Industrial

Industrial Relations MCP
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UNIT 1
INTRODUCTION
Concept and purposes of industrial relations; Process of industrial relations; Actors

(workers, employers, government) of industrial relations system, pluralist and Marxist
Introduction to Industrial Relations

Industrial relation has become one of the most delicate and complex problems of
modern industrial society. Industrial progress is impossible without cooperation of
labours and harmonious relationships. Therefore, it is in the interest of all to create
and maintain good relations between employees (Labours) and employers
(Management)
Concept of Industrial Relations
The term 'Industrial Relation' comprises of two terms; "Industry" and "Relations".
Industry refers to any productive activities in which an individual (or a group of
individuals) is engaged. By "relation" we mean "the relationship that exist within the
industry between the employer and his employees (work person)
Industrial relations have three faces: science building, problem solving, and ethical. In
the science building face, industrial relations are part of the social sciences, and it
seeks to understand the employment relationship and its institutions through highquality, rigorous or exact research. In this vein, industrial relations scholarship cross
with scholarship in labor economics, industrial sociology, labor and social history,
human resource management, political science, law, and other areas. In the problem
solving face, industrial relations seek to design policies and institutions to help the
employment relationship work better. In the ethical face, industrial relations contain
strong normative principles about workers and the employment relationship,
especially the rejection of treating labor as a commodity in favour of seeing workers
as human beings in democratic communities entitled to human rights.
The term industrial relations explains the relationship between employees and stem
directly or indirectly from union-employer relationship. Industrial relations are the
relationships between employees and employers within the organizational settings.
The field of industrial relations looks at the relationship between management and
workers, particularly groups of workers represented by a union. Industrial relations
are basically the interactions between employers, employees and the government, and
the institutions and associations through which such interactions are mediated.
The term industrial relations have a broad as well as a narrow outlook. Originally,
industrial relations were broadly defined to include the relationships and interactions

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between employers and employees. From this perspective, industrial relations cover
all aspects of the employment relationship, including human resource management,
employee relations, and union-management (or labour) relations.
Now its meaning has become more specific and restricted. Collective bargaining,
trade unionism, worker participation in decision making, grievance and dispute
settlement and labour-management relations are the fundamental element of industrial
relation. Beside that human resource management is a separate, largely distinct field
that deals with non union employment relationships and the personnel practices and
policies of employers.
Origins
The term "industrial relations" came into common usage in the 1910s, particularly in
1912 upon the appointment by President William Taft of an investigative committee
titled the Commission on Industrial Relations. The commission's charge was to
investigate the causes of widespread, often violent labour conflict and make
recommendations regarding methods to promote greater cooperation and harmony
among employers and employees.
Shortly thereafter, the term gained even greater saliency in the public mind due to the
wave of strikes, labour unrest, and agitation for "industrial democracy" that
accompanied the economic and political disturbances associated with World War I. As
a result, by the beginning of the 1920s universities began to establish industrial
relations centres and programs to conduct research and train students in employeremployee relations, while progressive business firms established the first "industrial
relations" or "personnel" departments to formalize and professionalize the
management of labour
Conclusion
The field and practice of industrial relations began in the early years of the twentieth
century and evolved in numerous ways in reaction to a host of far-reaching changes in
the economic, political, and social realm/empire. It began with a broad emphasis on
the employment relationship and the labor problems that grow out of this relationship.
As a result of the rise of mass unionism between 1935 and 1955, the field became
identified in the academic and practitioner worlds with, first and leading, the study
and practice of collective bargaining and labor-management relations.
Since then the unionized sector of the economy has shrink considerably, while a
competitor field of human resource management has grown and spreada product of

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both new ideas and practices and the opening up of a much-expanded unorganized
sector in the labor market. Thus the term "industrial relations" is increasingly
associated with the unionized sector of the labor market. But a minority of
participants continue to view industrial relations as pertaining to the entire world of
work and, in particular, the three solutions to labor problems: personnel/human
resource management, trade unionism and collective bargaining, and government
legislation.
Importance of Industrial Relations
The healthy industrial relations are key to the progress and success. Their significance
may be discussed as under
Uninterrupted production: The most important benefit of industrial relations is that
this ensures continuity of production. This means, continuous employment for all
from manager to workers. The resources are fully utilized, resulting in the maximum
possible production. There is uninterrupted flow of income for all. Smooth running of
an industry is of vital importance for several other industries; to other industries if the
products are intermediaries or inputs; to exporters if these are export goods; to
consumers and workers, if these are goods of mass consumption.
Reduction in Industrial Disputes: Good industrial relations reduce the industrial
disputes. Disputes are reflections of the failure of basic human urges or motivations to
secure adequate satisfaction or expression which are fully treat by good industrial
relations. Strikes, lockouts, stoppage tactics, gherao and grievances are some of the
reflections of industrial unrest which do not spring up in an atmosphere of industrial
peace. It helps promoting co-operation and increasing production.
High moral: Good industrial relations improve the morale of the employees.
Employees work with great zeal with the feeling in mind that the interest of employer
and employees is one and the same, i.e. to increase production. Every worker feels
that he is a co-owner of the gains of industry. The employer in his turn must realize
that the gains of industry are not for him along but they should be shared equally and
generously with his workers. In other words, complete unity of thought and action is
the main achievement of industrial peace. It increases the place of workers in the
society and their ego is satisfied. It naturally affects production because mighty cooperative efforts alone can produce great results.
Mental Revolution: The main object of industrial relation is a complete mental
revolution of workers and employees. The industrial peace lies ultimately in a
transformed outlook on the part of both. It is the business of leadership in the ranks of
workers, employees and Government to work out a new relationship in consonance
with a spirit of true democracy. Both should think themselves as partners of the
industry and the role of workers in such a partnership should be recognized. On the
other hand, workers must recognize employers authority. It will naturally have
impact on production because they recognize the interest of each other.

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Reduced Wastage: Good industrial relations are maintained on the basis of
cooperation and recognition of each other. It will help increase production. Wastages
of man, material and machines are reduced to the minimum and thus national interest
is protected.
Thus, it is evident that good industrial relations are the basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers.
New and new projects may be introduced for the welfare of the workers and to
promote the morale of the people at work. An economy organized for planned
production and distribution, aiming at the realization of social justice and welfare of
the massage can function effectively only in an atmosphere of industrial peace. If the
twin objectives of rapid national development and increased social justice are to be
achieved, there must be harmonious relationship between management and labor.
Objectives of the Industrial Relation
The main objectives of industrial relations system are;
To safeguard the interest of labor and management by securing the highest

level of mutual understanding and good will among all those sections in the
industry, which participate in the process of production.
To avoid industrial conflict or strife and develop harmonious relations, which

are an essential factor in the productivity of workers and the industrial
progress of a country.
To raise productivity to a higher level in an era of full employment by

lessening the tendency to high turnover and frequency absenteeism.
To establish and promote the growth of an industrial democracy based on

labour partnership in the sharing of profits and of managerial decisions, so that
prohibit individuals personality may grow its full stature or tallness for the
benefit of the industry and of the country as well.
To eliminate or minimize the number of strikes, lockouts and gheraos by

providing reasonable wages, improved living and working conditions, said
fringe benefits.
To improve the economic conditions of workers in the existing state of

industrial managements and political government.
Socialization of industries by making the state itself a major employer
Vesting of a proprietary interest of the workers in the industries in which they

are employed.

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Industrial relations System

An industrial relations system consists of the whole range of relationships between
employees and employers which are managed by the means of conflict and
cooperation.
A sound industrial relations system is one in which relationships between
management and employees (and their representatives) on the one hand, and between
them and the State on the other, are more harmonious and cooperative than conflictual
and creates an environment conducive to economic efficiency and the motivation,
productivity and development of the employee and generates employee loyalty and
mutual trust.
Actors in the IR system:
Three main parties are directly involved in industrial relations:
Employers: Employers possess certain rights vis--vis labors. They have the right to
hire and fire them. Management can also affect workers interests by exercising their
right to relocate, close or merge the factory or to introduce technological changes.
Employees: Workers seek to improve the terms and conditions of their employment.
They exchange views with management and voice their grievance. They also want to
share decision making powers of management. Workers generally unite to form
unions against the management and get support from these unions.
Government: The central and state government influences and regulates industrial
relations through laws, rules, agreements, awards of court ad the like. It also includes
third parties and labor and tribunal courts.

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Scope:
The concept of industrial relations has a very wide meaning and connotation. In the
narrow sense, it means that the employer, employee relationship confines itself to the
relationship that emerges out of the day to day association of the management and the
labor. In its wider sense, industrial relations include the relationship between an
employee and an employer in the course of the running of an industry and may project
it to spheres, which may transgress to the areas of quality control, marketing, price
fixation and disposition of profits among others.
The scope of industrial relations is quite vast. The main issues involved here include
the following:
1. Collective bargaining
2. Machinery for settlement of industrial disputes
3. Standing orders
4. Workers participation in management
5. Unfair labor practices
Theoretical perspectives
Industrial relations scholars have described three major theoretical perspectives or
frameworks that contrast in their understanding and analysis of workplace relations.
The three views are generally known as unitarism, pluralist and radical/Marxist. Each
offers a particular perception of workplace relations and will therefore interpret such
events as workplace conflict, the role of unions and job regulation varies differently.
The radical perspective is sometimes referred to as the "conflict model", although this
is somewhat ambiguous, as pluralism also tends to see conflict as inherent in
workplaces. Radical theories are strongly identified with Marxist theories, although
they are not limited to these.
Unitary Perspective
In unitarism, the organization is perceived as an integrated and harmonious whole
with the ideal of "one happy family", where management and other members of the
staff all share common purpose, emphasizing mutual cooperation. Furthermore,
unitarism has a paternalistic approach where it demands loyalty of all employees,
being predominantly managerial role in its emphasis and application.
Consequently, trade unions are deemed as unnecessary since the loyalty between
employees and organizations are considered mutually exclusive, where there can't be

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two sides of industry. Conflict is perceived as disruptive and the pathological result of
agitators, interpersonal friction and communication breakdown.
Pluralistic Perspective
In pluralism the organization is perceived as being made up of powerful and divergent
sub group's management and trade unions. This approach sees conflicts of
interest and disagreements between managers and workers over the distribution
of profits as normal and inescapable. Consequently, the role of management
would lean or twist less towards enforcing and controlling and more toward
persuasion and coordination. Trade unions are believed as legitimate
representatives of employees. Conflict is dealt by collective bargaining and is
viewed not necessarily as a bad thing and if managed could in fact be
channelled towards evolution and positive change. Realistic managers should
accept conflict to occur. There is a greater propensity or tendency for conflict
rather than harmony.
The implications of this approach include:
The firm should have industrial relations and personnel specialists who advise
managers and provide specialist services in respect of staffing and matters
relating to union consultation and negotiation.
Independent external arbitrators should be used to assist in the resolution of

disputes.
Union recognition should be encouraged and union representatives given

scope to carry out their representative duties
They should anticipate and resolve this by securing agreed procedures for
settling disputes.
Marxist Perspective
This perspective focuses on the fundamental division of interest between capital and
labor, and sees workplace relations against this background. It is concerned with
the structure and nature of society and assumes that the conflict in employment
relationship is reflective of the structure of the society. Conflict is therefore seen
as inevitable and trade unions are a natural response of workers to their
exploitation by capital. This view of industrial relations is a by product of a
theory of capitalist society and social change. Marx argued that;
Weakness and contradiction inherent in the capitalist system would result in

revolution and the ascendancy or superiority of socialism over capitalism.
Capitalism would foster monopolies.
Wages (cost to the capitalist) would be minimized to a subsistence level.

