RAI BUSINESS SCHOOL

ASSIGNMENT

ON

SUBMITTED TO:
Mr. U.S. WAHIE
RAI BUSINESS SCHOOL
NEW DELHI

SUBMITTED BY:
MUKESH KUMAR s/o
Mr. LALLU YADAV
MBA SEM-4th PTU
(IND-INT)
Question No.1:
“In order to understand the emergence of Industrial Relations, it is
necessary for us to study the process of evolutions of industry” explain this
concept in brief?
Answer:
Industrial relations define relationships between employers and employees toward
each other in terms of supervision, direction, planning and coordination of organizational
activities, with minimal human effort and functions; all this done with an enthusiastic spirit
taking into consideration the safety of all employees.
Industrial relations may also be defined as relations between employees and
management. It is always important to study the process of evolution of industry relation in order
understand the emerge of industrial relations.
The evolution of industrial relations in India began a long time ago. The caste system
greatly influenced the ancient industries and their development. Due to successive foreign
invasions in India, the living conditions of slave and artesian couldn't be differentiated.
Furthermore, under the autocratic regime of Muslim rulers, the conditions of employees
worsened. Wages were not guaranteed, the living conditions of workers were harsh, and there
was no proper management. The coming of the British didn't improve the working conditions.
After some time, however, most Indian industries were modeled after the British system of
business, and this led to growth in various sectors.
During British rule, India was expected to be a colonial market for British goods up
until a cotton mill was established in Mumbai in 1853 and a jute mill was established in Kolkatta
in 1955. The working conditions of workers, however, were still very harsh with low pay, and
this gave rise to various disputes involving the management and employees. On the other hand,
Tata Iron and Steel industry was also established in Jamshedpur in 1911. While there was great
demand of iron and steel before and during the First World War, the working conditions of
workers hadn't improved. Hence, the Factories Act of 1881 was established, and it granted
workers certain rights.
The First World War was an opportunity in disguise for local factories in India. Prices
of virtually all products went up and profits soared, however, wages of lower employees were
still the same. There were various strikes and disputes between management and employees.
During this time, the Workmen's Compensation Act (1923), the Trade Union Act (1926), and the
Trade Disputes Act (1917) were established. While the wages of employees remained the same,
they were given a certain share of profits made by their hiring industry. Strikes, however, were
sometimes prohibited under the Emergency Rules. The years following World War II involved
the most workers' upheaval, and saw the establishment of Industrial Employment Act (1946) and
Industrial Disputes Act (1947).
The post-independence era saw a developing relation between industry and labor. A
conference called the Industrial Truce Resolution took place in 1947, and foresaw the
establishment of the Minimum Wages Act, Factories Act, and Employees State Insurance Act in
1948. This ensured peace between labor and industry. While industrial relations in India have
evolved a long way, some features of the early system still exist today. Modern industrial
relations are dynamic, and may integrate industrial policies of American and British businesses.
Question No.2:
 Explain the process of collective bargaining. Outline the prerequisites for
success of collective bargaining.
Answer:

DEFINITION:
Collective bargaining is process of joint decision making and basically represents a
democratic way of life in industry. It is the process of negotiation between firm’s and workers’
representatives for the purpose of establishing mutually agreeable conditions of employment. It
is a technique adopted by two parties to reach an understanding acceptable to both through the
process of discussion and negotiation.
ILO has defined collective bargaining as, negotiation about working conditions and terms
of employment between an employer and a group of employees or one or more employee,
organization with a view to reaching an agreement wherein the terms serve as a code of defining
the rights and obligations of each party in their employment/industrial relations with one another.
Collective bargaining involves discussions and negotiations between two groups as to the
terms and conditions of employment. It is called ‘collective’ because both the employer and the
employee act as a group rather than as individuals. It is known as ‘bargaining’ because the
method of reaching an agreement involves proposals and counter proposals, offers and counter
offers and other negotiations.

Thus collective bargaining:

 Is a collective process in which representatives of both the management and employees
participate?
 Is a continuous process which aims at establishing stable relationships between the
parties involved?
 Not only involves the bargaining agreement, but also involves the implementation of
such an agreement.
 Attempts in achieving discipline in the industry
 Is a flexible approach, as the parties involved have to adopt a flexible attitude towards
negotiations?

