In brief, Labour Relations Department looks after: 1. Union Relations 2. Collective Bargaining 3. Handling Grievances.

Function # 1. Union Relations:

A trade union or labour union is a continuing long term association of employees formed to pro­mote, protect and improve, through collective action, the social, economic and political interests of its members. A trade union may also be defined as any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen or between employers and employers or for imposing restrictive conditions on the conduct of any trade or business and includes any federation of two or more unions.


Trade unions are the creation of industrialisation and modern industrial conditions. Industrial Revolution destroyed the earlier way of life and left the individual worker, who was protected by the customary values, to drift by himself in the anonymity of the town, and (also) gathered these workers together around the employer.


The employer did pay as little as possible to the workers; the workers as individual could not protest against it and therefore those (workers) similarly situated, economically and socially and closely associated with the work of the same employer developed mutual understanding and a common solution of their problems of living and this crystallised them into a self-conscious group what we may call as Trade Union. Trade unions got originated out of the necessity of workers to protect and defend themselves from encroachment, injustice and wrong imposed upon them by the employer or the manage­ment of the concern.

The aspects of the process of industrialisation those necessitated the origin of trade union are:

(i) Separation between the ownership of capital and labour, both of which are essential for producing goods and rendering services to the consumers.

A difference got created between the owners of capital and the labour. The former wanted to pay lowest possible to the latter and the latter were interested to secure the maximum possible price for the work done for the former. These two classes with divergent and conflicting interests gave rise to conflicting situations and the workers thought of uniting.


(ii) Since, individually the workers did not have any other source of the livelihood except that of service under the owners of capital, there was no match between the two as regards economic resources or bargaining power or skill. It was the owner of capital who dictated the terms and conditions of employment, i.e., wage rate, hours of work, etc. and either a worker had to serve under those conditions or starve. This again infused a spirit of union among the workers.

(iii) When the workers were suffering in this way, the State or Law remained silent because in its eyes workers and employers were equal. This further increased the exploitation of workers by the owners of capital.

(iv) Though an individual worker was dispensable to an employer, but he could not afford to dispense with the services of a group of workers. The day it was realised by the workforce, they thought to unite and get their reasonable rights from the owners of capital.



Functions of trade unions are:

1. The provision of friendly services such as a place for leisure pursuits, information about jobs existing in other factories, games and outings, etc.

2. The provision of social services such as insurance against old age, unemployment, strike, pay, payment for hospital fee, legal services, etc.

3. Wage bargaining, i.e. collective wage bargaining with the employers.


4. Safeguarding the job of the workers.

5. Political activities, i.e., the political pressure for reform, e.g., trade union legislation works to protect the union and the workers from such industrial abuses as delay in payment of wages, excessive hours of work, poor working conditions, etc.

6. To develop cooperation with employers.

7. To arouse public opinion in favour of labour.


8. To secure some shares in profit and in the control of the enterprise.


Objectives of trade unions are:

1. To take labour out of the competitive process; because if a number of workers freely compete for a job, the employer will definitely offer them less wages.


2. To negotiate at all levels with employers over wages and conditions of work.

3. To protect the workers in their inalienable right to higher and better life.

4. To make workers to take part in union activities and to obey union rules and decisions.

5. To protect and promote the interests of the workers.


6. To provide legal assistance to workers (i.e., union members) in connection with work affairs.

7. To improve economic status of workers.

8. To protect the jobs of the workers against lay off, retrenchment, etc.

9. To ensure that workers get as per rule, the pension, provident fund, compensation for injuries, etc.

10. To ensure for the workers, better health, safety and welfare standards.

11. To have a voice or participation in the factory management.


12. To ensure that workers get respect and human treatment from the foremen, managers, etc.

13. To improve their political status.

14. To offer educational services to the workers.

Function # 2. Collective Bargaining:

Collective Bargaining constitutes the negotiations between the management and the union with the ultimate objective of agreeing on a written contract covering the terms and conditions of settlement of the disputed issues. Collective bargaining is basically a give-and-take process involving proposals and counter proposals. Meetings between management representatives and union leaders are conducted in an attempt to arrive at an agreement or at the settlement of the dispute.