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Capitalists and workers would compete in controversy to win ground and

establish their constant win lose struggles would be evident.
Measures for Improving Industrial Relations

The following measures should be taken to achieve good industrial relations:
Strong and Stable Union: A strong and stable union in each industrial enterprise is
essential for good industrial relations. The employers can easily ignore a weak union
on the plea that it hardly represents the workers. The agreement with such a union will
hardly be honoured by a large section of workforce. Therefore, there must be strong
and stable unions in every enterprise to represent the majority of workers and
negotiate with the management about the terms and conditions of service.
Mutual Trust: Both management and labor should help in the development of an
atmosphere of mutual cooperation, confidence and respect. Management should adopt
a progressive outlook and should recognize the rights of workers. Similarly, labor
unions should persuade their members to work for the common objectives of the
organization. Both the management and the unions should have faith in collective
bargaining and other peaceful methods of settling disputes.
Workers Participation in Management: The participation of workers in the
management of the industrial unit should be encouraged by making effective use of
works committees, joint consultation and other methods. This will improve
communication between managers and workers, increase productivity and lead to
greater effectiveness.
Mutual Accommodation: The employers must recognize the right of collective
bargaining of the trade unions. In any organization, there must be a great emphasis on
mutual accommodation rather than conflict or uncompromising attitude. One must
clearly understand that conflicting attitude does not lead to amicable labor relations; it
may foster union militancy as the union reacts by engaging in pressure tactics. The
approach must be of mutual give and take rather than take or leave. The
management should be willing to co-operate rather than blackmail the workers.
Sincere Implementation of Agreements: The management should sincerely
implement the settlements reached with the trade unions. The agreements between the
management and the unions should be enforced both in letter and spirit. If the
agreements are not implemented then both the union and management stop trusting
each other. An environment of uncertainty is created. To avoid this, efforts should be
made at both ends to ensure the follow up of the agreements.
Sound Personnel Policies: The following points should be noted regarding the
personnel policies. The policies should be:

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Formulated in consultation with the workers and their representatives if they

are to be implemented effectively.
Clearly stated so that there is no confusion in the mind of anybody.
Implementation of the policies should be uniform throughout the

organization to ensure fair treatment to each worker.
Governments Role: The Government should play an active role for promoting
industrial peace. It should make law for the compulsory recognition of a
representative union in each industrial unit. It should intervene to settle disputes if the
management and the workers are unable to settle their disputes. This will restore
industrial harmony.
Progressive Outlook: There should be progressive outlook of the management of
each industrial enterprise. It should be conscious of its obligations and responsibilities
to the owners of the business, the employees, the consumers and the nation. The
management must recognize the rights of workers to organize unions to protect their
economic and social interests.
Industrial Relations Today
By many accounts, industrial relations today are in crisis. In academic circles, its
traditional positions are threatened on one side by the dominance of mainstream
economics and organizational behaviour, and on the other by postmodernism. In
policy-making circles, the industrial relations emphasis on institutional intervention is
trumped by a neoliberal emphasis on the fair promotion of free markets. In practice,
labor unions are declining and fewer or less companies have industrial relations
functions. The number of academic programs in industrial relations is therefore
withdrawal, and scholars are leaving the field for other areas, especially human
resource management and organizational behavior. The importance of work, however,
is stronger than ever, and the lessons of industrial relations remain vital. The
challenge for industrial relations is to re-establish these connections with the broader
academic, policy, and business worlds.

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Unit 2
Labor Policies and Legislations
Features of labor policy; The Labor Act; The Trade Union Act and
Structure of labor administration in Nepal
History of labor legislation
The features and objectives behind the formulation of labor
legislation/policies are,
to settle the industrial disputes in harmonious way,

to insure the economic, ethical and mental welfare of workers,
to provide social justice to laborers,
to develop the national economy by increasing working
efficiency through the provision of international unity through
the establishment of labor legislation.
In 1919, International labor organization (ILO) was established in the

form of world labor institution with the purpose of increasing the
standard of living of workers all over the world giving worker social
protection, equal distribution and opportunity of human rights and
providing social justice to the workers.
ILO has given due consideration to the saying labor is not
commodity. After the establishment of UNO on the 10th Dec 1948
UDHR (Universal declaration of Human Right) was made by the GA
(General Assembly) of UNO and gave the recognition to the right to
form free trade unions and right to motherhood of childhood. It was
felt necessary to launch labor laws by state with include all the
rights granted by the ILO and UDHR.
In Nepal first of all, Muluki Ain was promulgated on 1910 BS. and
made some provision regarding labor. In that Ain the worker should
be given agreed wages and if wages were not paid penalty and
punishment was to be made.
Before 2016 B.S. there was no law relating to industrial relation to
protect workers interests and solve the problems between worker
and management.

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Ashadh 15, 2016 BS. enacted factory and factory workers Act, with a
view to maintain peace and ensure the economic welfare of the
general public by making suitable arrangement concerning the
proper management of factories.
The safety and comfort of factory's workers and settlement of
disputes between factory employees and workers. But this Act was
enforced only on push 1 2018 BS.
Labour Act,2048 (1992)
1. Preamble: Whereas it is expedient or useful to make timely
provisions relating to labour by making provisions for the
rights, interests, facilities and safety of workers and
employees working in enterprises of various sectors.
Definition
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production process:
"Production process" means any of the following processes:
works relating to making, altering, repairing, ornamenting,

engraving, Finishing, packing, oiling, washing, cleaning,
breaking-up, dismantling or other kinds of activities given to
any article or substance with a view of bringing it to its use,
sale, distribution, transportation, or disposal.
Pumping of oil, water, or sewage of dirt
Generating, transforming, and transmitting energy; or
Printing, lithography, photography, book-binding and other
similar work.
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"Enterprise"
It means any factory, company, organization, association, firm, or

group thereof, established under the prevailing laws for the purpose
of operating any industry, profession or service, where ten or more
workers or employees are engaged and this expression also
includes:

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Tea estates, established under the law for commercial

purpose;
Enterprise operating within the industrial districts established
by Government of Nepal where less than ten workers or
employees are engaged.
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"Worker"
It means a person employed on the basis of remuneration to work in

any building, premises, machinery or any part thereof used for any
productions process or providing service, or any act relating to such
work or for any unscheduled works and this expression also includes
any worker working at piece-rate, contract or agreement.
"Proprietor" means the person having final authority on

the activities of the Enterprise and this expression also
includes any person appointed as the Chief of any branch
or unit of the Enterprise with powers to exercise final
responsibility or authority in respect thereof.
" Remuneration" means the remuneration or wage to be

received in cash or kind from the Enterprise by the worker
or employee for the works performed in the Enterprise and
this expression also includes any amount to be received in
cash or kind for the works done under piece-rate or
contract. Provided that, this expression does not include
any kind of allowance or facility.
2. Employment and Security of Service
Sec. 3(1) deal classification of job. The Proprietor shall classify

the job according to the nature of production process, service
or functions of the Enterprise and shall provide the
information thereof to the concerned Labor Office.
Sec. 4(1) deal Appointment of Worker and Employee. Before to
appoint a worker or employee in any post, Manager Shall have
to advertise in order to select them and selected person shall
have to be provided with appointment letter.
The appointed shall be kept on probation period unless completes

the continuous service period of one year and, based on, efficiency,

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sincerity discipline, diligence towards works, punctuality, etc in this
period he/she shall be appointed permanently.
An appointment letter shall be provided with the name of the post
and remuneration and conditions of service while making such
appointment. Information thereof shall also be provided to the
Labour Office.
3. Prohibition of Engaging Non-Nepalese Citizens at Work
According to sec. 4A. of the Act, Non-Nepalese citizens shall

not be permitted to be engaged at work in any of the posts
classified pursuant to Section 3.
Sec. 5 deal to Minors and females may be engaged in the
works normally from six o'clock in the morning till six o,clock
in the evening, except in the prescribed conditions.
4. Appointment in Contract Service
According to sec. 7, need of Enterprise any person may be

appointed in contract, by fixing a time period and setting forth
the remuneration, terms of service, for any specified work
sec.8 deal that any change in the ownership of the Enterprise
shall not be deemed to have affected on the terms and
conditions of service of the workers and employees of the
Enterprise.
5. Separate Registers to be Kept

According to sec. 9(1) separate registers of the workers and
employees mentioning the following particulars
(a) Name of the worker or employee,
(b) Nature of job,
(c) Remuneration and method of its payment,
(d) Other prescribed particulars.
The register maintained under Sub-section (1) shall have to be
submitted when demanded by the Labour Officer, Factory Inspector
or any other person designated by the Labour Office.

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6. Security of Service
Sec.10 said that, the service of any permanent worker or employee
may not be terminated without following the procedures prescribed
by this Act or the Rules or Bylaws made under this Act.
Sec. 12 (1) said that, any special circumstances, the production or
service of the Enterprise had to be curtailed or it has to be closed
party or wholly for more than three months, the Proprietor may, with
the approval of Government of Nepal through the Department of
Labour, retrench in the number of the workers and employees,
partly or wholly, of the Enterprise.
7. Compulsory Retirement
Sec. 15 said that the Proprietor may compulsorily retire any

worker or employee who has crossed the age 55. Provided
that he/she may extend the period of service of any worker of
employee by 5 years, in case the worker or employee is
indispensable for the operation of the functions Enterprise.
8. Working Hour
Sec. 16 said that,No worker or employee shall be deployed in work
for more than 8 hours per day or 48 hours per week and they shall
be provided 1 day as weekly holiday for every week.
Sec. 18 that, where work may be interrupt, no worker or employee
shall be deployed in work for more than five hours continuously
without an interval of half an hour for tiffin. Where works have to be
carried out continuously without interruption, such intervals shall be
provided on rotation basis.
9. Minimum Remuneration Fixation Committee
Sec.21. (1) Government of Nepal may fix the minimum
remuneration, allowances and facilities of workers or employees or
Enterprises on the recommendation of the Minimum Remuneration
Fixation Committee and the notification on rates so fixed shall be
published in the Nepal Gazette.
10.
Prohibition on Deduction of Remuneration

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Sec. 24. (1) said that, the remuneration of workers or employees
shall not be deducted expect under the following circumstances
(a) In case it is required to realize any fine
(b) In case it is required to deduct against absence
(c) In case it is required to deduct against loss or damage caused by
intentionally or negligently;
(d) In case it is required deduct in respect of providing prescribed
facilities
(e) In case it is required to deduct in respect of advance or over
payment of remuneration;
(f) In case it is required to deduct in respect of the period of
suspension
(g) In case it is required to deduct under the order of government
office or court'
(h) In case it is required to deduct as per the notification of
Government of Nepal published in the Nepal Gazette; or
In case it is required to deduct in respect of income tax or any other

tax levied under prevailing laws.
11.
Provisions Relating to Health and Safety
According to sec. 27, Proprietor shall make the arrangements in the

Enterprise as below
(a) To Keep clean and tidy by cleaning daily including with
germicidal medicines, necessary arrangements of proper drainage
and coloring from time to time and preventing from odor or smell
(b) To make arrangements for adequate supply of fresh air and light
as well as proper temperature in the working rooms
(c) To make arrangements of removal and disposal of solid waste
during production process,

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(d) To make arrangements of prevention of accumulation of dust,
fume, vapor and other impure materials in working rooms which
would adversely affect the health;
(e) To make arrangements of necessary preventive personal devices
for protection of health from adverse any other source, and make
provisions this would produce less noise during the work process;
(g) To make provisions for sufficient water in the Enterprise where
chemical substances, are used or produced which may be injurious
to the health, for the purpose of extinguishing fire or washing and
cleansing during emergency situations;
(j) Too cause to conduct compulsory health check-ups of the workers
or employees once every year in the Enterprises where the nature
of works is likely to affect the health adversely.
12. Welfare Provision
Sec 37, Welfare Fund
Sec. 38, Compensation
Sec. 39, Gratuity, Provident Fund and Medical Expenses
Sec. 40, Leave
Sec. 41, Provision of Quarters:
Sec, 42, Provisions Relating to Children
Sec. 43, Relaxing Room
Sec. 44, Canteen
Special Provisions to be Applicable to Special Type of
Enterprise
According to Sec. 45 said that the Special provision mentioned as
below shall be applicable in respect of the tea estates;
(a) Formation of Committee
(b) Provision of Quarter
(c) Provisions of Primary Health Care

