CHAPTER 23

Industrial Disputes and Collective Bargaining

CHAPTER OBJECTIVES

After reading this chapter, you should be able to:

  1. Understand the objectives, characteristics, causes and types of industrial disputes
  2. Explain the investigation and settlement of disputes
  3. Enumerate the features and procedures of collective bargaining
  4. List the conditions needed for effective bargaining

Tata Steel is one of the oldest and largest private sector steel companies in India. Its labour practices meet the United Nations Global Compact principles. It has won accolades for its HR policies and corporate governance. Some of the awards include the Most Admired Knowledge Award from MAKE Asia in 2007 and The Amity Corporate Excellence Award from the Amity International Business School. In addition, Business Today and Ernst & Young surveys rated Tata Steel as India’s Best Managed Company in Metals and Mining.

Tata Steel strongly believes in upholding the freedom of trade unions and the effective recognition of the right to collective bargaining. In fact, the first labour union in India was started at Tata Steel in 1920 and the Tata Workers’ Union is the organization that has been conducting collective bargaining from 1937 till now. The collective bargaining process is so successful in the company that it has enjoyed 75 years of uninterrupted industrial peace. It has a variety of formal two-way communication between the management and the unions and between the management and the employees. To ensure the prevalence of cordial industrial relations (IR) at every level of the company, it has a distinct three-tier consultative system—the joint departmental council, the joint works council and the joint council of consultative management—to ensure workers’ participation in management. This time-honoured and effective arrangement ensures widespread communication and consultation with the employees and a good relationship with the union.

The HR and IR practices of this company, including its effective collective bargaining, clearly show the importance of these factors in pre-empting industrial disputes and promoting industrial peace and unity. Given this context, we shall now discuss the different aspects of industrial disputes and collective bargaining in this chapter.

Introduction

An industrial dispute is basically a difference of opinion between the employer and the employees over one or more issues. Disputes are core to the industrial relations exercise of an organization. The primary aim of industrial relations exercises is dispute avoidance. The various aspects of industrial relations are designed with a view of restraining industrial dispute and the resultant labour unrest. Conflict is the driving force of the industrial relations system of an organization.1 Generally, organizations consider an industrial dispute as an uncommon and deviant behaviour of the employees. Consequently, the approach of any management towards an industrial dispute is one of precaution and prevention rather than one of management and resolution. Industrial disputes typically manifest in the debilitating form of strikes, lockouts, picketing, go-slows and gheraos. Hence, they require the development of appropriate strategies for prompt identification of employee grievances and their resolution. In fact, a timely resolution of grievances can prevent them from becoming industrial disputes.

Employers and employees have realized the fact that industrial tensions and disputes can demoralize people and destabilize institutions. There is also a growing realization that the loss of man-days due to strikes and lock-outs ultimately benefits no one in the organization. This has forced the organization and the unions to formulate some basic ground rules regarding dispute prevention and handling. Yet, grievance resolution and dispute avoidance are very tricky tasks since the employers and the employees often make competing claims over the organizational resources. For instance, employers aim to make more profits from their investment while the workers aspire for better compensation for their job performance. When the needs, goals and interests of the employers and those of the employees become incompatible, industrial disputes erupt. Section 2K of the Industrial Disputes Act, 1947 defines an industrial dispute as “any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person.”

Characteristics of Industrial Disputes

Based on the definition of the term industrial dispute given in the Industrial Disputes Act, its characteristics have been identified as follows:

  • An industrial dispute is a collective dispute between employer and employees. The dispute between an individual employee and employer is not normally viewed as an industrial dispute except for dismissal, discharge, retrenchment or termination of individual employee. Typically, the dispute should have been raised by a substantial number of employees.2
  • The relationship existing between the parties to the industrial dispute must be that of the employer and employee or co-workers, that is, between workmen and workmen.
  • The dispute may arise out of disagreements between employers and employees over the terms of employment like wages and salary, incentives and benefits, work loads, and so on.
  • It could also be connected to the conditions of labour like working conditions, occupational health and safety, and so on.
  • The industrial dispute may even relate to non-employment causes of workmen.

Objectives of the Industrial Disputes Act, 1947

The primary purpose of the Industrial Disputes Act, 1947 is to protect organizations from all forms of disputes irrespective of their sources, magnitude and implications. Although the employers and the employees have irreconcilable goals, needs and interests, the Industrial Disputes Act attempts to provide a mechanism for avoiding dispute and preserving industrial peace. This industrial peace ensures industrial growth, which is a must for any welfare state.3 This act is administered by the Ministry of Labour through its industrial relations division. We shall now see the objectives of the Industrial Disputes Act, 1947.

  • The primary purpose of this act is to preserve the peace and harmony of an industrial enterprise.
  • This act aims at ensuring better utilization of the available human resources by avoiding dispute-related manpower loss in the organization.
  • It looks to preempt the employees’ grievances and industrial tensions from developing into full-fledged disturbances and confrontations between employer and employees in the forms of strikes or lock-outs.
  • It strives to provide a mechanism for the resolution of industrial disputes and assure industrial justice, which is an essential element of enduring industrial peace.
  • It seeks to indicate the contingencies when strikes or lock-outs can be imposed lawfully.
  • It specifies the grounds for declaring a strike or a lock-out as illegal. It thus attempts to avoid illegal strikes and lock-outs and the consequent disruption to work and also production and income losses.
  • It endeavours to offer financial relief to the employees in the event of a lay-off or retrenchment.
  • It aims at encouraging and streamlining collective bargaining as a dispute resolution forum.

Causes of Industrial Disputes

Organizations can effectively avoid an industrial dispute only when it is able to locate the causes of the industrial tensions and disputes accurately. Generally, these causes are classified as economic and non-economic. The economic causes arise due to the non-fulfilment of economic needs such as wages and salary, incentives and benefits. On the other hand, the non-economic disputes may arise out of organizational violence, working conditions, and indiscipline. We shall now see the important reasons that often lead to disturbances in industrial enterprises.

Demand for Pay and Benefits Hike

Employees claim for increased pay and benefits and the employer’s refusal to concede their demand often gives rise to an industrial dispute. Employers and employees often make mutually irreconcilable claim over the profits and wealth of the organizations. On the one hand, the rising cost of living, improved social status and lifestyle changes often force employees to seek increase in their monetary compensation at periodic intervals. On the other hand, survival, prestige and growth needs drive the employers to retain the major share of the profit. When both employers and employees adopt an intransigent stand on financial issues, it ultimately paves way for an industrial dispute.

Demand for Hygienic and Safer Working Conditions

The employees’ insistence on good and safer working conditions may also form a ground for an industrial dispute. Specifically, the employees’ demand for a proper physical environment, adherence to statutory safety measures and workload-related issues can cause industrial disputes in an organization.

