Learn about Labour Laws & Industrial Relations
Table of Contents
- jaro Education
- 16, January 2024
- 9:00 am
Industrial relations refers to the relationships among workers and employers, whether at the national or regional level or company level. It includes all forms of interactions related to social and economic issues, such as wage determination, working hours, and working conditions. Those relations are vital for keeping harmony at the workplace and just practice within the labour market.
As per the ILO, industrial relations deal with the relationships between the state and employers and organisations of workers or the relationships of the organisations themselves of the occupation.
In this blog, we will learn about labour laws and industrial relations and how they are important to industrial relations, industrial relations and labour laws, industrial relations management, industrial relations in India and the impact on the broader socio-economic landscape.
What are Labour Laws?
Labour law consists of rules that outline employers’ and employees’ duties and rights. These regulations vary by location, and the explanation here focuses on labour law in India.
*The Indian Law
In the past, when factories and industries started growing, bosses took advantage of workers. They treated workers as replaceable and only cared about making the most money. The idea was that if a boss took risks, they had the right to hire or fire workers. The law back then also treated workers like servants, and the terms of work were usually just spoken and not written down. If workers broke the rules, they could be taken to court.Â
As time went on, the purpose of the labour law changed. At first, these laws were made to protect the interests of employers. This approach was based on the idea that the government should stay out of people’s business as much as possible. But now, modern labour law focuses on making sure employees are not taken advantage of by their bosses. This shift comes from a new way of thinking that believes in taking care of people, called the welfare state doctrine. The old ideas of easily hiring and firing workers and letting the market decide everything are no longer accepted.
Here are some examples of labour laws in India:
- Industrial Disputes Act, 1947
Aims to maintain peace and harmony in industries by resolving conflicts through conciliation, arbitration, and adjudication.
- Minimum Wages Act, 1948
Mandates contractors to pay their workers a minimum wage and ensures double wages for overtime work.
- Factories Act, 1948
Regulates working conditions in factories, covering aspects such as health, safety, and overall welfare.
- Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
Establishments with over 20 employees are required to have a provident fund. In this scheme, employees contribute 12% of their wages, and employers contribute an equal amount.
What is Industrial Relations?
Industrial relations refers to how workers behave in the organisations where they work. Scholars studying the importance of industrial relations aim to understand differences in work conditions, how much say workers have in decision-making, the role of unions and other ways workers are represented, and how conflicts between workers and employers are resolved. They look at how these interactions affect the outcomes of organisations, including things like worker satisfaction, job security, organisational efficiency, and the impact on the community and society. The key roles of industrial relations include:
- Facilitating communication between workers and industrial relations management for a positive relationship.
- Fostering collaboration between managers and employees.
- Harnessing the positive influence of trade unions to prevent conflicts.
- Protecting the interests of both workers and industrial relations management.
- Preventing an unhealthy and unethical environment in the industry.
- Developing measures that promote understanding, creativity, and cooperation to boost industrial productivity.
- Ensuring increased participation by workers.
- Importance of Industrial Relations of Positive Industrial Relations
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- Promoting Democracy
The importance of industrial relations involves using collective bargaining to address workers’ issues. This process relies on cooperation and mutual agreement among all parties involved—democracy in action. This includes industrial relations management and employee unions working together to establish industrial democracy, encouraging workers to contribute their best to the organisation’s growth and prosperity.
- Boosting Morale
Positive industrial relations elevate employee morale, inspiring them to work more efficiently.
- Preventing Conflicts Between Management And Union
Industrial relations help prevent conflicts between unions and industrial relations management by setting up mechanisms to resolve issues through mutual agreement. Both parties are bound to this agreement, reducing the likelihood of unfair practices and major conflicts between employers and trade unions.
- Reducing Wastage
Maintaining satisfactory importance in industrial relations is based on cooperation and mutual recognition within the department. This approach helps minimise wastage of material, manpower, and costs.
- Fostering Economic Growth And Development
Healthy and harmonious industrial relations lead to increased efficiency, prosperity, and reduced turnover, providing tangible benefits to the organisation. This, in turn, contributes to economic growth and development.
