This article is written by Nimisha Dublish. This article discusses the analysis and relationship between industrial relations and labour laws. The article aims to provide an understanding of and efficient implementation of Industrial relations and labour laws. The article also gives an overview of the changing trends of industrialisation and labour policies. It also unravels the history and present development in the Industrial sector.
It has been published by Rachit Garg.
Table of Contents
An organisation works with the joint efforts of its two main elements, i.e., technology and human resources. There’s a fundamental trait of widespread wage employment that is shared by all industrial civilisations. In a country like India, there are numerous people who are looking for wage employment and better industrial standards.
It is very difficult and tricky to manage people and make them work for your organisation. At present, managing manpower and people at the workplace has become a major challenge and a key aspect of running an organisation healthily. Mismanagement of the employee-employer relationship often leads to misunderstanding and toxic work culture in an organisation. As a result of which labour turnover increases, indiscipline increases, a decline in output is seen, and increased cost production is associated with various other problems in the marketplace.
Industrial relations, in a broader sense, is the relation between various unions, states, employers, and the government. Industrial laws and labour laws collectively make employment laws. Employment law is the body of law that governs the administrative rulings and precedents related to working people and their organisations. Labour law covers Industrial relations and related things.
A new branch of jurisprudence began to emerge during the evolution of the 20th Century called ‘Industrial Jurisprudence’. The development in industrial relations began back during the Industrial Revolution and was at boom during the post-independence period. Increased labour and industrial legislation are proof of the growth and evolution of industrial jurisprudence. The judiciary has also played a significant role in deciding upon the matters of industrial relations. The jurisprudence has shaped and shifted the belief of master-servant to industrial relations. Restraints have been laid down on the employer’s sole will to remove an employee. The hiring and firing process of employees is now subjected to many conditions to safeguard the interests of employees as well. The revolution has been seen in the concept of, the one who invests money is no more a master and the one who puts in the labour is no more a servant. The employer may hire the employee but cannot fire solely on his will. The laws are aimed at protecting the rights of the labour and workers. The industries are moving from the contract to status and status means the political, social, and economic juristic status.
It was after independence that industrial jurisprudence took its shape and changed the attitude of the government towards the working class. Industrial jurisprudence plays a vital role in shaping the developed and developing country’s industries. It contains an exhaustive study of human relations and problems arising from the large-scale development of factories. Since independence in 1954, the need to bring the labour policy was highly felt. The policy shall focus on the self-reliance of workers. On the other hand, the Industrial Revolution was also taking place resulting in the growth of the factory system and varying circumstances of the labour system.
Industrial relations defined
The term Industrial relations is made up of two separate terms, i.e. industry and relations. Industrial relationships are between the employees and employers of an organisation. Industry means any productive activity in which individuals or a group of individuals are engaged. In an economic sense, the industry is the secondary sector of the market influencing production, i.e. land, labour, capital, enterprise, men, material, money, and machines. Relations means the connection and bond between the employer and workmen within the industry. Therefore, the relationship between the employees and the management of an organisation is known as industrial relations. These relations are a direct or indirect result of the management-trade union relationship in an organisation.
Generally, it is seen that in an organisation, certain relationships arise, these include relationships between workers and their employers, employees themselves, and employers themselves. These relationships are created to grow and promote the healthy growth and expansion of the organisation at all levels. There are certain parties that are associated with the mechanism of industrial relations. Those parties are employees, employers, the government, employers associations, trade unions, and courts and tribunals. Industrial relation acts as a medium for all these parties to interact with each other under the professional setup on established terms and conditions.
Many authors have defined the term differently and according to their approach and views of the industry. But one thing that remains common is that industrial relations include all types of employer-employee relations at the workplace that are influenced by the government and other economic as well as social institutions.
According to V. Agnihotri, “industrial relations explains the relationship between employees and management, which stem directly or indirectly from the union-employer relationship.” As per Bethel, industrial relations is the management of the relationship between the employees and employers of an organisation, taking into account the possible interaction and dynamics between them.
Evolution of industrial relations in India
Before getting into the current scenario of how industrial relations work and what is its significance let’s see and understand the scenario prior to British rule and the post-independence era along with the emerging business scenario and changing dynamics of industrial relations in India.
India was inherently an agricultural land and, during its mediaeval and ancient times, had an agrarian economy. The relationship between employer-employee was that of master and slave or servant. Slavery was dominant in India. Craftsmen and workers of those times formed the unions. They used to believe that if men are united, then nothing can deter them. At the time of the foreign invasion, Indian handicrafts were severely damaged. Due to this, many craftsmen fled and sought refuge in distant villages. Their condition turned into the worst scenario and they started losing their skill and there remained no difference between an artisan and a slave. It was during the Mughal era when the situation improved. Under the rule of Akbar, industries were set up in Agra, Lahore, Fatehpur, and Ahmedabad where the workers could regain their artisan skills.
Industrial relations during the colonial period were mostly the master-servant relationship. The government imposed policies of laissez-faire and later imposed the penalty for breach of contract by them. The First World War had a great impact on India. It was for the first time that workers saw their potential and realised that if they weren’t able to produce goods for war, it couldn’t be fought successfully. Other events like the Russian Revolution in 1917, the establishment of the International Labour Organisation (ILO) in 1919, the influence of British liberal thoughts, the formation of the Indian Trade Union Act of 1926, the Trade Dispute Act of 1929, etc. helped in the acceleration of the pace of industrial relations during the colonial period.
After the Second World War, the two-fold action was implemented. Firstly, Statutory regulations: to make sure that there remains an uninterrupted flow of goods and services during the war scenario and a free flow of operations, the government implemented certain regulations. Some of these rules included the mandatory adjudication of industrial disputes, and the tripartite deliberation system helped the enactment of the Industrial Disputes Act of 1947.