Demand for Better Labour Welfare and Social Security Measures

The employees’ insistence on improvements in welfare facilities such as transport, housing, education, recreation, canteen, insurance, e-commuting and flexi time can also cause industrial disputes. Similarly, the need for better social securities like retirement benefits, medical facilities and compensation facilities may also act as a ground for industrial disputes.

Demand for Recognition and Appreciation

Besides the primary needs like wages, incentives, benefits, health and safety, the employees may also demand the fulfilment of social needs like recognition, self-expression, appreciation and scope for personal achievements. When these demands are denied or delayed by the employers, it may provide a ground for industrial dispute.

Demand for Justice for an Individual or a Group of Employees

When there is a mass lay-off or retrenchment of employees, it may provide reasons for the employees to develop a dispute with the employers. At times, even the disciplinary actions against individuals in the form of dismissal, discharge, demotions and suspensions may form a ground for industrial dispute as per Section 2A of the Industrial Disputes Act, 1947.

In addition to these causes, the unions may also raise industrial disputes out of inter-union rivalry, political compulsions and the eagerness to assert their statutory rights. These causes are explained here.

One-upmanship among the Unions

One-upmanship is the practice of always keeping one step ahead of the rest, i.e., friends or competitors. In their quest to prove their credibility and dependability among the employees, the unions may adopt a negative attitude towards the management deliberately. In such a situation, the unions may start a dispute with the management even on silly issues just to unite their members and expand their membership base. Moreover, when there is an inter-union rivalry, unions adopt a more strident posture and refuse to reach a consensus among themselves before the fixation of wages and other crucial negotiations. Consequently, these unions adopt conflicting and competing stands in their negotiations with the management. For instance, when some unions reach an agreement with the management, others oppose the agreement and start a dispute with the employers in order to portray the rival unions as betrayers.

External Interference

The system of allowing external leaders to manage the unions, like in India, also plays a significant role in an industrial dispute. In such a case, union activities are influenced more by political considerations than by organizational problems.4 The unions’ stands on organizational issues are dictated mostly by the ideology and leadership of the political parties with which the union is affiliated. Thus, political rivalry often causes union rivalry, which, in turn, affects their stands on organizational issues. This may lead to unnecessary tensions and dispute in the organization.

Numerous Labour Legislations

The government has enacted several legislations to protect the rights and interests of the workers in industrial establishments. It becomes a legal necessity for the organizations to provide these facilities to their employees. Understandably, any violation of these provisions or denial of statutory facilities to the employees becomes a ground for dispute between employers and employees.

Types of Industrial Disputes

An industrial dispute is basically a difference between employer and employees. Based on the characteristics of employees’ needs and interests, the disputes may be classified into interest and rights disputes. We shall now see these disputes in detail.

Interest Disputes

These refer to the disputes relating to the economic interest of the employees. The interest disputes often arise at the negotiation or bargaining stage of a collective bargaining process. They may relate to wages, incentives and other benefits of the employees. In short, an interest dispute relates to the conditions of employment of workers.

Rights Disputes

These involve disputes over the understanding, interpretation, and application of the rules and regulations which protect the rights of the employees. They may relate to the interpretation and implementation of statutory rules, company rules, collective bargaining agreements, and employment contracts. The alleged violation of these rules provides a ground for rights disputes. For instance, the non-implementation of safety rules, the violation of wages or bonus act and the misinterpretation of wage agreements can cause rights disputes.

When the efforts of employees and employers for an amicable settlement of rights and interest disputes fail, the employees may begin to express their disputes openly. The purpose of such an open expression of disputes is to apply pressure on the employers to get their demands fulfilled. They may also attempt to get the attention of the general public and government to their problems.

Outcome of Disputes

The interest and rights disputes may be expressed by the employees through the following forms and shapes:

Strikes

A strike is an important tool in the hands of the trade unions to exert pressure on the employers to achieve their demands. According to the Industrial Disputes Act, 1947, a strike means “a cessation of work by a body of persons employed in any industry acting in combination or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment. Employees may resort to strike collectively when there is an interest or rights violations.

Types of Strike Some of the important forms of strikes are general strike, pen-down, tools-down and sit-in strikes, wild-cat strike, go-slow and work-to-rule strikes, sick leave and mass casual leave strikes, hunger strike and sympathy strike. We shall now discuss these strikes.

General strike—It normally refers to a large-scale strike organized by the employees belonging to an industry, a region or an entire country. Normally, the employees of a region, state or nation are united by common goals and interests and as such struggle together. Since these strikes are organized on a mass basis, they create a huge impact and often put a lot of pressure on the employers. However, general strikes are normally not intended against any individual employer.

Pen-down, tools-down and sit-in strikes—In pen-down, tools-down and sit-in strikes, employees report for duty but do no work. In these forms of protest, the employees just refuse to leave their place after entering the work premises and remain idle. These strikes may be planned or spontaneous, depending upon the happenings and urgency of the situation.

Wild-cat strike—When employees resort to an unauthorized strike in violation of the labour contract or agreements, it is called a wild-cat strike. Unions may resort to a wild-cat strike to pressure their employers during negotiations. Strictly speaking, wild-cat strikes are illegal and the striking employees are not protected legally against the consequences of these strikes.

Go-slow (slow down) and work-to-rule strikes—Go-slow and work-to-rule strikes are forms of strike in which employees work but not up to their usual levels or capacity. They reduce their output deliberately to show their protest to the employers. In this form of strike, the employees continue to get the wages while the employer’s revenue is badly affected. Here, the employees strictly follow the rules and just refuse to deviate from them. They would quote the rule books to avoid or to go slow on the work.

Sick leave and mass casual leave strikes—Employees participating in these strikes apply for sick leave or casual leave en masse, mentioning sickness as the reason. The purpose of such mass casual or sick leave is to bring the work to a halt in order to achieve their demands. The employees may opt for this method even to forewarn the employers of the consequences of a strike planned in the future. In this form of strike, the striking employees are legally right and safe as they are entitled to a specified number of days of casual or sick leave in a year.

Hunger strike—In a hunger strike, the employees undertake fasting by abstaining from both food and work as a means of protest. Since there is a cessation of work due to employees’ participation in the fasting, it is viewed as a strike. The purpose of such a strike is to embarrass the employers and get the attention of the government and the general public to the cause of the strike.

Sympathy strike—The purpose of a sympathy strike is to express sympathy and solidarity with another group of striking employees belonging to a different category of employment in the same organization. For instance, in order to express solidarity with the striking doctors, the nursing staff may go on strike. The purpose here may be to further intensify the strike and its impact or to sympathize with the cause of the doctors’ strike or both. As such, the nursing staff may not have any direct or immediate cause to strike other than supporting the doctors’ strike. Incidentally, the sympathy strike may also be conducted for the striking employees in other organizations in the same or a different industry.