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(d) Safety Devices
(e) Provisions of Primary School
(f) Daily Consumer Goods
(g) Provision for Entertainment
(h) To get the works done on contract
Construction Business
(a) Provisions for Construction Tools
(b) Special Arrangements at Temporary Construction Sites
(c) Accident Insurance
(d) Safety Arrangements
Transportation Business
(a) Working Hours
(b) Trip Allowance
(d) Accident Insurance
(e) First Aid Materials
(f) Prohibition of Alcoholic Drinks
(g) Commission Agent
Business of Hotel, Travel, Trekking, Adventure, Rafting,
Jungle Safari etc
(a) Females may be engaged in work
(b) Safety of Workers or Employees engaged in Trekking or Rafting
(c) Accident Insurance
(d) Payment of Field allowance etc
(e) Provisions for First Aid
Conduct and Punishments

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According to sec. 50, Proprietor may punish any worker or employee
performing misconduct with any of the following punishments.
(a) To reprimand,
(b) To withheld annual grade increments,
(c) To suspend, or
(d) To dismiss from service.
Appeal
According to sec. 60, Any party not satisfied with any punishment
awarded under this Chapter may file an appeal within 35 days from
the date of such punishment of order in the following manner
(a) At the Appeal Court against the orders of Government of Nepal
or Department of Labour
(b) At the Court of Appeal in respect of the case tried and decided in
original jurisdiction by the Labour Court;
(c) At the concerned Labour Court in respect of the punishment or
order given by the Proprietor or other office or Authority.
Labour Relation Committee
According to Sec.63, there should be a Labour Relation Committee
in each Enterprise in order to create amicable or friendly
atmosphere between the workers or employees and the
management and to develop healthy labour or industrial relation on
the basis of mutual participation and co-ordination.
Settlement of Labour Dispute
According to the sec.72, Government of Nepal shall, establish
Labour Court by publishing a notice in Nepal Gazette. The
Jurisdiction and the location of such court shall be as prescribed in
such notice.
Special Provisions for Settlement of Dispute
According to Sec. 83(1), GoN deems that a dispute between workers
or employers and the Proprietor has arisen or there is possibility of
arising, GoN may constitute a committee of one of more persons, or

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tripartite committee consisting of representatives of the Proprietor,
the workers or employees and GoN in order to resolve the dispute.
Such committee may regulate its own procedures.
Trade Union Act, 2049 (1992)

Preamble : Whereas it is expedient to make legal provision
regarding registration, operation of Trade Union and other necessary
provisions relating to it for the protection and promotion of
professional and occupational rights of the persons engaging in selfemployment and the workers working in various industry, trade,
profession or service in Enterprises or outside the Enterprises.
Definitions
"Worker" means the worker engaged in various industry, trade,
profession or service in the Enterprises or outside the it on
permanent, temporary, agreement, daily wages, piece-rate or
contract basic or working there under and the Agriculture Labourer.
This term also includes the other personnel and the person engaged
at self-employment, except those personnel who are working at the
Manager or Proprietor level and who are working as the chief of its
department, branch, sub-branch and unit.
"Agriculture Labourer" means the person who earns livelihood by
working on wages or paid Labour in agriculture sector"
"Trade Union" means the Enterprise level Trade Union registered
under this Act for the protection and promotion of the occupational
rights of the workers and this expression shall also includes Trade
Union Association and Trade Union Federation.
There are 3 types of Trade Union they are; Enterprise level trade
union, Trade Union Association and Trade Union Federation.
Registration of Trade Union
Registered of Enterprise Level Trade Union: According to Sec.
3 (1), The workers of concerned Enterprise may constitute an
Enterprise Level Trade Union to protect and promote their
occupational rights.

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But an application in the prescribed form signed by at least ten
members of the Trade Union with the Constitution of the Trade
Union, prescribed fee and other prescribed particulars shall submit
to the Registrar.
That kind of Trade Union shall not be registered if at least twenty
five percent workers of the concerned Enterprise are not members.
Registration of Trade Union Association: According to sec.
4(1) At least fifty enterprise Level's Trade Union or five thousand
Agriculture Laborers of at least twenty districts comprising one
hundred persons from each district or Five thousand workers of
similar nature Enterprise, may constitute a Trade Union Association
by mutual agreement.
In order to register a TUA constituted with an application in the
prescribed form along with a copy of mutual agreement, the statute
of the trade unions, prescribed fee and other prescribed particulars
shall submit to the Registrar.
Registration of the Trade Union Federation: According to sec.
5(1) At least ten TUA may constitute a TUF by mutual agreement.
In order to registrar a an application in the prescribed form with a
copy of mutual agreement, statute of the TUF, prescribed fee and
other particulars shall submit to the Registrar.
Notwithstanding anything contained in above, no TUF shall be
eligible to be member of more than one TUF at a time. After the
registration of a TUF its registration shall remain valid for one year
even if the number of member of such TUF declines upto 10 %
Refusal of Registration
Sec. 7 deal about refuse to register a Trade Union in the following
circumstance:
If necessary particulars are not attached with the application.
If at least 25 percent worker of the concerned Enterprise are
not the member of the Enterprise Level Trade Union.
If the particulars mentioned in Section 10 are not being
included in the of the statute of Trade Union
Operation, Management and Recognition of the Trade Union
Autonomous and Corporate body

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(1) It shall be an autonomous and Corporate body having perpetual
succession.
(2) It Shall have a seal of its own to carry out its activities.
(3) It may acquire, posses, dispose or manage by other means of its
movable and immovable property as a person.
(4) It may sue or be sued under its name as a person.
Sec. 9 Objectives
(a) To engage in economic and social development of the workers by
improving their working conditions .
(b) To make an effort to establish good relationship between worker
and management.
(c) To assist in the development of Enterprise by increasing the
productivity of Enterprise.
(d) Try to make the workers dutiful and disciplined.
In addition to the objectives mentioned in above, the TUA and the

TUF shall have the following objectives:(a) To conduct activities providing education to the worker.
(b) To establish relation with International institutions for the benefit
of the workers.
(c) To provide necessary advice to Government of Nepal in
formulating the Labour Policy.
(d) AS required to conduct workshops, seminar etc and publish facts
and figures beneficial to the workers.
(e) In order to protect and promote the rights and interest of the
workers negotiate with Government of Nepal and take other
necessary measures subject to the prevailing law.
Sec 9 b, Functions Duties and powers of TUA and TUF

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In addition to the functions, duties and powers referred to in their
Statute of the TUA and TUF, the other functions, duties and powers
shall be as follows:
Sec.
To carry out and cause to be carried out the acts and

proceedings and programmes as required for the achievement
of the objectives of the TUA and TUF
To require their members to participate in the elections of TUA
and TUF.
To require their members to abide by the decisions of the TUA
and TUF
(d) To take necessary measures in order to resolve the Labour
disputes by entering into negotiations with Government of
Nepal, with professional associations and federations of
various types as well as with the Enterprises, representing the
entire workers on policy level labour disputes,
(e) To negotiate with the concerned Enterprise and Managers
on behalf of the Trade Union of Enterprise level,
(f) To establish and operate various types of funds for the
benefit and welfare of the workers,
(g) To make public the facts of oppression committed against a
worker and Trade Union and to make aware the concerned
Enterprise of such acts, as required.
10, Statute
The following particulars shall be included in the statute of the Trade

Union:(a) Name and address of Trade Union;
(b) Objective of the establishment of Trade Union;
(c) Procedure of the formation of the working committee as well as
the term of office to be a maximum period of four years;
(d) General Membership, the number of officials and the mechanism
(process) of their election;
(e) Provision that only a worker, who is a Nepali Citizen and having
served continuously for one year to be elected for the official post;
(f) Provision regarding fund of the Trade Union and its auditing;
(g) Provision regarding inspection and examination of the account of
the Trade Union.

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(h) Provision to bring the vote of no confidence against the officials;
(i) Provision regarding functions, duties, powers and meeting of the
working committee and the General Meeting of the Trade Union.
(j) The Procedure of amendment of the statute of Trade Union;
(k) Provision regarding dissolution of the Trade Union;
(l) Provision regarding liability and assets of the Trade Union after its
dissolution.
Sec. 28. Penalties
If any office-bearer, member or any employee of the TU

misappropriates the property of the TU or the property of the
fund and programme operated by such TU or causes loss and
damage of any kind to such property, the Labour Court may
order to recover and realise from such person the amount
equal to the amount so misappropriated or caused loss and
damage and may impose a fine of upto five thousand rupees
or impose an imprisonment of upto one year or impose both
punishment.
If the particulars, reports, notices, or any other documents to
be submitted on behalf of the TU in accordance with this Act
or the Rules under this Act is not submitted or false particulars
are submitted, the Registrar may fine the concerned official to
the extent of Rupees five hundred.
The Highlights of Labor Policy: A Critical

Evaluation (October 12)
"Workers of all Countries Unite"
Labor, as it is, is one of the most important factors of
production. Land may remain unexploited and capital idle if
labor does not come into the picture. It is said to be the prime
mover of all the means of production.
The importance of labor is laid down as: "Labor is the source of
all wealth, the political economist assert. And it really is the
source - next to nature, which supplies it with the material that
it converts into wealth. But it is infinitely more than this. It is
the prime basic condition for all human existence, and this to
such an extent that, in a sense, we have to say that Labor

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created man himself." (Karl Marx and Frederick Engels:
Selected Works, Vol III, P 66).
Labor is, thus termed as means and end of production and
consequently human welfare. "The mastery over nature began
with the development of hand, with labor, and widened man's
horizon at every new advance. He was continually discovering
new, hitherto unknown properties in natural objects". (Ibid-P68). And since labor cannot be separated from laborer, we
need to know the present scenario of workers' position in
different parts of the world.
There are 120 million or so unemployed worldwide and millions
more have given up the hope of finding work. (World
Development Report, 1995). The same is true in the case of
India. In India, there are 40 million unemployed persons. In
many countries, workers lack representation and work in
unhealthy, dangerous and/or demeaning conditions.
The matter becomes more clear when we see that social
security schemes or welfare measures in the forms of pension,
medical reimbursement, die-in-harness, maternity benefit, or
any policy or program related to the welfare of labor can at
best cover only the workers in formal/organized sector who
make up just 15 per cent of the labor force in low income
countries including India.
Majority of the workers in informal sector and rural areas, as
such, remains in all forms of dismal manifestations. In Manipur,
as also in other parts of the country, the workers, particularly
the workers in informal sector are in deplorable condition. For
instance, screen printers, tobacco harvesters, cement bag
dusters, agarbati workers, workers in local made mosquito
smoke made of DDT, rag pickers, construction workers, hotel
boys, etc. suffer from numerous health problems. What begins
as a minor occupation related health problem might develop
into a serious dreaded disease.
Besides, discrimination on grounds of sex is alarming. A female
worker earns lesser amount (Rs 10-20) than the male
counterpart during agricultural peak season for the same work.
However, many are on this pitifully low return to their hard
work. "Besides, physical problems, mental stress too takes its
toll. Women at work often tend to be worried about home and
family income. There may be sexual exploitation of these

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women at work. And at home too, they may suffer physical
violence." (Times of India, Sept 4, 2000, Monday).
It will be worthwhile to mention something about child labor
also. Restaurants, hotels, transport services, etc are the best
example where plenty of child labor operate. A passenger bus
has at least two conductors/handymen of tender age. Their
work remains near to servitude. This state of affairs relate to
"poverty" and poor quality or availability of education.
Children in poor families work because the family needs extra
income, especially if the parents' major source of revenue is
uncertain/meager. As parents' income rise, the problem could
be minimized to some extent. In India, a 10 percent increase in
mother's income would lower girls labor force participation by 9
to 10 percent.
The government of Manipur has announced the absence of
child labor in the state, in spite of the fact that their physical
appearance is in sight in both rural and urban areas. It can be
undoubtedly generalized that for most households, poor and
prosperous alike, income from work is the main determinant of
their living condition.
The economic objectives of households are similar everywhere:
families seek to meet their basic needs; improve their living
standard; manage the risks they face in an uncertain world;
and expand opportunities for their children. Here, as a result,
we should say economic growth is good for workers.
Investment in skills, health and nutrition of workers is key both
to their welfare and to economic success.
Imperatives of Labor Policy: Before we come to the points on
labor policy, let us spare some time on the economic scenario
of the state vis--vis the country.
Now is the time of changes. From feudal-like socio-economic
formation, the economy is compelled to leapfrog to the present
day knowledge-based economy. IT revolution has enhanced it.
The one leg is in the survival-oriented economy and one leg is
trying to step in the world of changes. It is unfortunate also
that event today we have 33 percent of the population below
poverty line. Literacy rate is high but number of educated
persons is low.

