Industrial Relations Management

Industrial Relations Management

This course contains the basics of Industrial Relations Management

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Industrial Relations Management


Industrial relations in India have been shaped largely by principles and policies evolved through tripartite consultative machinery at industry and national levels. The aim of the consultative machinery is to bring the parties together for mutual settlement of differences in a spirit of cooperation an goodwill´Thus these bodies play the role of consultants!!The Planning Commission has summarized the role of tripartite bodies as

Labour policy in India has been evolving in response to the specific needs of the situation in relation to the industry and the working class and has to suit the requirements of planned economy

A body of principles and practices has grown up as a product of joint consultation in which representatives of government, the working class and the employers have been participating at various levels.

The legislative and other measures adopted by government in this field represent the consensus of opinion of the parties vitally concerned and thus acquire the strength and character of a national policy, operating on a voluntary basis.


Tripartite bodies have been set up by the government to provide a forum of discussion and consultation on various labour related issues.

Some of the notable bodies’are-

  • The Indian Labour Conference (ILC)
  • The Standing Labour Committee (SLC)
  • The Committee on Conventions
  • The Industrial committee

Other bodies of tripartite nature which deals in various aspects of labour problems -

  • Steering Committee on Wages
  • Central Implementation and Evaluation Machinery
  • Central Boards of Workers· Education
  • National Productivity Council

Tripartism promotes the idea of partnership between the labor and the management. The two main principles of tripartism are:

  • Management and workers should share a relationship of partnership rather than that of employer and employee. They should work in synergy towards the building up of the national economy.
  • It holds the whole community liable for protecting the interests of workers and ensures that workers are not deprived of their due share in gains of economic development.

As the name suggests, tripartism involves three parties that participate in reaching a consensus or peace pertaining to the matters of industrial dispute. The three participants are the trade union, employer and the government, which conduct meetings to review all aspects of a situation, advice one another and try reaching a consensus.

The government plays the most important part in this process; it initiates in bringing the management and representatives of workers on the same platform. The Annual Labor Conference is the chief instrument for tripartism. It initiated proposals like worker participation in management, worker education and minimum wages legislation.

Some important measures agreed to by the Indian Labour conference in past are:

  1. Setting up of bipartite works committees, joint consultative and production committees.
  2. Adoption by employers and unions of a voluntary code of discipline;
  3. Following proper grievance and disciplinary procedures;
  4. Deciding norms for fixing need based wages;
  5. Rationalizing and revising wage structures of important industries through non statutory wage boards; and
  6. Encouraging voluntary arbitration for the settlement of industrial disputes.

Industrial relations in India have been shaped largely by principles and policies evolved through tripartite consultative machinery at the industry and national levels.

Evolution of Tripartite Bodies

The Whitley Commission,in 1931, recommended a body be set up to look into the needs for consultation on labour matters.It envisaged a statutory organization which should ensure adequate representation of the various interests involved: employers,labour and government. They recommended that labour members should be elected by registered trade unions and employers· representatives should be elected by their association. They should meet regularly.

It was only after the 4th Labour Conference held in 1942 that permanent tripartite collaboration machinery was set up Indian Labour Conference(ILC) and Standing Labour Committee (SLC)

Initially the ILC consisted of 44 members whereas the SLC was about half the size of the ILC. The pattern of representation was governed by the obtaining in the International Labour Conference. It ensured:

  1. Equality of representation between the government and the non-government representatives;
  2. Parity between employers and workers;
  3. Nomination of representatives of organized employers and labourers was left to the concerned organizations; and
  4. Representation of certain interests (unorganized employers and unorganized workers), where necessary, on an adhoc basis through nomination by government. The delegates are free to bring one official and one non-official adviser with them.

Tripartite Bodies

Indian Labour Conference (ILC) and Standing Labour Committee(SLC) have been constituted to suggest ways and means to prevent disputes. The representatives of the workers and employers are nominated to these bodies by the Central Government in consultation with the All-India organizations of workers and employers. The Labour Ministry settles the agenda for ILC/SLC meetings after taking into consideration the suggestions sent to it by member organizations. These two bodies work with minimum procedural rules to facilitate free and fuller discussions among the members. The ILC meets once a year, whereas the SLC meets as and when necessary..

