Employer-employee relations imply the relationships between employer and employees in an organization.

According to Dale Yoder, the term employer-employee relations refers to the whole field of relationships among people, human relationship that exist because of the necessary collaboration of men and women in the employment process of modern industry.

Learn about:- 1. Introduction to Poor Employer-Employee Relationship 2. Causes of Poor Employer-Employee Relationship 3. Principles 4. Methods for Settlement of Employer-Employees Disputes.

Employer-Employee Relationship in Industries: Introduction, Causes, Principles and Settlement

Employer-Employee Relationship – Introduction

Developing harmonious employer-employee relations should be understood as an integral part of management functions in order to have a faster rate of growth of the business unit. Maintaining relations is not an easy task. It has become one of the most delicate and complex problems of modern industrial society.


It has been widely accepted that no industry can progress until the labour cooperates and its management is in line with industrial harmony. Therefore, good relations between employers and employees are beneficial for all.

Employer-employee relations imply the relationships between employer and employees in an industrial organization. According to Dale Yoder, the term employer-employee relations refers to the whole field of relationships among people, human relationship that exist because of the necessary collaboration of men and women in the employment process of modern industry.

Employer-employee relation in the wide sense takes into account the relations between the various unions, between the State and the unions as well as those between the employers and the government. All these relations in connection with industry fall in the periphery of employer-employee relations.

The subject, therefore, includes individual relations and joint consultation between employers and workers at the place of work, collective relations between employers and their organizations and trade unions, and the part played by the state in regulating these relations.


The subject matter also seeks to study how people get together at work, the difficulties they face, the way their relations are regulated and the details of the organizations that are set up to protect different interests.

According to International Labour Organization (ILO), employer- employee relations comprise relationships between the state on the one hand and the employers’ and employees’ organizations on the other hand and the relationship among the occupational organizations themselves.

The ILO uses the term to denote such matters on freedom of association and the protection of the right to organize, the right to collective bargaining, collective agreements, conciliation and arbitration and the machinery for cooperation between the authorities and the occupational organizations at various levels of economy.

Employer-Employee Relationship – Causes

Disputes in employer-employee relations are clearly visible by frequent strikes, gheraos, lockouts and other forms of industrial disputes. Several economic, social, psychological, technological and political factors may be held responsible for poor employer-employee relations.


1. Economic Causes:

The main reasons for unhealthy relations among management and labour are poor wages and poor working conditions. Other economic causes include unauthorized deductions from wages, lack of fringe benefits, absence of promotional opportunities, dissatisfaction with job evaluation and performance appraisal methods, faulty incentive schemes, etc.

The industrial peace is disturbed when employers deny equitable and fair remuneration and good working and living conditions to the working class which agitates the trade unions. Inadequate infrastructural facilities, worn-out plant and machinery, poor layout, unsatisfactory maintenance and other physical and technical causes also contribute to industrial conflicts.

2. Organizational Causes:


Faulty communication system, dilution of supervision and command, non-recognition of trade union, unfair practices, violation of collective agreements and standing orders and labour laws are the organizational causes of poor relations between employers and employees in industry.

3. Social Causes:

The introduction of factory system at large scale and highly specialized character of the production system has made workers subordinate to machines. This is known as introduction of machine culture in production systems.

This mechanization has led to loss in the pride and job satisfaction of workers in these mechanized factories. The employer-employees relations have worsen due to tensions and conflicts arising out of break-up of joint family system and growing intolerance.


4. Psychological Causes:

The psychological reasons for unsatisfactory employer-employee relations include lack of job security, poor organizational culture, non-recognition of merit and performance, authoritative administration and poor interpersonal relations.

5. Political Causes:

There are many political issues which have contributed substantially to poor employer-employee relations. Some of them may be identified as the extremely political nature of trade unions, creation of multiple trade unions and emergence of rivalry among these unions have made them weaker in their bargaining position.


Such a culture in trade unions have drastically reduced their importance and made them mere strike committees. The leaders of these trade unions keep undue demands on employers which, when not fulfilled, strain employer-employee relations.

Strained employer-employee relations negatively affect all the individuals living in the society. Industrial conflicts leave adverse impact on labour productivity. This leads to increase in the cost of production and the quality and quantity of work suffers. Industrial discipline beaks down and labour turnover and absenteeism increase.

This industrial decline leaves the worst impact on the working class. They find it very difficult to get improved wages and working conditions. Many of them loose jobs and promotions. They get frustrated and demoralized. Employers face resistance to change in technology and organizational structure.