Characteristics:
• It is a group process, wherein one group, representing the employers, and the other,
representing the employees, sit together to negotiate terms of employment.
• Negotiations form an important aspect of the process of collective bargaining i.e., there is
considerable scope for discussion, compromise or mutual give and take in collective
bargaining.
• Collective bargaining is a formalized process by which employers and independent trade
unions negotiate terms and conditions of employment and the ways in which certain
employment-related issues are to be regulated at national, organizational and workplace
levels.
• Collective bargaining is a process in the sense that it consists of a number of steps. It
begins with the presentation of the charter of demands and ends with reaching an
agreement, which would serve as the basic law governing labor management relations
over a period of time in an enterprise. Moreover, it is flexible process and not fixed or
 static. Mutual trust and understanding serve as the byproducts of harmonious relations
between the two parties.
• It a bipartite process. This means there are always two parties involved in the process of
collective bargaining. The negotiations generally take place between the employees and
the management. It is a form of participation.
• Collective bargaining is a complementary process i.e. each party needs something that the
other party has; labor can increase productivity and management can pay better for their
efforts.
• Collective bargaining tends to improve the relations between workers and the union on
the one hand and the employer on the other.
• Collective Bargaining is continuous process. It enables industrial democracy to be
effective. It uses cooperation and consensus for settling disputes rather than conflict and
confrontation.
• Collective bargaining takes into account day to day changes, policies, potentialities,
capacities and interests.
• It is a political activity frequently undertaken by professional negotiators.

PROCESS OF COLLECTIVE BARGAINING:

Collective bargaining generally includes negotiations between the two parties
(employees’ representatives and employer’s representatives). Collective bargaining consists of
negotiations between an employer and a group of employees that determine the conditions of
employment. Often employees are represented in the bargaining by a union or other labor
organization. The result of collective bargaining procedure is called the collective bargaining
agreement (CBA). Collective agreements may be in the form of procedural agreements or
substantive agreements. Procedural agreements deal with the relationship between workers and
management and the procedures to be adopted for resolving individual or group disputes.

The collective bargaining process comprises of five core steps:

1. Prepare:
This phase involves composition of a negotiation team. The negotiation team should
consist of representatives of both the parties with adequate knowledge and skills for negotiation.
In this phase both the employer’s representatives and the union examine their own situation in
order to develop the issues that they believe will be most important. The first thing to be done is
to determine whether there is actually any reason to negotiate at all. A correct understanding of
the main issues to be covered and intimate knowledge of operations, working conditions,
production norms and other relevant conditions is required.

2. Discuss:
Here, the parties decide the ground rules that will guide the negotiations. A process well
begun is half done and this is no less true in case of collective bargaining. An environment of
mutual trust and understanding is also created so that the collective bargaining agreement would
be reached.
3. Propose:
This phase involves the initial opening statements and the possible options that exist to
resolve them. In a word, this phase could be described as ‘brainstorming’. The exchange of
messages takes place and opinion of both the parties is sought.

4. Bargain:
Negotiations are easy if a problem solving attitude is adopted. This stage comprises the
time when ‘what ifs’ and ‘supposals’ are set forth and the drafting of agreements take place.

5. Settlement:
Once the parties are through with the bargaining process, a consensual agreement is
reached upon wherein both the parties agree to a common decision regarding the problem or the
issue. This stage is described as consisting of effective joint implementation of the agreement
through shared visions, strategic planning and negotiated change.

Prerequisites for success of collective bargaining:

Collective bargaining includes not only negotiations between the employers and unions
but also includes the process of resolving labor-management conflicts. Thus, collective
bargaining is, essentially, a recognized way of creating a system of industrial jurisprudence. It
acts as a method of introducing civil rights in the industry, that is, the management should be
conducted by rules rather than arbitrary decision making. It establishes rules which define and
restrict the traditional authority exercised by the management.

