will be binding on the parties, subject to statutory
provisions for appeal to higher courts.

Steps in Grievance Handling Procedure

At any stage of the grievance machinery, the dispute must be handled by
some members of the management. In grievance redressal, responsibility lies
largely with the management. And, as already discussed, grievances should
be settled promptly at the first stage itself. The following steps will provide a
measure of guidance to the manager dealing with grievances.
Acknowledge Dissatisfaction: Managerial/supervisory attitude to grievances
is important. They should focus attention on grievances, not turn away from
them. Ignorance is not bliss, it is the bane of industrial conflict.
243
Employer – Condescending attitude on the part of supervisors and managers would
Employee aggravate the problem.
Relations

Define the Problem: Instead of trying to deal with a vague feeling of

discontent, the problem should be defined properly. Sometime the wrong
complaint is given. By effective listening, one can make sure that a true
complaint is voiced.

Get the Facts: Facts should be separated from fiction. Though grievances
result in hurt feelings, the effort should be to get the facts behind the feelings.
There is need for a proper record of each grievance.

Analyse and Decide: Decisions on each of the grievances will have a

precedent effect. While no time should be lost in dealing with them, it is no
excuse to be slip-shod about it. Grievance settlements provide opportunities
for managements to correct themselves, and thereby come closer to the
employees. Horse-trading in grievance redressal due to union pressures may
temporarily bring union leadership closer to the management, but it will
surely alienate the workforce away from the management.

Follow up: Decisions taken must be followed up earnestly. They should be

promptly communicated to the employee concerned. If a decision is
favourable to the employee, his immediate boss should have the privilege of
communicating the same.

Some of the common pitfalls that managements commit in grievance

handling relate to (a) stopping the search for facts too soon; (b) expressing a
management opinion before gathering full facts; (c) failing to maintain proper
records; (d) arbitrary exercise of executive discretion; and (e) settling wrong
grievances.

Key Features of a Good Grievance Handling Procedure

Torrington & Hall refer to four key features of a grievance handling
procedure, which are discussed below.

a) Fairness: Fairness is needed not only to be just but also to keep the
procedure viable, if employees develop the belief that the procedure is
only a sham, then its value will be lost, and other means sought to deal
with the grievances. This also involves following the principles of
natural justice, as in the case of a disciplinary procedure.

b) Facilities for representation: Representation, e.g., by a shop steward,

can be of help to the individual employee who lacks the confidence or
experience to take on the management single-handedly. However, there
is also the risk that the presence of the representative produces a
defensive management attitude, affected by a number of other issues on
which the manager and shop steward may be at loggerheads.

c) Procedural steps: Steps should be limited to three. There is no value in

having more just because there are more levels in the management
hierarchy. This will only lengthen the time taken to deal with matter and
will soon bring the procedure into disrepute.
244
d) Promptness: Promptness is needed to avoid the bitterness and frustration Grievance
that can come from delay. When an employee „goes into procedure,‟ it is Handling and
Discipline
like pulling the communication cord in the train. The action is not taken Management
lightly and it is in anticipation of a swift resolution. Furthermore, the Procedures

manager whose decision is being questioned will have a difficult time

until the matter is settled.

Essential pre-requisites of a Grievance Handling Procedure

Every organisation should have a systematic grievance procedure in order to
redress the grievances effectively. As explained above, unattended grievances
may culminate in the form of violent conflicts later on. The grievance
procedure, to be sound and effective should possess certain pre-requisites:

a) Conformity with statutory provisions: Due consideration must be given

to the prevailing legislation while designing the grievance handling
procedure.

b) Unambiguity: Every aspect of the grievance handling procedure should

be clear and unambiguous. All employees should know whom to
approach first when they have a grievance, whether the complaint should
be written or oral, the maximum time in which the redressal is assured,
etc. The redressing official should also know the limits within which he
can take the required action.

c) Simplicity: The grievance handling procedure should be simple and

short. If the procedure is complicated it may discourage employees and
they may fail to make use of it in a proper manner.

d) Promptness: The grievance of the employee should be promptly handled

and necessary action must be taken immediately. This is good for both
the employee and management, because if the wrong doer is punished
late, it may affect the morale of other employees as well.

e) Training: The supervisors and the union representatives should be

properly trained in all aspects of grievance handling before hand or else
it will complicate the problem.

f) Follow up: The Personnel Department should keep track of the

effectiveness and the functioning of grievance handling procedure and
make necessary changes to improve it from time to time.

A Model Grievance Procedure is given in Appendix 1.

Activity A: Study the grievance procedure and practices in an organisation to

which you have access and present a brief report.

…………………………………………………………………………………

…………………………………………………………………………………
…………………………………………………………………………………

…………………………………………………………………………………
245
Employer – …………………………………………………………………………………
Employee
Relations …………………………………………………………………………………

Nair & Nair state that in the Indian context, certain guidelines were evolved
in formulating grievance handling procedures in different types of
organisations - small, big, unionised, non-unionised.

According to Nair & Nair, grievance handling procedures can be broadly

classified as 3step, 4-step or 5-step. The details are tabulaed in the following
Table. One of the prominent features of the procedure suggested by Nair &
Nair is the intervention of Grievance Committes in the 5-step procedure,
which works in the Indian context. This committee consists of: in unionised
context, two nominees each from the management and the union (1 union
representative should be from the same department as the aggrieved
employee); in a non unionised set up, two representatives from the
management, representative in the „Works secretary/vice president of the
„Works Committee.‟

Table 2: Comparison of Grievance Redressal Procedure

Steps 3-Steps 4-Steps 5-Steps
Procedure Procedure Procedure
Step No.1 Worker with Worker with Worker with
shop Rep. of shop Rep. of shop Rep. of
union vs. G.M. or union vs. Shop union vs. Shop
Owner Supervisor Supervisor
Step No.2 Union Re. of Plant Work Committee Union Re. of
Vs. G.M. or Owner Vs. Manager Plant Vs.
G.M. or Owner Manager-R.R.
Step No.3 Arbitration by Local Union Grievances
independent Leaders Vs. Chief Committee Vs.
Authority Executive Director (P&A)
Step No. 4 Arbitration Regional Re.
Union Vs. Chief
Executive
Step No. 5 Arbitration

Source: Nair & Nair

13.8 GRIEVANCE MANAGEMENT IN INDIAN

INDUSTRY
At present, there are three legislations dealing with grievances of employees
working in industries. The Industrial Employment (Standing Orders) Act,
1946, requires that every establishment employing 100 or more workers
should frame standing orders. These should contain, among other things, a
provision for redressal of grievances of workers against unfair treatment and
wrongful actions by the employer or his agents. The Factories Act, 1948,
provides for the appointment of a Welfare Officer in every factory ordinarily
employing 500 or more workers. These Welfare officers also look after
complaints and grievances of workers. They will look after proper
246
implementation of the existing labour legislation. Besides, individual disputes Grievance
relating to discharge, dismissal or retrenchment can be taken up for relief Handling and
Discipline
under the Industrial Disputes Act, 1947, amended in 1965. Management
Procedures
However, the existing labour legislation is not being implemented properly
by employers. There is a lack of fairness n their part. Welfare officers have
also not been keen on protecting the interests of workers in the organised
sector. In certain cases, they are playing a dual role. It is unfortunate that the
public sector, which should set up an example for the private sector, has not
been implementing labour laws properly.

In India, a Model Grievance Procedure was adopted by the Indian Labour

Conference in its 16th session held in 1958. At present, Indian industries are
adopting either the Model Grievance Procedure or procedures formulated by
themselves with modifications in the Model Grievance Procedure. In other
words, the grievance Procedures are mostly voluntary in nature.
Proactive Grievance Redressal
The traditional Grievance Redressal System is mechanical reactive and
formal. But Grievances are human problems with lot of emotions and
sentiments attached with them. It requires informal, proactive & human
touch. It must give the impression that management cares their employees
and attach value to them.

A proactive grievance redressal system has been fixed in Visakhapatnam

Steel Plant and NALCO with a great success. It is based on the principle of
“management by walking”. A thirsty man goes to the well. That is a common
phenomenon. A proactive phenomenon will be if the well goes to the thirsty
and quenches his thirst.

In existing system an aggrieved employee goes to the Management and

follows formal procedure for the redressal of his grievance. It is insensitive to
human emotions. Very often, grievance get rejected on flimsy grounds. In
proactive system the management system goes to the worker, listen to
grievance and on subsequent day answer to his grievance. Even if his
grievance is not agreed, the causes and other details are explained in person.
This has worked on well. Organisations can improvise the system as per their
requirements. Improve experiments must go on.

Sincerity of management is the pre-condition. Unions leaders and shop

managers have to play positive role. It takes time to catch on. Therefore,
patience is another requirement. Message must go that management „care‟
their employees. Only then, it can serve the purpose.

Discipline Management
Employee discipline is the backbone of industrial relations. In fact, the
function of management is to keep an enterprise going on smoothly,
efficiently and profitably. To do this, you need a workforce that has to accept
certain reasonable standards of behaviour at the workplace. Effective
employee performance depends on the willingness on the part of your

247
Employer – subordinates to carry out the orders of their superiors, to abide by the rules
Employee and norms of your organisation.
Relations

The purpose of this part of the unit is to discuss and examine what discipline
is, what the various aspects of employee discipline are, and how positive
discipline can be achieved by you from your subordinates. We shall also
examine the judicial process of maintaining industrial discipline, and how to
deal with indiscipline among industrial employees.

13.9 CONCEPT AND MEANING OF DISCIPLINE

Discipline is the regulation and modulation of human activities to produce a
controlled performance. The real purpose of discipline is quite simple. It is to
encourage employees to confirm to established standards of job performance
and to behave sensibly and safely at work. Discipline is essential to all
organised group action.

Definition of Discipline
Webster‟s Dictionary gives three basic meanings to the word discipline, the
first being that of training that corrects, moulds, strengthens, or perfects. The
second meaning is control gained by enforcing obedience and the third is
punishment. By combining the first and second definitions you can say that
discipline involves the conditioning or moulding of behaviour by applying
rewards or you can say that discipline involves the conditioning or moulding
of behaviour by applying rewards or penalties. The third meaning is narrower
in that it pertains only to the act of punishing wrongdoers. Besides these
broad definitions, there are others referring to organisational life in particular,
for example:

“Discipline is a procedure that corrects or punishes a subordinate

because a rule of procedure has been violated.”
—Dessler,2001

“Discipline should be viewed as a condition within an organisation

whereby Employees know what is expected of them in terms of the
organisation‟s rules, Standards and policies and what the consequences
are of infractions.”
—Rue & Byars, 1996

From the above definitions, you can find the following elements:

 The objective is orderly behaviour .

 Orderly behaviour is a group desire.

 Orderly behaviour assists the attainment of organisational goals

 When members behave appropriately as per rules, there is no need for

disciplinary action. This is self discipline.

 When some members violate the rules and regulations, punitive

248 actions are needed to correct them.
  Punishment serves two purposes: first, to directly punish an individual Grievance
for an offence and secondly, to set an example for others not to Handling and
Discipline
violate the rules and regulations. Management
Procedures
Those employees who observe the rules and standards are rewarded by
praise, by security and often by advancement. Those who cannot stay in line
or measure up to performance standards are penalised in such a way that they
can clearly learn what acceptable performance and behaviour are. Most
employees recognise this system as a legitimate way to preserve order and
safety and to keep everyone working towards the same organisational goals
and standards. For most employees, self discipline is the best discipline. As
often as not, the need to impose penalties is a fault of the management as well
as of the individual worker. For that reason alone, a supervisor should resort
to disciplinary action only after all else fails. Discipline should never be used
as a show of authority or power on the supervisor‟s part.

Let us now distinguish the major aspects of discipline.

Negative Discipline: Negative discipline involves force or an outward

influence. It is the traditional aspect of discipline and is identified with
ensuring that subordinates adhere strictly to rules, and punishment is meted
out in the event of disobedience or indiscipline. As you can see, in this
perspective strict penalties are levied for the violation of rules. It is, in fact,
the fear of punishment that works as a deterrent in the mind of the
subordinate. Approaching discipline from this kind of a perspective has been
proving increasingly ineffective for various reasons.

Positive Discipline: In this type of discipline subordinates comply with the

rules not from fear of punishment, but from the desire to cooperate in
achieving the common goal of the organisation. In positive discipline
willingness to comply is most important. The emphasis here is on cooperative
efforts to secure compliance to organisational norms. It promotes emotional
satisfaction instead of emotional conflict, and the increased cooperation and
coordination reduces the need for formal authority. This approach to
discipline will help you to achieve both individual needs of the subordinates
and organisational goals for you. It would therefore motivate your
subordinates to work with zeal and fulfil their needs. Positive discipline, in
other words, calls for internalisation by your subordinates of the objectives
and expected norms of behaviour in your organisation. The positive concept
of discipline assumes a certain degree of self-discipline.

Discipline as Self-control: Discipline at one level means training that

corrects, moulds, strengthens, or perfects the behaviour. Discipline, in this
sense, refers to the development of an individual, i.e., one‟s efforts at self-
control for the purpose of adjusting oneself to certain needs and demands.
This is nothing but what you would call self-discipline. You will agree with
us that it is extremely important to have this kind of self-discipline both in
you and in your subordinates for effectively and efficiently achieving your
organisational objectives. Here again the emphasis is on establishing and
ensuring a minimum degree of orderliness. This orderliness is obtained in the
249
Employer – modern work context by increasing the degree and extent of compliance by
Employee subordinates. Let us examine it a little more closely.
Relations

13.10 INDISCIPLINE
Indiscipline refers to the absence of discipline. Indiscipline, therefore, means
non- conformity to formal and informal rules and regulations. We cannot
afford indiscipline as it will affect the morale, involvement and motivation of
subordinates in the organisation. Indiscipline often leads to chaos, confusion,
and reduces the efficiency of the organisation. It often leads to strikes, go-
slows, absenteeism, resulting in loss of production, profits and wages.

Factors Leading to Indiscipline

Various socio-economic and cultural factors play a role in creating
indiscipline in an organisation. We wonder if you realise the fact that often
indiscipline may arise because of poor management on your part. Insensitive
and thoughtless words and deeds from a manager are potent reasons for
subordinates to resort to acts of indiscipline. Defective communication by the
superiors and ineffective leadership devoid of tactful human relations
approach can cause indiscipline among subordinates. Indiscipline by your
subordinate may be an outcome of your non- response to his grievance.