Secondly, a tripartite consultative system was established during the war. This consultative system comprised two organisations, the Indian Labour Conference (ILC) and the Standing Labour Committee (SLC). These are the advisory body and responsible for the discussion of matters that are of all India importance in labour relations. Three major laws were passed by this tripartite system i.e. the Minimum Wages Act of 1948, Employee State Insurance Act of 1948, and the Employees’ Provident Funds Act of 1952. These laws still continue to govern industrial relations in India.
Industrial relations norms and mechanisms were inherited from the colonial rulers. During the independence era, the leaders promised and took pledges to make such norms that would restore the worker’s pride and dignity. Industrial Policy Resolution was formed in 1956 and it focused on the growth of public undertakings at both state and central levels. Followed by voluntary schemes for workers to educate them about management and worker relations. As a result of the whole effort taken by the government, the first National Commission on Labour was formed in 1969.
The emergency at the time of Indira Gandhi had a huge impact on industrial relations in 1975. Then the Prime Minister made certain amendments to the constitution to provide for workers’ participation and added Chapter 5B to the Industrial Disputes Act 1947. Unprecedented judicial activism was seen in the late 1970s and 1980s. There was a tremendous impact on the industry relation.
Need and importance of industrial relations
A lot of changes have been seen in the past few decades. These changes made us give more attention to the industrial relations within the organisation. Globalisation has played a very significant role in this and has changed the way an organisation or enterprise is managed and work is performed. The major goals of an organisation remain productivity and quality.
Technology has also shifted attention to workplace relations because the technology is managed by people and trained employees. Technology has replaced the jobs of various traditional skilled labour and requires newly acquired skills to operate it.
To help boost the nation’s economy, industrial relations play a very significant role. In order to maintain peace and harmony at the workplace, it’s important to have these relations settled so that they do not hamper the productivity of an organisation. Diverse people work in an organisation and many of them face difficulty settling into the complex setup of an organisation. The relationship between an employee and employer is one of the most significant relationships in an organisation as they collectively contribute to the industry’s growth. Healthy relationships are beneficial for employees and employers, and for the industry as well.
To ensure uninterrupted production it’s essential to maintain healthy industrial relations. The resources are fully utilised in this manner, resulting in the maximum possible production. The smooth running of the organisation results in a smooth inflow of income.
Reduced industrial disputes
If an industry has its industrial relations maintained then it will result in reduced disputes. Disputes reflect the number of failures that an organisation has seen due to a lack of proper industry relations. Reduced industrial disputes would help in increased production and more harmony within the organisation. Industrial relations have the inherent machinery to resolve the arising disputes or issues faced by the management and employees via mutual agreement. Both parties are bound by these decisions.
Maintain industrial democracy
To establish and maintain true industrial democracy, one of the main objectives of labour relations is to uphold the socialist approach during the course of business. The socialist approach is the maintenance of collective resource ownership and centralised decision-making. Every single person contributing to the organisation has a say in the decision-making. Let it be shareholders, management, workers, customers, society, etc. This makes sure that the stakeholders have a voice to mould and shape the company’s action in order to benefit all the parties involved.
Steps are taken to improve the collective bargaining strategies in an organisation. By doing this the relations between the management and the workers remain balanced and unharmed. The aspect of self-regulation is made familiar to the worker via collective bargaining itself. This makes it necessary for an employee to project their suggestions and insights on how they will act. In layman’s terms, Collective Bargaining is a process of negotiation between the employers and employees. In general, the interests of the workers or employees are represented by the trade unions to which the respective workers or employees belong. Under this the workers and employees make agreements and settlements to safeguard and promote industrial productivity. The main aim of collective bargaining is to address the concerns of the employees in the workplace. The issues may include compensation, working conditions, working environment, benefits, company policies and procedures.
Maintaining the discipline and morale of the employees
Good industrial relations make it possible for the employees to understand the work dynamics of an industry along with its functioning. The employees are in a better position to perform well when they know what is expected of them and the benefits they’ll be getting by performing as per expectation. A disciplined workforce would always be able to give better results and output to achieve the goals of the organisation. Hence, good industrial relations will lead to enhanced morale and a motivated workforce.
Reduced and optimised wastage
Maintaining industrial relations creates an environment full of cooperation and recognition for each and every department. This reduces the wastage of material, men, and production costs. This leads to the efficient functioning of the organisation and helps achieve the goals more effectively and efficiently.
The organisation has the objective of making a complete mental revolution in the minds of workers and employees. Ultimately, industrial peace lies in a transformed and updated outlook of the employees and workers. The role of the workers should be recognised in the partnership between the employer and worker. At the same time, the workers should acknowledge the employer’s authority. By recognising each other’s interests, the organisation’s production will perform exceptionally well.
Objective of industrial relations
- To improve and enhance the economic status of the workers.
- To establish peace and harmony within the organisation.
- To safeguard the interest of the workers and management by attaining a mutual understanding between them.
- To enhance productivity resulting in high turnovers by regulating production and promoting harmonious industrial relations.
- To improve the economic conditions of both workers and employees.
- To establish industrial democracy.
- To secure the social, economic, and political interests of the workers.
- To establish a situation of full employment and contribute to the economic growth of the country by maximised and efficient productivity.
- To develop friendly labour-management relations.
- To encourage the growth of trade unions in order to improve the worker’s strength.
Nature and scope of industrial relations
Industrial relations aims to safeguard the interest of employees and their relationship with management. It enables the organisation’s capacity to maintain the balance between and among employee expectations, trade unions, economic societies, and other issues.