Industrial Relations System in Pre-Independence Era
During the pre-independence era, workers were simply being hired and fired according to the principle of supply and demand. The relationship between the employers and workers could be described as that of a master-to-servant contract. Workers’ organisations in this period either did not exist or were barely in their infancy. Most of the few organisations formed were mainly philanthropic and lacked all the attributes of a modern trade union. The miserable lot of the workers was one of the progenitors of the revolutionary movement.Â
However, by the end of World War I, the trade union movement had hardly begun to germinate. There were hardly any laws for safeguarding the interests of workers, barring the Employers and Workmen (Disputes) Act, 1860, which was meant for settling wage disputes. The rest of the labour laws passed during the time, such as the Workmen’s Breach of Contract Act, 1859; the Employers and Workers (Disputes) Act, 1860; and the Assam Labour Emigration Acts (1863-1901), were meant mostly to protect the interests of the British employers. Jobbers, or Sardars, played a significant role in the importance of industrial relations of the era.
To address prevailing acute industrial unrest, in 1938, the Bombay government enforced the Bombay Industrial Relations (BIR) Act. For the first time, permanent machinery, termed the Industrial Court, was set up for the settlement of disputes.Â
The Act was replaced by the BIR Act of 1946, which was modified or amended in 1948, 1949, 1953, and 1956. Shortly after the Second World War, India faced many problems like rising cost of living, scarcity of essential commodities, high rates of population growth, great unemployment, a highly troublesome Importance of industrial relations situation, etc.
The fragmentation Of Trade Unions Is One Of The Most Important Hurdles To Consider In The Indian
A plethora of unions emerged nationally, each associated with different political parties and groupings. There are the Indian National Congress unions, Communist unions, and Socialist unions – all within a single industrial area, and many times within a single factory or establishment. Further, the absence of any law for the recognition of unions, except for the BIR Act and the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, has led to the further fragmentation of unions and inter-union rivalry. Also, even though the laws relating to the recognition of unions in India leave a lot to be desired, this has, unfortunately, discouraged any kind of restriction on such unions.Â
Inter-union rivalry poses a danger of industrial unrest.Â
To seek a remedy for the problem, a Code of Discipline has been framed, which clearly states that a union claiming recognition must comprise 25% of the total workers in that industry. The complications arise as to the verification of membership of opposing unions: the method of verification or the secret ballot. In another view, the solution hinges on granting recognition to the representative unions. Statutory recognition for representative unions was also recommended by the National Commission of Labour; however, the recommendations have never been implemented. Maharashtra is the only state that seems to have made some advancement in this regard.Â
It legislated the Maharashtra Act for Prevention of Unfair Labour Practices and Compulsory Recognition of Trade Unions, 1971. The Bombay Industrial Relations Act, more limited in application, gives powers to the appropriate authorities for recognising a representative union in a plant/industry. The 1978 Industrial Relations Bill also had provisions to establish a sole bargaining agent in a plant.
Following independence, many laws have been enacted regarding social security and regulation of labour employment, such as the ESI Act, 1948; EPF & Miscellaneous Provisions Act, 1952; Payment of Gratuity Act, 1972; Equal Remuneration Act, 1976; and so forth.
Labour Legislations in India
We will categorise these acts into three categories, as constructed by Banerjee.Â
- Protective and employment legislationÂ
- Social security legislationÂ
- Regulatory legislationÂ
Importance of Labour Law
Labour laws play a crucial role in improving the working conditions of employees. It’s important to recognise that these laws offer various benefits, not only for employees but also for employers, contractors, and society as a whole. Over time, labour laws have evolved and changed to stay relevant to changes in different industries, wages, skills, and living standards.
Rights of Employees and Employers
Labour laws, including the Employees’ Provident Fund (EPF) and contract labour laws, act as regulators, ensuring fair work practices. They establish guidelines that define employers’ and employees’ rights and responsibilities, fostering a smooth work culture in society. Employers are encouraged to provide a better work environment, while employees are ensured the right to a safe and conducive workplace, along with rights related to leaves, wages, and provident funds.
Prevention of Child Labor
Labour laws play a vital role in preventing child labour, recognising that it goes against the principles of a welfare state. These laws prohibit the employment of children below a certain age to safeguard their right to education. Any entity, be it a company, an individual, or a contractor, hiring such children is deemed illegal. This ensures the protection of children and their rights.