Your subordinates may indulge in acts of indiscipline because of unfair

practices on your part, like the wage differentials, unreasonable declaration of
payment of bonus or non-payment, wrong work assignments, defective
grievance handling, etc. The payment of low wages is perhaps another reason
for indiscipline. When the worker is paid low wages and in addition you
demand more and more work from him, he becomes dissatisfied, dishonest
and insubordinate. Poverty, frustration and indebtedness, generally
overshadow his mind which makes him agitated and indisciplined. His mind
and thought are more towards destruction than constructive discipline.

Low payment of wages also creates lack of motivation in your subordinates.

After all, each individual needs response, security, recognition and new
experience. A workman joins your organisation and agrees to give a certain
amount of work and loyalty, while he expects at the same time, in return, an
adequate economic reward, security, fair human treatment and other kinds of
support from you. If he does not get what he expected, he starts getting
dissatisfied. He gradually begins to express his grievance by way of
absenting himself, coming late to the office, inefficiency and insubordination.

Defective communication between you and your subordinate also leads to

conflict of various kinds. Very often your subordinates get no opportunity to
express their feelings and sentiments. Unless you adopt a humane and
understanding approach there is more likelihood that your subordiate may
take recourse to indiscipline.

250
 Grievance
Handling and
Forms of Indiscipline Discipline
Management
Absenteeism, insubordination, violation of plant rules, gambling, Procedures
incompetence, damage to machine and property, strikes, dishonesty and other
forms of disloyalty lead to industrial indiscipline. These are all forms of
misconduct against the management.
If an act of an employee is prejudicial or likely to be prejudicial to the
interests of the employer or to his reputation, it is a misconduct. The act of an
employee can become a misconduct in the following cases:
a) where the act of a workman is inconsistent with the peaceful discharge of
his duty towards his employer;
b) where the act of the employee makes it unsafe for the employer to retain
him in service;
c) where the act of the employee is so grossly immoral that all reasonable
men would not trust that employee;
d) where the conduct of the employee is such as to open before him ways
for not discharging his duties properly;
e) where the conduct of the employee is such that the employer cannot rely
on his faithfulness;
f) where the conduct of the employee is insulting and insubordinate to such
a degree as to be uncomfortable with the continuance of a superior-
subordinate relationship;
g) where the workman is abusive or he disturbs the peace at the place of his
employment; and
h) where the employee is habitually negligent in respect of the duties for
which he is engaged.

It is very difficult to lay down exhaustively as to what would constitute

misconduct and indiscipline. It would depend upon the examination of facts.
Some of the acts of misconduct are mentioned in the Model Standing Orders
as a part of the rules made under the Industrial Employment (Standing
Orders) Act of 1946. Non-performance of duty is a serious misconduct,
because it is basically inconsistent with the obligations of employment.
Under the act of negligence, an employee fails to give full care and attention
on account of which the work becomes defective, and production suffers both
in quantity and quality. It is a misconduct to cause disorder on the premises,
intimidate, threaten or assault other employees and use abusive language.
Preventing the entry and exist of willing employees and movement of goods
to and from the factory, obstructing the work being carried on, damaging the
property of the employer, indulging in mischief or other objectionable
activities, occupying the employer‟s premises or property, go-slow, etc. are
forms of misconduct.

Insubordination, assault or threat to superior officers, defamation, making

false complaint, are all acts of indiscipline. Non-performance of work during
working office hours, tampering with official records, misappropriation of

251
Employer – accounts are acts of indiscipline which are considered to be of serious
Employee gravity.
Relations

13.11 PURPOSE AND OBJECTIVES OF

DISCIPLINARY ACTION
The purpose of discipline according to Dessler (2001) is to encourage
employees to behave sensibly at work, where being sensible is defined as
adhering to rule and regulations. In an organisation, rules and regulations
serve about the same purpose that laws do in society; discipline is called for
when one of these rules or regulations is violated (Bittel & Newstrom, 1990).
Following are some of the purposes and objectives of disciplinary action:

 To enforce rules and regulations.

 To punish the offender.
 To serve as an example to others to strictly follow rules.
 To ensure the smooth running of the organisation.
 To increase working efficiency.
 To maintain industrial peace.
 To improve working relations and tolerance.
 To develop a working culture which improves performance.
Dessler (2001) opines that a fair and just discipline process is based on three
foundations: rules and regulations, a system of progressive penalties and an
appeals process.
Let us probe this a bit more. Dessler (2001) states that a set of clear rules and
regulations is the first foundation. These rules address things like theft,
destruction of company property, drinking on the job and insubordination.
The purpose of these rules is to inform employees ahead of time as to what is
and is not acceptable behaviour. This is usually done during the employee‟s
orientation.
A system of progressive penalties is the second foundation of effective
disciplining. Penalties, according to Dessler, may range from oral warning to
written warnings to suspension from the job to discharge. The severity of the
penalty is usually a function of the type of offence and the number of times
the offence has been committed.
Finally, there should be an appeals process as part of the disciplinary process;
this helps to ensure that discipline is meted out fairly and equitably.
Right to Take Disciplinary Action
Right to take disciplinary action emanates from employer-employee
relationship and is regulated by contract of employment, standing order of the
company (for workers) or conduct and discipline (appeal) rules (for
supervisory staff) of the organisation promptness in disciplinary cases is
essential. It has to be ascertained which disciplinary rules are applicable to
the deliquent employee for taking action.
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13.12 DISCIPLINARY ACTION PROCEDURE Grievance
Handling and
Discipline
To start with, based on any misconduct committed by the employee or Management
Procedures
complaint, a preliminary enquiry is called for. Then disciplinary authority has
to initiate action. The following authorities are laid by the organisation for
various levels of employees:

a) Disciplinary authority; b) Appellate authority; and c) Reviewing authority.

Stages of Disciplinary Proceedings are explained through Flow Chart (Figure 2)

Complaint

Preliminary investigation

DA Decision
Dropped

Major Penalty Action

Defence Case

Charge Sheet

Written Briefby PO
Written Statement of Defence and DE

Enquiry Report
Appointment of IO/PO

Submission of
Preliminary Hearing App. Report to DA
of Defence Asstt.

Decision by DA

Inspection of Docs.
And Defence
Statement
Penalty
Regular Hearing
Prosecution Case

Major Exoneration
- Reduction to lower stage Minor
- Reduction in rank - Censure
- Removal from service - Withholding of promotion
- Dismissal - Withholding of increment
- Industrial Dispute
* Arbitration! Adjudication

Figure 2: Flow Chart of Disciplinary Proceedings

253
Employer – Based on judicial pronouncement, elaborate procedure have been evolved
Employee which has to be followed to avoid infirmities in the disciplinary action.
Relations
Various stages involved are briefly indicated as under:

i) preliminary enquiry,
ii) framing and serving of charge sheet,
iii)holding of domestic enquiry,
iv) report of the enquiry officer,
v) consideration of the report of the enquiry officer by disciplinary
authority,
vi) order of punishment and its communication, and
ii) appeal.

1) Issue of the Charge-Sheet

Delinquent employee is to be issued a charge-sheet call him to submit his
explanation within a specified period of time. This charge-sheet should be
drafted in a clear and unambiguous language so that the workman does not
have any difficulty in understanding the charges that he has to answer.
Wherever possible, the relevant clause of the company‟s standing orders
should be mentioned in a charge-sheet. If the charge relates to an incident, the
date, time and place of the occurrence should be mentioned. Proper care
should be taken in framing the charge-sheet, for the validity of the
punishment would depend on the enquiry of the misconduct mentioned in the
charge-sheet. The charge-sheet should be in the local language.

The charge-sheet framed against delinquent employee and duly signed by the
disciplinary authority should be served on him personally if possible and
acknowledgement to the effect should be obtained from him. In case the
workman is absent, or if he refuses to accept the charge-sheet when presented
to him, the same should be sent to his local and home addresses by post
under-registered cover with acknowledgements due, after getting his refusal
attested by two witnesses. In case the charge-sheet is returned unserved with
the remarks of the postal authorities, the same should be kept intact without
opening. In such a case, the employer should display the charge-sheet on the
notice board or act in accordance with the provisions of the standing orders.
In some cases, it may be necessary to public the contents of the charge-sheet
in a local newspaper having wide publicity .

2) Suspension Pending Enquiry

In a case where the charges levelled against a workman are of serious nature
and it is considered by the disciplinary authority that his physical presence
might endanger the safety of other workmen, or if it is apprehended that he
might intimidate others or tamper with the evidence, he may be suspended.
During the period of suspension pending enquiry, the workman will get
subsistence allowance as per rules.

254
 Grievance
Handling and
3) Consideration of the Explanation Discipline
Management
Procedures
After a charge-sheet has been served on a workman for reply he may submit
his explanation:
i) admitting the charges and requesting for mercy, or
ii) denying the charges and requesting for an enquiry, or
iii) not submitting any explanation at all, or
iv) requesting for more time to submit explanation.

In a case where the workman admits the charge which is of a minor nature
and begs for mercy, no enquiry is held and decision is taken accordingly on
the charge-sheet. If, however the misconduct is serious enough to warrant
discharge or dismissal, the management should still arrange to hold a proper
enquiry, the admission of the charges not withstanding.

In a case where the workman submits an explanation mentioning that the

charges levelled against him are false, baseless, motivated, concocted, etc. A
proper enquiry as per procedure should be held before awarding any
punishment.

When the workman fails to submit any explanation within the specified time
limit, the management should take steps to hold a proper enquiry.

When the workman concerned makes a bonafide request on reasonable

grounds for extension of time to submit explanation, the same should be
granted.

4) Notice for Holding the Enquiry

After consideration of the explanation of the charge-sheeted workman or
when no reply is received within the specified time limit, the disciplinary
authority should issue an order appointing an enquiry officer or an enquiry
committee to hold the enquiry of the charge-sheet. The enquiry officer can be
an official of the company, or even anoutsider, but care should be taken to
appoint only such a person as enquiry officer who is neither a witness nor is
personally interested in any way in the matter for which the charge-sheet has
been issued. It should also contain the name of the management
representative.

Thereafter, the enquiry officer should issue a notice of enquiry. This notice of
enquiry should clearly mention the date, time and place of enquiry. It should
ask the workman to present himself with his witnesses/documentary
evidence, if any, for the enquiry. It should also be mentioned in the notice of
enquiry that if the workman fails to attend the enquiry on the appointed date
and time, the same will he held ex-parte. A reasonable period of time should
be given to the workman for preparing his defence before the enquiry is held.

255
Employer –
Employee
Relations 5) Holding of the Enquiry
The object of holding an enquiry is to find out whether the workman is guilty
of the charges levelled against him in the charge-sheet, or not. In doing so,
the enquiry officer gives the workman a reasonable opportunity to defend
himself by cross- examining the witnesses/documentary evidence/exhibits
produced against him and by examining the witnesses/documentary evidence
in his defence. The workman concerned can also make statement in his
defence apart from what is stated in reply to the charge-sheet. It should be
clearly understood that it is for the management‟s representative, i.e.,
evidence officer to prove the charges against a workman by adducing
evidence during the enquiry and it is not the workman who has to prove his
innocence. Unless management side has been able to prove the case against
the workman, he should not be considered guilty.

6) The Enquiry
On the appointed date and time, fixed for the enquiry, the following persons
should be present apart from the enquiry officer.

a) Presenting Officer: He is the person who will lead the case from the
management‟s side by producing witnesses and relevant documentary
evidence in support of the charge. He may himself be a witness, in which
case he is the first person to be examined. The presenting officer has a
right to cross-examine a charge-sheeted workman as well as the
witness/documentary evidence produced by him.

b) Delinquent Employee: No enquiry can be said to have been held as per

procedure in the absence of the charge-sheeted employee. However if he
refuses to take part in the enquiry after presenting himself, or when he
does not report for the enquiry despite receiving the notice to him, the
enquiry may proceed ex- parte, provided in the notice of the enquiry a
specific mention to that effect had been made. Also, if during the
enquiry, the delinquent employee withdraws himself, the same me be
held ex-parte. In such a case, it is not advisable to postpone the enquiry
and give another opportunity to the delinquent employee rather than
holding ex-parte enquiry. In a case, where the delinquent employee turns
up for the enquiry after some witnesses have been examined, it would be
proper for the enquiry officer to allow him to participate in the enquiry
after recording this fact in the proceedings. The enquiry officer should
recall the witnesses who have already been examined in the absence of
the delinquent employee so that he get an opportunity to cross-examine
such witnesses.

c) Representative of the Delinquent Employee: If the delinquent

employee writes to the charge-sheet or makes a subsequent request that
he should be allowed to take a knowledgeable co-worker of his choice to
assist him in the enquiry, the same should normally be allowed. In some
companies, union committee member of the recognised trade union is
256
 allowed to attend an enquiry on the specific request of the workman, to Grievance
either assist him or play the role of an observer as per procedure. Handling and
Discipline
Management
d) The Procedure of Enquiry: At the commencement of the enquiry, if the Procedures
delinquent employee is present, the enquiry officer should record the
date, time and place of enquiry, names of the persons present and obtain
their signatures on the order-sheet. Thereafter, he should proceed as
follows:

 Read out and explain the charges and the reply of the charge-sheet to
the delinquent employee and get his confirmation to that effect. In
case the delinquent employee has not accepted the charge in reply to
the charge-sheet, he should be asked if he pleads guilty of the charges.
If the charges are admitted, that should be recorded and signatures of
all concerned, with date, should be taken. A full-fledged enquiry need
not be held if the misconduct is of a minor nature. In case the charge,
if proved, is serious enough to warrant discharge or dismissal, the
proper course is to hold the enquiry.

 Explain to the delinquent employee concerned the procedure to be

followed in the enquiry, viz., that the presenting officer will produce
witnesses/documentary evidence/exhibits in support of the charge and

 the delinquent employee will have opportunity to cross examine.

Thereafter the delinquent employee should be given opportunity to
produce his witnesses/ and the management representative will have a
right to

 cross-examine them.

 The delinquent employee will have further opportunity to make

statement, if any, in his defence. At any stage of the enquiry, the
enquiry officer can seek clarification from any witness or the
delinquent employee by puffing questions to him. Neither the
presenting officer nor the delinquent employee can put leading
questions to their respective witnesses.

 Witnesses in support of the charge are to be examined one by one in

the presence of the delinquent employee.

 The charge-sheeted workman is to be given an opportunity to cross-

examine management‟s witnesses. In case he declines to cross-
examine any witness, an endorsement to that effect should be
recorded by the enquiry officer.