Picketing

It is a form of protest by employees in which the primary intention is to prevent or dissuade the non-striking employees from attending to their work during the strike period. In this method, the striking employees assemble in front of the factory gates and attempt to persuade the non-strikers to decide against going inside the premises and thereby participate in the strike. The intention of picketing is to achieve complete stoppage of work in order to increase the pressure on the employer. Picketing may be held at the workplace or even at some other prominent places to attract the attentions of the public and government.

Gheraos

It is a form of protest in which employees encircle their employers or top managers at the workplace with a view to restricting their movements. The purpose of a blockade or confinement is to force the employer or managers to concede the demands of the workers. The wrongful confinement of any person is not legally tenable and therefore gherao is an illegal act.

Lock-outs

A lock-out is the employer’s response to the employees’ continued protest in the form of strike. In a lock-out, the employer closes the workplace with the aim of preventing the employees from entering the factory premises and performing their job. Employers may resort to lock-outs when there are large-scale work disturbances, incomplete production or abnormally high production costs. It is also a strategy adopted by the employers to test the employees’ endurance and break their resolve to continue the strike. According to the Industrial Disputes Act, 1947, a lock-out means “the temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him.”

Investigation and Settlement of Disputes

Industrial disputes are dangerous for the future of an organization as they can fritter away its time, efforts, energy and resources. Therefore, it must make every effort to prevent disputes. However, in practice, it is not possible to ensure an organization being fully free of industrial disputes and disturbances. In such a situation, the best option is to resolve the disputes in an expeditious manner. Though judicial recourse is a viable option for solving a dispute permanently, it is an expensive, time-consuming and tedious process. When the resolution of a dispute is delayed for any reason, the organization may face a variety of problems. Till a legal verdict is obtained, there remains a state of uncertainty, which may cost in terms of organizational performance and efficiency, and employee productivity and motivation. It is for these reasons that a legal option is often considered to be the last resort. Understandably, non-judicial dispute resolution methods like conciliation and arbitration remain the first preference of organizations in dispute settlement.

The non-judicial methods have several merits over the judicial means of dispute settlement. For instance, the non-judicial methods are less formal and rigid, less expensive and less time-consuming.5 However, no single method or style of dispute settlement is likely to prove equally acceptable to both employers and employees or suitable for all occasions and organizations.6 An organization may choose a specific method for resolving the dispute, depending on the issues and the situation involved (see Figure 23.1 for the different dispute settlement methods). We shall now see the important methods used to resolve industrial disputes.

Negotiation

Negotiation as a process of dispute settlement is an effective first attempt to resolve an industrial dispute. Disputes arising out of interpersonal, inter-group problems can be addressed through direct negotiation between the employer and the union. However, an important requirement for the success of the negotiation method is the presence of mutual trust and confidence in the relationship between the employer and the union. In the absence of mutual trust and faith, negotiation as a method of dispute resolution is bound to fail. As part of the negotiation-based dispute settlement, organizations can refer disputes involving individuals to grievance procedures established in organizations in compliance with the Industrial Disputes Act, 1947.

Collective Bargaining

It is a forum for reaching an agreement between the employer and the union after negotiations and bargaining. As such, collective bargaining provides for resolution of disputes through compromises or concessions made by both the parties.7 The power equation between the employer and the union is critical in collective bargaining from the beginning to the end of dispute deliberation. For instance, when the employers perceive the union as relatively weak, they may not concede even its demand for referring an industrial dispute to collective bargaining. In such a situation, the union first resorts to some forms of agitation like strike or picketing to prove their strength and force the employers to seek settlement of the disputes through collective bargaining. Even during a collective bargaining process, the employees may keep the threat of a strike as a pressure tactic to reach agreements.8 Similarly, the employers may also make veiled threats by referring to their options like strike-breaking lay-off and lock-out to counter pressure the unions. (Collective bargaining has been discussed in detail later in this chapter).

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Figure 23.1
Methods of Disputes Settlements

Conciliation and Mediation

Conciliation means different forms of mediation through which disputes can be settled without arbitration. The Arbitration and Conciliation Act, 1996 deals with the different aspects of reconciliation. The purpose of the conciliation process is to remove the animosity and mutual distrust in the relationship between employer and employees. When agreements are reached for dispute resolution through conciliation without external intervention, the entire process becomes self-enforcing.9 Conciliation normally involves a third party who acts as a mediator and plays a key role in persuading the employer and the employees to reach voluntary settlement and execution. Conciliation can be defined as a procedure to achieve amicable settlement with the assistance of an independent third party.10 A single individual or group of persons may act as third party conciliator in the conciliation process. The major role the third party is to persuade the parties to settle the disputes by themselves. The role of the conciliator in the conciliation process consists of

  • Bringing the parties (employer and employees) together to the negotiation table
  • Guiding the discussion process by setting the agenda for the conciliation process
  • Helping each party to understand and appreciate the problems of the other
  • Ensuring that all parties agree to compromises and concession in order to reach a mutually satisfactory agreement to solve the dispute
  • Ensuring that the agreement reached is actually enforced and the dispute resolved

Since conciliation is a voluntary process, the parties to the dispute have an option to withdraw from it at any time during the entire process. Further, the implementation of the agreements reached in conciliation is voluntary and not binding on either party. The success of the conciliation process depends on the mutual trust and good faith of both the parties.

Section 4 of the Industrial Disputes Act of 1947 provides for the appointment of conciliation officers in organizations. The act empowers the appropriate government to appoint as conciliation officers such number of persons as it deems fit for the purpose of reconciliation. These officers are entrusted with the responsibility of mediating and encouraging the settlement of disputes through voluntary conciliation. Each conciliation officer may be assigned a specific area or one or more industries in a specific area. Their job tenure may be permanent or for a specific period.

When the government deems fit, it may even constitute a board of conciliation, comprising a chairman—an independent person—and a few members, for dispute settlement. Each party to the dispute will have an equal number of representatives in the board as members. For effective discharge of duty, the conciliation officers and the board of conciliation are vested with the powers of a public servant as per Section 41 of the Indian Penal Code (Act number 45 of 1860). They can exercise the following powers as part of the conciliation efforts:

 

Table 23.1 Data Relating to Dispute Settlement through Conciliation by Central Industrial Relations Machinery (CIRM)

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  • Entering the premises of the industrial establishment where the dispute is existing or anticipated, for the purpose of enquiry after due notice
  • Enforcing the attendance of any person or submission of any document for examination as part of the investigation of the dispute
  • Investigating the persons who the conciliation officers believe can provide more information about the dispute
  • Inspecting the documents deemed to be relevant to the industrial dispute
  • Sending a report to the appropriate authorities detailing the steps taken in resolving the dispute and the agreement reached. In case of failure to reach settlement, the subsequent steps to be taken for amicable settlement must be mentioned.

Table 23.1 lists the dispute settlements in India.