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A technical center is at the infant stage after 20th century.
There is crying phenomenon of 'miseducation'. Of its own, the
tiny land locked state, Manipur, remains industrially zero. The
geo-political constraints and other natural hindrances
captivated the economy in the rut of fundamental
backwardness. And here, by employment we mean merely
government jobs.
The ratio of the government employees to the population is
alarmingly large. It is 1:25 as against the all - India average
1:125. And these are most while-collar jobs, breeding middle
class bureaucratic mentality. No industrial base naturally
implies that agriculture still remains the backbone of the state
economy contributing nearly half of the State Domestic Product
(SDP) and sheltering 70 percent of its population. But we are
bound to remain drowned in the sea of changes-and tide of
Liberalization, Privatization and Globalization.
The dilemma is accentuated by another very important factor
supporting "this trend of change - urbanization in some cases is the age profile of the population. It is estimated that as much
as 67 per cent of the population will be under 34 years now.
The pre-dominantly young population will seek novelty, variety
and display greater propensity to change". (Perspective Plan for
the North East, - by North Eastern Council, NEC, Shillong).
As such, a sound level policy should bear all these images.
Isolated move would be fruitless and lead us nowhere. Thus,
we should afford such a policy that suits the economic changes
and realities in tune with new economy. Simultaneously the
question of 2Hs- health and happiness is to be kept in active
consideration.
Thus, a good policy will generally involves action in three
areas:
1) Enhancing mobility
2) Reducing income insecurity and
3) Equipping workers for change
Thus, enabling the workers to work in atmosphere of:
1) Establishing the rules of management-management
negotiations;
2) Spelling out right for workers, job security
3) Securing for income insecurity
4) Establishing dispute resolution mechanism; and

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5) Promulgating basic health and safety regulation much
remains to be done to improve the management market.
(Courtesy: The Imphal Free Press)
FNCCI
Labour Force
Nepal has an easily trainable and keen work force. Unskilled
labour is cheap and abundant. Semiskilled and skilled labour
are available in sufficient numbers. The government has
established technical institutions to develop skills at the
technical level in civil and electrical engineering, electronics,
air conditioning/refrigeration, general mechanics and auto
mechanics. Training programmes are also geared to industrial
and vocational training in wood working, metal working, leather
working, general fitters, tailoring and so on. The programmes
on entrepreneurial and management development and the
colleges of higher learning provide educated persons to be
groomed for managerial positions on both public and private
sector industries.
Industrial Relations
Nepal has a history of maintaining good industrial relations
during the past few decades when industrial activity gradually
expanded in the country. Labour unrest, lockouts and strikes do
not occur as frequently as they do in other developing
countries. The Labour Act lays down guidelines and procedures
for the settlement of disputes between employers and
employees. These guidelines and procedures provide a
favourable environment for the harmonious development of
industrial relations.
Legal Framework
The Labour Act, 1992 lays down the legal framework and the
basis for the rules, regulations and guidance on the proper
management of any establishment employing 10 persons or
more. It deals with matters relating to employment and
security of employment, working hours and minimum wages,
welfare of employees, employer employee relations and the

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settlement of labour disputes. Labour Regulation, 1993
complements the Labour Act with further clarification in issues
such as security of profession and service, remuneration and
welfare provision, health, cleanliness and safety, etc. The
Bonus Act of 1974, as amended subsequently, provides a legal
basis for the payment of bonus to the workers and employees
of factories and commercial establishments.
Wages and Salaries
The minimum wage rates set by the government are
comparatively lower than the going wage rates for workers in
SAARC and other countries of the region. Salaries of middle
management executives, technical grade officers, engineers
and other professionals are generally lower than in other
developing countries. Permanent employees of a factory should
contribute 10 percent of the monthly salary to a provident fund
and the management should make a matching contribution.
Gratuities are payable to workers who have worked for over 3
years.
Working Hours, Holidays
Normal working hours are fixed at 48 hours per week, 8 hours a
day. Continuous working hours should not exceed 5 hours.
There should be a break of half an hour. Overtime work is
remunerated at one and a half times the normal wage. In
addition to 13 public holidays, permanent workers are entitled
to one day's home leave for every 20 days, 15 days medical
leave with half pay and one month special leave without pay
every year. Female employees are entitled to 52 days
maternity leave with full pay. Such maternity leave shall be
granted only twice during the entire period of service. The
compulsory retiring age for workers is 55. However, in the case
of a skilled worker whose service is indispensable, the
retirement age could be extended upto 60 years.
Industrial Policy 2010: Good but inadequate reform

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Despite the never-ending political uncertainty, something good
happened in the economic policy front. A long-awaited industrial
policy (IP) to buttress the domestic industrial sector was endorsed
by the government two weeks ago. This new IP replaced the
outdated IP of 1992.
The main objectives of the new IP are to promote industrial activity,
increase employment generation, and boost per capita income. The
government hopes to increase contribution of the industrial sector
to the economy and expects a reduction in poverty. Though the new
IP has numerous progressive and encouraging policy agendas, it is
also riddled with loopholes and inconsistencies. It looks like a typical
government document formulated without adequate consultation
with associated parties and without prior appraisal by independent
agencies.
The new IP makes it clear that the 1992 IP did not do a good job in
promoting the industrial sector. The contribution of the industrial
sector to GDP is decreasing, especially after the start of Maoist
insurgency. Furthermore, it is paradoxical that the annual growth
rate of the industrial sector is declining after the implementation of
the 1992 IP. The dream of laying out a foundation for structural
transformation, thus absorbing surplus agricultural and unemployed
labor in the industrial sector, has remained a fairly tale.
Let me start with some of the salient features in the new IP. It
promises flexible labor policy, including the no-pay-for-no-work
principle. It allows easy exit from business for promoters, freeing
them from long-term labor and other liabilities. Tax and income
rebate incentives and easy credit are offered to export-oriented
firms. It promises tax holidays for 10, 7, and 5 years to firms that
invest respectively in highly underdeveloped (21 districts),
undeveloped (15 districts) and less developed (24 districts) areas.
As always, it aims to promote Special Economic Zones (SEZs) and
institute one-window policy for all industrial activities.
It aims to promote value-added industries and facilitate supply and
adoption of new technology to increase production and productivity.
The government promises to purchase goods that are produced by
domestic firms if there is 30 percent value-addition in the final
product. Furthermore, it offers to establish a bunch of bureaucratic
organizations to promote trade. It aims to upgrade technical and
skill-related aspects of the existing administrations related to the
industrial sector.

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Though the new Industrial Policy has numerous progressive and
encouraging policy agendas, it is also riddled with loopholes and
inconsistencies. It is formulated without adequate consultation with
associated parties.
Great! It looks like a good IP, at least better than the previous one.
However, there are some inconsistencies and poorly-formulated
plans that are worth mentioning. The document is indecisive in
identifying the priority sectors, is ambiguous, and might distort
incentives instead of enhancing them. Let me explain.
Despite numerous incentives, the IP is not clear if the overall
strategy is either to lead the market or to follow the market or to
do both. There is a danger that it might end up being an importsubstituting policy in some sectors rather than promoting and
sustaining competitive-edge of our industries. This is evident from
the governments willingness to impose anti-dumping duty and
countervailing duty (CVD) on imports. If we injudiciously impose
tariff and non-tariff barriers, then other countries might follow suit,
especially on our exports. It will have negative impact on some
sectors, as was seen when India imposed CVD, which it repealed
recently, of 4 percent on Nepali exports. The most troubling aspect
is the absence of sunset clauses in most of the proposed incentives.
It might foster the dependence of the industrial sector on seemingly
perennial concessions from the government.
There is no clear-cut identification and preference of industries
based on national priority. The whole exercise looks like a spray-gun
strategy trying to encompass everything under the roof of the
industrial sector. Since the economy is resource constrained, both
financially and in human capital, it should have promoted the
industries that matters the most. It means tackling the binding
constraints
head
on.
Our biggest constraint on economic growth is a lack of
infrastructure, chiefly transport, energy and communication. The IP
should have given utmost priority to addressing this constraint. This
sector would be an obvious winner with very little distortion of
incentives. Why? Because domestic demand for infrastructure,
energy and communication is higher than supply, offering a huge

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potential profitable markets. Moreover, there is tremendous demand
for energy from neighboring Indian states. Bhutan is following this
strategy and is growing at a phenomenal rate. There is no reason
why we cannot do it.
The proposed one-village-one-product strategy seems nonsense,
politically-charged and populist policy. It is a catchy slogan which
basically means one village specializing in one product. This
discounts the possibility of creating synergies among production
processes and techniques, i.e. very little possibility for economies of
scale and harmonization of products and production structure. How
are we going to decide a product each village will specialize in?
Similarly, will there be enough resources, financial and human
capital, to bring about such specialization? This kind of open-ended
and wooly strategy dilutes the very purpose of having a welldirected, specific and incentive-enhancing IP.
It offers varying incentives to industries willing to operate in less
developed districts. This will not lead us much far because
businesses, by nature, try to concentrate in places where their
counterparts and complementary industries are operating. A firm
will be disinclined to operate in less developed districts despite offer
of good incentives, which might not offset the increase in cost of
production incurred by operating in less developed areas. Simply
constructing roads up to factory sites wont suffice for the promotion
of industries in rural areas.
Furthermore, rather than coming up with brand new programs, it
would had been better to upgrade or overhaul the existing ones
such as the promotion of the IT park, expediting the establishment
of SEZs, and importing technologies to update the outdated
technological base of the industrial sector.
There are endogenous and exogenous variables contributing to the
decline of the industrial sector. The endogenous variables are utter
ignorance and lack of domestic firms to increase price and quality
competitiveness of products, and a habit of doing business under
others tutelage rather than their own intellect and sound
management. The business community relied more on concessions,
of various nature and degree, derived by coaxing politicians rather
than banking on their own ability to discover the potential to intrude
and expand in new markets. This habit and nature of doing business

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became self-reinforcing once the nexus between business
community and politicians became stronger. Additionally, it choked
product specialization and diversification, further necessitating the
need to seek political blessing for survival in the competitive
market. It was evident from the failure of numerous export-oriented
firms, the most infamous being the textiles and garment industry.
The most binding constraints on industrial activity are the
exogenous variables such as lack of infrastructure and energy,
deficient human resources, deteriorating labor and industrial
relations, political instability and policy inconsistency. The state has
to address these constraints decisively. Else, the IPs effectiveness
will be very minimal.
Published on 2010-05-29 02:23:04

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Unit 4
Industrial Dispute and Grievance
Concept, feature, causes, classification and manifestations of industrial disputes;