 The delinquent employee should be asked to produce his own

witnesses one by one and the presenting officer will be allowed to
cross-examine them. The delinquent employee should be asked to
give his statement after his witnesses are examined and cross-
examined. He may also produce documentary evidence, if any. In
case the delinquent employee declines to produce any
witness/documentary evidence or declines to give any statement, the
enquiry officer should make a record to that effect in the order-sheet 257
Employer – and obtain signatures of all concerned. If the enquiry remains
Employee incomplete in the first sitting and some more witnesses are required to
Relations
be examined, it may be continued or any other day mutually agreed
by both sides. In such a case, the enquiry officer should make a
suitable endorsement in the order-sheet and obtain signatures of all
concerned.

 On each. page of the enquiry proceedings, the signature with date of

the charge-sheeted workman, his representative, if any, the concerned
witness and the management representative should be taken. The
concerned witness should sign on each page of his statement only.
The

 enquiry officer will sign on each page of the proceedings after

endorsing that the statement has been recorded by him and explained
to the parties in their language before they were asked to sign. If the
delinquent employee refuse to put his signature even after he had been
asked to do so, the enquiry officer should make an endorsement to
that effect and get it attested by others present.

e) Ex-parte Enquiry: If, on the day fixed for the enquiry, the delinquent
employee does not turn up, an ex-parte enquiry may be held by following
the usual procedure. In such an enquiry, the presenting officer has to lead
the evidence against the charge-sheeted workman. The enquiry officer,
by putting questions to the witnesses, get facers to come to reasonable
conclusion about the validity or otherwise of the charges. As stated
earlier, it is advisable to fix another date of enquiry, instead of holding an
ex-parte enquiry on the first sitting itself.

The Enquiry Report: After the enquiry is over the enquiry officer makes
an appreciation of the evidence on record and comes to his conclusion. If
there is no corrobortive evidence on a particular point, the enquiry
officer has to give his own reasons for accepting or rejecting the
evidence of such a witness. The enquiry report is a document which
should clearly indicate whether the charges levelled against the
delinquent employee are proved or not. The conclusion of the enquiry
officer should be logical and based only on evidence brought out during
the enquiry. Tne enquiry officer may record clearly and precisely his
conclusions with reasons for the same. There is no place for any
conjecture or surmises in the enquiry report. It should be such that as per
the evidence on record, any impartial man, not connected with the case,
should be able to come to the same conclusion as that of the enquiry
officer.

7) Final Decision of the Disciplinary Authority

The enquiry report is submitted to the Disciplinary Authority. Before he takes
a decision on the findings of the enquiry officer, he is required to furnish a
copy of the enquiry officer‟s report to the concerned employee. If he agrees
with the findings of the enquiry officer, after considering the gravity of the
misconduct and the past record of the delinquent employee equitable
258
treatment with precedents of action taken, etc., he may pass an order on the Grievance
quantum of punishment after recording his reasons for the same in writing. Handling and
Discipline
An order in writing is passed to that effect and is communicated to the Management
delinquent employee. Procedures

In case the disciplinary authority decides to punish the employee for his
misconduct, the following are the punishments, which he can impose,
depending upon the severecy of the misconduct. There are two kinds of
punishment:

i) Minor Punishments
a) Warning or Sensor;

b) Fine (keeping the provisions of Section 8 of Payment of Wages Act

in view); and

c) Withholding of increment (either with cumulative effect or non-

cumulative effect).

ii) Major Punishments

a) Demotion;
b) Discharge; and
c) Dismissal

A letter communicating the order of discharge/dismissal should set out

clearly the charge(s) proved against the delinquent employee and the date
from which the order is to become effective. Normally, the order of
discharge/dismissal should be effective from the date of the order, unless
there is an express provision in the standing orders to the contrary.

8) Appeal
An employee can appeal against an order imposing upon him any of the
penalties. The appellate authority may confirm, enhance, reduce or set-aside
the penalty.

9) Conclude
It is the employer‟s right to direct its internal administration and maintain
discipline. However, before passing an order of discharge or dismissal, the
employer has to arrange for a fair and proper enquiry in consonance with the
principles of natural justice. The reason is that its decision may not be
reversed by the adjudicator at a later date, if the workman raises an industrial
dispute challenging the order.

A domestic enquiry need not be conducted in accordance with the technical

requirements of a criminal trial but they must fairly conducted and in holding
them, consideration of “fair play” and “natural justice” must govern the
conduct of the enquiry officer. A domestic enquiry must be conducted with
an open mind, honestly and bonafide, with a view to determine whether the
charge framed against the delinquent employee is proved or not.
259
Employer – In today‟s context, no employer can discharge or dismiss a delinquent
Employee workman even for a serious misconduct without following an elaborate
Relations
procedure for taking disciplinary action. An employer can be guilty and
penalised, if the adjudicator finds that there was want of good faith; or there
was victimisation or unfair labour practices; or the management was guilty of
a basic error or violation of a principle of natural justice; or on the grounds
that the finding was completely baseless or perverse.

Activity B: a) Mention briefly the practice of disciplinary action procedure

in your organisation.

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

b) List out the number of major and minor punishments given to employees
in your organisation and point out the causes of punishment.

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

13.13 LEGAL PROVISIONS RELATING TO

DISCHARGE OR DISMISSAL (UNDER
INDUSRIAL DISPUTES ACT, 1947)
i) Individual Dispute
Individual disputes are not covered by the Industrial Disputes Act, 1947,
except dispute of an individual workman relating to his discharge, dismissal,
retrenchment and termination from service, which is to be considered as an
industrial dispute under the Act (Sec.2a).

ii) Prior to Introduction of Sec. II A

In 1971, an employer could discharge or dismiss a workman for misconduct
as per standing orders after following the procedure for conducting a
domestic enquiry. The management‟s decision could not have been
challenged before labour court, if enquiry was fairly and properly conducted
as per the principles of natural justice. The court could not interfere with
quantum of punishment. However, court has powers to interfere only when:
(SCO Case - SC - 1958)
260
i) there was want of good faith, or Grievance
Handling and
ii) there was victimisation or unfair labour practice, or Discipline
Management
iii) violation of principles of natural justice, or Procedures
iv) findings was completely baseless or perverse.

iii) Position under Sec. llA

Section 11- A was inserted in the Act by the Industrial Disputes
(Amendment) Act,

1971, w.e.f. 15.12.1971. The Statement of objects and reasons specifically

referred to the decision of the Supreme Court in Indian Iron & Steel Co. Ltd.
and Another vs. their Workmen (1958-1 LLJ.260). It also referred to
recommendation No.119 of the International Labour Organisation, that a
worker aggrieved by the termination of his employment should be entitled to
appeal against the termination, among others, to a neutral body such as an
arbitrator, a court, an arbitration committee or a similar body.

Effect of Section llA

Prior to the introduction of Section II-A, the Tribunal had no power to
interfere with the finding of misconduct recorded in the domestic enquiry
unless there existed one or other infirmities pointed out by the Supreme court
in the case of Indian Iron & Steel Co. Ltd., The conduct of disciplinary
proceedings and punishment to be imposed were all considered to be
managerial function which the Tribunal had no power to interfere unless the
finding was perverse or the punishment was so harsh as to lead to an
inference of victimisation or unfair labour practice. But now under this
Section, the Tribunal is clothed with the power to reappraise the evidence in
the domestic enquiry and satisfy itself whether the said evidence relied on by
employer established the misconduct alleged against a workman. The
limitations imposed on the powers of the Tribunal by the decision in the
Indian Iron & Steel Co. Ltd. Can no longer be invoked by an employer.
Vaidialingam J. held: “The tribunal is now at liberty to consider not only
whether the finding of misconduct recorded by an employer is correct, but
also to differ from the said finding if a proper case is made out. What was
once largely in the realm of the satisfaction of employer has ceased to be so,
and now it is the satisfaction of the Tribunal that finally decides the matter.”
Ultimately, the Tribunal may hold that the misconduct itself is not proved or
that the misconduct proved does not warrant the punishment of dismissal or
discharge.

Under this Section, for the first time, power has been given to tribunal to
satisfy itself whether misconduct is proved. This is particularly so, regarding
even findings arrived at by an employer in an enquiry properly held. The
Tribunal has also been given power also for the fIrst time, to interfere with
the punishment imposed by an employer. When such wide powers have now
been conferred on tribunals, the Legislature obviously felt that some
restrictions have to be imposed regarding what matters could be taken into
account. Such restrictions are found in the proviso. The Proviso only
emphasises that the tribunal has to satisfy itself one way or the other 261
Employer – regarding misconduct, punishment and relief to be granted to workmen only
Employee on he basis of the “materials on record” before it.
Relations

Section ll-A does not cover retrenchment or retirement cases, because the
section clearly indicates that it is for discharge and dismissal cases only.

iv) Industrial Disputes (Amendment) Act, 1982

An employer may be held guilty of unfair labour practice, in case court finds
dismissal/discharge is to be: (i) on account of victimisation , (ii) not in good
faith, (iii) in utter disregard of natural justice, (iv) for patently false reasons or
disportionate punishment. Apart from the remedy of reinstatement of
workman, the employer is liable for the penalty under Sec.254.

13.14 SUMMARY
In the first part of the unit we have discussed about grievance handling. A
grievance is a form of discontent or dissatisfaction. There are several reasons
for this and grievance has several adverse effects on production, employer
and individual employee. There are several channels for discovering
grievances. Machinery for grievance handling procedure has been described
and a model grievance handling procedure has been provided at the end of
the unit.

The second part of the unit examined various aspects of discipline. We have
seen that discipline is by and large a result of the culture and the pattern of
authority/power that are available in an organisation. There are specific
purpose and objectives of disciplinary action in an organisation. A typical
disciplinary action procedure has 10 steps. There are few legal provisions
relating to discharge or dismissal under Industrial Disputes Act, 1947.

13.15 SELF ASSESSMENT QUESTIONS

1) Discuss the causes and effects of grievances.
2) Briefly outline the features of a grievance procedure and the steps
involved in it.
3) Why should organisations have a formal grievance procedure?
4) Explain the meaning and concept of discipline with examples.
5) Describe briefly the stages of disciplinary action procedure.

13.16 FURTHER READINGS

Chandra, S., Grievance Procedure: A Survey of Practices in India, ASCI,
Hyderabad, 1968.

International Labour Organisation, Extension of Grievances and

Communications within Undertakings, Geneva, 1965.
Walter, E., „Grievance Procedures‟ in Wilbert, E.S. (ed.) Personnel
Handbook, Chicago, 1985.
262
Monappa, A., Industrial Relations, Tata McGraw Hill, New Delhi, 1985. Grievance
Chakravarte, K.P., Law of Industrial Employment and Management of Handling and
Discipline
Discipline, Allhabad, 1983. Management
Procedures
Indian Labour Journal.

Appendix 1: Model Grievance Procedure

The Model Grievance Procedure suggested by the National Commission on
Labour involves six successive time-bound steps each leading to the next, in
case of dissatisfaction. The aggrieved worker in the first instance will
approach the foreman and tells him of his grievance orally. The foreman has
to redress his grievance and if the worker is not satisfied with this redressal,
he can approach the supervisor. The supervisor has to provide an answer
within 48 hours. In the even of the supervisor not giving an answer or the
answer not being acceptable to the worker, the worker goes to the next step.
At this stage the worker (either alone or accompanied by his departmental
representative) approaches the Head of the Department who has to give an
answer within three days. If the Departmental Head fails to give an answer or
it the worker is not satisfied with his answer, the worker may appeal to the
Grievance Committee, consisting of the representative of the employer and
employees. The recommendations of this Committee should be
communicated to the Manager within seven days from the date of the
grievance reaching it. Unanimous decisions, if any, of the committee shall be
implemented by the management. If there is no unanimity, the views of the
members of the Committee shall be placed before the manager for his
decision. The manager has to take a decision and inform the worker within
three days.

The worker can make an appeal against the manager‟s decision and such an
appeal has to be decided within a week. A union official may accompany the
worker to the manager for discussion and if no decision is arrived at this
stage, both the union and management may refer the grievance to voluntary
arbitration within a week of the receipt of the management‟s decision. The
worker in actual practice, may not resort to all the above mentioned steps. For
example, if the grievance is because of his dismissal or discharge he can
resort to the second step directly and he can make an appeal against dismissal
or discharge.

Box 1 : Model Grievance Procedure

Procedure Timeframe
Appeal to CMD One week
General Manager 7 days
Grievance Committee 7 days unanimous
(Manager + Union Reps.)
HOD 3 days
Shop-floor, Supervisor , Foreman 48 hours
Worker

263
Employer –
Employee UNIT 14 UNIONS AND ASSOCIATIONS
Dealing with Unions and
Relations Objectives
After completion of the unit, you should be able to:
• understand the background and forces responsible for birth of Trade
UnionAssociations;;
• discuss various conceptual and theoretical aspects of Trade
Unions/Associations;
• discuss the strength and weakness of Trade Unions/Associations;
• discuss the challenges before Trade Unions/Associations in changing
business environment; and
• understand the shifts that are required to make Trade
Unions/Associations responsive ones.
Structure
14.1 Introduction
14.2 Definition of Trade Unions
14.3 Formative Stages of Trade Unions
14.4 Forms of Trade Unions
14.5 Functions of Trade Unions
14.6 Objective of Trade Unions
14.7 Role of Trade Unions
14.8 Classification of Trade Unions
14.9 Theories of Trade Unionism
14.10 Growth of Trade Union Movement and Membership In India
14.11 Trade Union Act, 1926
14.12 Recognition of Trade Union
14.13 Rights of Recognised Unions
14.14 Problems Confronting Unions and Measures to Strengthen Trade
UnionMovement in India
14.15 White-Collar and Managerial Trade Unions
14.16 Why White-Collar Workers’ Unions?
14.17 Employers’ Association
14.18 Summary
14.19 Self-Assessment Questions
14.20 Further Readings