Proper Compensation and Reasonable Hours
Employees often find themselves in situations where they have limited income sources, making them vulnerable to exploitation. Labour laws, such as the EPF Act and Minimum Wages Act, set standards for compensation, ensuring that workers receive a fair amount for specific jobs or work hours. This benefits both employers, who can plan their hiring costs, and employees, who can anticipate their earnings.
Prevention of Discrimination
Labour laws promote equal work opportunities, discouraging discrimination based on factors such as caste, creed, sex, religion, or race. They ensure a fair and unbiased job selection process, fostering inclusivity and equal opportunities for everyone.
Prevention of Exploitation
Some employers take advantage of vulnerable workers, particularly women and children. Labour laws are designed to protect the interests of such workers by establishing guidelines for safe work conditions. These laws also mandate safety tools and regulations for specific worker categories, ensuring their well-being.
Better Work Environment and Social Justice
Acts like the EPF and Contract Labour Act contribute to a positive work environment, benefiting organizations of all sizes. These laws call for necessary provisions that make work smoother for both employers and employees. Additionally, EPF helps individuals save for the future, providing financial security during unexpected situations.
Elements of Labour Law
Labour law covers nine main areas: employment, individual work relationships, salary, working conditions, health and safety, social security, trade unions, workplace relations, labour law administration, and special rules for specific occupations or groups.Â
- Employment
Employment was initially focused on preventing excessive unemployment before the Great Depression, but contemporary labour laws emphasise creating job opportunities for economic stability.
- Individual Employment Relations
The historical concept of master and servant relationships in labour law involved contractual obligations, with evolving statutes limiting freedom of contract, especially in areas like termination, dismissal procedures, minimum wages, and social security rights.
- Wages and Remuneration
Substantive wage laws cover payment methods, protection against unlawful deductions, minimum wage arrangements, and income policies as deliberate instruments for economic stability and growth.
- Conditions of Work
This aspect of labour law, rooted in Industrial Revolution protections, addresses work hours, rest periods, vacations, child labour prohibition, young persons’ employment regulation, and special provisions for women, adapting to modernised sectors and changing social norms.
- Health, Safety, and Welfare
Occupational health, accident prevention, and regulations, including specific rules for hazardous jobs like mining and construction, constitute the health, safety, and welfare aspect of labour law. This also covers poisons, machinery, dust, noise, vibration, and radiation risks.
- Social Security
Social security in labour law ranges from employers’ liability for accidents to comprehensive schemes covering sickness, unemployment, retirement, injury, maternity, family, invalidity, survivors’ benefits, and medical care.
- Trade Unions and Industrial Relations
The importance of industrial relations in labour law involves legal aspects of trade unions, employers’ organisations, collective bargaining, agreements, representation of employees, joint consultation, codetermination, workers’ participation, and the prevention and settlement of labour disputes.
- Administration of Labour Law
Labour law administration involves the organisation and functioning of authorities like labour departments, inspection services, and other enforcement organs. It also encompasses labour courts for settling grievances and industrial disputes between labour and industrial relations management.
- Special Categories of Workers
Labour law includes provisions for specific occupational groups, often as parts of a general code or special legislation. This is common in sectors like mining, transportation, commerce, and agriculture and involves distinctions between blue-collar workers, salaried employees, and other employment categories.
Industrial Relations in India: The Scenario With Prospect of Change
The importance of industrial relations in India has witnessed a vast change in India since the last days of British rule, when a sense of awakening had started among the working class. The world wars acted as a catalyst for the employers to befriend the workers to witness uninterrupted production during the war. Out of sheer self-interest, they became benevolent to some extent.Â
Leaders began to emerge; Mr. Roy, Tilak, Mahatma Gandhi, and others worked to set up worker unions and force the hand of the government to frame labour laws for the betterment of workers. In 1929, the Industrial Dispute Act came into being, later in 1947 becoming the Industrial Dispute Act, whereby mechanisms to solve industrial disputes were stipulated. Â
(1) The directive principles of state policy, as enshrined in our constitution, give the state the mandate to ameliorate the conditions of workers and their working environment so that productivity can be improved, which will ensure further wealth for the nation.