Arbitration

Like conciliation, arbitration is also a mechanism for the settlement of a dispute by a third party. However, in arbitration, the decision of the arbitrator is binding on both the parties to the dispute and its enforcement is compulsory. Arbitration can be classified as compulsory and voluntary. In case of compulsory arbitration, the dispute is referred for arbitration even without the consent of the parties to the dispute. In case of voluntary arbitration, the parties to the dispute voluntarily submit their dispute for arbitration on the basis of their common understanding. The Industrial Disputes Act provides only for voluntary reference of dispute for arbitration. However, once the parties commit themselves to the arbitration process, they can neither withdraw from the process nor refuse to implement the recommendations of the arbitrator. Though arbitration is different from judiciary, it is also a formal process and the disputants have to make their presentation through evidences and arguments.11

The Arbitration and Conciliation Act, 1996 The Arbitration and Conciliation Act, 1996 deals with domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards in India. It indeed provides a statutory protection to arbitration as a quasi-judicial dispute resolution method. The characteristics of arbitration according to this act are:

  • It is a quasi-judicial mode of dispute settlement process.
  • Parties to the dispute voluntarily refer the dispute for arbitration as an alternative to approaching courts of law.
  • The parties have no right to withdraw from the arbitration tribunal for any reason during the arbitration process before its final award except during circumstances like (i) the disputer withdrawing his claim with the consent of all the parties to the dispute; (ii) both parties jointly agreeing on the withdrawal; and (iii) differences over the jurisdiction of the arbitration tribunal.
  • The decision called ‘awards’ are binding on the parties and without any recourse to other legal options.

The arbitrator of the dispute must be impartial and independent and have a high degree of integrity. He must keep the interest of all parties in mind and treat them fairly and equally. He must avoid reaching any judgment before hearing the views of all parties to the dispute. Usually, arbitration awards are enforceable within three months from the date of announcement of the award.

Adjudication

Adjudication is a court-based decision-making process that involves a third party and the judgments are binding on the parties. When the conciliation efforts fail and no agreement is reached, parties may take recourse to the legal process as a final option. Normally, the conciliation officers make a recommendation for referring the dispute for adjudication. Such recommendations are made by them to the appropriate authorities as the next step for settling the dispute. Adjudication is usually a highly formal and time-consuming process. Moreover, it is normally an involuntary and adversarial process. In an adversarial process, judgment is decided in favour of the party which is proved right and, by the same extension, the other party is proved wrong. However, appeals can be filed in higher courts against the judgments.

The Industrial Disputes Act provides for a multi-tier system for settling disputes through adjudication. These are courts of enquiry, labour courts, industrial tribunals and national tribunals. We shall now see these courts and tribunals in detail.

Court of Enquiry When the government deems fit, it may order a court of enquiry for investigating all matters pertaining to an industrial dispute. Such an enquiry may be ordered

  • to identify the cause of the industrial dispute
  • to fix responsibility for the dispute
  • to suggest steps for preventing its occurrence in the future
  • to provide a solution to the dispute specifically referred to it

The government normally issues notification for the constitution of the court of enquiry in the official gazette. This court may have one or more independent persons for conducting the enquiry. When the court has more than one person, one of them should be made the chairman of the court and remaining persons would act as its members.

When the appropriate government forms an opinion that an industrial dispute exists or is anticipated, it may refer any matter appearing to be connected with and relevant to the dispute to the court of enquiry but only through a written order. The court will have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (Act number 5 of 1908). Certainly, the court can get the assistance of experts on the subject-matter by appointing them as court assessors. The specific recommendations of the court of enquiry are usually forwarded to the appropriate government for further action.

Labour Court Like the court of enquiry, the appropriate government through gazette notification may constitute a labour court for settling an industrial dispute. However, the labour court must have only one person who should have the appropriate qualification as prescribed by the Industrial Disputes Act. Labour courts normally deal with matters like the discharge and dismissal of workmen, application and interpretation of standing orders, and legality of strikes or lock-outs. The government through appropriate written orders may refer a dispute to the labour court for adjudication.

However, a voluntary reference of dispute to the labour court by the parties to the dispute is also possible. For instance, the employers and the employees, through a written agreement, may refer a specific dispute to the labour court for adjudication. The labour court will also have the same powers as vested in a civil court under the Code of Civil Procedure, 1908 (Act No 5 of 1908). The judgment of the labour court is binding on all the parties. In case of dispute involving dismissal or discharge of employees, the court has the power to order the reinstatement of the discharged or dismissed employee. It can also reduce a punishment by awarding a lesser punishment, especially in the case of grave actions like dismissal or discharge of employees.

Industrial Tribunal It is one more option available to the appropriate government for settling the dispute between employer and employees. When the government deems fit, it may constitute one or more industrial tribunals for settling industrial disputes. These tribunals deal with collective disputes such as wages, allowances, hours of work, leave, retrenchment, closure, etc., in addition to the matters covered under the purview of labour courts. Like a labour court, an industrial tribunal also has only one member called the presiding officer with necessary qualifications as prescribed by the Industrial Disputes Act. The government, if necessary, can appoint two knowledgeable persons as assessors to the tribunal. In addition to the government’s involuntary reference of a dispute to the tribunal, the parties to the dispute may voluntarily refer a dispute to the tribunal for adjudication. The powers and functions of the tribunal are similar to that of the labour courts. Table 23.2 lists the labour courts in India.

National Tribunal National tribunals are formed by the central government for adjudicating the industrial disputes which have implications for the entire nation or affect the industrial organizations in more than one state. The presiding officer of a national tribunal is appointed by the central government after ensuring his eligibility as prescribed by the Industrial Disputes Act. The presiding officer can have two assessors with expert knowledge in the subject matter under consideration. The powers, duties and functions of the presiding officer of a national tribunal are on par with those of the heads of a labour court and an industrial tribunal.

 

Table 23.2 Labour Courts in India

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Collective Bargaining

As mentioned earlier, collective bargaining is a process established to improve industrial relations by resolving industrial disputes through collective negotiations. It is also viewed as a mechanism for regulating the relationship between employer and employees. Collective bargaining at the industry level is an important form of negotiation forum between employers and employees in public sector organizations, but the private sector organizations of late prefer organizational-level or workplace bargaining.12 Collective bargaining is differently viewed by the organizations as industrial relations strategy and participative management strategy. Certainly, it provides an opportunity to the employees to involve themselves in the organizational decision-making process on matters affecting their interests and rights. Understandably, it can improve employees’ loyalty and commitment. Employers also gain through collective bargaining by improving employee cooperation and commitment and ensuring cordiality in industrial relations. The International Labour Organization (ILO) has recognized collective bargaining as an instrument of social justice. According to ILO, collective bargaining serves the purposes of protecting the fundamental rights of workers, providing them social protection and promoting sound industrial relations.13

Collective bargaining normally covers issues such as working hours, wages, benefits, working conditions, workloads, and the rules of the workplace. When the collective bargaining process is successful, the employers and the employees’ union reach an agreement and ratify it later. This agreement is usually in force for a specific period like three or five years. However, in practice, collective bargaining is often viewed as an adversarial process in which one party gains at the expense of another. For instance, when the wages are substantially raised without any increase in the workload, the union may view it as a complete victory for itself and, correspondingly, the management may consider it as a negative outcome of the bargaining process. In the long run, this may affect the ability and trustworthiness of the collective bargaining as a fair system of dispute settlement. It is, therefore, essential for the parties to develop mutual trust and accommodative approach in the collective bargaining process. Thus, the parties must strive to reach agreements that are made on trust and enjoy the genuine support of both parties as these are more likely to be respected.14 However, in recent times, the importance of collective bargaining is declining due to factors like lack of recognition for trade unions, high employee mobility and, finally, employees’ preference for individualized bargaining with the organization on the basis of their skills and market demand.