Methods of prevention(joint management council, work committee, grievance
handling, code of discipline, code of conduct, profit- sharing and statutory methods)
and settlement (collective bargaining, conciliation, arbitration and adjudication) of
industrial disputes with reference to Nepal.
Concept of Industrial Disputes
An industrial dispute is a clash or difference in opinion between the management and
workers of a corporation or industry as a whole. A trade union, which acts as the
representative of workers, plays an important part in initiating as well as resolving an
industrial dispute. Certain factors that lead to industrial dispute are wages, working
conditions and working hours. Both management and workers use various tools and
techniques to pressurize each other. For instance, while the management may opt for
lockouts, workers resort to strikes and gheraos. Similarly, various methods are
adopted to ease the tension in the employee-employer relationship; important among
them.
It is three party relationships. These parties participate in reaching a consensus or
peace pertaining to the matters of industrial dispute. The three participants are the
trade union, employer and the government, which conduct meetings to review all
aspects of a situation, advice one another and try reaching a consensus.
The government plays the most important part in this process; it initiates in bringing
the management and representatives of workers on the same platform. The Annual
Labor Conference is the chief instrument for it. It initiated proposals like worker
participation in management, worker education and minimum wages legislation.
Causes of Industrial Dispute
The causes of industrial disputes can be broadly classified into two categories:
economic and non-economic causes. The economic causes will include issues relating
to compensation like wages, bonus, allowances, and conditions for work, working
hours, leave and holidays without pay, unjust layoffs and retrenchments. The non

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economic factors will include victimization of workers, ill treatment by staff
members, sympathetic strikes, political factors, indiscipline etc.
Economic causes:
The most common causes of industrial disputes are economic causes. These are
follows:
Demand for higher Wages: Raise in the cost of living forces the workers to demand
more wages to meet the rising cost of living index and to increase their standards of
living. This brings them into conflict with their employers who are never willing to
pay more wages to workers.
Demand for Allowances and Bonus: Increase in cost of living was the main cause of
the demand of certain allowance such as; dearness, house, medical, night shift,
transportation allowance etc; by the workers to equate their wages with the rise of
prices. Bonus also plays an important role as a cause of industrial dispute. Both the
amount and the method of bonus payment have led to a number of disputes.
High Industrial Profits: In the changing world, concept of labour has changed
considerably. At the present, employers consider themselves as a partner of the
industry and demand their share in the profits.
Over Time Payment: The employees demand over-time payment as prescribed in the
factory act. But the employer either does not make any payment or makes underpayment. This causes frustration among employees and they resort to agitations.
Non- Economic Causes
Working Conditions and Working Hours: The working conditions in Nepal
industries are not hygienic. There is not ample provision of water, heating, lighting,
safety etc. On the other hand, working hours are also greater. The demand of palatable
working conditions and shorter hours of work led to labour disputes
Modernization and Automation of Plant and Machinery: The attempt at
modernization and introduction of automatic machinery to replace labour has been the
major cause of disputes.Workers goes on strike, off and on, to resist such
rationalization.
Demand for proper leave Rules: The employers want that leave rules and working
hours should as laid down in factory act. No worker should be forced to work more

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than 48 hours or more in a week. However, generally employers ignore these rules
which results in industrial dispute.
Punishment to Workers: Sometimes, the employer adopts dictational policy and
victimises the employers by suspending or dismissing them from services. In order to
get the victimisation redressed the employees resort to agitational approach. This
disturbs the industrial peace.
Mass retrenchment & undue promotions: One major cause of industrial dispute is
the mass retrenchment and undue promotions of the employees. The employees start
agitation to show their resentment against the callous or heartless attitude of the
management.
Insecurity of Service: In Nepal, the employment opportunities are very fixed. The
employees want security of service. If the employer does not meet with their demand
they adopt agitational approach.
Wrong policy or decision: Sometimes, the policy or decision taken by the
management is determined to the interests of employees. This causes frustration
among the employees and they went to agitational approach in bid to put pressure on
the management to withdraw the wrong decision.
Bad Behaviour: The pre-requisite of industrial peace is the cordial relations between
the employer and employees. If the behaviour of the management is bad towards the
employees, good will disappears and dispute arises.
None addressed of grievances: The employees place their grievances before the
management time and again. If their genuine grievances are not removed or properly
attended, it gives rise to frustration and ultimately a dispute.
Personnel Causes: Sometime industrial disputes arise because of personnel problems
like dismissal, retrenchment/reduction of expenditure, layoff, transfer, and promotion
etc.
Political Causes: Various political parties control trade unions in Nepal. In many
cases, their leadership vests in hands of persons who are more interested in achieving
their political interests rather than the interests of the workers.
Indiscipline: Industrial disputes also take place because of indiscipline and violation
on part of the workforce. The managements to curb indiscipline and violence resort to
lockouts

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Non-reorganization of trade unions: The employers usually do not like the
interference by trade unions. They do not recognize them. This brings the workers
into conflict with their employers.
Weakness of Trade Unions: Weaknesses of trade unions encourages the management
to deny certain basic needs of the workers such as medical, education and housing
facilities etc. This led to resentment on the part of workers who resorted to direct
action.
Miscellaneous causes: Behaviour of supervisors, Lack of proper communication
between management and workers, rumours or gossip spread out by trade union,
Inter-trade union rivalry or competition etc; are the other causes that cause dispute
between management and employers.

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Manifestation of Industrial Dispute

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Manifestation of individual and

organized group
Manifestation of organized group
Manifestation
of unions
Non
Cooperation
Manifestation of
Management
Unwillingness
to negotiate
Arguements
Termination
Hostility
Demotion
Stresses and
Tensions
Unwillingness to
negotiate
Worker
Unorganized
withholding of efforts
Intentional waste
and inefficiency
Management
Autocratic
supervision
Over- strict
discipline
Labor turnover
Penalties
Absenteeism
complaints
Unnecessary firing
Instances of
breaking of rules
Demotion
Lay-offs
Lockouts
Resentment or
anger
Strikes
Lay- offs
Absenteeism
Work- to - rule
Demostration Morcha, Gherao

Loss of Production
Strike
Lockouts

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Dispute Settlement Process

The Process of dispute settlement includes conciliation, arbitration and adjudication
with the objective of promoting relations between workers and management. Below
are presented the steps of the dispute settlement process
In the below figure, the employer and employees enter into dispute if they fail to settle
it in a timely manner. In such a situation, the role of a conciliation officer (a mediator
appointed by the government for the settlement of dispute) becomes important. In the
above figure, the first step is the state of employers and employees entering into
disputes after their difference in the settlement process. By way of conciliation, both
the employer and employees will come together to settle the dispute. However, the
conciliator has the right to make the final decision on the disputed issue. In fact, the
power of the conciliator is not mandatory but strictly recommendatory. If the
conciliators succeeds in making the parties agree, his work is over after the mutual
Industry
signature on the papers of dispute settlement
by the employer and employees. If not,
he or she submits a report to the government with the reasons for disagreement.
Employer
Workers
Industry
Mutually settle
(agreement)
Fail to settle
Conciliation
Officer
Fails
Succeeds
(settlement)
Appropriate
government
Does not refer
(Parties free to lock
out or strike)
Labour
Court
Industrial
Tribunal
Award
Refers for
adjudication out or
strike)
National
tribunal

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Methods of Prevention of industrial Disputes

In our labour administrative structure the Ministry of Labour is an apex body, which
is responsible for policy formation. Another important central body is the Department
of Labour which implement of labour policies and execution of labour legislation. At
the bottom, there are 10 zonal level labour offices. These offices play crucial and vital
role in the settlement of labour disputes.
Prevention of Labour Disputes
According to the Labour Act and Rules of Nepal the legal provisions and procedures
for prevention of disputes have been set out as below;
a. Formation of clear and suitable labour policy and legislation.
b. Maintaining
machinery
competent
dispute
settlement
institutional
c. Promotion labour management relation at the plant level and

encourage worker participation at the plant level
Labour Disputes Settlement Procedure
There are various formal and informal methods of disputes settlement. Among them
negation, conciliation and mediation are informal method. Similarly arbitration and
adjudication are formal method. We are going to discuss about these method one by
one.

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Negotiation
In this procedure, concerned parties sit together and negotiate or exchange dialogues n
order to reach to an agreement or to settle the disputes. Labour Act, 1992 sec. 74(2)
provided the process of negotiation. If the dispute could not settle through the sec.
74(2) then the dispute shall be solved within 15 days holding bilateral discussions in
the presence of Labour Officer according to sec 75(3).
Conciliation and Mediation
In this process third party provides assistance to employers and workers in case of a
dispute between them. Third party cannot be imposed to get consensus but facilitation
disputing parties. In conciliation, the third party brings the parties to dispute together,
encourages them to discuss on their differences and assist them to come to their own
solution. In mediation, the mediator is more active and submits his own proposal for
settlement of the disputes to both parties but they are free to refuse or accept these
proposals putting by mediator.
Arbitration
Arbitration is a process whereby a third party takes a final decision on a dispute. If the
conciliation fails either one of the party or both can seek arbitration. Similarly any one
of the two parties involved which is not willing to settle the dispute through
conciliation can take recourse to arbitration. The recourse to arbitration can be
voluntary or compulsory. According to sec. 74(4) of Labour Act, 1992 tripartite
committee constitute with the consent of both parties by Nepal Government having
equal representation from the workers, employers and the government. The mediator
of the committee so appointed shall decide on the dispute within 15 days.
Adjudication
Adjudication is a judicial process of dispute settlement involving labour courts,
industrial tribunals and national tribunals. When all the above efforts have failed the
solutions through adjudication are sought to the disputes. Under adjudication the
disputes are settled though labour courts and industrial tribunals and national
tribunals.
1. Establishment of a labour court: The Labour Act 1992(2048) made a
provision for constituting a labour court to settle dispute between workers and
their company. The court may proceed against its contempt and if contempt is

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established, it may punish the accused with a fine of up to Rs 5000 or an
imprisonment of up to two months or both. However, if the accused satisfied
the court it may grant pardon or reduce the amount of punishment or suspend
punishment.
2. Filing personal claims: If one or more workers have any complaint against
the company relating to their jobs or services, they may submit it in writing to
the company's management. Once such a complaint is filed, the company has
to call the concerned worker or employee for discussion on the complaint
within 15 days of its submission to resolve the problem.
If the problem could not be resolved within 15 days of submission the workers
or employees may file a petition in the Labour Office specifying their claims
in detail. The Labour Office has to solve the dispute within 15 days from the
date of filing a petition by means of bilateral discussion between the proprietor
and workers' representatives. If, even after the bilateral discussion and with the
involvement of Labour office, the dispute is not settled, the Chief of the
concerned Labour Office has to decide on the dispute within the next 7 days.
If any party concerned is not satisfied with the decision of the Chief, it may
appeal before the Labour Court within 35 days from the date of the service of
notice of the decision.
3. Filing collective claim: At least fifty one percent of the workers or employees
have to sign their claims relating to collective right, interest and facilities and
submit such claims in writing to the concerned proprietors. While filing a
collective claim, workers have to clearly state the name of their
representatives.
Upon receipt of the claim relating to the dispute, the proprietor shall hold
bilateral discussions with the workers' representatives and try to solve the
problem within 21 days and shall enter into an agreement. If the bilateral
discussion fails to resolve the dispute, it shall be resolved within 15 days by
holding bipartite discussions in the presence of Labour Office.
If, even after the involvement of labour Office, the dispute is not settled, it
may be referred to an arbitrator appointed with mutual consent of the company
and workers, if any difficulty arises with the mutual consent of both the
parties. The tripartite committee comprises equal representation of the
company, workers and Government.