Importance to employees:
 Collective bargaining develops a sense of self respect and responsibility among the
employees.
 It increases the strength of the workforce, thereby, increasing their bargaining capacity as
a group.
 Collective bargaining increases the morale and productivity of employees.
  It restricts management’s freedom for arbitrary action against the employees. Moreover,
unilateral actions by the employer are also discouraged.
 Effective collective bargaining machinery strengthens the trade unions movement.
 The workers feel motivated as they can approach the management on various matters and
bargain for higher benefits.
 It helps in securing a prompt and fair settlement of grievances. It provides a flexible
means for the adjustment of wages and employment conditions to economic and
technological changes in the industry, as a result of which the chances for conflicts are
reduced.
Importance to employers:
 It becomes easier for the management to resolve issues at the bargaining level rather than
taking up complaints of individual workers.
 Collective bargaining tends to promote a sense of job security among employees and
thereby tends to reduce the cost of labor turnover to management.
 Collective bargaining opens up the channel of communication between the workers and
the management and increases worker participation in decision making.
 Collective bargaining plays a vital role in settling and preventing industrial disputes.
Importance to society:
 Collective bargaining leads to industrial peace in the country
 It results in establishment of a harmonious industrial climate which supports which helps
the pace of a nation’s efforts towards economic and social development since the
obstacles to such a development can be reduced considerably.
 The discrimination and exploitation of workers is constantly being checked.
 It provides a method or the regulation of the conditions of employment of those who are
directly concerned about them.

Question No.3:
Explain the machinery for prevention and settlement of industrial
disputes in India.

Answer:
Preventive Machinery of Industrial Disputes:
Prevention is always better than cure. Preventive steps should, therefore, to be taken so
that industrial disputes do not occur. The following measures can be taken to prevent disputes in
industry.

Code of conduct
Each individual organism its code or may follow the code of discipline in industry
formulated by the govt: and made applicable to industry and workers from June 1st 1958. It aims
at preventing disputes through negotiations without the interference of an outside agency.

Objectives:
 To avoid work stoppages
  To maintain discipline in industry
 Eliminate all forms of coercion and violence in IR
 Secure settlement of disputes and grievances by negotiation, conciliation and arbitration.
 Promote constructive co-operation between the parties concerned at all levels.
 Improve motivation & communication
 Improve productivity and compensation of employees.

Workers Participation in Management

It is a method whereby the workers are allowed to be consulted and to have a say in the
management of the unit. WPM is essentially the step promoting Industrial Democracy. It is the
modern trend in the industrial world both developed and developing countries .WPM means
sharing of profit and pain.

According to Dr. V.G. Mehtras:

“Applied to industry the concept of participation means sharing the decision making power
by the ranks of an industrial organization through their proper representatives at all appropriate
levels of management, in the entire range of managerial actions.”

The important schemes of workers participation are:

 Joint Consultation
 Works committee
 Joint management council
 Shop council
 Joint council

Joint Consultation
It is a process where by employer consults the workers either directly or through their
representatives and seeks their opinion on various issues while retaining to himself the right of
taking final decisions. it is carried out through joint consultation committees consisting the
representatives of both the employer and workers.

Work Committees
Every industrial undertaking employing 100 or more workers is under an obligation to
set up a works committee consisting equal number of representatives of employer and
employees. The main purpose of such committees is to promote industrial relations. According
to Indian Labour Conference work committees are concerned with:-
 Administration of welfare & fine funds.
 Educational and recreational activities.
 Safety and accident prevention
 Occupational diseases and protective equipment.
 Conditions of work such as ventilation, lightening, temperature & sanitation including
latrines and urinals.
 Amenities such as drinking water canteen, dining rooms, medical & health services.
 The following items are excluded from the preview of the work committees.
  Wages and allowances
 Profit sharing and bonus
 Programs of planning and development
 Retirement benefits
 PF and gratuity
 Housing and transport schemes
 Incentive schemes
 Retirement and layoff

LAYOFF:
Inability of the employer in certain conditions, it is a measure to cope up with the
temporary inability of an employee to offer employment to a workman to keep the establishment
as a going concern.

Joint Management Council:

Just to make a start in labour participation in management, the govt: suggested in its
Industrial Resolution 1956 to set up joint management councils. It consists of equal numbers of
workers and employers (minimum 6 & maximum 12) decisions of the JMC should be unanimous
and should be implemented without any delay. JMC members should be given proper training.