Box 23.1
Definitions

“Collective bargaining is defined as the process through which representatives of management and the union meet to negotiate a labor agreement.”15

—Gary Dessler

“Collective bargaining is a process, necessitated by a conflict of needs but resting on the basic interdependency and commonality of interest, whereby employee and employer collectives by the conduct of continued negotiation and the application of pressure and counter-pressure, attempt to achieve some balance between the fulfillment of the needs of the management on the one hand and the employee on the other hand.”16

—Sonia Bendix

“Collective bargaining is defined as one method whereby trade unions could maintain and improve their members’ terms and conditions of employment.”17

—Webb Sidney and Webb Beatrice.

The fulfilment of mutual needs through negotiation is the essence of collective bargaining. We shall now see some of the definitions of collective bargaining in Box 23.1.

We may define collective bargaining as a free and voluntary forum that facilitates negotiation between employers and employees’ unions on issues affecting the interests and rights of both parties so that an amicable settlement is reached in good faith.

Features of Collective Bargaining

Based on these definitions, the characteristics of collective bargaining may be derived as.

Joint Process Basically, collective bargaining is a two-way process in which employers or their representatives and employee unions participate in the discussion.

Interactive Mode It provides an opportunity to both the parties to influence each other. It aims at fulfilling the needs, aspirations and goals of both the employers and the employees.

Continuous Process Since needs are never-ending, employers and employees view collective bargaining as a continuous process. They utilize it to hold discussions with other parties at regular intervals to get their goals and needs fulfilled.

Adversarial Strategy Collective bargaining is basically an adversarial process in which each party attempts to fulfil its needs by applying pressures and counter-pressures on the other. At the end of the process, the ultimate gain of one party may be the loss for the other.

Union-based Initiative In practice, collective bargaining usually holds little value for employers in monetary terms as agreements with unions, like wage agreements, often result in a huge expenditure for them. Understandably, in most cases, the initiative for bargaining has to come from the unions only. They often force the employer to organize and conduct collective bargaining by resorting to various agitations. Box 23.2 outlines the relevance of collective bargaining as a dispute settlement mechanism.

Classifications of Collective Bargaining

The nature and type of bargaining may vary depending upon the organization, industry, region and situation. The prevailing situation, for instance, may have an impact on the bargaining process. Similarly, the issues taken up for discussion may also influence the bargaining process. Further, the levels at which the collective bargaining is done may also influence the bargaining process. Apparently, these factors may form the basis for classifying the collective bargaining. For instance, based on the issues scheduled for discussion in a collective bargaining process, the bargaining may be classified into distributive bargaining and integrative bargaining. Similarly, on the basis of the levels at which the bargaining is done, it may be divided into centralized bargaining and decentralized bargaining. We shall now discuss the different types of bargaining.

Box 23.2
Collective Bargaining: A Forum for Social Dialogue at ACC

Collective bargaining is recognized as an effective means of achieving social justice by many global organizations like the United Nations and the International Labour Organization (ILO). In fact, ILO considers collective bargaining as one of the fundamental rights of the employees. The collective bargaining convention was approved by ILO in 1981 with the aim of encouraging free and voluntary collective bargaining between employers and employees to settle their disputes. Collective bargaining is viewed as a form of social dialogue and the employers and the employees are considered as its social partners. As such, it enables the employers and the employees to discuss all issues which have a bearing on the social and economic life of the employees. Besides ILO, the United Nations too views collective bargaining as an important right of the employees. In fact, it has developed 10 global compact principles for promoting better corporate responsibilities among the employers. Four of the ten global compact principles deal with the labour aspects of an organization. These four principles are: (i) effective recognition of the right of collective bargaining, (ii) elimination of all forms of forced and compulsory labour, (iii) effective abolition of child labour and (iv) eliminating discrimination in respect of employment and occupation. Many organizations are now conforming their policies and practices along the United Nations’ global compact principles. In this regard, ACC presents an interesting case.

ACC Limited is a signatory to the United Nations Global Compact. It has committed itself to all the 10 principles of the Global Compact, including collective bargaining. As far as the corporate and HR policies are concerned, this company clearly respects the workers’ right to collective bargaining, and encourages dialogues with their unions and associations to solve issues pertaining to work, facilities and benefits. As part of the effective implementation of collective bargaining, ACC holds periodic dialogues and negotiations with the recognized trade unions to discuss and settle their needs and interests cordially. The workers and their elected representatives get the opportunity for consultation and negotiation. Regular interaction with the association and the unions are held to sustain the cordiality and harmony in the industrial relations. The social dialogue with the union is an ongoing process of this company.

Adapted from http://www.acclimited.com/newsite/comm_progress.asp.

Distributive Bargaining

A bargaining process is described as distributive bargaining when the parties to the bargaining process have conflicting needs, interests and goals. In such a situation, the employers and employees normally adopt opposing positions. Normally, this type of bargaining is adversarial in character and a hostile environment prevails in the discussion. In this kind of bargaining, one party’s gain is another party’s loss as their needs are mutually exclusive. Economic issues like wages revisions, benefits, bonuses, leaves, and workloads become the major agenda of distributive bargaining. Similarly, controversial issues like employee dismissal, discharge and other disciplinary actions can also be the subject-matter of distributive bargaining. This kind of bargaining is normally a distressing experience for both the parties since they have to bring in enormous pressure on the other party. For instance, the employees’ unions may hold the threat of a strike during the bargaining, while the employers may counter it with the threat of a lock-out and even disputing the union status as the real representative of the employees. Depending upon the power equation, one party finally gains at the expense of another in distributive bargaining.

Integrative Bargaining

When there is a convergence of interests, needs and goals among the parties to the bargaining, the bargaining process is usually described as integrative bargaining. In this type of bargaining, the employers and the employees have the same attitude towards the issues discussed in the bargaining and are equally concerned about its outcome. For instance, agreements regarding employee health and safety at the end of the bargaining process benefit both the parties. It is indeed a win-win situation for both the parties. Issues like promotions, productivity-linked incentives, job security, and training and development can be the agenda of this kind of bargaining. The entire discussion in the bargaining is oriented towards finding a mutually beneficial solution to the issues. Unlike distributive bargaining, this method facilitates closer coordination and a better understanding between the employer and the employees.