14.1 INTRODUCTION
Trade Unionism grew as one of the most powerful socio-economic political
institutions of our time - to fill in the vaccum created by industrial revolution
in industrial society. It came as a contervailling force to reconcile social and
economicaberrations created by Industrial Revolution. Individual
dispensibility and collective indispensability was the basic principle for its
formation. United we stand and divided we fall is the philosophy. The
government policy of “Laissez-faire” left the working class at the mercy of
mighty employers. The worker lacked bargaining power and seller of most
perishable commodity (labour) he was no match for the mighty employer.
The supply of labour was more and demand was less. Employers employed
them at their terms, which were exploitative. The exploitation of labour was
at its peak.
264
Combination of workers was considered as ‘criminal conspiracy’ and the Unions and
Associations
terms of contract was regulated by workman Breach of Contract Act, 1860
and general law of the land. Discontent was brewing. Liberal democratic and
revolutionary ideas (set in motion by American war of Independence, French
Revolution and Thinkers like Rousseau & Marks etc.) of the time fanned the
discontentment which was a smoldering since long and gave birth to an
institution known as “trade union.”
14.2 DEFINITION OF TRADE UNION
According to Webbs, a trade union is a continuous association of wage
earners for the purpose of maintaining and improving the conditions of their
working lives. Under the Trade Union Act of 1926, the term is defined as
“any combination, whether temporary or permanent, formed primarily for the
purpose of regulating the relations between workers and employers, or for
imposing restrictive conditions on the condition of any trade or business and
includes any federation of two or more unions”. Let us examine the definition
in parts.
l) Trade union is an association either of employees or employers or of
independent workers.
2) It is a relatively permanent formation of workers. It is not a temporary or
casual combination of workers.
3) It is formed for securing certain economic (like better wages, better
working and living conditions), social (such as educational, recreational,
medical, respect for individual) benefits to members. Collective strength
offers a sort of insurance cover to members to fight against irrational,
arbitrary and illegal actions of employers. Members can share their
feelings, exchange notes and fight the employer quite effectively
whenever he goes off the track.
A more recent and non-legislative definition of a union is “an organisation of
workers acting collectively who seek to protect and promote their mutual
interests through collective bargaining” (De Cenzo & Robbins, 1993).
14.3 FORMATIVE STAGES OF TRADE UNION
Trade Union has to pass through a very difficult and hostile period in the
initial years. The employers wanted to crush them with iron hands. Then
came the period of agitation and occasional acceptance. When the union
gained strength they started confronting with the employer. This is period of
struggle which continued for long. Employers were forced to accommodate,
tolerate and hesitatingly accept them. Then came the period of understanding
and industry in collective bargaining. This was followed by fraternal stage
where union became matured and employers started consulting them. The
desired state is the “Fusion Stage” in which joint efforts were required to be
made for union management co-operation and partnership.
14.4 FORMS OF TRADE UNIONS
There are three forms of trade unions:
1) Classical: A trade union’s main objective is to collectively protect the
interests of its members in given socio-economic-political system. Trade
Unions are the expressions of the needs, aspirations and wishes of the
working class.
265
Employer – 2) Neo-classical: It goes beyond classical objectives and tries to improve
Employee
Relations
up other wider issues like tax-reliefs, raising saving rates etc.
3) Revolutionary: Change in the system. Establishing the rule of working
class even through violence and use of force etc.
14.5 FUNCTIONS OF TRADE UNIONS
Functions of trade unions are:
a) Militant or protective or intra-mutual functions: These functions
include protecting the workers’ interests, i.e., hike in wages, providing
more benefits, job security, etc., through collective bargaining and direct
action such as strikes, gheraos, etc.
b) Fraternal or extramural functions: These functions include providing
financial and non-financial assistance to workers during the periods of
strikes and lock outs, extension of medical facilities during slackness and
causalities, provision of education, recreation, recreational and housing
facilities, provision of social and religious benefits, etc.
c) Political functions: These functions include affiliating the union with a
political party, helping the political party in enrolling members,
collecting donations, seeking the help of political parties during the
periods of strikes and lockouts.
d) Social functions: These functions include carrying out social service
activities discharging social responsibilities through various sections of
the society like educating the customers.
14.6 OBJECTIVES OF TRADE UNIONS
Unions concentrate their attention to achieve the following objectives:
a) Wages and Salaries: The subject which drew the major attention of the
trade unions is wages and salaries. Of course, this item may be related to
policy matters. However, differences may arise in the process of their
implementation. In the case of unorganised sector the trade union plays a
crucial role in bargaining the pay scales.
b) Working Conditions: Trade unions with a view to safeguard the health
of workers demands the management to provide all the basic facilities
such as, lighting and ventilation, sanitation, rest rooms, safety equipment
while discharging hazardous duties, drinking, refreshment, minimum
working hours, leave and rest, holidays with pay, job satisfaction, social
security benefits and other welfare measures.
c) Discipline: Trade unions not only conduct negotiations in respect of the
items with which their working conditions may be improved but also
protect the workers from the clutches of management whenever workers
become the victims of management’s unilateral acts and disciplinary
policies. This victimisation may take the form of penal transfers,
suspensions, dismissals, etc. In such a situation the seperated worker who
is left in a helpless condition may approach the tradeunion. Ultimately
the problem may be brought to the notice of management bytrade union
and it explains about the injustice met out to an individual worker and
fights the management for justice. Thus, the victimised worker may be
protected by the trade union.

266
d) Personnel Policies: Trade unions may fight against improper Unions and
Associations
implementation of personnel policies in respect of recruitment, selection,
promotions, transfers, training, etc.
e) Welfare: As stated earlier, trade unions are meant for the welfare of
workers.Trade union works as a guide, consulting authority and
cooperates in overcoming the personnel problems of workers. It may
bring to the notice of management, through collective bargaining
meetings, the difficulties of workers in respect of sanitation, hospitals,
quarters, schools and colleges for their children’s cultural and social
problems.
f) Employee-employer relation: Harmonious relations between the
employees and employer is a sine quo non for industrial peace. A trade
union always strives for achieving this objective. However, the
bureaucratic attitude and unilateral thinking of management may lead to
conflicts in the organisation which ultimately disrupt the relations
between the workers and management. Trade union, being the
representative of all the workers, may carry out continuous negotiations
with the management with a view to promote industrial peace.
g) Negotiating machinery: Negotiations include the proposals made by
one party and the counter proposals of the other party. This process
continues until the parties reach an agreement. Thus, negotiations are
based on ‘give and take’ principle. Trade union being a party for
negotiations, protects the interests of workers through collective
bargaining. Thus, the trade union works as the negotiating machinery.
h) Safeguarding organisational health and the interest of the industry:
Organisational health can be diagnosed by methods evolved for
grievance redressal and techniques adopted to reduce the rate of
absenteeism and labour turnover and to improve the employee relations.
Trade unions by their effective working may achieve employee
satisfaction. Thus, trade unions help in reducing the rate of absenteeism,
labour turnover and developing systematic grievance settlement
procedures leading to harmonious industrial relations. Trade unions can
thus contribute to the improvements in level of production and
productivity, discipline and improve quality of work life.
14.7 ROLE OF TRADE UNIONS
Adopting the model of Prof. Clark Kerr unions assume the following roles:
a) Sectional Bargainer: Interests of the workers at plant, industry, national
level multiplicity of unions, Crafts Unions, white Collar Union etc.
b) Class Bargainer: Unions representing the interest of the class as whole
as inFrance Agricultural Unions, Federations of unions, Civil Servants
Union.
c) Agents of State: As in U.S.S.R., ensuring targets of production at fixed
price. In1974 Railway strike, INTUC stood behind Government and its
agent.
d) Partners in Social Control: Co-determinator in Germany. Also, some
examples are found in Holland, France, Italy and Sweden; some half-
hearted attempts are being made in India also.
e) Unions role which can be termed as enemies of economic systems,
driven by political ideologies than business compulsions. Leftist unions 267
Employer – want to change the fundamental structure of economy and want to have
Employee
Relations
control over it. Therefore, they encourage high wages, high bonus etc.
without any consideration for thehealth of the economy.f) Business
Oriented Role: Here unions consider the interests of the organisation
along with workers. They think that their members fate is inextricably
linked with that of organisation and they swim or sink together.
g) Unions as Change Agent: Lead the changes than to be led by them and
thus, performing the pioneering role.

268
14.8 CLASSIFICATION OF TRADE UNIONS Unions and
Associations
Classification of trade unions is based upon ideology, trade and agreement.
Classification based on ideology
a) Revolutionary Unions: Believe in destruction of existing
social/economic order and creation of a new one. They want shift in
power and authority and use of force - Left Unions.
b) Reformist or Welfare Unions: Work for changes and reforms within
existing socio-political framework of society - European Model.
c) Uplift Unions: Advocate extensive reforms well beyond the area of
working condition i.e., change in taxation system, elimination of poverty
etc.
Classification based on trade
a) Many unions have memberships and jurisdictions based on the trades
they represent. The most narrow in membership is the craft union, which
represents only members certified in a given craft or trade, such as pipe
fitting, carpentry, and clerical work. Although very common in the
western world, craft unions are not common in countries like India and
Sri Lanka.
b) At the other extreme in terms of the range of workers represented in the
general union, which has members drawn from all trades. Most unions in
India and Sri Lanka are in this category.
c) Another common delineation of unions based on trades or crafts is that
between socalled blue-collar workers and white-collar workers. Unions
representing workers employed on the production floor, or outdoor
trades such as in construction work, are called blue-collar unions. In
contrast, those employees in shops and offices and who are not in
management grades and perform clerical and allied functions are called
white-collar workers.
d) In addition, trade unions may be categorised on the basis of the industry
in which they are employed. Examples of these are workers engaged in
agriculture of forestry: hence agricultural labour unions or forest worker
unions.
Classification based on agreement
Another basis on which labour agreements are sometimes distinguished is on
basis of the type of agreement involved, based on the degree to which
membership in the union is a condition of employment. These are:
a) Closed Shop: Where management and union agree that the union would
have sole responsibility and authority for the recruitment of workers, it is
called a Closed Shop agreement. The worker joins the union to become
an employee ofthe shop. The Taft-Hartley Act of 1947 bans closed shop
agreements in the USA, although they still exist in the construction and
printing trades. Sometimes, the closed shop is also called the ‘Hiring
Hall.’
b) Union Shop: Where there is an agreement that all new recruits must join
the union within a fixed period after employment it is called a union
shop. In the USA where some states are declared to be ‘right-to-work’.
c) Preferential Shop: When a Union member is given preference in filling
a vacancy, such an agreement is called Preferential Shop.
269
Employer – d) Maintenance Shop: In this type of arrangement no compulsory
Employee
Relations
membership in the union before or after recruitment exists. However, if
the employee chooses to become a member after recruitment, his
membership remains compulsory right throughout his tenure of
employment with that particular employer. This is called a maintenance
of membership shop or maintenance shop.
e) Agency Shop: In terms of the agreement between management and the
union a non union member has to pay the union a sum equivalent to a
member’s subscription in order to continue employment with the
employer. This is called an agency shop.
f) Open Shop: Membership in a union is in no way compulsory or
obligatory either before or after recruitment. In such organisations,
sometimes there is no union at all. This is least desirable form for unions.
This is referred to as an open shop.
The above classifications are more usual in the west than on the Indian sub-
continent.
14.9 THEORIES OF TRADE UNIONISM
There is no one theory of Trade Unionism, but many contributors to these
theories are revolutionaries like Marx and Engels, Civil servants like Sydney
Webb, academics like Common and Hoxie and labour leader like Mitchall.
Important theories of trade unionism are as follows.
a) Political Revolutionary Theory of Labour Movement of Marx and
Engels: This theory is based on Adam Smiths theory of labour value. Its
short run purpose is to eliminate competition among labour, and the
ultimate purpose is to overthrow capitalist businessman. Trade union is
pure simple a class struggle, and proletarians have nothing to lose but
their chains and they a world to win.
b) Webbs Theory of Industrial Democracy: Webb’s book ‘Industrial
democracy’ is the Bible of trade unionism. According to Webb, trade
unionism is an extension of democracy from political sphere to industrial
sphere. Webb agreed with Marx that trade unionism is a class struggle
and modern capitalist state is a transitional phase which will lead to
democratic socialism. He considered collective bargaining as the process
which strengthens labour.
c) Cole’s Theory of Union Control of Industry: Cole’s views are given in
his book “World of Labour” 1913. His views are somewhere in between
Webb and Marx. He agrees that unionism is class struggle and the
ultimate is the control of industry by labour and not revolution as
predicted by Marx.
d) Common’s Environment Theory: He was skeptical of generalisations
and believed only that which could be proved by evidence. He agreed
that collective bargaining was an instrument of class struggle, but he
summarised that ultimately there will be partnership between employers
and employees.
e) Mitchell’s Economic Protection Theory of Trade Unionism: Mitchell,
a labour leader, completely rejected individual bargaining. According to
him unions afford economic protection to.