The term industrial relations is a broad term that has been expressed in different ways by different scholars. As per the International Labour Organisation (ILO), industrial relations include the relationship between the state and employers and the relationship between trade unions and employer associations. The different functions that are performed by the industrial relations department of an organisation are public relations, labour relations, management of policies and programs, maintaining employment records of employees, etc.
Functions of industrial relations
There are several functions of industrial relations that are performed to help the organisation achieve its goals efficiently and effectively. Some of the functions are as follows:
- To build a healthy and harmonious relationship between the workers and management.
- To encourage innovation, creation, and cooperation to improve industrial standards as well as worker engagement.
- To make sure that the trade unions peacefully contribute to the resolution of disputes and avoid the unhealthy, unethical and undisciplined working environment in the organisation.
- To achieve the organisational objectives by maintaining the organisational relationship and efficient productivity.
- To make and formulate such policies that promote understanding, creativity and cooperation within the organisation along with enhanced productivity.
- To ensure better working standards and workers’ participation in organisational activities.
Industrial relations and human relations
|S. No.||Content||Industrial Relations||Human Relations|
|1.||Meaning||Industrial organisations use the term industrial relations very widely. It refers to the relationship between the employers and employees or workers in an organisation.||Human relations are more concerned with the interpersonal relationships among individuals and their behaviour as individual members of groups.|
|2.||Relation||It covers human relations and relations between employers and employees or workers regulated by law.||It is related to the behaviour of an individual on the basis of moral and social elements. They are personal in nature.|
|3.||Objective||The main objective of industrial relations is to maintain peace and harmony along with effective dispute settlement.||The main objective of human relations is to create and develop a sense of belongingness among the workers by improving their efficiency and treating them as human beings.|
What are the different types of industrial relations
There are four types of industrial relations:
The employer-employee type of industrial relations consists of the working relations between the workers and employers of an organisation. There is a mutual relationship between both of them to achieve beneficial results for the organisation. It is very important for these two to develop a strong relationship, failing which will lead to an inability to achieve goals. This relationship between the employer and employee is known as employment relations. If the relationship works successfully then it will result in increased economic growth and increased productivity. If an employee has a positive and healthy relationship with the employer, then he tends to perform more effectively and give their best to ensure the success of the organisational goals. Having a good employer-employee relationship is the core foundation of any organisation. If the employees feel valued, they’ll make the most out of their talents and expertise.
Group relations are the relations between various workmen, supervisors, technical persons, etc. The group relations theory gives an opportunity to learn about groups and social dynamics along with the interplay of tradition and innovation. It governs the relationship between the organisation and its social, political, and economic environment.
Industrial relations also have an aspect that is governed by labour law, collective bargaining, agreements, and arbitration procedures. This is the relationship between the union and management also known as labour management relations.
The interaction that an organisation has with society and external bodies is known as a public affair. To survive in the industry for a longer duration, the organisation must maintain a healthy and cordial relationship with the public. So basically it’s a relationship between the industry and society.
Factors affecting industrial relations
- The authoritative attitude of the management towards the workers and the union members.
- The inferior or revolting attitude of workers towards the management and union members.
- Conflicting attitudes of the unions, workers, and employers within themselves.
- Rivalries between the various departments or levels of the organisation.
- Differences of opinion and misunderstandings between the management and workers.
- Problems faced by the authorities.
- Policies and Plans- obeyance and implementation.
- Militancy of unions whether locally or nationally.
- Bargaining at national and local levels.
- National and Local procedure’s implementation and effectiveness.
- The legal framework governing the industrial relations within an organisation.
Different models and approaches to industrial relations
Industrial relations cover a wide spectrum and are perceived differently by different people. HRs are required to understand each aspect of industry relations because they are the ones who are expected to provide viable solutions for every HRM problem. Mainly there are three popular approaches i.e. unitary approach, pluralistic approach, and Marxist approach. However there’s no right or wrong approach, these approaches can be used either individually or collectively for understanding the complex and diverse situations between the actors and players of industrial relations.
This approach revolves around the concept that there is only one single source of authority. This source of authority of the management controls the factors influencing the decision-making in issues related to negotiation and bargaining. The conflicts arising at the workplace are seen as a result of poor management, from employees who don’t coordinate well with the organisation’s culture. The employer is deemed to be the leader and the sole decision maker while the employees act as passive recipients of the decisions. Unions also tend to cooperate with the management and their right to manage is accepted because of the underlying assumption that whatever the management does is for everyone’s benefit and harmony is promoted. This approach follows the reactive industrial relations strategy and direct negotiations with employees are sought. Many critics have criticised the unitary approach as being manipulative and exploitative. They say that this approach is unrealistic as it ignores the inherent power imbalance between employers and employees.
This approach identifies the inherent conflict between the management and employees. It recognises the diversity of thoughts and perspectives within the workplace. This approach focuses on the resolution of conflict rather than its generation. The social environment is an important and essential factor in organisation conflicts. The main aim of the pluralistic approach remains to promote mutual respect and understanding between employers and employees. The employer-employee relationship is seen as a dynamic relationship that is affected by political, social and cultural factors. However, there are certain criticisms of the pluralistic approach as well. It gets difficult to make decisions and reach a consensus where the pluralistic approach is followed. The organisation believes that the conflict between the management and workers is inevitable and gets lost on the track to be followed. The theory evolved during the mid-1960s and early 1970s.