ILC and SLC are both important constituents of tripartite bodies and play a vital role in shaping the IR system of the country.The function of ILC is to advise the Government of India matter referred to it for advice, taking into account suggestions made by the provincial government, the states and representative of the organizations of workers and employers´.The function of SLC is to consider and examine such questions as may be referred to it by the central government and to render advice,taking into account the suggestions made by various governments, workers and employers.

The functions of ILC are

  1. To promote uniformity in labour legislation
  2. To lay down a procedure for the settlement of industrial disputes
  3. To discuss matters of All-India importance as between employers and employee

According to the National Commission on Labour these 2bodies have contributed to attainment of the objectives set before them. They have facilitated the enactment of central legislation on various subjects to be made applicable to all the states and union territories in order to promote uniformity in labour legislation.

Tripartite deliberations have helped reached consensus on statutory wage fixation, introduction of a health insurance scheme, enactment of the Standing Employment Order Act1946,, Industrial Disputes Act 1947, Minimum Wages Act1948, Employees· State Insurance Act 1948, Provident Fund Scheme 1950, The Mines Act 1952 etc.

Other subjects processed by tripartite bodies are workers education, workers participation in management, training, wage policy, Code of Discipline, criteria and procedures for the recognition of unions. Though the recommendation of tripartite bodies is of advisory nature, they carry considerable weight with the government, workers and employers, A detailed account of various resolutions adopted by the ILC’s in their last two sessions is presented here:

  1. The 30th Session of the Indian Labour Conference

    The 30th Session of the ILC was held on September 7-8, 1993 at New Delhi. After deliberations,it arrived at the following conclusions4.

    1. On the impact of New Industrial Policy, the chairman referred to the assurance by the Prime Minister that it would not lead to any human distress and the legitimate interests of labour would be protected.
    2. In regard to retraining and redeployment, the conference desired identification of labour for such retraining and redeployment and a scheme for industry-wise and occupation-wise redeployment. The conference also expressed the view that Government should identify the agency for retraining and their redeployment. The conference also wanted to know how labour of one unit would be redeployed in another unit.
    3. For absorption of surplus labour, if any, as for maximizing capacity utilization, the conference suggested diversification and broad-basing by working the units round the clock and on all days of the week.
    4. The conference expressed its serious concern at the low productivity of Indian industry and expressed its determination to improve wherever necessary its productivity, enhance its quality and reduce the price of goods to make them internationally competitive. The conference decided to strive for improvement in discipline and attitude to work at all levels. It also decided that bipartite efforts to improve productivity and quality should be institutionalized.
    5. The Trade Unions demanded:
      1. The removal of ceiling on bonus both for eligibility and for computation by promulgation of an ordinance;
      2. The immediate implementation of the DA rate of Rs.2 per point of the Consumer Price Index (1960 series).
      3. Permission for the managements of the public sector units to commence negotiations with the unions on their charter of demands immediately.
      4. Clearance by government to the agreement regarding pension and for the pension scheme for its early introduction.
      5. Enhancement of the rate of interest on Employees’ Provident Fund to at least 13 per cent.
      6. Enhancement of the limits of exemption of income tax substantially.
    6. The employers wanted postponement of the decision on removal of ceiling on bonus both for eligibility and computation of bonus by one year so that a well- thought out scheme could be evolved. They also wanted productivity linked bonus as prescribed under the law.
    7. The trade unions indicated that the first National Commission on Labour was appointed about 25 years ago and a time had come to set up another National Commission on Labour to examine the issues that labour was facing today in view of the many changes that has occurred in the meantime.
    8. The Labour Cell in the Planning Commission may be revived to facilitate consultation with trade unions while formulating policies concerning labour. The view expressed by the participants in the conference with regard to employment policy may be conveyed to the Planning Commission for its consideration and for the consideration of the two Sub-Committees of the Planning Commission/ NDC which are considering strategies for implementation of the employment policy.
  2. 31st Session of I.L.C

    This session of I.L.C was held at Delhi on 3rd-4th January 1995.In this session various problems of industrial relations in the context of changed economic environment were discussed. The various resolutions adopted at the said conference are as under.