270
f) Simons Theory of Monopolistic, anti-Democratic Trade Unionism: Unions and
Associations
He denounced trade unionism as monopoly founded on violence. And he
claimed monopoly power has no use save abuse.
g) Perlman’s Theory of the “Scarcity Consciousness” of Manual
Workers: He rejected the idea of class consciousness as an explanation
for the origin of the trade union movement but substituted it with what he
called job consciousness.According to him, ‘working people in reality
felt an urge towards collective control of their employment opportunities,
but hardly towards similar control of industry.’ Perlman observed that
three dominant factors emerged from the rich historical data:
i) the capacity or incapacity of the capitalist system to survive as a
ruling group in the face of revolutionary attacks (e.g., failure in
Russia).
ii) the source of the anti-capitalist influences being primarily from
among the intellectuals in any society.
i) the most vital factor in the labour situation was the trade union
movement.
Trade unionism, which is essentially pragmatic, struggles constantly not
only against the employers for an enlarged opportunity measure in
income, security and liberty in the shop and industry, but struggles also,
whether consciously or unconsciously, actively or passively, against the
intellectual who would frame its programmes and shape its policies.
But Perlman also felt that a theory of the labour movement should include
a theory of the psychology of the labouring man. For instance, there was
a historical continuity between the guilds and trade unions, through their
common fundamental psychology; the psychology of seeking a
livelihood in the face of limited economic opportunity. It was when
manual workers became aware of a scarcity of opportunity, that they
banded together into unions for the purpose of protecting their jobs and
distributing employment opportunities among themselves equitably, and
to subordinate the interests of the individual to the whole labour
organism. Unionism was ruled thus by this fundamental scarcity
consciousness (Perlman, 1970).
h) Hoxies Functional Classification of Unionism: He classified Unionism
on the basis of their functions. His classification were Business
Unionism for protecting the interest of various craftmen, “Uplift
unionism” for the purpose of contributing better life such as association
of sales engineers etc. “Revolutionary Unionism” which is eager to
replace existing social order, “Predatory Unionism” which rests on these
support of others.
i) Tannenbaum’s Theory of Man Vs. Machine: According to him Union
is formed in reaction to alienation and loss of community in an
individualistic and unfeeling society. In his words, the union returns to
the workers his society, which he left behind him when he migrated from
a rural background to the anonymity of an urban industrial location. The
union gives the worker a fellowship and a value system that he shares
with others like him. Institutionally,the trade union movement is an
unconscious effort to harness the drift of our time and reorganise it
around the cohesive identity that men working together always achieve. 271
Employer –
Employee
14.10 GROWTH OF TRADE UNION MOVEMENT
Relations AND MEMBERSHIP IN INDIA
Trade unions in India, as in most other countries, have been the natural
outcome the modem factory system. The development of trade unionism in
India has chequered history and a stormy career.
Early Period
Efforts towards organising the workers for their welfare were made, during
the early period of industrial development by social workers, philanthropists
and other religious leaders mostly on humanitarian grounds. The first
Factories Act, 1881, was passed onthe basis of the recommendations of the
Bombay Factory Commission, 1875. Due tothe limitations of the Act, the
workers in Bombay Textile Industry under the leadership of N M Lokhande
demanded reduced of hours of work, weekly rest days, mid-day recess and
compensation for injuries. Bombay Mill owners’ Association conceded the
demand for weekly holiday. Consequently, Lokhande established the first
Workers’ Union in India in 1890 in the name of Bombay Mill hands
Association. A labour journal called “Dinabandu” was also published.
Some of the important unions established during the period are:
Amalgamated Society of Railway Servants of India and Burma (1897),
Management the Printers Union, Calcutta (1905) and the Bombay Postal
Union (1907), the Kamgar HitavardhakSabha (1910) and the Social Service
League (1910). But these unions were treated as ad hoc bodies and could not
serve the purpose of trade unions.
Modest Beginning
The beginning of the Labour movement in the modest sense started after the
outbreak of World War I in the country. Economic, political and social
conditions of the day influenced the growth of trade union movement in
India. Establishment of International Labour Organisation in 1919 helped the
formation of trade unions in the country. Madras Labour Union was formed
on systematic lines in 1919. A number of trade unions were established
between 1919 and 1923. Categorywise unions, like Spinners’ Union and
Weavers’ Union, came into existence in Ahmedabad under the inspiration of
Mahatma Gandhi. These unions were later federated into an industrial union
known as Ahmedabad Textile Labour Association. This union has been
formed on systematic lines and has been functioning on sound lines based on
the Gandhian Philosophy of mutual trust, collaboration and non-violence.
All India Trade Union Congress
The most important year in the history of Indian Trade Union movement is
1914 when the All India Trade Union Congress (AITUC) was formed
consequent upon the necessity of electing delegates for the International
Labour Organisation (ILO). Thisis the first all India trade union in the
country. The first meeting of the AlTUC was held in October, 1914 at
Bombay (now Mumbai) under the presidentship of Lala Lajpat Rai. The
formation of AlTUC led to the establishment of All India Railwaymen’s
Federation (AIRF) IN 1922. Many Company Railway Unions were affiliated
to it. Signs of militant tendency and revolutionary ideas were apparent during
this period.

272
a) Period of splits and mergers: The splinter group of AITUC formed All Unions and
Associations
IndiaTrade Union Federation (AlTUF) in 1929. Another split by the
communists in1931 led to the formation of All India Red Trade Union
Congress. Thus, splits were more common during the period. However,
efforts were made by the Railway Federation to bring unity within the
AITUC unity. These efforts didbear fruit and All India Red Trade Union
Congress was dissolved. Added to this, All India Trade Union Federation
also merged with AITUC. The unified AITUC’s convention was held in
1940 in Nagpur. But the unity did not last long. The World Was II
brought splits in the AITUC. There were two groups in theAITUC, one
supporting the war while the other opposing it. the supporting group
established its own central organisation called the Indian Federation of
Labour.
A further split took place in 1947, when the top leaders of the Indian
NationalCongress formed another central organisation.
b) Indian National Trade Union Congress: The efforts of Indian National
Congress resulted in the establishment of Indian National Trade Union
Congress (INTUC) by bringing the split in the AITUC, INTUC started
gaining membership right from the beginning.c) Other Central
Unions: Socialists separated from AITUC had formed Hind Mazdoor
Sabha (HMS) in 1948. The Indian Federation of Labour merged with the
HMS, Radicals formed another union under the name of United Trade
Union Congress in 1949. Thus, the trade union movement in the country
was split into four distinct central unions during the short span of 1946 to
1949.
Some other central unions were also formed. They were Bharatiya
Mazdoor Sangh (BMS) in 1955, the Hind Mazdoor Panchayat (HMP) in
1965 and the Centre of Indian Trade Unions (CITU) in 1970. Thus,
splinter group of INTUC formed Union Trade Union Congress, the split
in the Congress Party in 1969 resulted in the split in INTUC and let to
the formation of National Labour Organisation (NLO).
There are over 9,000 trade unions in the country, including unregistered
unions and more than 70 federations and confederations registered under the
Trade Unions Act,1926. The degree of unionism is fairly high in organised
industrial sector. It is negligible in the agricultural and unorganised sectors.
Though the number of unions has greatly increased in the last four decades,
the union membership per union has not kept pace. The National commission
on labour has stated that only 131 unions had a membership of over 5,000.
More than 70% of the unions had a membership of below 500. Over the years
the average membership figures per union have faIlen steadily from about
1387 in 1943 to 632 in 1992-93 (Pocket Book of Labour Statistics, 1997).
Unions with a membership of over 1400 constitute roughly 4 per cent of the
total unions in the country.
There is a high degree of unionisation (varying from 30% to over 70%) in
coal, cotton, textiles, iron and steel, railways, cement, banking, insurance,
ports and docks and tobacco sector. White-collar unions have also increased
significantly covering officers, senior executives, managers, civil servants,
self employed professions like doctors, lawyers, traders, etc. for safeguarding
their interest. 273
Employer – There are as many as 10 central trade union organisations in the country (as
Employee
Relations
against one or two in UK, Japan, USA). The criteria for recognition as
Central Trade Union has been that the combined strength should be 5 lacs
numbers with a spread over to at least 4 states and 4 industries as on
31.12.89. Ten such Trade Unions are; (1) BMS(2) INTUC (3) HMS, (4)
U.T.U.C - LS (5) AITUC (6) CITUC (7) NLO (8) UTUC (9) TUCC (10)
NFITU. As per one survey (Economic Times, 24.9.97) the five leading Trade
Unions’ strength are as follows:
Box 1 Trade Union Strength
Trade Union Strength
BMS - 331 Lakhs
INTUC - 271 Lakhs
AITUC - 18 Lakhs
HMS - 15 Lakhs
CITU - 3.4 Lakhs

274
14.11 TRADE UNION ACT, 1926 Unions and
Associations
The Trade Union Act, 1926 legalises the formation of trade unions by
allowing employee to form trade union. It allows trade union to get registered
under the act.
Registration provides legal status to the trade union and it becomes body
corporate. Itcan hold moveable and immoveable property and can enter into
contract and can sue and can be sued. The act also provides immunities to the
unions from civil and criminal prosecution for bonafidy trade union activities.
Union can generate General fund for day-to-day activities and Political fund
for political activities. For details refer the Act.
14.12 RECOGNITION OF TRADE UNION
The underline idea of former trade union is to negotiate and bargain with
employers to improve the service and employment conditions of workers on
their behalf. This collective bargaining process can be possible only when
employer recognises a trade union as bargaining agent and agree to negotiate
with it because it is difficult to negotiate with multiple trade unions in a
single organisation.
The Trade Union Act, 1926, the only Central Law, which regulates the
working of the unions does not have any provision for recognition of trade
union. Some attemptswere made to include compulsory recognition in the
Trade Union Act in 1947, 1950,1978 and 1988, but it could not be
materialised.
There are, however, state legislations like Maharashtra Recognition of Trade
Union and Prevention of Unfair Labour Practices Act 1971, Madhya Pradesh
Industrial Relations Act, 1960 and other states like Gujarat, Andhra Pradesh
and Orrisa etc. which have gone for such legislations, of late.
The usual methods used to determine union strength, which is the basis of the
recognitions are following:
1) Election by Secret Ballot: Under which system, all eligible workers of
an establishment may vote for their chosen union, elections to be
conducted by a neutral agent, generally the Registrar of Unions, in a
manner very similar to the conduct of general elections. Once held, the
results of the elections would remain valid for a minimum period,
usually two years.
2) Check-Off method: Under which each individual worker authorises
management in writing to deduct union fees from his wages and credit it
to the chosen union. This gives management concrete evidene about the
respective strengths of the unions. But the system is also prone to
manipulation, particularly collision between management and a favoured
union. Sometimes, genuine mistakes may occur, particularly when the
number of employees is large. It also depends on all unions accepting the
method and cooperating in itsimplementation.
3) Verifiction of union membership method by the labour directorate as
adopted as a resolution in the same session of the ILC and used widely in
many establishments. This process is carried out by the labour
directorate, which on the invitation of unions and management of an
organisation or industry, collects particulars of all unions in a plant, with
regard to their registration and membership. The claim lists of the 275
Employer – unions, their fees books, membership records and account books are
Employee
Relations
scrutinised for duplicate membership. Under a later amendment, unions
also with lists of members in order to avoid dual membership. After
cross checking of records, physical sampling of workers, particularly in
cases of doubt or duplication, a final verified list is prepared for
employers, unions and the government.
4) Rule of Thumb or intelligent guessing by management or general
observation to assess union strength, either by the response at gate
meetings, strikes or discussions with employees. This is not a
reliablemethod, particularly in large estalishments and can also be
subject to change atshort intervals.Of the above methods the first one is
universally accepted method used all over the world but there has been
no consensus amount among the trade unions on that in India.
The Second National Commission of Labour considered the issues seriously
and made the following recommendations:
1) We recommend that the negotiating agent should be selected for
recognition onthe basis of the check off system. A union with 66%
membership be entitled to be accepted as the single negotiating agent,
and if no union has 66% support, then unions that have the support of
more than 25% should be given proportionate representation on the
negotiating college.
2) Secret ballot is logically and financially a difficult process in certain
industries.
Check-off system has the advantage of ascertaining the relative strength of
trade unions. Check-off system should be made compulsory for all
establishments employing 300 or more workers. For establishments
employing less than 300 workers also the check-off system would be the
preferred mode. Recognition once granted, should be valid for a period of
four years, to be coterminous with the period of settlement.
14.13 RIGHTS OF RECOGNISED UNIONS
Recognised unions have certain rights, which are as follows:
a) the right to raise issues with the management,
b) right to collect membership fees within the premises of the organisation,
c) ability to demand check-off facility,
d) ability to put up a notice board on the premises for union
announcements,
e) ability to hold discussions with employees at a suitable place within the
premises
f) right to discuss members’grievances with employer,
g) ability to inspect before hand a place of employment or work of its
members, and
h) nomination of its representatives on committees formed by the
management for industrial relations purposes as well as in statutory
bipartite committees.
Multiplicity of trade unions create problems for both the employer and the
trade unions. Therefore recognition of a trade union as negotiating agent is a
business necessity. Sooner a central legislation is passed and industry and
business houses start dealing with recognised unions, better it will be. Such a
276 device is beneficial for both the employer and the trade unions. It provides
strength, it provides opportunity for understanding and mutual appreciation Unions and
Associations
and thus, provides opportunity for a matured employer union relationship.
14.14 PROBLEMS CONFRONTING UNIONS AND
MEASURES TO STRENGTHEN TRADE
UNION MOVEMENT IN INDIA
Over the years, trade unions in India have been taken for a ride by outside,
political leaders. In the process, the interests of workers and their aspirations
have been totally neglected. The Trade Unions Act, 1926, did not go for
recognising a representative union. As a result multiple unions have cropped
up, often with blessings from management and outsiders. The union finances
have not been very sound in the beginning. The average membership figures
for each union remain poor and have not improved. The forces of
liberalisation unleashed in early 90s have strengthened the hands of
employers in closing down unviable units. The new corporate
‘mantras’productivity, performance, efficiency, survival of the fittest have
virtually pushed them to the wall-where their very survival looks uncertain.
Let’s recount the factors responsible for their ever-increasing woes and
depreciated status thus as below:
a) Trade Union leadership: The nature of leadership significantly
influences the union-management relations as the leadership is the lynch-
pin of the management of trade unions. The leadership of most of the
trade unions in India has been outside leadership mainly drawn from
political parties.
Reasons for emergence of outside leadership: Outside leadership has been
playing a pivotal role in Indian Trade Union Movement due to the inability of
insiders to lead their movement. In view of low education standards and poor
command over English language which is still the principal language of
labour legislation and negotiations, low level of knowledge about labour
legislation, unsound financial position, fear of victimisation by the employer
and lack of leadership qualities-outside leaders have come to stay. The main
reason for this trend is that the Trade Unions Act, 1926, itself provided the
scope for outside leadership. Section 22 of the Act requires that ordinarily not
less than half of the officers of the reregistered union shall be actively
engaged or employed in an industry to which the union relates. Thus, this
provision provides the scope for outsiders to the tune of 50% of the office
bearers. The Royal Commission of Labour (RCI) 1931, recommended for the
reduction of the statutory limit of outsiders from 1/2 to 1/3 but no efforts
were taken in this direction.
The evil effects of outside leadership: The evil effects of outside leadership
analysed by National Commission on Labour are as follows:
1) Outside leadership undermined the purposes of Trade Unions and
weakened their authority. Personal benefits and prejudices sometimes
weighed more than unions.
2) Outside leadership has been responsible for the slow growth of Trade
Unions.
3) Internal leadership has not been developed fully.
4) Most of the leaders cannot understand the worker’ problems as they do
not live the life of a worker.
277
Employer – Even though outside leadership is permissible in the initial stages it is
Employee
Relations
undesirable in the long run because of many evils associated with it. Political
differences of leaders have been inhibiting the formation of one union in one
industry. Most of the Trade Union leaders fulfil their personal aspirations
with their knowledge and experience gained in the Trade Unions.
Measures to minimise the evil effects of outside leadership: In view of the
limitations of outside leadership, it is desirable to replace the outside leaders
progressively by the internal leaders. The National Commission on Labour,
1969, also stated that outsiders in the Trade Unions should be made
redundant by forces from within rather than by legal means.
Both the management and trade unions should take steps in this direction.
The steps may be:
• Management should assure that the victimisation will be at zero level,
even if the trade unions are led by insiders;
• Extensive training facilities in the areas of leadership skills, management
techniques and programmes should be provided to the workers;
• Special leave should be sanctioned to the office bearers. Union rivalry
has been the result of the following factors:

1) The desire of political parties to have their basis among the industrial
workers;
2) Person-cum-factional politics of the local union leader;
3) Domination of unions by outside leaders;
4) Attitude and policies of the management, i.e., divide and rule policy; and
5) The weak legal framework of trade unions.
Measures to minimise union rivalry: In view of the evil effects of inter-
union rivalry and the problem of formation of one union in one industry, it
may be necessary to consider the recommendations of National Commission
on Labour, 1969. The recommendations of NCL to minimise union rivalry
are:
• Elimination of party politics and outsiders through building up of
internal leaders;
• Promotion of collective bargaining through recognition of sole
bargaining agents;
• Improving the system of union recognition;
• Encouraging union security; and
• Empowering labour courts to settle inter-union disputes if they are not
settled within the organisation.
b) Multiple unions: Multiple unionism both at the plant and industry levels
pose a serious threat to industrial peace and harmony in India. The
situation of multiple unions is said to prevail when two or more unions in
the same plant or industry try to assert rival claims over each other and
function with overlapping jurisdiction. The multiple unions exist due to
the existence of craft unions, formations of two or more unions in the
industry. Multiple unionism is not a phenomenon unique to India. It
exists even in advance countries like UK and USA. Multiple unionism
affects the industrial relations system both positively and negatively. It is
278 sometimes desirable for the healthy and democratic health of labour
 movement. It encourages a healthy competition and acts as a check to the Unions and
Associations
adoption of undemocratic practice, authoritative structure and autocratic
leadership. However, the negative impacts of multiple unions dominate
the positive impacts. The nature of competition tends to convert itself
into a sense of unfair competition resulting in inter-union rivalry. The
rivalry destroys the feeling of mutual trust and cooperation among
leadership. It is a major cause forweakening the Trade Union Movement
in India. Multiple unionism also results in small size of the unions, poor
finances, etc.
c) Union Rivalry: The formal basis for Trade Union Organisation is
provided by the Indian Trade Union Act, 1926. The relevant article reads
as follows:“Any seven or more members of a trade union may be
subscribing their name to the roles of the trade union and by otherwise
complying with the provisions of this act with respect to the registration,
apply for registration of the trade union under this Act.”
This provision has led to the formation of multiple unions and resulted in
inter- union rivalry in different industries. But the inter-union rivalry
breaks the very purpose of the trade unions by weakening the strength of
collective bargaining. On the other hand, the existence of a single, strong
union not only protects the employee interests more effectively but also
halts the various unproductive activities of the unions and forces the
leaders to concentrate on the strategic issues. Further, it helps to bring
about congenial industrial relations by bringing about a system of
orderliness in dealing with the employees and by facilitating expeditious
settlement of disputes.
The state of rivalry between two groups of the same union is said to be
inter union rivalry. Inter and intra-union rivalries have been a potent
cause of industrial disputes in the country. They are responsible for weal
bargainingpower of trade unions in collective bargaining. These rivalries
are responsible for slow growth of trade union movement in the country.
d) Finance: Sound financial position is an essential ingredient for the
effective functioning of trade unions, because in the process of rendering
services or fulfilling their goals, trade unions have to perform a variety of
functions and organise programmes which require enormous financial
commitments. Hence, it is imperative on the part of a trade union to
strengthen its financial position.
But it is felt that the income and expenditure of trade unions in India
over the years is such, with few exceptions, that the financial position of
the union is generally weak, affecting their functioning. It is opined that,
“trade unions could be more effective, if they paid more attention to
strengthening their organisations and achieving higher attention of
financial solvency.”
The primary source of income to the unions is membership subscription.
Their other sources of union finances are donations, sale of periodicals,
etc. The items of expenditure include: allowances to office bearers,
salaries to office, annual convention/meeting expenses, rents, stationery,
printing, postage, telegrams, etc.
Most of the trade unions in India suffer from inadequate funds. This
unsound financial position is mostly due to low membership and low rate 279
Employer – of membership fee. Trade Union Act, 1926, prescribed the membership
Employee
Relations
fee at 25 paise per member per month. But the National Commission on
Labour recommended the increase of rate of membership subscription
from 25 paise to Re. 1 in the year 1990. But the Government did not
accept this recommendation.
As the National Commission on Labour observes, “ an important factor
limiting the effective functioning of unions in our country has been their
fmancial weakness.. In most unions, poor finances are the result of
inadequate membership strength. This in turn, can be traced to the small
size of units. In a majority of unions, the rate of contributions required of
members is also small. With a relatively low rte of unionisation, total
funds collected are small. The general picture of finances of unions is
disappointing.”
e) Low membership: The average membership figures of each union are
quite depressing. In 1992-93 the average membership figure was 632, a
steady fall from 3,594 per union from 1927-28. “Because of their small
size, unions suffer from lack of adequate funds and find it difficult to
engage the services of experts to aid and advise members in times of
need’. They can’t bargain with the employer effectively on their own.
f) Heterogeneous nature of labour: Since workers come to the factory
with varying backgrounds, it is difficult for them to put a joint front in
case of trouble. Employers exploit the situation, under the circumstances,
by dividing workers on the basis of race, religion, language, caste, etc.
g) Lack of Interest: For a large majority of workers, unionism even today
remains a foreign issue. In fact, workers avoid union activities out of
sheer disinterestedness. Those who become part of the union, do not also
participate in the union work enthusiastically. In such a scenario, it is not
surprising to find outside political leaders exploiting the situation serve
their own personal agenda.
h) Absence of paid office bearers: Weak finances do not permit unions to
engage the services of full time, paid office bearers. Union activists, who
work on a part time basis, neither have the time nor the energy to take up
union activities sincerely and diligently.
i) Other problems: The other factors responsible for the unsound
functioning of trade unions in India are:
1) Illiteracy: Workers in India fail to understand the implications of
modern trade unionism. Their illiteracy coupled with ignorance and
indifference account for the predominance of outside leadership.
2) Uneven growth: Trade unionism activities are, more or less, confined to
major metros in India and traceable only in large scale units (especially
cotton textile.
The membership fees should be raised as the amount of wages of the
workers increased significantly, compared to the situation in 1926 when
Trade Union Act provided for the collection of 25 paise per month per
member as subscription fee.
Even amended Rs.l/- is not sufficient. Some other source of finance may
also explored to make trade union financially healthy.
Other Measures

280
• Trade unions should extend welfare measures to the members and Unions and
Associations
actively pursue social responsibilities. Social responsibility of Trade
Unions should go beyond their limited constituency within members
only.
• The Trade Union Act, 1926 should be amended and the number of
members required to form a trade union should be increased from 7 to
50% of the employees of an organisation. Similarly, the scope for the
outside leadership should be reduced from 50% to about 10%. The
membership subscription should be enhanced from 25 paise to 1 % of the
monthly wage of the worker.

• Trade Unions should make efforts to raise their declining membership

which is world over phenomenon.

Table 2: Declining Membership

Country Membership % Decline membership
and year and year

Japan 50% in 1950 25% in 1991

U.S.A 30% in 1959 16% in 1989

• Trade Union must broaden their base membership in unorganised

sectors, which constitute about 92% of workforce and IT
sectors/BPO/Call Centres where most of the employment is coming
attracting and retaining new bread of workers by monitoring them.
• Trade Unions must reorient themselves:
– From political/ideology obsession to Business Union - Partners in
progress, sharing the gains.
– Protesting organisation to Partnering organisation
– Bureaucratic organisation to democratic and service organisation
– Complacency to struggle
– Power-hunger to service orientation.
• Trade Unions should be smart, IT savvy on-line working to have
connectivity to employees abroad as also International Trade Unions and
other Trade bodies.
• Trade Unions have to adapt to new realities in new business
environment. “The simple notion of solidarity is now outdated, a narrow
concept to encompass the mutual support of those whose positions and
interests are different.” (Zoll -
• 1996). Solidarity concept is getting diluted because of diversities in work
force and increasing individualization industry). The degree of unionism
also varies from industry to industry, varying between to 30-70 per cent
in coal, cotton textiles, iron and steel, tobacco, railways, cement,
banking, insurance, ports and docks, etc. The degree of unionism is quite
negligible in the agricultural and unorganised sector.

281
Employer – Measures to strengthen Trade Union Movement in India
Employee
Relations
The following are some of the measures to minimise trade union problems
and to strengthen the Trade Union Movement of India.
a) United Labour Front
Unions must put a joint front. Splinter groups multiple unions dissipate their
energies, dilute their power and reduce their effectiveness. Trade unions
should form a sort of labour party and all the trade unions in the country
should be affiliated to it. It gives adequate strength to the trade unions both
industry and Parliament.
b) Efficient Leadership
Outside political leadership has developed due to the absence of internal
leadership. Outside leadership is the main cause for the multiple problems of
the trade unions. These problems can be eradicated through the development
of leadership talents from within. Management should encourage internal
workers to lead their own movement. Management and trade unions should
provide educational and training facilities for the development of internal
leadership.
c) Membership Fees
In order to make members updated Trade unions must organise
continuoustraining and developmental programmes. Future needs smart and
responsive TradeUnions, if they have to survive and thrive.
d) The Trade Union Act should be amended in order to avoid dual
membership.
e) There should be legal provision for the recognition of the representative
union.
f) Unions should not intervene in day-to-day matters. They must focus
onimportant issues affecting workers.
14.15 WHITE-COLLAR AND MANAGERIAL
TRADE UNIONS
There was a time when unions and strikes were known only to Blue-collar
workers in factories, mines, railways docks, etc. White-collar employees and
professional people like doctors, engineers, lawyers, professors and senior
executives and managerial staff thought it below their dignity to band
themselves in unions, march the high streets, and yell slogans. Today it is
different. Trade unions exist among most professionals, whitecollar
employees, officers, senior executives, and managers, and so do strikesand
gheraos.
Highly paid employees in banks, in the Life Insurance Corporation and in
many other establishments are organised, and so the Central Government
andsemi-government employees. They take recourse to strikes, mass casual
leaves,work to rule, dharnas, and gheraos for securing their demand and thus
creating some embarrassing problems for their employers/managements
requiring serious consideration.
Both blue and white-collar workers are employees, but are of different status,
and holding different positions at different levels. The differences between
these two categories of unions are as summarised in the Table 3 below
Table 3: Differences between Blue and White Collar Workers
S. Blue-Collar Worker White Collar Worker
282
No. Unions and
Associations
1. All shop-floor workers (Part of All clerical or office staff who do
production not work on the shop floor, are
system who operate machines termed as white-collar workers as
and related their work and working places are
systems) are termed as blue- clean.
collar workers, as They are generally involved in a
their work is not generally desk job or providing service over
clean. the counter.
They are manual workers with They are non-manual workers
2. lower literacy forming a distinct social ground
and education, and have their characterised by divergent socio-
own social and economic backgrounds, level of
economic background. education, manner of speech, social
custom and ideology. They are
better educated and have jobs
requiring mental capabilities to a
greater extent.
3. They may be paid by time, or They are time workers paid on
by piece, or results, monthly basis. They enjoy longer
either on daily, or weekly, or holidays and leave facilities and
fortnightly, or better privileges.
monthly basis. They are
generally wage earners,
and may have lesser holidays,
and leave facilities
and other privileges than white-
collar workers.
They hold such jobs that they are
They are not so inclined regarded as part of the
4. towards management. management, and so they are more
On the other hand, they may be inclined towards it than the blue-
caring for their collar workers.
unions than for the
management.
5. Excepting highly skilled Because of their professional and
categories who are in social standing they are generally
greater demand and can better paid and have better terms
manage to have higher and conditions of employment,
wages income, the blue-collar including better perquisites and
workers are not fringe benefit.
so well paid. Their fringe
benefits and
perquisites are lower than that
of white-collar
283
Employer – 6. They have better union They have no union protection if
Employee
Relations protection and job they are not unionised, and also job
security by labour legislation, security if they are not covered by
such as Industrial the Industrial Disputes Act, 1947 as
Disputes Act, 1947. may be the case with not a few of
them.