In such meetings, the two parties bargain with each other on disputed issues (which may be such as salary and fringe benefits, terms and conditions of employment, etc.) to arrive at an agreement. The agreement is signed by both the parties and the length of time the treaty will operate may be specified. Collective bargaining introduces an element of democracy in the field of Industrial Relations and Management.

Collective bargaining imposes certain restrictions upon the employer. Unilateral action is prevented. The employer is no longer free to make and enforce employment decisions. Manage­ment must bargain with the union on appropriate subjects. The collective bargaining is not an easy process and it is often exasperating.


Procedural steps:

The steps involved in collective bargaining process are:

(i) Putting up before the management, by the employees, their demands and grievances collectively.

(ii) Discussing and negotiating with the management representatives, with a view to settle the dis­puted issues.

(iii) Sighing a formal or informal agreement mutually arrived at.

The mutual agreement may be as regards the following:


(a) Union security.

(b) Wages, bonus and other benefits.

I Terms and conditions of employment:

i. Hours of work.

ii. Holidays.

iii. Safety and health.


iv. Promotion, transfer and discharge, etc.

(d) Grievance procedure.

(e) Incentives.

(f) Management responsibilities, etc.

If either of the party, later on, feels reluctant in abiding by its commitments under the mutual agreement, the other party can employ economic pressures to force that party to meet its obligations.

(iv) In the event of no agreement, various pressures are brought to bear upon the management by the union (such as strikes, picketing, gheraos, etc.) or on union by the management (such as lock-out) to reconcile.


But both the parties, i.e., management representatives and union officials have a basic obligation to establish a constructive relationship of working harmony in the settlement of disputes and in the advancement of labour-management peace.

Voluntary Arbitration:

In this method of settling disputes, a third neutral party as a judge (to decide the disputed issue) hears and collects the facts from the two primary parties and proceeds to make a decision which is usually binding upon the union i.e. one primary party and the management (i.e., the second primary party). Many industrial disputes have been (e.g. those between union and management of Rohtas Industries Ltd., Dalmia Nagar etc.) and are being settled today through voluntary arbitration. The Industrial Dispute Act 1947 recognises voluntary arbitration as a method for settling industrial disputes.

Establishment of Compulsory Collective Bargaining:

If, either union or management resists the establishment of voluntary collective bargaining, but the state feels that collective bargaining will be useful, it may advise, encourage or even impose collective bargaining compulsorily on the two parties to settle their disputes through negotia­tions and discussions.

Compulsory Establishment of Bipartite Committee:

A bipartite committee consists of representatives of workers as well as of the employer (at the factory level). Such committees work on the principle of ‘nip the evil in the bud’ and settle labour-management disputes as soon as they appear and do not permit them to grow large and take an unmanageable shape.

The main purpose of such Bipartite committees or works committees is to:

(i) Promote measures for securing and preserving amity and good relations between workers and employers;

(ii) Comment upon matters of their common interest;

(iii) Compose any material difference of opinion in respect of such matters and to;

(iv) Encourage workers and management to settle their differences without the Arbitrator.

Compulsory Arbitration or Adjudication:

Unlike voluntary arbitration, in Adjudication, the Arbitrator or Adjudicator is appointed by the government. In adjudication, the industrial dispute is referred for arbitration by the government and both the parties have to accept the decision of the arbitrator. The objective of adjudication is to maintain industrial peace by stopping the parties from causing work-stoppages and providing a method for settling the industrial dispute.

Compulsory Conciliation (machinery) and Mediation:

Conciliation is a process by which the discussion between workers and employer is kept going on through the activities of a conciliator i.e., third party. A conciliator aids resolving the differences between two parties and keeps them to understand and appreciate the situation better. Mediation is a process by which the third party attempts to stimulate labour and management to reach some type of agreement.

The mediator cannot decide the issue. He is strictly neutral who can only listen, suggest, communicate and persuade. What has been described above, it is voluntary conciliation and mediation. In compulsory conciliation and mediation, the government imposes an obligation on the workers and management to refer their disputes to the conciliation and mediation service. The govern­ment also prevents both the parties from work-stoppages till the conciliation or mediation is going on. Conciliators and Mediators are asked to furnish their report within a time period. If the efforts to reconcile fail, workers are free to go on strike and the employer is free to declare a lock-out.