Collective bargaining can also be classified into centralized and decentralized bargaining, based on the level at which the bargaining is conducted. These are being explained below.

Centralized Bargaining

When collective bargaining is conducted at higher levels like the national level or industry levels in a centralized manner, it is called centralized bargaining. This may be sectoral or central wage bargaining. Non-market institutions like the government and its agencies play a major role in determining the outcome of the centralized collective bargaining. The economic position and macro-level performance of the nation become important influencing factors in the centralized bargaining process. The chief merit of centralized bargaining is that the centralized wage agreements ensure equal pay increase for equal jobs, irrespective of all other factors. In fact, the individual strengths and weaknesses of each organization are never considered in centralized bargaining while fixing the wages. The other merits of centralized bargaining are: (i) wages are decided purely on the basis of the collective power of employers and unions; (ii) bargaining is usually done in a more systematic and professional manner; (iii) it ensures equal wages for equal jobs across the industry or region. However, on the negative side, the rigid wages structure may affect the ability of an individual organization to attract the best talents from the labour market. Further, centralized bargaining may fix minimum wages for the employees to the advantage of employers.

Decentralized Bargaining

In the case of decentralized collective bargaining, the bargaining is conducted at the enterprise level or even at the individual level. In fact, centralized collective bargaining is fast being replaced by decentralized bargaining. In many countries, there is a gradual shift from centralized to decentralized form of bargaining.18 In decentralized bargaining, an organization can develop a tailor-made wage package which best suits the interests of both the employer and the employees. Besides, decentralized bargaining provides an opportunity to the employees to participate in the decision-making process. It is also a simple, effective and faster process for deciding the wages and other benefits for the employees. Moreover, it facilitates need-based revision of wage agreements and labour contracts.

However, the main drawback of this method is that this may act against the interests of the employees as their individual bargaining power is limited. It may also result in frequent industrial disputes and disturbances as the employers are the direct decision makers in organizational-level bargaining. The wage bargaining may not be conducted by professionals and, as such, the techniques of effective bargaining may not be known to them.

The Collective Bargaining Process

The primary purpose of collective bargaining is to ensure the continuance of cordiality in the employer–employee relationship. This is done by avoiding unilateral actions of the employers and by ensuring a rightful place for the trade union in the decision-making process. In fact, the trade unions significantly influence the decisions concerning the interests and well-being of the employees in many collective bargainings. Those organizations that follow decentralized collective bargaining can have their own bargaining process, but at the centralized level, the process is almost the same. In any case, every bargaining process undergoes a few stages.19 The agenda for bargaining usually have an influence on the preparation for and duration of the collective bargaining. The process indicated in Figure 23.2 can be adopted by any organization with necessary modifications. We shall now see the steps in a collective bargaining process.

Deciding the Negotiation Team

The first step in a bargaining process is the determination of the negotiation team for the collective bargaining process. The employers and the trade unions both must choose their respective negotiating teams and the chief negotiator to conduct the collective negotiations. Each party must also have the power to remove or replace any member of the negotiating team. The negotiators must be knowledgeable and loyal persons with adequate negotiation skills. Whenever necessary, they may be provided with a supporting team to help in the preparation for the negotiation and bargaining process.

Planning for Negotiations

The next step in the bargaining process is doing one’s homework properly. This is applicable both to the employers and the trade unions. No party can afford to stumble at the negotiation table. The negotiators of each side must be fully equipped to present their case effectively and defend their positions strongly in the bargaining. They must have prior meetings among themselves to evolve a strategy for a successful initiation and completion of the negotiation process.

The management must have a solid database to support its bargaining positions.20 It must gather sufficient data about the existing compensation packages and other benefits. To strengthen its arguments, it should also have information about the industry pay averages and the pay scales of the rival companies in the same industry. It must also compute the probable labour cost for different compensation packages. Besides, it must use its experience gained from the earlier bargainings to decide its strategy for the future.

As for the trade union, it must gather comprehensive information about the needs and desires of the employees. It must clearly know what the employees expect from the next collective bargaining. It must also prioritize the demands for presentation and bargaining. Finally, it must predict the likely attitude of the other side to the collective bargaining on the basis of its past experience. Accordingly, it must devise its strategy for the bargaining.

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Figure 23.2
Steps in the Collective Bargaining Process

As far as possible, each side must keep alternative proposals to offer in the event of the original proposal falling through in the negotiation. Finally, each side must be aware of the culture, climate, history, general economic conditions and laws concerning wages and other benefits and salary structure of similar organizations.21

Presentation of Demands

Once the framework and the ground rule for the bargaining process is agreed upon by both the parties, each party would make a detailed presentation about its demands and the issues concerning them. The issues may relate to wages and salary, incentive, paid holidays, bonus payments, profit-sharing plan, sick leave, pension plan, promotions, grievance procedure, lay-offs, transfers, work assignment, work schedule, workloads, rest periods, and employee health and safety. Prior to making this presentation, both sides may exchange their views and opinions about the execution of earlier agreements. They may also discuss the additions, deletions and modifications required in the earlier agreements or contracts. After both parties complete their presentation, the stage is set for bargaining.

Bargaining over the Demands

This is the most crucial stage in a collective bargaining process. When the bargaining is integrative in nature, the employers and the unions may not feel any need to bring pressure on the opposite side to clinch the issues. This is because the final outcome in integrative bargaining normally benefits both the parties. In the case of distributive bargaining, each party would be wary of the strategies of the other party in the bargaining. Obviously, each party would adopt strategies to settle the issues in its favour. During the time of bargaining, the negotiating teams must consult regularly with, report to and take instruction from the higher authorities regarding the developments, revised strategies, and response to the offers made by the other party. When the negotiation breaks down or reaches a stalemate, the negotiators may offer alternative proposals for reviving the negotiation in due consultation with their top-level authorities. When all the efforts fail, the parties may seek a third-party intervention in the form of arbitration and adjudication or resort to arm-twisting the opposite party for a forced negotiation and settlement.

Winding up the Bargaining with or without Settlement

When the bargaining ends with a tentative agreement between the employers and the unions, it becomes the responsibility of each party to get the agreement ratified. The negotiators representing the management would seek the employers’ approval for signing the formal agreement. Since these negotiators have constantly been in touch with the management during the negotiations, there may not be any major problem in getting its approval. In contrast, the real challenge of the unions in collective bargaining actually lies in convincing the union members about the gain of the agreement and finally getting ratification from them for signing the formal contract. Till ratification is obtained from both the sides, it is not possible to make the agreement operational. Once the agreement is signed by all the parties, it is given effect either from the date agreed upon by the negotiators during the bargaining or after the expiry of the existing agreements.