    1. The institution of the Indian Labour Conference should be strengthened further
    2. The Central and State Governments and the social partners should come together in making the comprehensive industrial relations law a reality and an instrument of production, productivity, employment generation and enhancement of living standards.
    3. Productivity of economic enterprises as a whole is of paramount importance.
    4. The government should give special attention to streamlining the public distribution system, particularly in centers of concentration of working people.
    5. The Government should review the situation arising out of the wage negotiations in Central Public Sector Undertakings and should facilitate speedy conclusion of wage negotiations and settlements.
    6. The worker’s representatives demanded that the eligibility and calculation ceilings under the Payment of Bonus Act should be scrapped, whereas the employers’ representatives demanded that a quick decisions should be taken on introduction of DA slabs.
    7. The government should introduce the Pension for Provident Fund subscribers on priority basis and there should be tripartite consultations before its introduction. Management of Social Security Funds should be professionally handled so as to maximize the returns on investments.
    8. Steps should be taken for speedy and orderly investigation into the rehabilitation of sick industrial enterprises registered with the BIFR,minimizing distress for the workers and disabilities for the employers.
    9. The constitution and the functioning of the National Renewal Fund should be reviewed such that the Fund truly serves the purpose of industrial renewal and regeneration and creation of employment opportunities.
    10. Implementation of training programmes should be undertaken within the framework of a well thought-out plan.
    11. The Central and State Governments should give high priority to allocation of resources for elementary and vocational education. Special attention should be given to the education of women.
    12. The government should enact, on priority basis, laws for covering agricultural and construction workers.
    13. The Labour Ministry should set up an Advisory Body to review, from time to time, the status of women.
    14. The Constitution of the Child Labour Advisory Committee should be reviewed to ensure that it is fully representative of the social partners.
    15. Representatives from workers’ and employers’ organizations should be included in the National delegation to the World Summit for Social Development.
    16. The Vocational Training System in the country should be reorganized.
    17. The resolutions of the 32nd Session of the Standing Labour Committee in respect of the social clause, child labour elimination and bonded labour were fully endorsed. The social partners should take further follow up action on the resolutions.18. The new International Economic Order holds out vast opportunities for economic betterment and up gradation of the living standards of the people. The risks involved in formulating and implementing economic policies to avail of these opportunities should be so handled as to minimize human distress.
  3. The 31st Session of Standing Labour Committee
  4. The 31st session of S.L.C was held in New Delhi on July 25, 1992. The Committee arrived at the following conclusions:

    1. It was resolved that future sessions of the Standing Labour Committee(SLC) should carry fewer items on the agenda so that these could be discussed in greater detail.
    2. It was resolved that Government may bring specific proposals for new Industrial Relations Law in the ensuring session of Indian Labour Conference which should reflect the needs of the qualitative change in the industrial /economic scenario in the national/global context.
    3. It was resolved to set up a tripartite sub-committee to review the implementation of important Labour laws.
    4. It was resolved to set up an autonomous Bipartite Productivity Councils at the national, regional, industrial and plant levels.
  5. The 32nd Session of Standing Labour Committee
  6. The thirty second session of the Standing Labour Committee was held in New Delhi on October 27, 1994. It discussed various issues concerning employment, vocational training, child labour, bonded labour, labour standards and international trade. It adopted three important resolutions discussed below:

    1. Social Clause: It was agreed that the government along with employers and labour organizations would resist in I.L.O. and all other fora any attempt to introduce “Social clause”, in relation to carrying our marketing at the international level, contingent upon enforcement of labour standards. Further,it advocated sustained national and international action for upgrading labour standards without any trade linkage.
    2. Child Labour: With respect to child labour, it remarked that the “Central and State Governments and Organizations of employers and workers should take co-ordinated action for the elimination of child labour in hazardous occupations by the year 2000 and in other employments progressively”. It also emphasized that both Central and State Governments should implement time bound and action plans to take away children from work and provide them education, primary vocational training, health and nutrition and concurrently provide to the parents of such children gainful employment.
    3. Bonded Labour: It exhorted that all states should take fresh surveys for the identification release and rehabilitation of bonded labour.Besides this, measures shall be initiated to check the relapse of bondage of such labour.