JMC should look after 3 main areas:

 information sharing
 consultative
 administrative
Representation of workers to the JMCs should be based on the nomination by the representation.
Objectives
 Satisfy the psychological needs of workers
 Improve the welfare measures
 Increase workers efficiency
 Improve the relation and association between workers, managers and promoters.
 JMC deals with matters like:-
 Employee welfare
 Apprenticeship scheme
 Causes of failure of JMCs:-
 Attitude of animosity
 Crisis of confidence in elected representatives
 Limited scope of JMC
 Level of participation
 The performance of JMC is not satisfactory due to:
 The absence of representative unions made it difficult for the council to work smoothly.
 The leaders feel that the council would weaken their hold over workers
 Managers feel that it is very difficult to convince uneducated representatives of workers.
  Managers feel that with work committees and collective bargaining there is no need for
this councils.

Shop Council:
Shop councils have been established in the manufacturing and mining industries
employing 500 or more workers in private, public and joint sectors.
These councils assist the mgmt in achieving production targets, improving production,
productivity and efficiency, eliminating wastage and in achieving optimum utilization of
machinery and manpower.
Features:
All decisions of a shop council shall be on the basis of consensus and not by the basis of
voting that either party may refer the unsettled matters of the joint council for consideration.
There will be shop council for each department or one council for more departments considering
the number of workers employed. The number of members in the council may be decided by
management in consultation with recognized unions. The total members may not generally
exceed 12. A shop council once formed shall function for a period of two years. It will meet as
frequently as possible at least once in a month. Each shop council shall consist of equal number
of representatives of employers and employees. Every decisions of a shop council shall be
implemented by the parties concerned within a period of one month, unless otherwise stated in
the decision itself and compliance report shall be submitted to the council.

FUNCTIONS:
Assist management in achieving production targets.
 Identify areas of low productivity.
 Improve production
 Suggest healthy, safety, welfare measures.
 Assist in maintaining general discipline in the shop or department.
 Physical conditions of work environment

Joint Councils:
JC are set up for the whole unit and deals with matters relating optimum production and
efficiency and the fixation of productivity norms for man and machine for the as a whole. in
every industrial unit employing 500 and more workers there should be a Joint Council for the
whole unit.

Features:
 Members of the council must be actually engaged in the unit.
 The chief executive of the unit will be the chairman of the council and vice chairman will
be nominated by worker members.
 Term of the council will be two years.
 JC shall meet at once in a quarter.
 Decision of the council will be based on consensus and not on voting.
FUNCTIONS:
 Optimum use of raw materials and quality of finished products
  Optimum production, efficiency and function of productivity norms of man and machine
as a whole.
 Preparation of schedules of working hours and of holidays.
 Adequate facilitates for training.
 Rewards for valuable and creative suggestions received from workers.

Settlement of Disputes:
The different Methods for prevention of industrial Disputes are shown in the chart. Usually they
are divided in two groups:

A. Voluntary Methods

B. Statutory Measures

Each of them is explained in detail.

Voluntary Methods:
Collective Bargaining:
Collective Bargaining is process of joint decision making and basically represents a
democratic way of life in industry. It is a technique adopted by two parties to reach an
understanding acceptable to both through the process of discussion and negotiation. According to
Prof. Paul Samuelson, “Collective Bargaining is the process of negotiation between firm’s and
worker’s representatives for the purpose of establishing mutually agreeable conditions of
employment”.
 ILO has defined Collective Bargaining as, “Negotiation about working conditions and
terms of employment between an employer and a group of employees or one or more employee,
organization with a view to reaching an agreement wherein the terms serve as a code of defining
the rights and obligations of each party in their employment relations with one another.
Characteristics of Collective Bargaining:
1. It is a group process, wherein one group representing the employers and the other
representing the employees sit together to negotiate terms of employment.
2. Negotiations form an important aspect of the process of Collective Bargaining i.e.
there is considerable scope for discussion, compromise or mutual give and take in
Collective Bargaining.
3. It is flexible or mobile and not fixed or static.
4. Collective bargaining is a process in the sense that it consists of a number of steps. It
begins with the presentation of the charter of demands and ends with reaching an
agreement, which would serve as the basic law governing labour management
relations over a period of time in an enterprise.
5. It a bipartite process.
6. Collective Bargaining is a complementary process i.e. each party needs something
that the other party has, labour can increase productivity and management can pay
better for their efforts.
7. Collective Bargaining is continuous process.
8. It enables industrial democracy to be effective.
9. Collective Bargaining takes into account day to day changes, policies, potentialities,
capacities and interests.
Trade union
Strong trade unions help prevent industrial Disputes. They can bargain with employers
effectively and seek quick redressal of grievances. Industrial relations will be sound only when
the bargaining power of the employees’ union is equal to that of management. A strong union
can protect the employees’ interest relating to wages, benefits, job security, etc. Some of the
examples are as under:
Craft Unions: supports skilled craftsmen, e.g. Musicians’ Union
Industrial Unions: grew from traditional heavy industrial e.g. Union of Shop, Distribution
Workers (USDAW)
General Unions: usually semi-skilled and unskilled workers e.g. GMB
White Collar Unions: people working in clerical jobs e.g. UNISON
Joint Consultations:
To prevent industrial disputes, two ways of joint consultation are adapted – works committees
and Joint management councils.