Compulsory Investigation:

Government may set up a machinery to investigate into any dispute. Machinery may be a Court of Inquiry to explore facts and issues involved. A wide publicity may be given to it because, quite possible, the public opinion may compel the two parties to leave their rigid and obstinate attitudes and try to arrive at a settlement. Moreover, the period during which Court of Inquiry is being conducted, may serve as a cooling off period for the two primary parties to reconsider their stands coolly. Court of Inquiry is given almost same powers as remain with a civil court.

Function # 3. Handling of Workers Grievances and Grievance Procedure:

Individual employees generally have some complaints called grievances against the working rules of the business enterprise, e.g., wages, bonus, working conditions, behaviour of supervisors etc. The one thing which is very harmful to good relations between workers and management is the feeling among workers that the management does not look into their problems and difficulties.

This result in dissatisfaction in the minds of workers and distrust towards management which in turn introduces inefficiency and lack of co-operation from the worker’s side, Hence, if no systematic way exists for bringing workers’ complaints or grievances to the surface, they may pile up and explode into an industrial Dispute. A Grievance may be defined as any feeling of discontent or dissatisfaction, whether expressed or not and whether valid or not, arising out of anything connected with the company that an employee thinks, believes or even feels is unfair, unjust or inequitable.

A grievance may be:

(i) Unvoiced or stated by the worker,

(ii) Written or unwritten, and

(iii) Valid or ridiculous, and may arise out of something connected with the company, e.g., company policy or actions.

Examples of Workers Grievances:

1. Regarding wage structure, wage calculation, deduction, incentive, etc.

2. Regarding factory working conditions such as light, noise, smoke, fumes, too hot or too cold, environments, dampness, inadequate toilet facilities, lunch rooms, impure drinking water etc.

3. Regarding supervision such as rigid rules, regulations not clearly posted, foreman being partial, inadequate job instruction, etc.

4. Regarding partial attitude of management towards deciding seniority, promotions, transfers, discharges, lay-offs, penalties, night shifts, etc.

5. Regarding collective bargaining, e.g., management violating agreements, not attending to union grievances, penalising workers who belong to union, etc.

Grievance Procedure:

If an enterprise wants to get maximum out of its workers/employees, it must attempt to satisfy them by providing good working conditions, fair wages, settling grievances and taking them into confidence. Thus, an adequate and effective procedure must be developed by the management to handle and settle grievances of its employees. A good grievance procedure is essential to develop sound labour relations.

A good grievance handling procedure should:

(i) Be simple, easy to understand and to operate;

(ii) Settle grievances at lower level;

(iii) Systematically handle the grievances and promptly remodify the conditions complained of;

(iv) Depending upon the nature of grievance, refer it to appropriate authority;

(v) Ask the employee to give his complaint in writing;

(vi) Permit the worker to appeal against the decision taken at lower level, and lastly

(vii) The grievance procedure should be made, realising the importance of industrial harmony and good labour relations.

Steps involved in grievance handling procedure:

Fig. 21.1 shows steps involved in a grievance procedure.

Step 1:

The aggrieved employee presents his grievances in writing to his foreman or supervisor; he puts his grievance to union representative who also is a full time employee of the company. If the foreman, aggrieved employee and the union representative fail to work out a settlement of grievance, the dispute in the written form is sent to a higher step in the procedure.

Grievance Procedure


The grievance is looked into by the middle management and the union committee man; a union committee man supervises several union representatives and is specialist in union management ne­gotiations. If the situation still remains unsettled, as the third step, the case is forwarded to top management and top-union officials.


Top management representatives and top union official discuss the grievance which by this time has now become issue that has political implications. Thus it is very difficult to secure an integration of interests at this high level.


If top management and union leaders fail to settle the issue, the fourth step, then, is to submit the same to an impartial Arbitrator for a final decision as to the action required.

A failure to settle the issue at step-4 may result in strike, picketing, Gherao or lockout.

It is the best if the grievance gets settled at the level of supervisor and union representative.