This is also known as the radical theory. Just like the pluralists, Marxists also acknowledge the conflict between employers and employees is inevitable. However, Marxists believe that conflicts arise not because of the division between societies but because of the division between society and those who manage it. They believe that if a social change is required to take place then it’s essential to have a class conflict prior to that. This leads to strong worker reactions and bridges the gap between the owners and workers of the organisation/production. They see trade unions as a weapon to bring revolution in social change as well as labour reaction to exploitation by capital. The main focus of trade unions is to improve the condition of the workers within the capitalist system. Marxists used to believe that all the strikes were a result of political factors. The Marxists’ at various points contradict the pluralist approach. The target of the Marxist approach remains to promote greater democracy and social justice in the employment relationship.
The psychological approach focuses on the individual’s notions and concerns within the organisation. Individual behaviour and perspective of both employer and employee are the main highlights of this approach. It is believed that the success of an organisation depends on the interaction between the employee and management. These interactions are highly influenced by the motivation, attitudes, and personality of the people. There are three theories i.e. motivation theory, personality theory, and organisational behaviour theory that are highly used to understand and improve industrial relations.
The focus of the sociological approach is to build the social structures within industrial relations. This approach emphasises the power relations and broader societal factors that affect the relations between employers and employees amongst themselves. In order to understand the dynamics of the broader social context, industrial relations must go beyond the immediate workplace. It also recognises that it is the social, economic, and political factors that play a huge role in shaping industrial relations.
There are various theories that are used to better understand the workplace dynamics. These are conflict theory, systems theory, and institutional theory. The conflict theory focuses on the resolution of conflict via collective bargaining and worker mobilisation. Systems theory focuses on the importance of learning the fact that changes in one part of a system can affect the entire system. It recognises industrial relations as a complex system of individual interdependent parts. The institutional theory recognises the changes that institutions can bring into industrial relations. All in all, the focus of the sociological approach is on collective action and social mobilisation to achieve the goals of social justice in the workplace.
Human relation approach
The main focus of the human relations approach is on communication and job satisfaction along with a positive working environment. Industrial relations shouldn’t be just about implementing rules and regulations, but also about making a supportive work culture within the organisation that promotes employee productivity and motivation to work.
This approach considers employees as human beings with certain emotional needs and desires, and not merely a medium of getting the work done. The employees must be treated well and must be respected in the workplace. They shall be involved in the decision-making of the organisation. They shall be given various opportunities within the organisation to grow and develop both in their personal and professional sphere. The main aim of the human relations approach remains to promote a healthy and positive working environment for the employees. The organisation through this approach should recognise the well-being, productivity, and job satisfaction of the employee.
The Giri approach was introduced by the Indian scholar D.R. Giri and it was based on the Gandhian principles of non-violence, mutual understanding, social justice and the importance of collaboration. Industrial relations were seen through the scope of collaboration, mutual understanding, and social justice. Industrial relations must be based on cooperation and mutual respect between employees and employers. To resolve a certain conflict, the organisation must follow the process of dialogue and negotiation. This promotes mutual understanding within the organisation. Getting social justice in industrial relations is one of the key factors of this approach. The focus of the organisation shall be on the welfare of the workers.
The approach is based on the Gandhian principles of non-violence, social justice and mutual respect. The approach was adopted by the leader of India’s independence movement Mahatma Gandhi. He was in support of a non-violent, just and fair society. There shall be mutual respect and cooperation within the industrial relations in this approach. The focus shall be on building the foundation of relationships based on trust and collaboration.
The conflicts shall be resolved through the medium of dialogue and negotiation. The organisation has a social responsibility to create an inclusive and healthy workplace to promote the well-being of the employees. There shall be community empowerment in the industrial nature and the focus shall be on developing the local industries by promoting self-sufficiency. The approach focuses on promoting an equitable society for all.
Advantages and disadvantages of industrial relations
- There is increased productivity as a result of positive employee-employer relationships. Good employee-employer relation leads to growth in productivity.
- The retention rates get higher. The people would like to stay and work in an organisation where they are valued and their abilities are recognised.
- People who work get motivated and are driven by the common goal of the organisation. If the workers are provided with the technology they want, a good working environment, a highly motivated team and personalised feedback, then they tend to achieve their goals more efficiently.
- Due to the motivation and drive to work, it reduces absenteeism from the workplace.
- The revenues are increased in return for good industrial relations. There exists no major disputes within the organisation and minor conflicts are resolved by the negotiation mechanism of the organisation to maintain good industrial relations.
If the relations are good, then peace and order will be maintained in the organisation and outside the organisation as well. However, poor industrial relations will lead to the following circumstances:
- In some industries, the workers face loss of wages, physical injuries, bitter relations, adverse effects on careers, etc.
- In some industries, the industrialists face less production, less profit, bad human relations, damaged machines, the burden of fixed expenditure, etc.
- There are also certain effects on the government such as loss of revenue, lack of peace and order in the society, blame-shifting on different political parties, etc.
- Consumers are also affected by bad industrial relations leading to high prices, scarcity of goods, and the effect on the quality of goods.
- Huge impact on the international trade and economic development of the country.
- Uncertainty in the economy.
Application of industrial relations in India
The industrial relations in India are of a tripartite nature. The government of India plays a huge role in the administration of labour. However, with the advent of the IT industry, the system is changing towards a bipartite system. The following are the changing systems in India and their role in the application of industrial relations in India.
The formation and evolution of trade unions began back in the independence era. In the 19th century when industrialisation was taking place, workers faced poor working conditions and even their basic rights were not protected. This led to the initiation of the worker’s movement and protests at various workplaces. The first organised strike in India was that of Express Mill in Nagpur in 1877. After independence in 1947, growth in the public sector was seen and this led to increased employment. The labour movement was controlled and guided by the government at that time. Soon, the era of industrial stagnation and inter-union rivalry came, leading to unfair terms of trade, oil prices, reduced employment, reduced labour productivity, etc. This led to an increased number of strikes and inter-union rivalries.