Committee on Conventions:

Once a country has ratified an ILO convention,it is obliged to report regularly on measures it has taken to implement it. The government must submit reports regularly detailing the steps they have taken in law and practice to apply any of the conventions they may have ratified. Governments are required to submit copies of their reports to employers· and workers· organizations. These organizations may comment on the governments· reports; they may also send comments on the application of conventions directly to the ILO.Committee in Conventions is a three-man tripartite committee set up in 1954. The object was To examine the ILO conventions and recommendations which have not so far been ratified by India.To make suggestions with regard to a phased and speedy implementation of ILO standards.

It is generally composed of eminent jurists appointed by the Governing Body for three-year terms. The Experts come from different geographic regions,legal systems and cultures. The Committee's role is to provide an impartial and technical evaluation of the state of application of international labour standards.When examining the application of international labour standards the Committee of Experts makes two kinds of comments: observations and direct requests.Observations contain comments on fundamental questions raised by the application of a particular convention by a state. These observations are published in the Committee's annual report.

Direct requests relate to more technical questions or requests for further information. They are not published in the report but are communicated directly to the governments concerned. The Committee's annual report consists of three parts. Part I contains a General Report, which includes comments about member states' respect for their Constitutional obligations and highlights from the Committee's observations Part II contains the observations on the application of international labour standards Part III is a General Survey.

Industrial Committees

Industrial Committees are tripartite bodies where the number of workers· representatives are equal to the employers· representatives. These were set up to discuss various specific problems special to the industries covered by them and suggest ways to overcome them. These committees provide a forum for the discussion of proposals for legislation and other matters connected with the labour policy and administration before they brought before the legislature.

Other committees

  1. Steering Committee on Wages:

    It was set up in 1956 and consists of representatives of state government, employers, workers and an economist.Its functions were

    1. To study trends in wages, production and price.
    2. To draw a wage map of India.
    3. To help laying down principles which will guide wage fixing authorities2.
    4. Central Boards of Workers Education:
      This was constituted to encourage growth of strong and well informed trade union movement on responsible and constructive lines and comprised of representatives of central & state government, employers and workers
  2. National Productivity Council:

    It encouraged the productivity in the country and consists of the government, employers associations, labourers association & organizations and independent experts.

  3. Central Implementation and Evaluation Machinery:

    This is setup to ensure proper implementation of labour awards, agreements and Code of Discipline. It consists of 4 representatives each of central employers· and workers organizations with union labour minister as chairman


Bipartism is a system of industrial relations where social and labour issues are discussed between trade unions and management, usually at the enterprise level. The bipartite consultative machinery comprises two important constituents, viz., the works committees and the joint management councils. These are purely consultative and not negotiating bodies. This consultative joint machinery- with equal representation of the employers and the workers has been set up exclusively for dealing with disputes affecting the plant or industry.

Evolution of Such Bodies

The importance of bipartite consultative machinery was first recognized as early as in 1920, when a few joint committees were set up in the presses controlled by the Government of India. They were also introduced in Tata Iron and Steel Company at Jamshedpur. The importance of bipartite consultation was further highlighted by the First-Five-Year Plan which maintained: “There should be the closest collaboration, through the consultative committee at all levels, between employers and employees for the purpose of increasing production, improving quality, reducing cost and eliminating waste,” The second Plan also stressed the need for “joint consultation and progressively associating the workers and technicians, wherever possible, in management.

Evolution of Such Bodies

The importance of bipartite consultative machinery was first recognized as early as in 1920, when a few joint committees were set up in the presses controlled by the Government of India. They were also introduced in Tata Iron and Steel Company at Jamshedpur. The importance of bipartite consultation was further highlighted by the First-Five-Year Plan which maintained: “There should be the closest collaboration, through the consultative committee at all levels, between employers and employees for the purpose of increasing production, improving quality,reducing cost and eliminating waste,” The second Plan also stressed the need for “joint consultation and progressively associating the workers and technicians, wherever possible, in management.