7. They are mostly engaged in They are concentrated in the fields

production of commerce, transport, storage and
processes. communication. They are engaged
in different occupations that fall
under the category of professional,
administrative, executive and
managerial workers, clerical and
related workers, sales staff,
technical, and supervisory and other
workers, engaged in transport and
Communication services,
or in sports and recreational
facilities, artists and musicians.
8. They have no authority, and They are linked with their
nor they associated with employers by being associated with
decision taking. that part of the productive process
where authority is exercised and
decisions are taken.
Source: Industrial Relations, Arun Monappa, Tata McGraw Hill, New Delhi, 1985, pp.33-34
14.16 WHY WHITE COLLAR-WORKERS’
UNIONS?
Seeing how unions of blue-collar workers had improved their service,
employment and working conditions by bargaining collectively with their
employers for better and regular payment of wages, bonus and other fringe
benefits, and job and socialsecurity, whitecollar workers also started uniting
and organising themselves and forming their unions for fighting for better
pay scales, more fringe benefits, internal promotion by collective bargaining,
agitation and litigation. Other factors responsible for the growth of white
collar unionism are discussed below.
1) Denial of both Job Security and Social Security to them by their
exclusion from the purview of labour laws like; Industrial Disputes Act,
1947, and Lawsrelating to wages, bonus and social security against such
social risks as sickness, maternity, premature death, and permanent or
temporary disabilities caused by accidents, old age and retirement.
2) Anomalies in pay caused by implementation of the recommendations of
WageBoards and Pay Commissions.
3) Nationalisation and consequent rationalisation of pay and perquisites.
4) White and Blue collar workers unions are mostly registered under the
Trade Unions Act, 1926 and are generally known as workers and
284
 employees Unions, white-collar workers unions are registered either Unions and
Associations
under the Trade Unions Act,1926, or under the Societies Registration
Act, 1860, and are known as employees unions, or employees or staff
associations. Since the immunity from civil and criminal prosecution is
provided to unions, its members and office bearers for bona fide trade
union activities under the Trade Unions Act, and as this is not
specifically provided under the Societies Registration Act, 1860 the
white-collar workers organisations registered as association under the
latter Act have to be selective in using pressures for getting their demand
met. They generally take recourse to mass casual leave, work to rule,
peaceful demonstrations anddharnas, or hunger strike, rather than to
strike, picketing and boisterous agitation and demonstration.
5) Members of white-collar unions are more educated, knowledgeable and
intelligent, and, therefore, they are more capable in negotiating and
bargaining for their demands. Their union leadership is, therefore, mostly
internal or endogenous. As blue-collar workers are largely illiterate or
low educated, the leadership is more external than internal, as they
require the help of the outsiders in bargaining for them collectively and
representing them in conciliation,arbitration and adjudication
proceedings under the Industrial Disputes Act, 1947.
6) Financially and membership-wise white-collar unions are stronger than
blue- collar unions. Small membership and poor finances make the latter
more dependent on outside leadership and political parties for their day
to day working, negotiations with employers, and conciliation and
adjudication of their disputes. These outsiders may not work always
entirely in the interest of workers. Increasing militancy of blue-collar
unions could be attributed to some extend to their poor bargaining power
and frustration.
7) White-collar unions suffer must less from multiplicity, politicalisation
and outside leadership, and consequently from inter-union rivalries than
the blue- collar unions. They, therefore, have better bargaining power
and greater possibility of arriving at collective and bipartite agreements.
Most of the whitecollar unions are independent, as they are not affiliated
to central trade union organisations with different political ideologies.
All India Federation of Railwaymen (AITUC), and National Federation
of Indian Railwaymen (INTUC) are working more cohesively than as
rivals. Similar is the case with All India Bank Employees Association
and National Union of Bank Employees, they do not sacrifice the
interests of their members for some political gains.
8) Lastly, some of the white-collar employees may be outside the purview
of the Industrial Disputes Act, 1947, and so may have the problem of job
security which their unions may have to look after. This may not be the
problem with Blue-collar Unions as their members are almost covered by
the I.D. Act, 1947.
9) Inconsistent and discriminatory promotion and salary policies which
have been causing so many conflicts and disputes.
10) Gradual narrowing of wages and salaries differentials of blue and white-
collar workers due to fast improvement in the wages and fringe benefits
285
Employer – of the former organization account of their union activities, and so
Employee
Relations
causing feeling of deprivation among white-collar workers.
11) Inflation and soaring prices resulting in erosion of pay and standard
living of whitecollar workers, and thus leading to demand for higher pay,
dearness allowance and annual bonus and other fringe benefits. It is
because of unions of the Government employees and public sectors
undertakings who had been excluded from the purview of the Payment of
Bonus Act, 1965, enabled them to receive now annual bonus worked out
on the basis provided under this Act.
Distinguishing Features of White-Collar Unions
There are some noteworthy features of unions of white-collar workers which
distinguish them from that of the blue-collar unions as stated briefly below:
a) Managerial Association
Managerial trade unionism is no longer a fiction, but is an established fact.
Though this phenomenon is more than forty years old, it is yet to be
considered as worthwhile to be concerned with either by the Government, or
by the central bodies of trade unions, or by academicians. The Government
could not enact a legislation concerning this aspect of trade unionism, or
could not introduce some procedure for redressal of grievances of the
managerial staff. The Central orgnisations of trade unions could have
provided leadership or guidance for proper organisation of such unions. The
academicians, if they had wished, could have attempted an in-depth study of
managerial unionism and workshops. It is only the corporate managements
who could not ignore this happening. In fact they are finding it difficult to
develop working relations with their managers and other officers in the
absence of any corporate or national policy on this subject.

286
b) Nature of Managerial Association Unions and
Associations
Hardly any organisation of managerial employees is a union. They are known
as Officers’ associations registered either under the Societies Registration
Act, 1860, or under the Trade Unions Act, 1926. The officers do not like their
association to be equated with a trade union, though many of their
organisations are registered underthe Trade Unions Act, 1927. Some cases
are also reported to be pending in the Courts, wherein the officers of certain
oranisations are claiming that they are not managersbut workmen, and they
should be given protection under the provisions of the Industrial Disputes
Act, 1947. The purpose of managerial unions is not very much different from
that of other trade unions for employees at different but lower levels in the
hierarchy. The means and strategies may differ in the sense that the
managerial unions are relatively soft in their wheelings and dealings than
most of the blue-collar unions. The officers eligible for membership of such
associations are below the level of Director. They may be from the rank of
trainees and upward up to the rank of Deputy General Manager, and in some
cases even the General Manager. It is the junior and middle level managers
who provide leadership of these associations. These officers rise from the
ranks, and as members of the non-executive cadre they may have had
prolonged experience as members of trade unions, if not, as office-bearers.
In India, Managerial unionism is more in public sector than in private sector.
Its lesser development in private sector may be due to the fact that most of
the organisations in this sector are usually small, and, therefore, they are free
from the cold andimpersonal atmosphere usually found in large bureaucratic
organisations. In small organisations the problems and difficulties of the
officers do not remain unattended. Such individualised attention is supposed
to be missing in big public sector establishments. The other possible reason
for slower growth of managerial trade unions in private sector may be that
there employers are not willing to permit their officers to combine and form
unions of their own.
The emergence of Officers Associations in the public sector is relatively a
new happening, whereas these associations have existed in the banking
industry and insurance companies for a fairly long time. In Western Europe
officers are organised in almost all countries, and there also it predominates
in the public sector. There the formation of such unions have been facilitated
by the fact that demarcation between a workman and non-workman is not so
rigid as in India, and there trade unions are alsonot so apathetic towards
officers association as they are here in India. In fact there the unions want to
bring officers unions under the banner of the existing trade unions.
Why Managerial Association
i) Feeling of relative deprivation has been an important reasons for the
officers/ managers to organise themselves and form their associations for
obtaining fair deal from their managements. There has been a feeling that
as compared to unionised cadre of workmen and lower staff they have
been getting a raw deal. They complain about narrowing wage
differentials generally. It is after the management had negotiated a
settlement with the unionised staff and a settlement is arrived at, the ad
hoc increase in emoluments is given to them unilaterally, which is
287
Employer – usually less than the increase given emoluments of the junior officers and
Employee
Relations
the wages of the senior workmen.
ii) Feeling of insecurity is another reason for the growth of officers unions.
They do not have that enormous protection under the Industrial Disputes
Act, 1947, which is enjoyed by the employees covered by this Act. They
are left high and dry to fend for themselves. This has made them to
realise the message of “unit and organise” to protect the interest of their
membership through collective bargaining, a strategy of which efficacy
has been demonstrated amply by the workmen and staff unions.
iii) Growing harassment of managerial staff by their subordinates: The
authority of the managers has been grossly eroded by the unionised
workmen and staff. They are making it difficult for the managers to take
work from them by being emboldened by the support from their union
and protection they enjoy from labour legislation. Under pressure of the
unionised staff top management often fails to provide the required
support to junior and middle level managers. Even whenever they are as-
saulted by the workmen, the matters are hushed up for maintaining
industrial peace. Managerial unions have been formed to pressurise top
management to provide neces- sary protection against such harassment.
iv) To be a Third Force between the Working Class and the
Management: Being denied the protection of labour laws, and as well as
of the privilege of a real manager, the junior and middle level managers
have gone for the only option left to them, that is, the formation of the
Officers Association. They would not like to be considered as part and
parcel of either of the working class or the management, but as a “third
force” between these two groups.
14.17 EMPLOYERS’ ASSOCIATION
Employers’ Organisations (EOs) are “formal groups of employers set up to
defend, represent or advise affiliated employers and to strengthen their
position in society at large with respect to labour matters as distinct from
economic matters. They may conclude collective agreements but this is not a
formal rule and cannot be an element of their definition. Unlike trade unions,
which are composed ofindividual persons, employers’organisations are
composed of enterprises. Most legal definitions of a trade union apply to
them. (Oechslin, 1990). The Trade Unions Act, 1926 includes in its purview,
both associations of workers as well as employers.
EOs are mainly concerned with matters relating to a wide range of
employment issues including industrial relations. Chambers of Commerce are
usually set up to defend the economic interests of employers. However, in
some countries such as the U.K., Norway and Jordan, for instance, the same
organisation deals with both. In India, as we shall discuss latter, the former
are set up by the latter. Also, sectoral associations such as Confederation of
Indian Industry (till 1991 it was a sectoral association mainly confined to
engineering industry) and United Planters’ Association of south Indian
perform a combined role defending the interest of employers’ in both
economic and labour matters.
Employers’ Associations came into existence as a result of the formation of
ILO and the growing presence of Trade Unions, especially after the First
288 World War. The Royal Commission on Labour, 1929, recommended that the
Indian employers need and some other factors which influenced the Unions and
Associations
formation of unions of managers, senior executives and other officers, are
nationalisation and rationalisation of pay and perquisites, and anomalies in
pay arising from the recommendations of Pay Commissions and Wage
Boards and their implementation.
Objectives of EOs
The main objectives of EOs are similar though they may vary to an extent in
matter of detail.
For organisations “to deal with labour problems from the employer’s point of
view”. As rightly pointed out by Mr. Naval Tata, employers’ organisations
are required to:
• Develop healthy and stable industrial relations;
• Promote collective bargaining at different levels;
• Bring a unified employers’ viewpoint on the issues of industrial relations
to the government in a concerted manner; and
• Represent in the meetings of ILC and SLC boards in conformity with
tripartite approach to labour matter.
Employers’ Associations are formed to promote and protect interests of
employers in Trade and industry. They are: “formal groups of employers set
up to defend, represent or advise affiliated employers”. They perform several
important functions:
Primary Objectives
a) Promote and protect the interest of employers engaged in industry, trade
andcommerce in India.
b) Study, analyse and disseminate information relating to labour policy,
labour management relations, collective bargaining, etc.
c) Offer advice concerning various aspects of labour policy.
d) Liaise with Union Government and initiate steps that are representative
and legislative in nature.