Industry, economy and society are interdependent. Therefore, industrial strikes have multiplier effect on the economy and society. Social tensions and law and order problems, drinking and gambling and other social evils tend to rise in an atmosphere of poor employer-employee relations.

Employer-Employee Relationship – Principles that Guide Sound Employer-Employee Relations

Some fundamental principles or requirements that guide sound employer-employee relations are:


1. Sound Human Resource Policies:

An organization having clear and transparent human resource policies of compensation, transfer, promotion, etc., are found to have better employer-employee relations than the ones which do not disclose their policies clearly to its staff and top management. Everyone in the enterprise along with the union leaders should have complete understanding of all the human resource policies. It is not only the formulation of fair and strong policies but their equitable implementation as well plays a vital role.

2. Constructive Attitudes:

Any organization can witness harmonious employer-employee relations in case both the parties involved- management and trade unions adopt a positive attitude towards each other. It is the responsibility of both trade unions and management to respect and trust each other’s decisions and works.

Management should view employees and their leaders as important building blocks of the firm. They should perceive union leaders as the custodian of the employees’ rights. Union leaders, on the other hand should recognize the rights and limits of the employers. If such an optimistic view is formed by each party for the other, the probability for conflicts between the two would drop down significantly.


3. Collective Bargaining:

Collective bargaining between employers and employees should be seen as an important negotiation process between the two parties involved. No unit should try to take undue advantage of its strong position. A genuine desire on the part of the employers to bargain with employees on equality basis is necessary.

There is an important role which Government can play here to improve these relations. The government should not devise any policy that favors only one set of people. It should have a welfare approach which takes care of both the parties involve. Also, a change in approach from legalistic to problem-centric will serve the purpose to a great extent. Besides, widespread union management consultations and information sharing would also be of great help.

4. Participative Management:

If the management of the company provides opportunities to employees to participate in policy formulation and human resource activities, it provides the employees a sense of belongingness to the company. This element of belongingness provides confidence to employees on their employers.

They, therefore, consider themselves as a part of the company and hence, contribute their best to the production process. Also, management should take trade unions as an asset instead of hindrance creating agent. This way it is easier for the employers to win loyalty of the employees.


5. Responsible Unions:

Unions, on the other hand should also adopt responsible attitude towards employer-employee relations. It is widely observed that trade unions adopt a political attitude instead of a responsible one. Hence, they do not wish to understand employers’ situation and concentrate on their demands in order to protect their political interest.

Hence, the focus shifts from labour welfare to political benefits. This agitates the employers and their relations with the workers suffer in turn. Each union should recognize that the welfare of the labour is highly dependent on the smooth operation of the company and its production.

6. Employee Welfare:

Employers should recognize the need for the welfare of workers. They must ensure reasonable wages, satisfactory working conditions, opportunities for training and development, and other necessary facilities for labour. A genuine concern for the welfare and betterment of working class is necessary.

7. Grievance Procedure:


Employer-employee relations can be made better by adopting a simpler and faster grievance redressal procedure. This would provide the employees an outlet for tensions and frustration of workers. When the employees feel that the employers are concerned about their problems and are adhering to them they would definitely think high of the management and company in turn. This would develop cordial relations among them and their employers.

Employer-Employee Relationship – Methods for Settlement of Employer-Employees Disputes

Every Government is very keen that there should be no strikes and employer-employees relations should be cordial. Each strike causes many problems and creates dislocations. But strikes sometime become unavoidable because the expectations of the employees are raised so high the trade unions and associations that the government at times finds it almost impossible to meet these. In India however, as a matter of policy government employees are permitted to form associations and trade unions but strikes in essential services are badly discouraged.

Some of the methods which have been adopted for settlement of disputes with the employees are as under:

(1) The representatives of the employees are given every opportunity to discuss their problems with the seminars in the department and every effort is made to see that those problems which concern a department and can be solved at departmental level are solved without delay.

(2) The government encourages the system of conferences and committees for discussing problems of the employees.

(3) The government tries to solve human problems with human approach.


(4) At the national level-employer employees representatives periodically meet and try to resolve all differences through negotiations which concern a vast majority of every government employees.

(5) Ministry of Labour and other concerned ministries have issued instructions to all concerned to examine all employees’ demands and accept those which can be immediately accepted so that relations do not get strained.

(6) The government tries that each department and each category of employee should have only one association/union as that it becomes easy for the government to come to a settlement with the employees.

(7) Efforts are made to make the government employees realize the limitations of the government, more particularly financial ones, so that employees can put forward their demands accordingly.

Thus though efforts are made to avoid strikes yet it is unfortunate that sometimes strikes do take place, which cause inconvenience to the public and create an unhealthy situation of confrontation between the employers and the employees.