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The arbitrator or tripartite committee has to give its decision with in 15 days.
If any party is not satisfied with the decision, it may appeal to HMG within 35
days from the service of the notice of such a decision. In case, the arbitrator or
tripartite committee does not give its decision within 15 days or in case HMG
does not decide on the appeal within 60 days from the date of filing the appeal,
the workers or employees may call strike.
4. Right to strike : If the dispute is not settled, the workers can decide to go on
strike, However, prior to this, a notice in writing stating the claim and its
rationale, including a resolution passed by at least 60 percent of the total
workers through secret ballot, shall have to be provided to the concerned
proprietor thirty days in advance. This notice will also be provided to the
Department of Labour, Labour office and Office of the Local Administration.
5. Lockout : Employers also have the right to lock out their organizations if the
collective dispute is not solved. They can lock out their organizations after
submitting their justification and obtaining the approval of His Majesty's
government. However, before declaring a lockout, a company has to issue a
notice for information of all workers and employees at least 7 days in advance,
specifying the date of the lockout being effective and announcing that the
enterprise shall be locked-out if the strike is not called off .
Concept of Grievance
A grievance is a formal expression of dissatisfaction about a work situation usually by
an individual employee, but it may sometimes be initiated by a group of employees or
a union acting on their behalf.
Causes of Grievance
Following are the cause of grievance;
Promotion
continuity of service
compensation
disciplinary action
fines
increments
leave
medical benefits
nature of job
payment
acting promotion

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recovery of dues
safety appliances
transfer
victimization
condition of work
Grievance procedure
Grievance procedures are formal and agreed procedures that an employer and his or
her employees or representatives have agreed to follow to deal with or resolve
workplace problems. Grievance procedures may be set out as a provision in an award
or agreement, but there may also be an internally developed procedure. Grievance
procedures are based on the principle of natural justice and it is recognized as good
business sense to have effective grievance procedures.

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Following of the Outcomes of Grievance Procedure
A peaceful method of conflict resolution to reduce industrial action and

provide greater stability
Quick and effective results
Improved communications and working relationships
Employee participation and consultation in the workplace
Increased productivity and efficiency of the organization
Resolution of problems with workplace change programs
Better emotional well-being, performance and morale of employees
Avoidance of the costs and delays of going to the tribunal
Natural justice for employees.
Features of a good grievance procedure

Complaints must be fully described by the person with the grievance
The person(s) should be given the full details of the allegation(s) against them
The person(s) against whom the grievance/complaint is made should have the
opportunity and be given a reasonable time to put their side of the story before
resolution is attempted
Proceedings should be conducted honestly, fairly and without bias
Proceedings should not be unduly delayed.
How to handle a grievance
Deal with the grievance promptly: Initiate discussion quickly, investigate and
double check all the facts.
Be accessible: Make sure staff understands the grievance procedure and how it works.
Informality: Discuss the issue in a non-threatening environment. No-one should
receive a printed form letter in response to a problem. Remember, when such a letter
is perceived as "legal", your employee may feel they need "legal" assistance.
Be consistent: Policies and procedures must apply equally to all staff.
Admit errors: If you have acted incorrectly or inappropriately say so! Then fix the
problem
Closure: Decide your response/action and give a full explanation. This allows the
matter to be finalized.
Learn from it: Resolving the grievance should give you practical insight into dealing
with such situation (and possibly others) in the future.
Handling Grievances or Grievance Procedures
Handling grievance is important for both unionised and non unionized organizations.
Tn unionized organizations the union and management agree on the grievance
procedures. A formal grievance handling procedure is presented below

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Arbitrator
Top
management
Employee grievance
Committee, national
Union representative
Middle management
And labour relations
specialist
Employee, union,
grievance committee
Employee union steward
Supervisor
Aggrieved
employee
1.
Contact supervisor: When there is any problem about any employment

related issue an employee first contacts his or her supervisor with the help of the
union steward. They discuss the grievance and try to solve it on the shop floor.
This is some sort of informal discussion if the grievance is not settled with
agreement in this step; the next step will be effective.
2.
Meet with management and labour relation specialist: At this step the
employee together with union specialist meets with the management. They try to
reach an agreement after discussion the issue.
3.
Meeting between union executives and top management: When the

concerned manager fails to reach an agreement, the complaint can enter into the
third step of grievance procedure. At this step top management and union
executives sit together to reach an agreement. Because of the authority of the top
management to make decisions, there is possibility of setting complaints at this
level.
4.
Arbitration: This is the final step where an independent arbitrator mediates

between management and employees. The mediator goes through the rules to

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handle grievance to settle it in a way acceptable to all parties involved. He or her
may be appointed by the government or by other private agencies.
Employee Discipline
All managers have to deal with some employees/workers who frequently remain
absent from the jobs, drink on the job, are insubordinate, steal Company , property,
show habitual tardiness, fight and commit other serious offences on the job. These
problems lead to disciplinary actions to control such undesirable behaviours at work.
There are a number of definitions and views regarding discipline in an organization.
According to Dessler, A procedure (discipline) that corrects or punishes a
subordinate a rule or procedure has been violated.
According to Beach, Discipline involves the conditioning or moulding of behaviours
by applying rewards or penalties.
The term discipline refers to a condition in the organization when employees
conduct themselves in accordance with the organizational rules and standards of
accountable.
Unfortunately in our culture many people interpret discipline as punishment. But it
doesnt always need to be punishment. The problem solving nature of constructive
discipline differentiates it from punitive discipline. As such constructive discipline is
designed to be a learning process that provides an opportunity for positive growth.
Effective managers use constructive discipline when people slip in readiness. Heresy, Blanchard and Johnson
If employees can be self-disciplined there is no necessity for an extrinsic disciplinary
process. However, in each organization there may be some employees whose
behaviour does not conform to the norms and values of the organization. Thus, the
need for extrinsic disciplinary action arises. The main purpose of discipline is to
encourage employees to behave in the way that makes sense at work. As outlined
above to enforce discipline, managers can use either reward (constructive) or
punishment (punitive). The most effective discipline is to provide opportunity to the
employee for moulding his or her behaviour permanently. However punishment is a
short-term approach of moulding employees undesirable behaviour because they may
repeat that behaviour again and again and create employee relation problems at work.
Types of discipline Problems
Disciplinary problems are grouped into four categories:

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1. Attendance related:
Habitual tardiness
Unexcused absences
Failure to report accidental injury
Leaving job area without prior notice
Abuse of sick leaves
Most of the managers face attendance related problems of discipline from their
employees. The reasons for attendance problem are;
failing to align individual goals with the organizational goals;
Thanking that employment is for just passing the time and not the central life
interest of the employee;
No fear of dismissal as a result of being a union member.
2. On-the-job misbehaviours:
Fighting
Horseplay or rough and tumble
Gambling
Sleeping on the job
Smoking in the workplace
Failure to obey safety rule
conceal one's defective work
Arriving at work drunk
Work output below standard
Excessive defective work due to employee's own error
The use of drug
Attacking fellow employees with intent to seriously injure.
3. Dishonesty
Unauthorized selling of company property
Stealing
Malicious damage or destruction of companys property

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Deliberate falsification of company records
Promotion of gambling on company property.
4. Outside activities
Involvement in unauthorized strikes
Criminal activities outside the job
Spying for competitor's benefits and leaking important information
Criticizing the management in public
Damaging the quality of work on the guidance of competing organizations.
These are the different offensive behaviours that create disciplinary problems in the
organization. What is important for a manager is to identify which are minor and
which are serious offences for the company and to handle them with proper skills.
After identifying the degree of seriousness of offences, the disciplinary action is
planned.
Causes of Indiscipline
There are number of causes of indiscipline at work. Some of these are briefly
presented below:
1. Lack of supervision: In the lack of effective supervision of the workers problem of
indiscipline can arise. It is the responsibility of every supervisor to comply workers
with workplace rules and regulations.
2. Violation of rights of employees: Employees must be treated with respect and be
allowed to express themselves or raise their voice, given rights to contribute to the
best of their abilities and the like. When these rights are violated by the organization
they feel dissatisfied that can cause indiscipline.
3. Absence of grievance handling and settlement machinery: If a company has no
proper mechanism to handle employees' grievances on time, will result indiscipline.
There must be a quick response for the settlement of any grievance that arises at the
work place.
4. Personnel problems: Any type of unfair personnel practice can result indiscipline
problem. Some examples of personnel problems are delay in promotion,
discrimination in salary and wages, unfair performance appraisal and the line are the
causes of indiscipline at work.

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5. Employer's attitudes: There are a number of obligations of an employer towards
its employees. Some of these obligations are for example providing healthy working
conditions, adequate tools and equipments, timely supply of raw materials and equal
pay for equal jobs. The breach of these obligations by the employers will lead to
indiscipline.
6. Lack of communication: A two-way communication between superior and
subordinate is essential to communicate essential issues and problems. In the lack of
an effective communication mechanism indiscipline will rise.
Administering or Manage Discipline
Administering discipline is a challenging job for a HR manager. There should be
adequate mechanisms to initiate disciplinary action against employees in the
organization. Some of these begin prior to the violation of rules and some come after
such violation. There are certain orderly procedures of administering discipline in the
organization. A brief discussion of such a procedure is discussed below.
Define disciplinary policies and procedure
Respond immediately
Provide warning
State the problem specifically
Allow the employee to explain his/her position
Keep discussion impersonal
Be consistent
Take progressive action
Obtain agreement on change
Define disciplinary policies and procedures: Top

management has to define its policies and procedure of disciplining employees
in the organization. In this process they have to clearly state what the expected
job behavior is and how they want to achieve this. All supervisors must be
sufficiently instructed regarding the rule and regulation, behavior expected
from employees, disciplinary punishment, and the employee's rights.
Respond immediately: However, even in the best

supervisory and managerial conditions, behavioral problems are possible,

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which might cause a violation of such rules and regulation. When a violation
occurs, managers have to respond quickly to discipline the employee.
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Provide a warning: Before initiating any disciplinary action,

managers have to provide a warning to check violation at source
State the problem specifically: Managers have to explain

clearly and specifically about time, date, place, individuals involved and any
mitigating circumstances surrounding the violation.
Allow the employee to explain his or her position: provide

an opportunity to the violator to explain why and how he or she behaves
undesirably. Managers have to listen carefully and try to understand his or her
problem.
Keep discussion impersonal: Manager must be concerned

with the type of violation, not with the personality of the violator.
Be consistent: The disciplinary action that a manager

chooses should be consistent for all employees. Inconsistency in enforcing the
rules for violation may damage a managers effectiveness.
Take progressive action: If a manager chooses penalties to

correct the repeated undesirable behavior, he or she to take a progressive
action. Thus, the manager starts with a verbal warning and then proceeds
through a written reprimand, suspension, a demotion or pay cut, and finally
dismissal.
Obtain agreement on change: Finally, the employee has to

convince the manager how he or she plans not to repeat the violation in the
future.
Disciplinary Actions
It include six progressive steps
Simple oral warning
Written warning
Suspension
Demotion
Pay cut
1.
Dismissal
Simple oral warning: An effective manager starts his or her reprimand

process by making a simple oral warning. When any violation is noticed the

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manager starts action by describing the rules and regulations and his expectation
together with informal oral warning. At the same time, the manager provides an
opportunity to the employee to suggest ways of improving the current
behaviour. If the manager thinks that the problem is solved with the behaviour
of the employee corrected, he or she assures the top management regarding the
understanding of rules by the concerned employee.
2.
Written warning: This is activated where there is a repetition of the offences

following oral warning, or where the offence is more serious. This is a formal
disciplining process in which a written warning letter is given and a copy of it
will be filed in the employee's personal file for a record. In this letter, a
description of the nature of violation, its effect and the result of such violation
are described to warn the concerned employee.
3.
Suspension: If and when previous written warnings have not been effective a
suspension notice is given to the employee concerned. The time for suspension
depends on the degree of violation. Depending on the nature of violation and its
effect on the organizations performance and image' the suspension may be for a
week or for a year without pay. Some organizations skip suspension for fear of
negative consequences for both the employee and company.
4.
Demotion: It is an alternative of a dismissal. Many organizations avoid

dismissal of employees because of its probable effect on the behaviour of coworkers. In such a case, the manager prefers to demote the concerned employee
if suspension has not been effective.
5.
Pay out: This is another alternative of a dismissal. Organizations do not want

to lose an employee who is experienced. Especially in the case of those
employees who are scare in the labour market, it is better to think in ways other
than dismissal. Pay cut although de-motivating for the employee concerned is an
appropriate way to reprimand an employee to correct his or her behaviour on the
job.
6.
Dismissal: As a final resort, dismissal is used when an employee fails to

comply with other disciplinary actions. However, for a gross misconduct where
the offence is very serious (eg theft, fraud, fighting and other serious
negligence), following an investigation, the employee may be dismissed with
going through the other steps.