(2) Several acts have been enacted by Parliament both before and after independence and, in some way or the other, have workers’ interests and welfare in view. The Factory Act, the Industrial Disputes Act, and the Trade Union Act give great direction to attain the constitutional directives.Â
(3) Also, the Wages Act, 1948; Bonus Act, 1965; Gratuity Act, 1972; and Qual Remuneration Act, 1975, are a few other acts in that direction.Â
(4) In 1972 the National Commission on Labour recommended the establishment of a permanent Industrial Relations Commission, a recommendation that was not favourably accepted by the government.
(5) The National Conference of 1982 made several recommendations, namely: b) the emphasis on establishing a permanent Industrial Relations Commission; c) demanding a stringent punishment for the violation of the collectives.
(6) A check-off system was prescribed whereby, by ballot election, how many are real members of a union, how many are dual, bogus, etc., could come to light. This did not sit well with unions, but some unions have arranged for the deduction of their subscription through employers’ pay. To some extent, the checks of the system are working.
The Importance of Industrial Relations
- Promotes Democracy: The Importance of Industrial Relations describes how collective bargaining is used to resolve issues facing workers. This bargaining is undertaken in cooperation and mutual agreement among all affected parties; i.e., the democratic approach adopted includes industrial relations management and workers’ unions. Such an arrangement enables any organisation to establish industrial democracy that, in turn, inspires workers to do their best for the growth and prosperity of the organisation.
- High Morale: Sound industrial relations keep the morale of the employees very high and motivate the workers to get into higher gears of efficiency.
- Avoids Conflicts between Management and unions: Industrial relations resolve conflicts between unions and management. The reason is that the machinery establishes how problems faced by industrial relations management and employees will be resolved based on mutual agreements to which both parties are bound. In this process, any unfair course of action that would create problems between employers and trade unions would generally be ignored.Â
- Minimises Wastage: Satisfactory industrial relations involve cooperation and recognition among departmental members. It helps in minimising wastage of materials, manpower, and costs.
- Economic Growth And Development: The importance of industrial relations and harmony increases productivity and development and hence brings down wastage in turnover and other tangible benefits to the organisation. This step contributes to economic growth and development.
Industrial Relations and Labour Laws in India: Navigating the Current Landscape
The current state of industrial relations and labour laws in India is shaped by the ongoing developments and expansion in the industrial sector. The growth in this sector has brought about a significant impact on the employment landscape, influencing the economic conditions of workers and their relationship with organisations. Understanding the intricacies of these laws is not a one-size-fits-all approach; rather, it requires a thorough examination of empirical and statistical data to comprehend the nuances of labour policies.
Each industry operates under specific rules and regulations that necessitate compliance with both national and regional laws and policies. On 28th September 2020, the Industrial Relations Code 2020 received the president’s assent. This legislative move aimed to consolidate the Industrial Disputes Act of 1947, the Industrial Employment (Standing Orders) Act of 1946, and the Trade Unions Act of 1926. The overarching goal of this code was to bring about benefits for both employers and employees. Here are some advantages of the Industrial Relations Code 2020:Â
- Enhancing the efficiency of dispute resolution processes to facilitate amicable solutions and preserve the employer-employee relationship.
- Safeguarding employees with fixed-term contracts, ensuring protection for those engaged in specific-duration employment.
- Enforcing compliance with established standing orders within industrial establishments.
- Imposing stringent penalties on authorities failing to adhere to regulations and addressing non-compliance issues effectively.
- Fostering a business-friendly environment and providing employers with increased flexibility in decision-making for smoother operations.
Conclusion
The state of Indian industrial relations is evolving without conforming to specific patterns like tripartite or bipartite systems. Initially, internal and external factors posed challenges, but India has made progress in developing and enhancing industrial relations. When issues arise, management employs various approaches to address them. Effectively managing conflicts is crucial for organisational growth, as poor industrial relations can lead to decline.Â
The contributions of labour and workers are vital for organisational success, and their rights are now protected. Reforms aim to streamline labour procedures, making them simpler and more transparent. Fewer, concise laws benefit both employers and employees, fostering a more employment-friendly environment. Simplified codes can boost global investments in India’s industrial sector, elevating the country’s global standing and supporting initiatives like Make in India.
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