Administration of the Agreement

The success of collective bargaining depends more on its successful implementation than on its signing or ratification. Unlike arbitration or adjudication, collective bargaining is not a binding agreement. Thus, the management may evade its commitment for implementing the agreement by citing practical difficulties. For instance, the management may force the unions to accept a partial implementation of wage agreement by citing cost escalation and low profit margin as reasons. Similarly, the unions may resist the attempts of the management to introduce the revised workloads, promotion and transfer policies, as agreed upon by them in agreements. When there is a failure of implementation of agreement, the relevance and importance of the collective bargaining agreement would be considerably undermined. It is the primary responsibility of the organization to explain and implement the agreement by providing the necessary training to its managers and supervisors.22 The unions have an equal responsibility to ensure the effective implementation of the agreement.

Essentials of Effective Collective Bargaining

An effective collective bargaining enables both the parties to work together to define their relationship through an agreement. It helps the employers and the employees in several ways. On the one hand, it helps the employees in influencing the managerial decisions concerning them, and on the other hand, it helps the employers in getting adequate support for their future plans and programmes from the employees and their unions. Ultimately, it helps the entire organization in improving the industrial relations. It is thus essential to ensure the effectiveness of collective bargaining. The presence of the following factors can enhance the effectiveness of collective bargaining.

Strong Unions and Effective Leadership

The important prerequisite for the success of collective bargaining is the presence of strong unions with an effective leadership in the organization. Only a strong leadership with effective control over its members can get the bargaining agreements ratified by the members without much difficulty. Thus, a strong and wise union leadership is an important element of effective collective bargaining.23

The Organization’s Recognition of Unions

The next important element of an effective collective bargaining is the presence of official unions in the collective bargaining. In this regard, the management must accord due recognition to the unions to represent the employees in the collective bargaining. In case of existence of multiple trade unions, the organization can identify and recognize the largest union as the authorized representatives of the employees. In this regard, the organization may undertake democratic exercises like elections to decide on the popularity of each union for awarding recognition.

Top-management Support

The support of and the encouragement from the top management are critical for the success of collective bargaining. The management must have faith in the system of collective bargaining as a dispute resolution process. It must also own responsibility for the fulfilment of the agreements reached through collective bargaining. There must also be a commitment from the management to deal with the employees and their unions in good faith.

Positive External Environment

The external environment and events have an important influence on the strategies adopted by the parties in the collective bargaining and also on the outcome. The most influential factors in the external environmental are the national political environment and the policies of the national trade unions. When the government follows pro-labour policies and is positively inclined towards trade unions, the power equation in the collective bargaining could be in favour of the unions. On the other hand, if the government is inclined towards protecting employers and their interests, the power balance might tilt towards the employers in the bargaining.

Openness and Flexibility

The degree of openness adopted by the employers and the employees in the bargaining process can also determine its efficiency. When the parties show a greater degree of openness in the bargaining, the chances of a positive outcome at the end of the process are brighter. The management should be honest not only in the bargaining but also in the implementation of the agreements. Similarly, the employers and the unions both must adopt an accommodative approach and be ready to ‘give and take’ in the negotiation to reach a settlement. A flexible approach alone can help in the long-term success of the collective bargaining process. The parties must attempt to make every collective bargaining an integrative bargaining so that everyone gets something at the end.

Fair Labour Practices

The management must desist from unfair labour practices such as the victimization of union activists through unfair disciplinary actions and even unfair dismissals of union members.24 The other unfair labour practices which the management must avoid are (i) obstructing and undermining the employees’ collective bargaining rights; (ii) preventing the formation or administration of unions through unfair means; (iii) discriminating against the unionized employees in increments, promotion or other career advancement plans; and (iv) keeping unfair recruitment practices to discourage the employees from joining unions.

Similarly, the unions should also avoid unfair labour practices like (i) making unreasonable demands on the employers through coercive techniques like strike, picketing and gherao; (ii) preventing the employees from exercising their rights on matters relating to collective bargaining; (iii) discriminating against the non-union members and penalizing those who do not participate in the union-sponsored strikes; (iv) refusing to bargain collectively with an employer; and (v) forcing the employees to participate in strikes and picketing against their will. Fair labour practices would keep the organization free of irritations, victimization and tension. They also help in keeping the industrial relations healthy and cordial.

Summary

  1. An industrial dispute is defined as any dispute or difference between employers and employers, between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person.
  2. The causes of industrial disputes are demand for pay and benefits hike, demand for hygienic and safer working conditions, demand for better labour welfare and social security measures, demand for recognition and appreciation, demand for justice to an individual or a group of employees, one-upmanship among the unions, external interference and numerous labour legislations.
  3. The types of industrial disputes are interest disputes and rights disputes; and the outcomes of disputes are strikes, picketing, gherao and lock-out. Strikes may be classified into general strike, pen-down, tools-down and sit-in strikes, wild-cat strike, go-slow and work-to-rule strikes, sick leave and mass casual leave strikes, hunger strikes and sympathy strikes.
  4. The forums for the settlement of disputes are negotiations, collective bargaining, conciliation and mediation, arbitration and adjudication.
  5. Adjudication includes courts of enquiry, labour courts, industrial tribunals and national tribunals.
  6. Collective bargaining is defined as a free and voluntary forum that facilitates negotiation between employers and employees’ unions on issues affecting the interests and rights of both the parties so that an amicable settlement is reached in good faith.
  7. The features of collective bargaining are: joint process, interactive mode, continuous process, adversarial strategy and union-based initiative. The types of bargaining are distributive bargaining, integrative bargaining, centralized bargaining and decentralized bargaining.
  8. The steps in the collective bargaining process are: deciding the negotiation team, planning for negotiations, presentation of demands, bargaining over the demands, winding up the bargaining with or without settlement, and administration of the agreement.
  9. The essentials of effective collective bargaining are strong unions and an effective leadership, the organization’s recognition of unions, top management support, positive external environment, openness and flexibility, and fair labour practices.

Review Questions

Essay-type questions

  1. Enumerate the causes of industrial dispute with relevant examples.
  2. Evaluate the different forms of industrial strikes critically and in detail.
  3. Discuss the different methods available for investigating and settling disputes.
  4. Explain the different methods of collective bargaining using examples.
  5. Describe the different steps in a collective bargaining process.
  6. Enunciate the essentials of effective collective bargaining.
  7. “Collective bargaining improves industrial relations but not productivity.” Discuss.

Skill-development Exercise

Objective – The objective of this exercise is to provide you with practice in investigating and settling disputes, especially in a specific situation where there is a high level of industrial disturbance like strike, picketing and lock-out.

Procedure Note – The class is split up into groups. Each group has (1) an HR manager, (2) two HR team members, (3) two office-bearers of trade unions, and (4) two observers of the meetings. The role of the observer is to observe the various aspects of the role-playing sessions and report on them.