Bipartite Bodies

The two important constituents of bipartite consultative machinery are

  1. Works Committee,
  2. Joint Management Councils. A brief review of these bodies is given here.
  1. Works Committees

    In the case of any industrial establishment in which one hundred or more workmen are employed or have been employed on any day in the preceding twelve months, the appropriate Government may by general or special order require the employer to constitute in the prescribed manner a Works Committee consisting of representatives of employers and workmen engaged in the establishment so however that the number of representatives of workmen on the Committee shall not be less than the number of representatives of the employer. The representatives of the workmen shall be chosen in the prescribed manner from among the workmen engaged in the establishment and in consultation with their trade union, if any, registered under the Indian Trade Unions Act,1926 (16 of 1926).

    It shall be the duty of the Works Committee to promote measures for securing and preserving amity and good relations between the employer and workmen and, to that end, to comment upon matters of their common interest or concern and endeavor to compose any material difference of opinion in respect of such matters.

  2. Joint Management Council
  3. If in respect of any industry, the state Government is of opinion that it is desirable in public interest to take action under this section. It may, in the case of all undertakings or any class of undertakings in such industry, in which five hundred or more employees are employed or have been employed on any day in the proceeding twelve months, by general or special order, require the employer to constitute in the prescribed manner and within the prescribed time limit a Joint Management Council, consisting of such number of members as may be prescribed, comprised of representatives of employers and employees engaged in the undertaking, so however, that the number of representatives of employees on the Council shall not be less than the number of representatives of the employers. Notwithstanding anything contained in this Act,the representative of the employees on the Council shall be elected in the prescribed manner by the employees engaged in the undertaking from amongst them:

    Provided that a list of industries in respect of which no order is issued under this sub-section shall be laid by the State Government before the State Legislature within thirty days from the commencement of its first Session of each year.One of the members of the Council shall be appointed as Chairman in accordance with rules made in this behalf.

    The council shall be charged with the general duty to promote and assist in the management of the undertaking in a more efficient, orderly and economical manner, and for that purpose and without prejudice to the generality of the foregoing provision, it shall be the duty of the Council

    1. to promote cordial relations between the employer and employees;
    2. to build up understanding and trust between them;
    3. to promote measures which lead to substantial increase in productivity;
    4. to secure better administration of welfare measures and adequate safety measures;
    5. to train the employees in understanding the responsibilities of management of the undertaking and in sharing such responsibilities to the extent considered feasible : and
    6. To do such other things as may be prescribed.

    The Council shall be consulted by the employer on all matters relating to the management of the undertaking specified in sub-section (1)and it shall be the duty of the council to advice the employer on any matter so referred to it.

    The Council shall be entrusted by the employer with such administrative functions, appearing to be connected with,or relevant to, the discharge by the Council of its duties under this section, as may be prescribed



The state of bipartite relations has an impact on the effectiveness of tripartism. However, it is necessary to be clear about what is meant by bipartism in this connection. In many Asian countries bipartism has been viewed as the relationship between each of the social partners separately with the government and public authorities. This view has been engendered by factors such as the power of some governments which have no equivalent in the West, the politicization of unions, or the power of employers in business friendly countries. This is not the sense in which the term bipartism is used. Bipartism in this context means the relationship (dialogue, dealings, negotiation) between the organizations of employers and employees, at the enterprise, industry and national levels.

Apart from the number of parties in the two relationships, there are several points of distinction between them. First, tripartism operates at the national, industry or provincial levels. It cannot simply that tripartism operates at that level, in the same way that though the State prescribes rules relating to marriage, it does not mean that the marriage relationship involves State participation. Even though labour inspection is a process undertaken by the State with a view to ensuring the observance of laws and rules required to be observed by enterprises, or at the enterprise level, it is not tripartism. Bipartism, on the other hand, operates at all three levels, more particularly and frequently at the enterprise level.

A second distinction is based on the subject matter. In tripartite dialogue issues addressed are policy-oriented. This is also the case in bipartite relationships when they occur at the national or industry level. At the workplace level issues relate to the particular workplace, and are of a more practical nature.