Statutory Measures:
Works Committee:
For promoting dialogue between the employer and the workmen and for securing and
preserving amity, the Industrial Disputes Act, 1947, provides that every industrial establishment
employing 100 or more workmen may be required by the government to constitute a works
committee comprising equal representatives of management and workmen. The main function of
this committee is to endeavor to compose any difference of opinion in matters of common
interest and thereby promote measures for securing and preserving amity and cordial relations
between the employer and workmen. The representatives of workmen are to be chosen from
among the workers engaged in the establishment in the prescribed manner and in consultation
with their trade union, if any, registered under the Trade Unions Act, 192613.
Conciliation:
Conciliation is a process by which representatives of workers and employers are brought
together before a third party with a view to persuading them to arrive at an agreement by mutual
discussion between them.
Voluntary Arbitration:
When conciliation proceedings fail to settle the dispute, the conciliation officer may
persuade the conflicting parties to voluntarily refer the dispute to a third party known as
Arbitrator, appointed by the parties themselves. The arbitrator listens to the viewpoints of both
parties and delivers award or judgment on the disputes. He, however, does not enjoy judicial
powers. The arbitrator submits his judgment on the disputes to the government. Therefore the
government publishes the award within 30 days of it submission. the award becomes enforceable
after 3 days of its publication. The arbitration award is binding on all the parties to the agreement
and all other parties summoned to appear in the proceeding as parties to disputes. Before
delivering the judgment, the arbitrator is expected to follow procedure of giving notice to parties,
giving a fair hearing, relying upon all available evidence and records and following the principal
of the nature justice.
Despite the best efforts of government to give place of prominence to arbitration, it has
not been a resounding success of India. Existing data on disputes settlement machinery shows
that not even one per cent of the disputes reported were referred to arbitration. According to the
National Commission on Labour, employers have not welcomed the step wholeheartedly. The
main hurdles came in the way were:
 Dearth of suitable arbitration enjoying the confidence of disputing parties.
 The complicated procedure to be followed in voluntary arbitration.
 The payment of arbitration fees. Unions can seldom afford to pay such fees
equally with management.
 The absence of recognized unions which could bind the workers to a common
agreement.
 Easy availability of adjudication in case of failure of conciliation or
negotiation.
 Absence of legal remedy for appeal against the award given by the arbitrator.
With a view to promote voluntary arbitration, the Government has appointed a tripartite
National Arbitration Promotion Board July, 1987, consisting of representatives of employers,
trade unions and the Government. The board keeps the panel of experts who could act as
arbitrator. The board evaluates the progress of voluntary arbitration from time to time and
advances suggestion for its improvement. It also tries to evolve principles, norms and procedures
for guidance of the arbitration and the parties.
Adjudication:
Adjudication or compulsory arbitration is the ultimate remedy for the settlement of disputes
in India. Adjudication consists of settling disputes through the intervention of a third party
appointed by the government. An industrial dispute can be referred to adjudication by the mature
consent of the disputing parties. The government can also refer a dispute to adjudication without
the consent of the parties. The Industrial Disputes Act, 1947, provides three-tier adjudication
machinery – namely Labour Courts, Industrial Tribunals and National Tribunals – for the
settlement of industrial disputes.