Later on in the 1980s India had to face an imbalance in the balance of payment and took huge loans from the International Monetary Fund (IMF). After this economic reforms were seen in India. These reforms brought about changes in industrial relations and gave greater employment flexibility and reduced government intervention. In 2008, at the time of the global recession, job losses in huge numbers were seen. The tertiary sector was especially affected by the recession in 2008. This led to a gradual decline in the power, unity and influence of trade unions.
With the passage of time, trade unions started to lose track of and pace of growth. It was at this time that management became powerful and took command of workplace management. Management is better able to get control of the workplace with the advent of an open market system. There are times when the management and trade unions have joined hands and entered into mutual arrangements to benefit a business. However, this arrangement was not much appreciated because it was the trade union that had to bear the concessions like wage cuts, etc. After all the possible permutations and combinations, it was found that it was the management who was able to balance the power and maintain the industrial relations. Downsizing, subcontracting, and outsourcing gave the management more control over the workplace. This power and authority in return helped the management make its decisions independently and implement them without unnecessary opposition from any union.
Still, there are many industries that operate on the model of trade unions. There are certain places that prefer trade unions and others prefer management. The tug of war between the both remains to continue even today. It is very complex yet essential to maintain the balance between the management and trade union in an Industrial setup in India.
Labour rights were ignored in the British era before independence. Workers used to face a lot of suppression at the workplace where their needs were also not taken care of. After independence, the Indian government tried to protect the workers and their interests by introducing various legislations. These legislations promised to safeguard the basic rights and protect their interest in relation to wages, working environment, etc. Huge growth and expansion were seen in the Public Sector Undertakings (PSUs). At that time the government sector started dominating the market leaving behind the private sector. The private sector had to seek permissions and was dependent on the government a lot. But now, with the passage of time, the government’s dominant role has been sidelined and bipartite is seen. The government continuously puts effort into maintaining a healthy relationship between workers and employers through Indian Labour Conferences. Though various legislations have been introduced to date to cope with the crisis faced by workers in the workplace, there still remain certain untouched areas. Protection of the interest of workers in informal and non-regular forms of employment is yet to be covered fully.
Five-year plans and industrial relations
Five-year plans were made from 1947 to 2017 and their emphasis was on bringing the integrated national economic programs. Indians were focused on the planning and execution of these programs by the way of introducing new targets every five years. These plans were made, executed, and monitored by the Planning Commission of India (1951-2014) and NITI Aayog (2015-2017). India was able to launch its very first five-year plan soon after its independence under the tenure of India’s first Prime Minister Jawaharlal Nehru.
First 5-year plan (1951-1956)
The main emphasis of the first 5-year plan was on agricultural activities and their development. The government was more focused on growing the already set-up industries rather than setting up new industries. The goal for the industrial sector was to renovate and modernise the industry to make better utilisation of the existing capacity.
Second 5-year plan (1956-1961)
The second 5-year plan saw the development and growth of heavy industries and transportation. The heavy industries were to be set up on the P.C. Mahalanobis model. The main light was cast upon the iron and steel industry, fertiliser industry and heavy engineering industry. Along with this, the second industrial resolution policy was announced in 1956 and Durgapur Steel Plant was set up in West Bengal along with Bhilai Steel Plant in Chhattisgarh. Rourkela Steel Plant was also set up in Odisha in 1959. Many well-known steel plants were set up and expanded during this plan only.
Third 5-year plan (1961-1966)
Major expansion of basic industries like iron and steel, power, etc. was seen during the third 5-year plan. Bokaro Steel Plant was set up in 1964 in Jharkhand. Capital goods industries were also in the limelight at that time, and certain developments were done to build them.
Fourth 5-year plan (1969-1974)
Again, in the fourth 5 year plan the focus was on the agricultural-based industries. These included cotton, jute, sugar, etc. Progress was seen in the alloys and aluminium sectors. There were certain efforts made to boost the process of Industrial dispersal. The coal sector was also nationalised in 1972 by the government of India.
Fifth 5-year plan (1974-1979)
The rapid growth of iron and steel plants, export-oriented products and goods of mass consumption was the main focus of the fifth 5-year plan. Oil refining, chemical and heavy engineering industries were making steady progress.
Sixth 5-year plan (1980-1985)
Village handicraft products were at boom at this moment and more focus was on exploiting the domestic as well as international market. The aim of the sixth 5 year plan was to attain balanced regional development. Many industries like commercial vehicles, cement, coal, etc. achieved the targets.
Seventh 5-year plan (1985-1990)
Electronic industries were the main focus during 1985-1990. Industrial dispersal, exploitation of local resources, self-employment, and proper training were given more importance during these 5-year plans. Focus was laid on the development of the domestic markets for export potential. A major change in the industrial policy of the Indian government was seen during the annual plan period of 1990-92. New Industrial policy came into being in 1991 leading to the liberalisation of industrial trade and foreign investment policies.
Eighth 5-year plan (1992-1997)
The regional imbalances were removed after the implementation of the liberalisation policies. The plan motivated the growth of small-sector employment growth.
Ninth 5-year plan (1997-2002)
The emphasis was laid upon the development and steady growth of the cement, coal, consumer goods, oil, infrastructure, and quality steel industries.
Tenth 5-year plan (2002-2007)
The main objectives of the plan were to reduce transaction costs and increase exports. Also, to achieve increased global competitiveness and balanced regional development. The government adopted the Special Economic Zones (SEZs) Policy to remove regional inequalities in 2005.
Eleventh 5-year plan (2007-2012)
The focus of the plan was on faster growth and that the benefits of the development shall reach various sectors of the population. Rapid industrialisation and development was done to generate employment and reduce poverty.