Third, in regard to parties to the dialogue, tripartite processes involve representatives of employers and employees, as does bipartism at the national, industry or provincial level. But at the enterprise level, there is less scope for the involvement of employers' organizations, though such involvement does occur in countries where the employers' organization negotiates on behalf of the employer in respect of workplace issues such as disputes and strikes, wages and terms and conditions of employment. However, it may be argued that when an employers' organization enters such negotiations, the matter is taken out of the enterprise level. Bipartism can take place at the enterprise level even if there is no union. It is conceivable for bipartism to operate in the same enterprise with or without a union at different levels. As in the case of joint consultation in Japan, bipartism may operate in the form of workplace information-sharing through group activities without the union, and at the corporate level through joint consultation committees consisting of management and union representation. There is an interplay and interaction between tripartism and bipartism. Since macro level decisions (which may be taken through tripartite consultation) have little value if they are not translated into practice at the enterprise level, bipartism can be a process for giving effect at the enterprise level to tripartite decisions. For example, Singapore's decision in the second half of the 1980s to introduce a flexible wage system was the result of a tripartite consensus. But implementation was determined on a bipartite basis, thus leaving employers and employees (and their representatives) to opt between a profitability or productivity model (or a combination of both). There are, of course, some tripartite decisions which do not call for implementation at the enterprise level, as in the case of social security schemes operative at the national level.

Bipartism is not a process intended only to give effect to tripartite decisions. With the increasing emphasis on workplace relations, macro level policies and decisions are influenced by what takes place, or what is needed to support practices, at the micro level. Further, the outcomes of bipartite relationships at the national, industry or provincial levels can have a major influence on tripartite consultation and macro level policies. A good example is Sweden, where in the 1960s and 1970s the labour market was regulated by the social partners and national policies reflected their agreements on labour market issues. In its most advanced form, bipartism may lead to 'social contracts' as evidenced in some of the Scandinavian countries and Germany, which define the basic relationship and objectives of the social partners in the labour market.

Tripartism can become an important means to settle issues when bipartism does not result in a consensus. When such failure leads to disputes, the State's involvement (including through conciliation and adjudication) brings into play the tripartite process.

Tripartism’s contribution to Bipartism

Tripartite consultations and agreements can exercise profound influence in directing and shaping collective bargaining and industrial relations. The three-tier frame work of industrial relations proposed by Kochan, (1987) suggests a direct and active role for tripartite consultation at macro level, to be reinforced by bipartite consultations, collective bargaining, communication, information sharing, and employee participation at industry and firm/plant level.

Whether it was the arrangements for the avoidance/settlement of disputes, procedures for recognition of unions, grievance redressals, consultations and cooperation at work place, or collective bargaining on a host of matters relating to industrial relations and human resources, tripartite initiatives played a substantial role in setting up internationallabour standards, enactment of national legislations, and conclusion of national agreements. In the Indian context, for instance, the following tripartite declaration played a useful role, at least for a number of years, in influencing bipartite relations and agreements relating to union recognition, automation, and modernization.

  1. Code of discipline,
  2. Code of Conduct,
  3. Automation Without Tears.

Bipartism’s Contribution to Tripartism

Bipartism or more importantly, collective bargaining, which is a key instrument of bipartism, may reduce the need for tripartite interventions. In some cases, tripartism begins where bipartism fails. For instance, when bipartite dialogue does not result in dispute avoidance or settlement, tripartite interventions such as conciliation/mediation and arbitration/adjudication become imperative.

Bipartite arrangements can contribute in the following ways to facilitate meaningful and effective tripartite social dialogue at industry and national level:

  1. In countries where the representative character of the social partners is very much limited due to the predominant characteristics of an economy (large unorganized, in formal-sector economy), the outcomes of tripartite discussions do not necessarily reflect the wishes of the large majority of the working population, not to speak of the society at large. In these and similar other situations it is better to adopt a bottom-up approach through bipartite dialogue at enterprise level.
  2. The interests of employers and workers are affected by government policies in areas other than industrial relations such as fiscal, monetary, trade, taxation, licensing, etc. The effects of these aspects is;more closely and effectively reckoned and evaluated in bipartite consultations, particularly collective agreements, than in tripartite dialogue.
  3. Consensual approaches are best planned and implemented if they are developed by parties at the grass root level,that is plant level. The parties/persons directly affected should be involved in consensus-building social dialogue. Externally imposed