289
Employer – Secondary Objectives
Employee
Relations
a) Train and develop staff and members.
b) Obtain data on wages and conditions of work in industries attached to
them.Come out with surveys, research-based reports on issues of
importance to both labour and management.
c) Take up projects for social and family welfare.
d) Deal with safety and health at work place and working environment. e)
Initiate steps to improve public image and improve public relations.
f) Educate the public regarding the character, scope, importance and needs
of trade, industry and commerce represented by members.
Structure of EOs
At present EOs are organised at three levels :
a) Local Organisations: They serve the interests of local businessmen. The
Bombay Mill Owners Association, for example, has been formed to
protect the local interests of manufacturing units operating within the
city. Such bodies operate through the local chambers of commerce.
b) Regional Organisations: The regional outfits such as Employers’
Federation to South India, Employers’Association, Calcutta are affiliated
to central employers organisation. They offer consultancy service; take
care of training, safety and welfare measures on behalf of their members.
They even have special committees for specific region or industry related
problems.
c) Central Organisations: AIDE, EFI, AlMO operated as apex bodies
governing the affairs of several regional, local associations. To have
better coordination a super structure called the Council of Indian
Employers was formed in 1956, bringing AIDE and EFI under one
umbrella.
Different EOs in India
AlOE: The All India Organisation of Employers is a unitary type of
organisation, setup in 1953; members hail from manufacturing, banking,
insurance, commercial establishments; and has no sub-organisation on an
industrial or geographical basis. The President is elected every year.
EFI: The Employers’ Federation of India has a federal structure formed in
1933, it has governing body executive committee and the secretariat. The
governing body formulates policies, the executive committee implements
policies and the secretariat with its own permanent staff is responsible for
carrying out the decisions of the governing body. It had only four presidents
in over 50 years. EFI was registered as a trade union in 1963 under the Indian
Trade Unions Act of 1926.
IOE: International Organisation of Employers, represents the interests of
employers in all social and labour matters at the international level. Founded
in1914 with headquarters in Geneva, it has a membership of Employers’
Associations from over 100 countries. The Central Council of Indian
Employers is a matter of IDE.SCOPE: The objectives of the Standing
Conference of Public Enterprises cover a wider ambit. SCOPE looks upon its
tasks as both internal and external to the public sector. Internally, it would
endeavour to assist the public sector in such ways as would help improve its
total performance. Externally, it would help improve its total boundary role in
conveying such information and assist the public sector in such ways as
290
would help improve its total performance and advice to the community and Unions and
Associations
the Government as would generally help the public sector in its role.
CIE: The main object in setting up the Council of Indian Employers was to
ensure closer co-operation and coordination between the two bodies which
together represent particularly the interests of large-scale industry in India. In
the year 1973, the SCOPE joined the CIE.
The CIE, with its headquarters in the office of the AlOE in Delhi, consists of
equal number of representatives of the AlOE, EFI and SCOPE. Its principal
functions are: (i) to discuss generally problems confronting Indian employers,
with particular reference to matters coming up before the ILO Conferences
and various Industrial Committees and to formulate, from time to time, the
policy and attitude of Indian employers in the matter of collaboration with
employers of other countries; (ii) to furnish and exchange information on
problems relating to industrial relations with employers of other countries;
(iii) to maintain a close contact with the International Organisation of
Employers (IOE) with a view to study international trends in the employer-
employee relations and to keep the two parties informed of such matters; and,
(iv) to select the personnel of the Indian Employers’ Delegation to the
various Conference and Committees of the ILO.
The same point was emphasised differently in the list of objectives. To
mention a few: (i) to take all steps which may be necessary to promoting,
supporting or opposing legislative and other measures affecting or likely to
affect directly or indirectly, industry, trade and commerce in general, or
particular interest; (ii) to take all possible steps for counteracting activities
inimical to industry, trade and commerce of the country; (iii) to promote and
protect the interests of employers engaged in industry, trade and commerce in
India.
The principal objectives relating to the industrial relations aspects include: (i)
to encourage the formation of EOs and to foster cooperation between EOs in
India and abroad; (ii) to nominate delegates and advisers, etc., representing
Indian employers at the International Labour Conference, International
Chamber of Commerce and other Conferences and Committees affecting the
interests of trade, commerce and industry, whether as employers or
otherwise; (iii) to promote and support all well considered schemes for the
general uplift of the labour and to take all steps to establish harmonious
relations between capital and labour; (iv) to educate the public with regard to
the character, scope, importance and needs of industry, trade and commerce
represented by the Members.
The rules and regulations of the AlOE thus seem to provide for trade related
activities as well, though the preoccupation of the AlOE has always been in
influencing labour policy and legislation and disseminating information and
news to members.
Amalgamation of EOs
During the pre-independence era industry, trade and employer associations
were divided on the basis of Swadeshi vs. Foreign, large vs. small, and to an
extend on regional basis. After independence the indigenous private
industrialists bean to train their guns against public sector which had
witnessed a rapid growth (at least until1990s when privatisation is becoming
the “in-thing”). The small and medium sectors have formed their own 291
Employer – associations. There is also a plethora of sectoral associations.With the
Employee
Relations
proliferation of EOs the need for their unification began to find expression.
After several initiatives and meetings, it was in 1956 that a super structure
called the Council of Indian Employers (CIE), was formed to bring the AlOE
and EFI, the two national level EOs together under one umbrella.
Statutory Protection of EOs in India
EOs could be registered in any of the following legal forms: The Trade
Unions Act,1926; the Indian Companies Act, 1956; or the Societies Act,
1860. The AlOE remained a registered body till 1969 when it was registered
under the Indian Trade Unions Act. The EFI came into being in March, 1933
as a company under the Indian Unions Act. A quarter century later, it was
reorganised as an unregistered Association, a position which continued till
1963 when it too was registered under the Indian Trade Unions Act.
The main reason for the AlOE opting for registration under the Trade Unions
Act was to allow it to take up test cases before the courts and industrial
tribunals. In the caseof the EFI, the motivation was to overcome the burden
of income-tax on its steadily rising income and surplus.
The SCOPE, however, continues to be registered under the Societies Act.
The Constitution grants the right to organise, and so nobody including
manager and officer, can be prevented from forming or joining any
organisation, if he so desires. The Trade Unions Act, 1926 and the Societies
Registration Act, 1860 which provide the only legal framework for the
managerial and officers unions, permit the registration of unions and
associations formed by any seven workers/persons. The registered trade
unions are protected, civil and criminal proceedings for bona fide trade union
activities, including peaceful strike and picketing. The Trade Unions Actonly
provide for the right to organise, but not the right to bargain collectively, as
there is no provision in the Act for the recognition of unions by the
employers. Only Bombay Industrial Relations Act, 1946 which has been
adopted in Rajasthan and Madhya Pradesh and is application in Maharasthra,
provides for compulsory recognition of unions as bargaining agent. This is a
serious lacuna in our industrial relations system, which must be removed at
the earliest, if union and management relations are to be improved.
Apart from the limited protection afforded by the two enactments as
mentioned above, managerial and administrative employees and other
officers have no other statutory protection or benefit except what is provided
by the Civil and Common Law. They have neither the job security nor the
arrangement for quick recovery of their dues, which the workmen or the blue-
collar workers have as provided by the Industrial Disputes Act, 1947 and the
Payment of Wages Act, 1936. Most of the Indian organisations have some
sort of grievance handling procedure to take care of the grievances of the
workmen, but no such procedure exists for the executives or officers. Such a
discriminatory treatment and the fact that revision of salaries of managerial
staff has always to wait till the wages of workers are revised by collective
bargaining, has compelled the former to form their own unions and agitate for
improvement and security of their jobs and emoluments.
It is not that the Government has never thought about the situation of the
Managerial employees. On August 30, 1978 the Janata Government
introduced in the Lok Sabha Bill (No.143 of 1978), called the Employment
292
Security and Miscellaneous Provisions (Managerial Employees) Bill, to Unions and
Associations
provide the security of employment to persons not covered by the Industrial
Disputes Act, 1947. If this Bill had been enacted, it would have enabled a
managerial employee to approach, Employment Security Tribunal for:
a) setting aside termination of his employment or a notice of such
termination issued by his employer,
b) reliefs if the employer affected reduction in rank, salary or allowances,
and
c) recovery of amounts due to him from the employer.
On behalf of the three organisations, the CIE also submits representations to
the Government of India on matters involving important issues of labour
policy on which a common approach is desired.
Under the Constitution of the ILO, its member countries (India is a member
of the ILO since its inception in 1919) should accord recognition to the most
representative organisations of unions an employers. CIE is the organisation
which represents the Indian employers.
Organisation and Management of EOs in India
Membership: As in most countries in India too membership in EOs is
voluntary. AlOE has two categories of members: individual (enterprise) and
association (group of enterprises). EFI additionally has provision for
honorary membership whereby individuals with special skill or experience,
such as legal luminaries or professionalsare coopted to serve on various
committees of the federation. While the predominantly private sector EOs do
not bar public sector enterprises becoming members and rather welcome their
entry and indeed have a few, the SCOPE remains an EO exclusively for the
public sector that too mainly the public sector enterprises in the central
sphere.
648 EOs were registered in 1986 under the Trade Unions Act. Of these,
however, only98 submitted returns. Several more were registered under the
Companies Act and the Societies Act whose number is not known. The
definition of an EO under these three legal forms is much wider than the
meaning assigned to EO in the ILO parlance and inclue industry associations,
chambers of commerce, etc., at various levels including national, regional,
state, local, etc.
In 1986, the AlOE and the EFI had 59 and 31 association members
respectively; even the strength of individual members (enterprises) was low
at 130 and 247 respectively. Some members in both the categories are
common for the AlOE and the EFI. The representative character of the AlOE
and the EFI. Even with regard to the large industry, is thus rather limited. The
SCOPE, on the other hand, is the most representative organisation for the
public enterprises in Central sphere (i.e., those established by the Union
Government) with over 95 per cent of them being members of the SCOPE.
Organisation Structure: The AlOE has a unitary type of organisation. It has
no sub- organisation on an industrial or geographical basis. Even though
there are important clusters of members in Calcutta and Bombay, there has
been no attempt to create local committees or offices. The EFI, however, has
federal type of organisation structure with its activities distributed over a
central body and the regional committees. Both the AlOE and the EFI have a
governing body, executive committee and the secretariat. 293
Employer – The governing body is the supreme policy-making body, the executive
Employee
Relations
committee is responsible for implementing the policies and objectives of the
organisation and the secretariat with a permanent staff, is responsible for
carrying out the decisions of the bargaining. In India this role is voluntary
and at the initiative and request of the members; training and development of
staff and members; safety and health at workplace and working environment;
and public image and public relations.
The above list is indicative and not exhaustive. A survey of members of EOs
in India (Venkata Ratnam, 1989, pp. 112-113) noted that over 70 per cent of
the respondent members of EOs believe that EOs: (a) are active in
disseminating information to members and making representations whenever
an issue or problem arises; henceforth need to be proactive; (b) are not going
as well as they should be doing in their advisory role and in providing a
guidance on issues relating to collective bargaining, etc.; (c) should pay more
attention to: (i) studying problems of concern to employers; (ii) improving
their interaction with members, unions and government; (iii) concentrating on
training workers and members; (iv) strengthening advisory services; (v)
taking up projects for social and family welfare; and (d) need not participate;
as before, directly in enterprise level negotiations or settlement of industrial
disputes at firm level.

Relations: In the course of exercise of their functions, EOs interact with the
three principal actors; i.e., employers (who are their members), Government
and unions. Traditionally employers are individualistic in nature and
competitive consideration affect their ability to confederate as a cohesive
entity. Employers want individual discretion than take a collective, unified
stand for a good policy. This attitude influenced their orientation towards
relations with governments. Individual office bearers would like to cultivate
personalised relations with government functionaries than institutionalise the
interactions. The relations with unions are typically adversarial and
occasional interactions but not usually founded on the realisation of the
importance of a continuous dialogue and discussion to develop rapport,
mutuality, trust and confidence in each other.
EOs also interact with political parties, professional organisations and the
community. Relations with political parties assume significance even if EOs
choose to remain avowedly a political. The presence of professional
organisations make it imperative to see whether these organisations of
managers are similar or dissimilar to those of employers. In today’s context
of large, modem corporations, the employers’ dependence on professional
manager had increased. Likewise the professionals and professional bodies
do draw their sustenance, to an extent, from employers. The EOs also need to
maintain relations with the community.
Future Challenges of EOs
Employers are not only individualistic, but also not a homogeneous class.
The conflict of Swadeshi vs. Videshi in pre-independent era, the public-
private debate in post- independence era, the rivalry between ASSOCHAM
and FICCI, AIMO’s dislike towards the big brother attitude of major
chambers of commerce, the conflict among handloom, powerloom and mill
sector in textile industry, the formal-informal sector divide and the like
294
exemplify that employers are not necessarily a homogeneous class. EOs need Unions and
Associations
to governing body. There is greater continuity in the leadership of the EFI
than the AlOE.
The EFI had only four presidents in over 50 years. The AlOE which used to
elect a new president every two years is now electing a new president every
year. The EFI constitution provides for setting special technical committees if
need arises to provide special attention on any subject.
The SCOPE has two administrative organs, the Governing Council and the
Executive Board besides the Secretariat with permanent staff. The Governing
council lays down policy and elects office-bearers, the Executive Board
oversees implementing of policies. The chief Executive of a member
enterprise/organisation shall automatically be a member of the Governing
Council. Additionally it has three government representatives nominated by
the Director-General, Department of Public Enterprises, as ex-officio
members of the Governing Council with full voting rights.
Finances: EOs are referred to as rich men’s poor clubs. The EFI’s balance
sheet for1985-86 shoes an income of Rs.14 lakhs and that of AlOE Rs.5
lakhs approximately. Nearly half of the income of the EFI and one-fourth of
the income of the AlOE are from membership subscriptions. Other incomes
include interest on corpus/deposits, conferences, publications, etc. Excessive
dependence on income from subscription make EOs financially vulnerable.
The surest way for them to raise funds is to upgrade the quality, relevance
and usefulness of services to their members and other constituents, including
the community.
Representation: EOs in India play two types of roles in representing the
interests of their members: One, they are called to nominate representatives
of employers in voluntary or statutory bodies set up not only to determine
wages and conditions of employment of workers in a particular
industry/sector, but also for consultation and cooperation on social and labour
matters in national and global context. Secondly, they seek to redress the
grievances arising from legislative or other measures by making submissions
to concerned authorities. It is difficult to recapitulate and synthesise the role
played by EOs in representing the interests of employers in the ILO, various
committees/institutions, bipartite and tripartite for at the national level and on
various issues such as legislation, voluntary codes, social security, bonus, etc.
(For an indicative analysis, see Venkata Ratnam, 1989).
Services: The real worth of an EO and the best justification for its support is
the range of services that it provides to its members. Within the overall
framework of the need to develop enlightened human resource management
practices, the kind and range of services that an EO could provide should rest
mainly on the needs of the members and their priorities as also the resources
and competence within the leadership and secretariat of the EO. Some of the
basic services very EO may be expected to provide the following: study and
analysis of problems and dissemination of information - advice, advocacy
and dispute settlement; guidance or conduct of collective reconcile the
concept of a federation with the spirit of competition among their members.
EOs work may concentrate on areas where members interest converge. They
need to overcome the crisis of being the rich men’s poor clubs by upgrading
the quality, relevance, usefulness and cost-effectiveness of their services. 295
Employer – They should learn to be proactive than reactive. The distinction between the
Employee
Relations
reactive and proactive approaches may be described as the difference
between settling disputes and taking preventive care, between raising
demands and removing grievances, seeking amendments to the law and
influencing the law in advance, controlling wages and providing incentive,
enforcing discipline and promoting good relations.
EOs should also reflect on the emerging challenges and redefine their role in
a rapidly changing scenario. For instance the spread of democracy and the
transition to free market economy in most countries the world over rendered
old notions of ideological class conflict less relevant today. The gradual shift
towards information technology society requires reorientation in the basic
philosophy of human resource management policies, technological,
structural, economic and other changes which require adaption and
adjustment with a “human face”. These, then, are some of the new
opportunities and challenges for EOs.
Evaluation of EOs
EOs have remained disparate groups, passing resolutions, airing grievances
from various platforms. EOs’ relations with Government have remined
individualistic in nature. They were keen to have personalised relations with
Government functionaries instead of presenting unified stand for the common
benefit of all constituent groups. The relations with unions were also far from
satisfactory. The focus was not on having an open dialogue on issues
affecting the lives of both the employer and employee. Naturally, the
occasional interactions between the two groups remained adversarial.
Employers were never a homogeneous class. The reasons for this conclusion
are fairly obvious: the conflict between Swadeshi and Videshi in pre-
independence era; thepublic and private ownership debate in post-
liberalisation era, the on-going rivalry and battles between ASSOCHAM,
ElMO and FICCI - all these prove the point clearly.
Unless they present a unified front, maintain cordial relations among all
constituent groups and learn to address the conflicting issues head-on, it will
not be possible to achieve the ends that EOs have adopted over the years.
They have many dilemmas and challenges. The technological, structural,
economic and social changes have altogether transformed the lives of
corporation in a dramatic way, especially after the 90s. The constituent parts
of EOs (their members, unions, government, public at large) must realise the
futility of carrying the age-old clash-conflict ideology into the 21st century.
The free market forces have hanged the rules of the game completely. Unless
the EOs understand and adjust to such challenges and dilemmas (such as
technological, structural, economic, social, etc.) in a smooth way, they would
be falling behind.
They should learn to be proactive than reactive. The distinction between the
reactive and proactive approaches may be described as the difference
between settling disputes and preventive care, between raising demands and
removing grievances, seeking amendments to the law and influencing the law
in advance, controlling wages and providing incentives, enforcing discipline
and promoting good relations.
14.18 SUMMARY
296
In this unit, we have covered trade unionism and Employers Associations. Unions and
Associations
Formative stages and the reasons for formation of the both have been
discussed. So also different forms of trade unionism like; classical, neo-
classical and revolutionary have been touched upon. The objectives,
functions of both trade unions and EOs are covered. Theories of trade
unionism and growth and position of trade unionism in India have also been
discussed.

297
Employer –
Employee
14.19 SELF-ASSESSMENT QUESTIONS
Relations 1) Narrate the growth of trade unions in India.
2) Write a note on the theories of trade unionism.
3) Describe the classification of trade unions citing examples.
4) Discuss the measures required to strengthen trade union movement in
India.
5) Write down the differences between blue-collar and white-collar
workers.
6) Discuss the growth of employers’ associations.
7) Why managerial association is required? Discuss.
8) What are the EOs exist in India? Write down their objectives and
functions.
9) Describe the management and organisation of EOs in India.
14.20 FURTHER READINGS
AIOE, Fifty Years of All India Organisation of Employers, AIOE, New
Delhi, 1984. Bean, R. Comparative Industrial Relations: An Introduction to
Cross-NationalPerspectives, Croom Helm, London, 1985.
Ramaswamy, E.A. The Worker and His Union: A Study of South India,
AlliedPublishers, Mumbai, 1977.
Ramaswamy, E.A. and Uma Ramaswamy, Industry and Labour, Oxford,
New Delhi,1981.
Trade Union Act, 1926.
Venkatratnam, C.S. Globalisation and Labour Management Relations,
ResponseBooks, New Delhi.
Verma, P. and Surya Mookerjee, Trade Unions in India, Oxford, New Delhi,
1982.

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