Situation

Indus Aluminium Limited is a large aluminium-producing company. It is engaged in the production of high-grade bauxite and aluminium. The company focuses on three major business activities, namely, mining, refining and smelting. The HR policy of Indus Aluminium is geared towards developing its existing employees and preparing them to be future leaders. This company has a workforce of 7,200 employees. Though it has specific policies for human resources (HR) and industrial relations (IR), its IR record is not impressive. As a matter of fact, it has witnessed several industrial disputes and conflicts in the last few years. It has already lost several precious man-days due to industrial disturbances. Now, the management of this company wants to have a system that would prevent the industrial disputes from developing into a full-fledged confrontation between the management and the employees in the form of debilitating strikes and lock-outs. With the options of direct negotiation, collective bargaining conciliation, arbitration and adjudication before it, the management instructed the HR department to decide the appropriate way for an effective settlement of disputes.

Steps in the exercise

There are three steps in the exercise:

Step 1: The HR manager meets the office-bearers of the trade unions to know their views on the different dispute settlement techniques.

Step 2: He convenes a meeting of his HR team to choose the dispute settlement technique appropriate for the company.

Step 3: The observers analyse the performance of the members in the role-playing session and provide their feedback.

Case Study

Vikas Motor Limited is the second-largest two-wheeler manufacturer in the country. The company has ten brands, each performing well, and five production plants in different regions of the country. It has a single recognized union which is strong and effective with nearly 70 per cent membership of the employees. As part of its IR strategy, Vikas Motor follows a well-established collective bargaining technique for deciding labour-related issues, including wages and other benefits. Due to collective bargaining, the company has been revising the compensation packages of the employees once in three years. Collective bargaining has also ensured that the company has remained free from any major industrial dispute and disturbances for several years till date.

However, the entry of foreign companies into the market, which created a price war in the two-wheeler segment instantly meant that every company in the automobile industry was forced to respond in some way to this emerging trend . Obviously, companies viewed cost reduction as the most viable approach to warding off the threat of elimination from the market.

Understandably, the emphasis of Vikas Motor was also on cost cutting, and its board decided that the best strategy for wage reduction or freezing and cutting back on expensive employee benefits is the introduction of individual employee-level bargaining and the elimination of collective bargaining. The directors also felt that collective bargaining achieved the desired result on the IR front but not in terms of productivity and cost reduction. However, Mr Gupta, Director of HR and IR, differed with the general opinion of the board and advised it to look at collective bargaining as an instrument of change and not as an obstruction. Finally, the board decided to abolish collective bargaining as a wage-fixation technique and replaced it with individual employee-oriented and performance-based system for wage determination. The employees and their union received the news with shock and disbelief and responded with a flash strike. The company witnessed a strike after several years but the management viewed it as an emotional response of the employees and hoped that normalcy could be restored through talks and awareness campaigns. However, Mr Gupta feared a steady deterioration in the relations between the employers and the employees and also reduced employee cooperation and performance.

Questions for discussion

  1. What is your opinion about the problems of Vikas Motor Limited that have been caused due to the advent of foreign companies?
  2. Do you agree with the decision of the board of directors regarding the abolition of collective bargaining and its replacement with individual employee bargaining?
  3. How do you foresee the future of this company? What measures are required now to normalize the situation?

Notes

  1. C. Faucheux and J. Rojot, “Social Psychology and Industrial Relations: A Cross-Cultural Perspective” in G. M. Stephenson and J. Brotherton (eds), Industrial Relations: A Social Psychological Approach (New York: John Wiley, 1973), pp. 33–49.
  2. Jerome Joseph, Industrial Relations: Towards a Theory of Negotiated Connectedness (London: Sage, 2004), p. 142.
  3. O. P. Malhotra, The Law of Industrial Disputes, 1, 4th ed., (Delhi: Universal, 1998), p. 3.
  4. E. A. Ramaswamy, “Indian Management Dilemmas: Economic Versus Political Unions,” Asian Survey, 23, no. 8 (August 1983): 976–990.
  5. Isaak Ismail Dore, Arbitration and Conciliation Under the UNCITRAL Rules: A Textual Analysis (Dordrecht: Martinus Nijhoff Publishers, 1986), p. 3.
  6. John Thomas Dunlop, Dispute Resolution: Negotiation and Consensus Building (New York and London: Greenwood Publishing Group, 1984), pp. 217–218.
  7. Sonia Bendix, The Basics of Labour Relations (Cape Town: Juta and Company Limited, 2000), p. 138.
  8. Sonia Bendix, The Basics of Labour Relations (Cape Town: Juta and Company Limited, 2000), p. 138.
  9. M. Domke, “Commercial Arbitration at vii,” (1965), referred by Isaak Ismail Dore, Arbitration and Conciliation Under the UNCITRAL Rules: A Textual Analysis (Dordrecht: Martinus Nijhoff Publishers, 1986), p. 4.
  10. Report of the Secretary General, “Conciliation of International Trade Disputes,” (1979), A/CN.9/167, p. 4.
  11. Henry H. Perritt, “And the Whole Earth Was of One Language: A Broad View of Dispute Resolution, 29, Villanova Law Review (1984): 1221, 1331.
  12. Jerome Joseph, Industrial Relations: Towards a Theory of Negotiated Connectedness (London: Sage, 2004), p. 13.
  13. Shauna Olney and Marleen Rueda, “Promoting Collective Bargaining, Convention No. 154,” Social Dialogue, Labour Law and Labour Administration Department, ILO, Geneva, p. 6.
  14. Shauna Olney and Marleen Rueda, “Promoting Collective Bargaining, Convention No. 154,” Social Dialogue, Labour Law and Labour Administration Department, ILO, Geneva, p. 6.
  15. Gary Dessler, Human Resource Management (Delhi: Pearson Education, 2005), p. 613.
  16. Sonia Bendix, The Basics of Labour Relations (Cape Town: Juta and Company Limited, 2000), p. 138.
  17. Sidney Webb and Beatrice Webb, Industrial Democracy (Edinburgh: R&R, Clark Limited, 1898).
  18. Greg J. Bamber, Funkoo Park, Changwon Lee, Peter Ross and Kaye Broadbent, Employment Relations in the Asia-Pacific: Changing Approaches (London: Allen & Unwin, 2000), p. 48.
  19. Arthur A. Sloane and Fred Witney, Labor Relations (Upper Saddle River, NJ: Pearson Prentice Hall, 2004), pp. 177–218.
  20. John Fossum, Labor Relations (Dallas: BPI, 1982), pp. 246–250.
  21. R. Wayne Mondy, Human Resource Management, 11th ed. (Upper Saddle River, NJ: Pearson Education, 2007), p. 398.
  22. R. Wayne Mondy, Human Resource Management, 11th ed. (Upper Saddle River, NJ: Pearson Education, 2007), pp. 411–412.
  23. Augustus H. Smith, Economics for Our Times (New York: McGraw-Hill, 1959), p. 380.
  24. Roger Blanpain, Encyclopedia of Labour Law and Industrial Relations, Legislation 103 (Supp. 101, 1989).
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