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Unit 5
Collective Bargaining
Concept, feature, principles, types and process of collective of bargaining; Collective
bargaining in Nepal.
Concept
One of the motivations of employees to join unions is to strengthen group effort
bargain with the management in order to increase the pay and benefits, to improve the
working conditions and to handle other employment relation problems. Collective
bargaining is the main element of industrial relation/ employment relations. Outcomes

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of collective bargaining are not any effective for a unionized firm but they equally
have implication for the non-unionized firms, society and economy as a whole. For
example, when a new wage rate is determine thought the collective agreement of the
union representative and management, such agreement also affects non-unionized and
social organization. A few important defection of collective bargaining are presented
below.
A process by which the representatives of the organization meet and attempt to work
out a contract with representatives of the workers -Fossum,
The term collective bargaining refers to the negotiation, administration, and
interpretation of a written agreement between two parties that covers a specific
period of time.
-De Cenzo and Robbins
Generally, collective bargaining includes two type of interaction between
management and employees. First, interaction will be held to form a mutual
understanding at the of negotiating on the conditions of work .Secondly, it will be
held to solve conflict during the time of enforcing the mutual agreement. In other
words, collective bargaining is equally applicable to the day-to-day dealings between
management and employees. With the changes in the global industrial environment,
the nature of collective bargaining is also changing. Since competition is increasing, it
is regarded as the strategic tool of employment relation to link a firms strategic
activities with the workplace activities (communication, proper selection,
performance evaluation and so on).
Bargaining issues in Collective Bargaining
Collective bargaining is guided by the labour law of a country. There are mainly three
categories of bargaining issues.
1. Voluntary bargaining issues
2. Permissive bargaining issues
3. legal bargaining issues
Voluntary bargaining issues: To bargain collectively on some items, both the union
and management have to make a joint agreement. These items are; rates of pay,
wages, overtime pay, holidays, pensions, insurance benefits, profit sharing plans,
employee security, management union relationships and drug testing of employees.
No one party can force the other to bargain on these items.

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Permissive or liberal bargaining issues: There are the some items on which both
parties have to negotiate to reach an agreement. Such items are; pension rights, union
affairs, scope of the bargaining units, including supervisors in the contact, use of
union label, prices in cafeteria.
Legal bargaining issues: There are certain issues on which bargaining is forbidden.
There issues are; closed shop, separation of employees based on race and other
discriminatory treatment
Purposes of Collective Bargaining
Increasing salary and wages of employees, improving working conditions and
negotiating on the terms and conditions on employment relation matters are the
concerns of both employees and management. Both parties are to sit together to
decide on the issues in order to lead to effective relation. Furthermore, both parties
have to work on a day-to-day basis to implement their joint agreements. In the process
of implementing these agreements, their relations shall be further strengthened.
1.
Enhancing the quality of work life: Once labour and

management establish their relation, it will enhance the quality of work life. The
working environment will not be any communication barriers, the mechanism of
grievance handling will be established, predication at work will be enhanced and
labour and management will work co-operatively. Thus, collective bargaining
increases the quality of work and consequently increases productivity.
2.
Solving worker-management problems at source: The

proper mechanism of collective bargaining solves problems of employee relations
at source. A collective bargaining mechanism helps to recognize shop floor
problems, grievances and other operational issues. Once these problems are
recognized, workers and management sit together to solve them at source. This
will minimize the chances of conflict, arbitration and strike.
3.
Competitive advantage: In every organization, strategic

programs are in process at the different levels of the organization. For example if
an organization tries to be a low cost producer is to compete in the national
/international markets.
Types of Collective Bargaining

1.
Integrative bargaining: The purpose of integration bargaining is to create a

cooperative negotiating relationship that benefits both parties. In this situation,
both labour and management win rather than dace a win-lose situation, bargaining

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for new work setting and for quality-of-lose-life improvement presents examples
of integrative bargaining where both parties will benefit from the agreement.
2.
Distributive bargaining: This form of collective bargaining takes place

when labour and management are in disagreement over the issues in the proposed
contract, such as, wages, working conditions etc. In other words, in this type of
collective bargaining a gain for one side represents a loss to other. In this
bargaining process, each party involved tries to serve its best interest.
3.
Productivity bargaining: The main purpose of this form of bargaining is to

improve the effectiveness of the organization by eliminating work rules and
inefficient work methods that inhibit productivity. The productivity bargaining
assumes that if improved work methods are used, it helps it to increase
productivity and will secure the employment of people in organization.
4.
Attitudinal bargaining: When bargaining is related to the enhancement of

understanding between labour and management on the job, it is called attitudinal
bargaining. This type of bargaining is important in that it develops employment
relation at work by increasing the degree of friendliness, honesty, motivation and
interaction.
Collective Bargaining process

The process of collective bargaining is complex. Normally, steps in the process
depend on the county, specific legal provisions and the type of issue. Some of the
important steps in the collective process are the following;
1. Selection of representations for bargaining
2. Certification of representation
3. Presentation for negotiation
4. Negotiation
5. Contract administration
1. Selection of representatives for bargaining: The process of bargaining begins
with the selection of employee and management level union selects the
representatives from among its members who are vocal and can understand and
present the issues and can hold discussion with management in an effective
manner. Similarly, from the side of management, the chief of the HRM division
takes part in the bargaining. If the organization is too small, only the president or
general manager can bargain with the employee representatives. In big
originations, normally an industrial relations expert will represent the management
in bargaining with labour.

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2. Certification of representation: Once union representatives are selected, it is
necessary to legitimize their authority to bargain as per the provision of the
Labour Act or Trade Union Act by certification. Certification is usually made on
the authorising card. The greater the number of sing natures on the card, the
greater will be the chances for victory in the bargaining.
3. Preparation for negotiation: After the certification of the representatives, the
next step is the preparation for negotiation. Both management and labour
representations have to be involved in homework to develop their negotiation
skills. In this, both have to collect the information useful for developing such
skills. Normally, the union requires the following information in preparation for
negotiation:
The financial statements of the company and its ability to increase pay or other
facility,
The attitude of management towards the issues for bargaining,
The attitude and desire of the employees whom the union represents at
bargaining.
Similarly, management requires the following information to be prepared for

bargaining:
Unions issues of bargaining,

The economic affordability of the organization after the agreement on issues.
Qualitative and quantitative facts and finding for negotiating with the union.
4. Negotiation: After collecting information on various issues and after being

prepared to go on collective bargaining, the negotiation process begins. Both the
representatives from management and the union sit together with a list of issues
and demands. Such demands might be related to wages, working conditions, and
increase in the percentage of bonuses, shop floor management problems and
changes in the work process driven by new work technology. Each party has to
listen to the others proposals and priorities of demands. There will be discussion
between the parties to reach a satisfactory settlement. In the process of
negotiation, union representatives try to push their demands; the management tries
to convince the other side about their resource constraints and about reaching
desired agreement. However, the final outcome of negotiation may be either a
mutual agreement or disagreement. In case they fail to agree, a third party may
enter into the negotiation and it is known as an arbitrator or moderator. The final
result of the disagreement will be to go on strike from the side of labour, whereas,
from the managements side, it is to lock out the organization.

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5. Contract administration: Once the negotiation is completed and both parties
agree upon issues and actions, the final step is the signing of the agreement and its
ratification for the implementation of the contract. However, in the process of
administering the contact in practice, there are chances of disputes between the
management and employees. Thus, all have to follow the procedure of
administering the contract. Any sort of dispute and complaint in the administration
and implementation process will be handled by following the agreed-upon
grievance procedure.

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Unit 6
Workers' Participation in Management
Concept, purpose and significance of participation; Forms of participation:
information sharing, consultation, association of workers, joint decision- making and
Board of Directors. Scenario of worker's participation in management in Nepal:
problems, prospects, legal provisions and present status.
Concept:
The concept of workers participation in management is considered as a mechanism
where workers have a say in the decision making process of an enterprise.
Participation basically means sharing the decision-making power with the lower ranks
of the organization in an appropriate manner. It is depending on the socio-political
environment and cultural conditions, the scope and contents of participation change.
It encourage for achieving social justice. From the point of view of social scientists,
participative management is one of the tools of management where the emphasis is on
the utility of a one of the tools of human approach. The experiments of Blake, Mayo,
Lewin and Likert popularized the belief that if workers are given opportunities to
participate in the management process there could be positive gains to the
organizations effectiveness and morale.
Definition:
According to International Institute of Labour Studies: Worker's Participation in
Management (WPM) is the participation resulting from the practices which increase
the scope for employees share of influence in decision-making at different tiers of
organizational hierarch with concomitant/associated assumption of responsibility.
Similarly, International Labour Organization (ILO) define that, Workers participation
may broadly be taken to cover all terms of association of workers and their
representatives with the decision-making process, ranging from exchange of
information, consultations, decisions and negotiations, to more institutionalized forms
such as the presence of workers member on management or supervisory boards or
even management by workers themselves.
Basically, there are three groups of managerial decisions affecting the workers of any
industrial establishment. They are;
A. Economic decisions: Methods of manufacturing, automation, shutdown, layoffs, and mergers.
B. Personnel decisions: Recruitment and selection, promotions, demotions,
transfers, grievance settlement, work distribution
C. Social decisions: Hours of work, welfare measures, questions affecting work
rules and conduct of individual workers safety, health, and sanitation and
noise control.

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Objectives and Important:
Following of the fundamental objectives and important of WPM;
Objectives
An instrument for increasing the efficiency of enterprises and establishing
harmonious relations;
A device for developing social education for promoting solidarity among
workers and for tapping human talents;
A means for achieving industrial peace and harmony which leads to higher
productivity and increased production;
A humanitarian act, elevating the status of a worker in the society;
An ideological way of developing self-management and promoting industrial
democracy,
To improve the quality of working life by allowing the workers greater
influence and involvement in work and satisfaction obtained from work;
To secure the mutual co-operation of employees and employers in achieving
industrial peace; greater efficiency and productivity in the interest of the
enterprise, the workers, the consumers and the nation.
Important
Unique motivational power and a great psychological value.
Peace and harmony between workers and management.
Workers get to see how their actions would contribute to the overall growth of
the company.
They tend to view the decisions as `their own and are more enthusiastic in
their implementation.
Participation makes them more responsible.
They become more willing to take initiative and come out with cost-saving
suggestions and growth-oriented ideas.
Significance of Workers Participation:
1. Higher Productivity: The increased productivity is possible only when there will
fullest co-operation between labour and management. It has been found that poor
labour management relations do not encourage the workers to contribute anything
more than the minimum desirable to retain their jobs.
2. Greater Commitment: An important prerequisite for forge greater individual
commitment is the individuals involvement and opportunity to express him.
Participation allows individuals to express themselves at the work place rather
than being absorbed into a complex system of rules, procedures and systems. If an
individual knows that he can express his opinion and ideas, a personal sense of
gratification and involvement takes place within him.