Twelfth 5-year plan (2012- 2017)
The theme of this plan was faster and more inclusive sustainable growth. Infrastructural projects and electricity supply in villages were emphasised. New opportunities for the non-farming sectors were created under this plan.
After the twelfth 5-year plan, there were no further plans made as the Planning Commission was disbanded in 2014.
Industrial relations and labour laws : an overview of the current situation in India
Developments and expansion in the industrial sector of the nation have opened the prospects of employment laws in India. There are economic effects on the workers and their relation with the organisation due to the labour regulations in being. Creating an understanding of these laws is not a straight-jacket formula. One needs to go through the empirical and statistical data to understand labour policies. Every industry has its specific rules and regulations which need to comply with the national and regional laws and policies.
Recently Industrial Relations Code, 2020 received the president’s assent on 28th September 2020. The government made an attempt to amalgamate the Industrial Disputes Act of 1947, the Industrial Employment (Standing Orders) Act of 1946, and the Trade Unions Act of 1926. The main purpose of this code was to benefit both employers and employees in the following manner-
- Streamlining the mechanism of dispute resolution. It will help the disputes to be solved amicably without hampering the employer-employee relationship.
- Protection of the employees who work for a fixed term and have been contracted for a specific period of time.
- Making sure that the industrial establishments abide by the standing orders made.
- To deal with non-compliance, strict penalties have been imposed on the concerned authorities.
- Promoting a business-friendly environment and more flexibility amongst the employers to make decisions smoothly.
The re-framing of Indian labour laws was the need of the hour and it has been delayed for such a long time. India stands on the verge of where it can grow and expand industries if legal support and protection are given to the concerned people. It’s the country’s labour law that has been stopping various foreign clients from setting up industries in India. There is a dire need to rectify and maintain compliance and regulatory barriers.
Overview of various labour reforms introduced in 2020
The subject of labour in India comes under the concurrent list. The subjects falling under this list can be taken up by both the Parliament and the State legislature in order to enact laws. There were more than 40 central laws and more than 100 state laws on labour matters. The Codes were introduced to amend and amalgamate these laws into codes. The Second National Commission on Labour (2002) recommended that the labour laws should be integrated under the following categories-
- Industrial Relations
- Social Security
- Welfare and working conditions
The recommendation was made keeping in view that the existing labour laws were complex and had inconsistent definitions. To promote transparency and uniformity there was a need for simpler labour codes.
Industrial Relations Code, 2020
The Industrial Relations Code 2020 was prepared after the amalgamation and simplification of the Trade Unions Act of 1926, The Industrial Employment (Standing Orders) Act of 1946, and the Industrial Disputes Act of 1947. The Code aims to provide a broader framework for the protection of the rights of workers to make unions, reduce friction between employee and employer, and provide a regulatory framework for amicable settlement of industrial disputes.
The key subsequent areas that are regulated by the Code are as follows-
- Trade Union registration
- Trade Union cancellation
- Trade Union Name alteration
- Formation of Work Committee
- Incorporation of registered Trade Unions
- Standing Order registration
- Standing Order preparation
- Constitution of Industrial Tribunal
- Compensation to workers
- Retrenchment and Re-employment of retrenched workers
- Prohibition of lay-off
- Closure and shutting down of an Industrial establishment
The Code aims at safeguarding the interests and rights of employers and employees by providing reforms and ease of doing business. The objective behind this is to promote peace and harmony, and resolution of industrial disputes. This will in turn bring up the cordial relations between the employers and employees.
The key highlights of the Code are as follows-
- Gratuity for the fixed-term employee.
- Many definitions have been modified and have been made more inclusive.
- Certain statutory benefits like ESI, PF, bonuses, and wages are made for fixed-term employees.
- The threshold limit has been increased from 100 workers to 300 workers.
- A mandate 14 days advance strike notice to be served by the Trade Union.
- Dispute Resolution tribunal and a better mechanism have been introduced.
- Establishment of re-skilled fund for the workers.
- Better provisions and conditions for the hiring and firing procedure.
Social Security Code of 2020
The Social Security Code of 2020 is brought to amend and consolidate the laws that are related to social security. The code aims at providing and extending social security to all the employees and workers of both organised and unorganised sectors. The Code is to ensure that safety measures are taken to safeguard healthcare and income security in cases of old age, maternity, accidents, etc. 9 central labour laws have been amalgamated to make the Social Security Code.
Key highlights of the Code are as follows-
- The scope of the definition of employee has been expanded and now includes inter-state migrant workers, platform workers, and film industry workers as well.
- The gratuity period has been reduced from 5 years to 3 years for working journalists.
- Social security funds are set up under the provision of the Code for unorganised workers, gig workers, and platform workers.
- The contribution of employer or employee towards PF or ESI, is to be decreased or deferred by the central government in case of a pandemic, epidemic, or national disaster. This can be done for up to 3 months.
- The schemes shall be formulated on the recommendation of the National Social Security Board that has been set up under the Code. The Central government shall take up recommendations and suggestions from the board while formulating the policies and schemes for various sections of unorganised workers, gig workers, and platform workers.
Occupational Safety, Health, and Working Conditions Code of 2020
The Occupational Safety, Health, and Working Conditions Code, 2020 aims to subsume the legislation related to the working conditions of the workers and amalgamate them into one comprehensive code. The Code consolidates the laws that regulate the occupational safety, health and working conditions of the employees in an establishment. The Code consolidates 13 Acts which cover the factories, mines, dock workers, contract labour, etc.
The key highlights of the Code are as follows-
- The definition of factory has been expanded and has been described as a premise wherein at least 20 workers work for a process with power and 40 workers for a process without power.