Question No.4:
Write notes on:
i. Distributive bargaining,
ii. cooperative bargaining,
iii. productivity bargaining and
iv. composite bargaining

Answer:
Distributive bargaining:
Distributive bargaining, also called "claiming value," "zero-sum," or "win-lose"
bargaining, is a competitive negotiation strategy that is used to decide how to distribute a fixed
resource, such as money. The parties assume that there is not enough to go around, and they
cannot "expand the pie," so the more one side gets, the less the other side gets.
Distributive bargaining is important because there are some disputes that cannot be
solved in any other way -- they are inherently zero-sum. If the stakes are high, such conflicts can
be very resistant to resolution. For example, if budgets in a government agency must be cut 30
percent, and people's jobs are at stake, a decision about what to cut is likely to be very difficult.
If the cuts are small enough that the impact on employees will be minor, however, such
distributive decisions can be made more easily.
Even in cooperative negotiations, distributive bargaining will come into play.
Distributive bargaining and integrative bargaining are not mutually exclusive negotiation
strategies. Integrative bargaining is a good way to make the pie (joint value) as large as it can
possibly be, but ultimately the parties must distribute the value that was created. If they are able
to expand the pie enough, distribution is easy. If there is still not enough to give each side what it
wants, however, distributive negotiation will be more difficult.

Cooperative bargaining:
 Both parties are more open to coming down from their high horses and co-operating.

 They are willing to negotiate the terms of employment in a flexible way.

 This willingness is because of recession and the need to be able to survive in such
difficult times.

 This would not be possible without each other’s support and hence co-operative
bargaining.

 TELCO and Ashok Leyland resorted to co-operative bargaining when the automobile
sector was going through a period of recession

 Employees may now be willing to accept a cut in wages in return for job security.
  Management may also agree to modernize and bring in new technology and invest in
marketing efforts in a phased manner.

Productivity Bargaining:
A form of collective bargaining in Britain in which higher rates of pay are traded against
employees' acceptance of greater flexibility in work tasks and functions, or other changes in
working practice, or where productivity payments are related directly to volume of output.

 In this method, workers’ wages and benefits are linked to productivity.

 Initially, a standard productivity index is finalized through negotiations.

 This index is not fixed at an exceptionally high level.

 Workers crossing the standard productivity norms will get substantial benefits.

 This method of bargaining helps in making the workers realizes the importance of raising
productivity for organizational survival and growth.

Composite Bargaining:

 Workers tend to argue that productivity bargaining increases their workload.

 Rationalization, introduction of high technology, tight productivity norms hit the

unions and workers below the belt.

 As a result, workers tend to favour composite bargaining?

 In this method, labour bargains for wages as usual.

 In addition, they also bargain for such issues that, if permitted, may result in lower
employment in some other plant, diluting the bargaining powers of unions.
Eg. Workers demand further equity in matters relating to work norms, employment
levels, manning standards, environmental hazards, sub-contracting clauses, etc.

 We see that workers are no longer solely interested in the monetary aspects to the
exclusion of work related matters.

 Through composite bargaining, unions are able to prevent the dilution of their powers
and ensure justice to workers by putting certain limits on the freedom of employers.

 For the employer, this is the lesser evil when compared to strikes and lockouts.
Question No.5:
Case Study

Tridev Financing started as a small organization ten years ago with only fifty workers.
The employee Mr. Raghav is a XII passed man without formal degree to his credit. He employed
people whom he knew and who had reasonable capabilities of performing accounts work. No
formal recruitment procedures were followed nor were any formal qualifications asked for. Now
his son who has done his MBA wants to expand and improve the organization activities. He
hired a HR professional to conduct all the HR functions. He decided to discontinue the old 50
workers and employ properly qualified ones in their place.
The 50 workers rise in protest and request the senior employer to protect them and their
source of income. The son reconsiders his decision and decides to give some less important jobs
that they do not involve much skill and decision making to them. But the employees refuse to
accept this move and resent working under young juniors.

Question: How would you handle the situation if you were to take over the now Personnel
Manager?

Answer:

If I were to take over the now personnel manager, I will try to handle the situation with
patience and tactfully. First I will test the old employee’s skills according to their previous job
profile; like accounting and finance knowledge for finance related job, sales and marketing
knowledge for marketing related work. I will verify if they have the skill to fulfill the company’s
increasing demand irrespective of their education qualification. After all they are all experience
people does not qualify the skill test, I’ll try to arrange some specific base training for a short
period. Even after they do not qualify and does not want to work other less important jobs, under
the supervision of junior colleagues. Finally I will ask the management to give some
remunership to the old employees and asked the employees to leave the organization.