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3. Reduced Industrial Unrest. Industrial conflict is a struggle between two
organized groups, which are motivated by the belief that their respective interests
are rare by the self-interested behaviour of the other. Participation cuts at the very
root of industrial conflict. It tries to remove or at least minimize the diverse and
conflicting interests between the parties, by substituting it with cooperation,
homogeneity and common interests. Both sides are integrated and decision arrived
at are mutual rather than individual.
4. Improved Decisions. Communication is never a one way process. Participation
tends to break down the barriers, and makes the information available to
managers. To the extent such information changes the decisions; the quality of
decisions is improved.
5. Human Resource Development. Participation provides education to workers in
the management of industry. It fosters initiative and creativity among them. It
develops a sense of responsibility. Informal leaders get an opportunity to reinforce
their position and status by playing an active role in decision-making and by
inducing the members of the group to abide by them.
6. Reduced Resistance to Change. Generally, changes are arbitrarily introduced
from above without explanation. Subordinates tend to feel insecure and take
counter measures aimed at disruption of changes. But when they have participated
in the decision making process, they have had an opportunity to be heard. They
know what to expect and why. Their resistance to change is reduced.
Form of participation:
Workers participation in management falls into several categories. It depend on the
various socio-legal, political, economic environment. There is some form of
participation. They are;
A. Informative: Participation there is a sharing of information- for instance the
information regarding production figures, the balance sheet of the company,
economic condition etc.
B. Consultative: Participation of workers representatives is consulted on matter
relating to wale fare facilities by the management.
C. Associative: Participation management accepts the suggestion of the council
for solving a problem on hand.
D. Administrative: Participation management the decision is already taken and
councils have the right to choose the method of implementing it.
E. Decisive participation. Finally decisive participation is the highest form of
participation where all matters, economic, financial and administrative are
brought under the security of the council and the decision are taken jointly.

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Beside the above mentioned form of participation, following are the practice in the
field of industrial relation to participation.
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
Board level participation

Ownership participation
Complete control
Staff or work councils
Joint councils and committees
Job enlargement and enrichment
Suggestion schemes
Quality circles
Financial participation
Board level Participation: This is highest form of industrial democracy. The

workers representative on the Board can play a useful role in safeguarding the
interests of workers. He or she can serve as a guide and a control element. He or she
can prevail upon top management not to take measures that would be unpopular with
the employees. He or she can guide the Board members on matters of investment in
employee benefit schemes like housing, and so forth.
Ownership Participation: This involves making the workers shareholders of the
company by inducing them to buy equity shares. In many cases, advances and
financial assistance in the form of easy repayment options are extended to enable
employees to buy equity shares.
Participation through complete control: Workers acquire complete control of the
management through elected boards. It is a system of self-management. Selfmanagement gives complete control to workers to manage directly all aspects of
industries through their representatives.
Participation through Staff and Works Councils: Staff councils or works councils
are bodies on which the representation is entirely of the employees. There may be one
council for the entire organization or a hierarchy of councils. The employees of the
respective sections elect the members of the councils. Such councils play a varied
role. Their role ranges from seeking information on the managements intentions to a
full share in decision-making. Such councils have not enjoyed too much of success
because trade union leaders fear the wearing down of their power and prestige if such
workers bodies were to prevail.
Participation through Joint Councils and Committees: Joint councils are bodies
comprising representatives of employers and employees. This method sees a very
loose form of participation, as these councils are mostly consultative bodies. Work
committees are a legal requirement in industrial establishments. Such committees
discuss a wide range of topics connected to labour welfare.

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Participation through Collective Bargaining: Through the process of CB,
management and workers may reach collective agreement regarding rules for the
formulation and termination of the contract of employment, as well as conditions of
service in an establishment. Even though these agreements are not legally binding,
they do have some force. But in practice, while bargaining, each party tries to take
advantage of the other.
Participation through Job Enlargement and Job Enrichment: Excessive job
specialization that is seen as a by-product of mass production in industries, leads to
associated problems in employees. Two methods of job designing job enlargement
and job enrichment are seen as methods of addressing the problems. Job enlargement
means expanding the job content adding task elements horizontally.
Job enrichment means adding `motivators to the job to make it more rewarding. This
is WPM in that it offers freedom and scope to the workers to use their judgment. But
this form of participation is very basic as it provides only limited freedom to a worker
concerning the method of performing his/her job.
The worker has no say in other vital issues of concern to him issues such as job and
income security, welfare schemes and other policy decisions.
Participation through Suggestion Schemes: Employees views are invited and
reward is given for the best suggestion. With this scheme, the employees interest in
the problems of the organization is aroused and maintained. The ideas could range
from changes in inspection procedures to design changes, process simplification,
paper-work reduction and the like.
Participation through Quality Circles: Concept originated in Japan in the early
1960s and has now spread all over the world. A QC consists of seven to ten people
from the same work area who meet regularly to define, analyze, and solve quality and
related problems in their area. Training in problem-solving techniques is provided to
the members. QCs are said to provide quick, concrete, and impressive results when
correctly implemented.
Financial Participation: This method involves less consultations or even joint
decisions. Performance of the organization is linked to the performance of the
employee. The logic behind this is that if an employee has a financial stake in the
organization, he/she is likely to be more positively motivated and involved. Some
schemes of financial participation are as follows;
Profit-linked pay
Profit sharing and Employees Stock Option schemes
Pension-fund participation
Scenario of worker's participation in management in Nepal: problems,
prospects, legal provisions and present status
Industrial development and economic prosperity of the country is essential to secure
harmonious relationship between worker and management. Workers participation in

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management is the fundamental things for sustainability of industrial sector. The
philosophy of workers participation is based on the social justice and as such
attempts to symbolize collectively feeling, aspiration, emotion, imagination, own
feeling, etc. workers participation in management (WPM) permitting to workers to
keep their views in the various managerial aspects prior to making decision.
In our context, industries were gradually begun to establish from 1936 but there were
not single statutory provision. Our industrial environment was operated by the Indian
Factory Act. Still we are facing various problems regarding industrial relation among
the management and workers due to lack of proper statutory measures. First of all we
have to know that Nepalese attitude and development of industrial environment in
Nepal. Fundamentally, lack of statutory provision, role of labour organization,
management and workers attitude regarding WPM, worker ability, management
interest, socio economic, geographical and political system of the country are the
responsible for the WPM.
Socio economic background of the worker and ability of the worker plays vital role to
participate in management. Previously we had three large industries namely
Biratnagar Jute Mills, Sugar Mills and Cotton Mills. After analysis the situation of
these industries we can find out some points which were the obstacle for WPM. The
points were as follows;
Most of the workers were rural migrants
No previous work experience and most of the agricultural worker
Highly Illiterate
Majority of the worker was male
Large number of worker was non Nepalese
Skilled and highly skilled human resource was non Nepalese
Large of segment of management were non Nepalese
Above mentioned reality shows the scenario of the WPM in our context. In Nepal,
Factory and Factory Workers Act, 1959 make obligations to form works committee. It
called joint committee. It fails to fulfil the present demand of Nepalese industrial
community. Lack of specific objectives, limited scope, advisory nature of
participatory forum, role conflict between works committee and trade union etc. were
responsible factors which can hardly be eradicated in the present structure of joint
consultation. Still so many unnecessary things need to be changed. Now a days we
have labour law, trade union act but these are not perfect.
Lack of plant level labour union, absence of legislative measures for collective
bargaining, imperfect implementation of labour legislation, poor institutional
framework of works committee, non participative attitude of management, non
consideration of workers etc. are key problems of WPM in Nepalese industries.
Illiteracy, lack of education and training, absence of knowledge, unrecognized labour
force and negative attitude towards management etc. are poor characteristics of
Nepalese workers, which are the root causes of small performance of statutory
participative forum.

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At the present perspective to drive industrial ventures in right direction it is necessary
to offer a comprehensive labour law considering the political, economical and socio
cultural realities of the nation. The scheme of workers participation developed on
these realities of the country will make fullest contribution towards developing
harmonious relation between the management and the workers.
Unit 3: Trade Unionism

Concept, objectives of trade unions and methods of achieving the
objectives; Features and functions of trade unions; Types of trade
unions; Theories of trade unionism; Trade unionism in Nepal growth,
characteristics, present position and right and responsibilities.
Unit 4: Industrial Dispute and Grievance

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Concept, feature, causes, classification and manifestations of
industrial
disputes;
Methods
of
prevention(joint
management
council, work committee, grievance handling, code of discipline,

code of conduct, profit- sharing and statutory methods) and
settlement
(collective
bargaining,
conciliation,
arbitration
and
adjudication) of industrial disputes with reference to Nepal.

Unit 5: Collective Bargaining
Concept, feature, principles, types and process of collective of
bargaining; Collective bargaining in Nepal.
Unit 6: Workers' Participation in Management
Concept, purpose and significance of participation; Forms of
participation:
information
sharing,
consultation,
association
of
workers, joint decision- making and Board of Directors. Scenario of

worker's
participation
in
management
in
Nepal:
problems,
prospects, legal provisions and present status.

Unit 7: International Labor Organization (ILO) and Nepal
An Introduction to ILO: origin, objectives and structure of ILO; Role of

ILO in Nepalese labor development activities; Nepal's ratifications on
the conventions of ILO and adaptation of international labor
standards in its policies and laws.

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Industrial Relations MCP

Concept and purposes of industrial relations; Process of industrial relations; Actors

Introduction to Industrial Relations

Industrial Relations MCP

Industrial Relations MCP

Industrial Relations MCP

To safeguard the interest of labor and management by securing the highest

To avoid industrial conflict or strife and develop harmonious relations, which

To raise productivity to a higher level in an era of full employment by

To establish and promote the growth of an industrial democracy based on

To eliminate or minimize the number of strikes, lockouts and gheraos by

To improve the economic conditions of workers in the existing state of

Socialization of industries by making the state itself a major employer

Vesting of a proprietary interest of the workers in the industries in which they

Industrial Relations MCP

Industrial relations System

Industrial Relations MCP

Industrial Relations MCP

Independent external arbitrators should be used to assist in the resolution of

Union recognition should be encouraged and union representatives given

Weakness and contradiction inherent in the capitalist system would result in

Wages (cost to the capitalist) would be minimized to a subsistence level.

Industrial Relations MCP

Capitalists and workers would compete in controversy to win ground and

Measures for Improving Industrial Relations

Industrial Relations MCP

Formulated in consultation with the workers and their representatives if they

Clearly stated so that there is no confusion in the mind of anybody.

Implementation of the policies should be uniform throughout the

Industrial Relations MCP

to settle the industrial disputes in harmonious way,

In 1919, International labor organization (ILO) was established in the

Industrial Relations MCP

"Production process" means any of the following processes:

works relating to making, altering, repairing, ornamenting,

It means any factory, company, organization, association, firm, or

Industrial Relations MCP

Tea estates, established under the law for commercial

It means a person employed on the basis of remuneration to work in

"Proprietor" means the person having final authority on

" Remuneration" means the remuneration or wage to be

2. Employment and Security of Service

Sec. 3(1) deal classification of job. The Proprietor shall classify

The appointed shall be kept on probation period unless completes

Industrial Relations MCP

3. Prohibition of Engaging Non-Nepalese Citizens at Work

According to sec. 4A. of the Act, Non-Nepalese citizens shall

4. Appointment in Contract Service

According to sec. 7, need of Enterprise any person may be

5. Separate Registers to be Kept

Industrial Relations MCP

Sec. 15 said that the Proprietor may compulsorily retire any

Prohibition on Deduction of Remuneration

Industrial Relations MCP

In case it is required to deduct in respect of income tax or any other

Provisions Relating to Health and Safety

According to sec. 27, Proprietor shall make the arrangements in the

Industrial Relations MCP

Industrial Relations MCP

Industrial Relations MCP

Industrial Relations MCP

Trade Union Act, 2049 (1992)

Industrial Relations MCP

Autonomous and Corporate body