- The daily working hour limit has been set to a maximum of 8 hours.
- The manpower limit has been removed for hazardous working conditions. It is made obligatory for the contractors to recruit 50 or more workers, earlier it was 20.
- The formalisation of employment has been made compulsory wherein the employer is required to issue an appointment letter.
- Journey allowance has also been included in the Code. This is a lump sum amount that is to be paid to the worker for the travel expenses from his native state to the state of employment.
- Portability benefits are given to inter-state migrant workers.
Old reforms and new reforms
The following is a comparative analysis of the provisions that have been changed or introduced for the betterment of the labour sector in India. The old reforms include all the Acts that have been incorporated into different Codes.
|S. No.||Old Reforms||New Reforms|
|1.||The definition of employee wasn’t clear and didn’t encompass the scope of fixed-term employment.||A new definition of employee, fixed-term employment is introduced and the term workman is renamed as workers.|
|2.||As per Section 9(c) of the Industrial Disputes Act, the workers were not allowed to raise their grievances to the committee before moving to a conciliation officer.||As per the Industrial Relations Code, it is mandatory to set up a Grievance Redressal Committee for workers.|
|3.||No recognition was given to the Negotiating Union.||Recognition is given to the Negotiating Union and it is mandatory to recognise every organisation|
|4.||The threshold limit for the applicability of standing orders was 100 or more workers.||The threshold limit is increased to 300 workers.|
|5.||There was no time limit given for completing the disciplinary proceedings against the workers.||The time limit of 90 days from the date of suspension has been prescribed by the Code to carry out the investigation and inquiry.|
|6.||There existed no concept of a worker re-skilling fund.||Chapter XI introduced the concept of worker re-skilling and as per this provision, the employer is required to deposit an amount equal to 15 days last drawn wages of every retrenched worker.|
|7.||Penalties were not strict and were very minimal.||The penalties have become more stringent and up to Rs. 2,00,000 plus Rs. 2000/day for continuous contravention.|
|8.||Earlier only one member of the tribunal under the Industrial Disputes Act was used to resolve the industrial dispute.||Now, a mechanism has been made under the Industrial Relations Code, as per which, there shall be two members out of which one shall be a judicial member and the other shall be an administrative member.|
Role of National Law Commission in labour law reforms
The Colonial period is the ancestor of the labour law system that the majority of countries are following in today’s era. However, there are several inconsistencies present in these laws. India has seen a trend of raising demand by increasing labour movements and their demand for uniform labour laws. Many decades before, the National Law Commission in its report of 1947 suggested cosmetic changes including the change of the Industrial Disputes Act to the Industrial Relations Act in order to encourage smooth working industrial relations. They also made a suggestion of compiling and consolidating the Trade Unions Act, Industrial Employment (Standing Orders) Act and the Industrial Disputes Act. However, even after so many years, there were no serious attempts taken to simplify and consolidate laws. It was in 1978 when the Janata Party government introduced the Industrial Relations Bill in the Parliament. However, it was dropped by the Parliament at a later stage. Then again in 1982, an attempt was made by the Congress government to introduce another Industrial Relations Bill. Yet again it failed to pass in the Parliament. It was only after the National Law Commission Report of 2002, that serious attempts were taken to implement the Code.
Suggestions were made by the Second National Law Commission in 2002 that the labour codes of India should be on similar grounds as those of Russia, Germany, Hungary Poland and Canada. There were several changes suggested by the Commission, which are as follows-
- There shall be no prior permission given with respect to lay-off retrenchment or shutdown of an establishment as prescribed by law.
- In case of retrenchment or lay-off, a prior notice of 2 months is mandatory for the establishment.
- There must be an increase in the rate of compensation in case of retrenchment.
- Certain establishments having more than 300 workers are required to obtain post facto approval from the government as prescribed.
- To protect the interests and rights of the workers of an organisation, Chapter V-B must be followed for the closure of the establishment. Chapter V-B is pertaining to the permission for the closure of the establishment (in case of 300 or more workers).
- There must be tougher laws for strikes. A strike ballot must be conducted to take the necessary votes of the workers. There shall be at least 51% of the workers supporting the strike.
- The laws on labour management relations must include the gender-neutral expression ‘worker’ instead of ‘workman’.
- The law should be applicable in uniformity to all the establishments that come under the purview of the law.
- Collective negotiations and bargains were encouraged.
- The disputes must be settled by the way of arbitration as long as possible and where there is a need for adjudication there should be no interference by the government.
- There shall be provisions to identify and determine the negotiating agents on behalf of workers. Appropriate authorities must be established for the process of determining the negotiating agent.
- Both organised and unorganised sectors must be governed by the laws and must be given adequate laws for better and smooth functioning.
Judicial trends in labour and industrial relations in India
After the recommendations by the National Law Commission several suggestions were challenged in the High Courts. The amendment that was challenged was regarding the raising of the limit of retrenchment by the government in the Amendment Act of 1976. The Courts also held these violative rights guaranteed under Article 19(1)(g) of the Constitution of India. These imposed unreasonable restriction on the right of the employer to retrench workers and was thus held invalid. These provisions were also arbitrary and unconstitutional from the point of view of employers as held in the case of Workmen v. Meenakshi Mills Ltd (1994). There were several regulations set by the higher judiciary in the matter of retrenchment to ensure that it was fair and just. The Allahabad High Court in the case of Umesh Chandra v. Nagar Nigam, Allahabad (2005) held that the termination of a worker who has worked for more than a year and has given his continuous service will be considered illegal if, the notice or retrenchment compensation is not paid to him on time. Hence, it was observed that compensation must be given at the time of retrenchment of the worker and if not given then it will be set aside and considered invalid.
In the case of Permanent Magnets Ltd. v. Umashankar Pandey (2005) it was held that if an employee who has served for 25 years and has not absented himself unnecessarily throughout his tenure then he shall not be removed if he gives justifiable reasons for his absence due to some medical reasons. The court here sees the past tenure of the worker to judge the current decision of the employer to remove the employee on unfair grounds. The employer cannot remove an employee if he has served for so many years without any absenteeism and had good conduct during his tenure. There must be a fair reason to remove him and if he is genuinely in some trouble then it must be taken into account.
In the case of North Eastern Karnataka RTC v. Ashappa (2006), It was held by the court that continuous absence from work is not a minor misconduct and that too without any reasonable justification. The worker must be able to prove the reasonable grounds to justify his absence from work for such a long period and that too without intimation to the employer. It was in this and many other cases that there were certain judicial shifts seen in judging the case of continuous absence from the workplace. In the case of DTC v. Sardar Singh (2004), it was held by the Supreme Court that if an employee is absent from his workplace without sanctioned leave then it can be prima facie seen that he’s not interested in the job. The employer can, on his previous record, take some action against the employee if he has done this before in his tenure.
In the infamous Daily Rated Casual Labour Case, the workers filed a petition raising the issue that they have been working for ten years as casual labourers and there is no increase in their wages and their wages are very low as well. They were much less than the regular employees of the Post and Telegraphs Department. Union of India prepared no such scheme for them to protect their interest with respect to low wages and regularising their income. They demanded the same salary allowances as those of the regular employees of the Union of India. The court discovered that the workers were subjected to hostile discrimination. It was also observed that the government cannot take undue advantage of its dominant position in the market and cannot compel the workers to work for such low wages. The workers agree to do the work at such low wages only because they are poverty-stricken and have no other better source of income. Also, they believe that instead of earning nothing they are at least getting some amount to merely fulfil their basic needs. This is the reason why the workers agree to work for such low wages and not that they are satisfied.
In the case of Viveka Nand Sethi v. J&K Bank Ltd (2005), it was held that if the employee of a bank remains habitually absent from the job and also fails to report to the management even after continuous notices, it can be presumed by the management that he has abandoned the job. It can also be established by the bipartite settlement that if an employee absent himself for more than 30 days without giving any notice then it can be presumed that he has no interest in doing the work and that he has abandoned the job.
It can be seen from the above-mentioned judicial trends that the judiciary was much more sensitive towards the needs and wants of the workers in the pre-liberalisation era. The judgments were given on the basis of equity and justice along with taking into account the socialist nature of Indian democracy. The poles of labour laws were based on the principles of social justice and the social welfare of the labourers. This was done to acknowledge the efforts, interests and rights of the workers along with ensuring that they get ample facilities to contribute to industrial growth. Industrial productivity and growth were thought to be the main goals of industrialisation. The courts used to get swayed away by the emotions and good causes of the workers. The trends then began to shift with the changing labour policies. The judiciary which was more emotional became more objective and practical. Earlier most of the decisions were given in favour of workers but with changing trends, the decisions also began to come in favour of the industries.
Indian Industrial relations are still developing and do not fall under any specific pattern like tripartite, bipartite, etc. The Indian Industrial system has the characteristics of almost all the systems. Initially, India faced various internal and external factors that affected industrial relations. But later on, India managed to develop and gradually improve industrial relations. Whenever any issue arises in the organisation, the management tends to adopt one of the approaches or a combination of approaches to resolve the issue. It is not easy to maintain industrial relations but it is an art of management who manages to maintain these relations effectively. Conflicts, misunderstandings, and rivalries do arise in various organisations, but that’s not an issue. But how the management manages to cope with these is the game changer. An organisation grows with the growth in industrial relations. Bad industrial relations could become a major reason for its fall or decline. Labour and workers play an essential role in building an organisation. Their contribution leads to the growth and expansion of the organisation. Society has shifted from status to contract, wherein the worker’s rights are equally protected. The reforms are being made to promote the growth and transparency in the procedure of acquiring and employing the workers. As long as we have fewer laws, it will be better to monitor, and comply with and it will benefit both the employers and employees. To make the public as well as industrialists understand the labour and industrial laws, it is apt to make shorter, compiled and simplified codes and policies. This will make the laws less cumbersome to understand and will make them more employment-friendly. A simpler, less cumbersome, employment-friendly friendly and effective law will help India attract more investments in the Industrial sector globally. This will promote India on a global stature and give a push to the Make In India scheme as well.
Frequently Asked Questions (FAQs)
What is the role of trade unions in industrial relations?
The rights of the workers are protected by the trade unions. They make sure that no worker becomes the victim of the management’s behaviour. For example, random suspension, wage cut, unreasonable transfer, etc.
What is the role of Industrial relation unions?
Industrial Relations unions are like the labour unions that help to protect and advance the interests of workers at the workplace. These are the laws, conventions, and institutions that help to regulate the workplace. Support is provided for economic and social issues such as wages, working hours, etc.
Who is the father of the concept of industrial relations?
John R. Commons is institutionally the first person who first created a program for industrial relations at the University of Wisconsin in 1920.
What are the examples of industrial relations?
The most basic examples of industrial relations are union organisation, collective bargaining, and strikes. These need the active participation of both the labour and the management of the organisation.
What are the laws related to Industrial relations in India?
Some of the significant laws are the Minimum Wages Act of 1948, the Maternity Benefits Act of 1961, the Factories Act of 1948, Payment of Bonus Act of 1965. These laws aim to safeguard the workers and their interests in both organised and unorganised sectors.
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