35  Industrial Relations

ImportantLearning Objectives

By the end of this chapter, the reader will be able to:

  1. Explain industrial relations as a broader concept beyond the Industrial Disputes Act, 1947, including the principal theoretical perspectives of unitarist, pluralist, and radical approaches.
  2. Identify the principal stakeholders in Indian industrial relations, including employers, workers, trade unions, employer organisations, and the state.
  3. Trace the historical evolution of Indian trade unionism from the early twentieth century through the post-Independence consolidation to the contemporary diversity of trade union federations.
  4. Explain the framework of collective bargaining in India, including the role of the Trade Unions Act, 1926, the recognition of unions, and the bargaining process.
  5. Identify the contemporary challenges facing Indian industrial relations, including the decline of formal trade unionism, the rise of the gig economy, the increasing workforce diversity, and the evolving regulatory framework under the Code on Industrial Relations, 2020.

35.1 Introduction

Chapter 34 introduced the Industrial Disputes Act, 1947 and its institutional architecture. This chapter takes a broader view, examining industrial relations as a substantive concept and as a field of study and practice. The treatment is structured around the theoretical perspectives, the principal stakeholders, the historical evolution, the framework of collective bargaining, and the contemporary challenges.

flowchart LR
    A["Industrial Relations"] --> B[Theoretical Perspectives]
    A --> C[Stakeholders]
    A --> D[Historical Evolution]
    A --> E[Collective Bargaining]
    A --> F[Contemporary Challenges]

    B --> B1[Unitarist]
    B --> B2[Pluralist]
    B --> B3[Radical]
    B --> B4[Systems Theory]

    C --> C1[Employers]
    C --> C2[Workers]
    C --> C3[Trade Unions]
    C --> C4[State]

    F --> F1[Decline of Formal Unionism]
    F --> F2[Gig Economy]
    F --> F3[Workforce Diversity]
    F --> F4[Code on Industrial Relations]

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35.2 Theoretical Perspectives on Industrial Relations

Industrial relations as an academic field has been shaped by several distinct theoretical perspectives. The principal perspectives are summarised below.

35.2.1 Unitarist Perspective

The unitarist perspective, associated with traditional management thought and elaborated in the work of Alan Fox in his 1966 paper Industrial Sociology and Industrial Relations, treats the enterprise as a unified entity with a common purpose. On this view, conflict between employers and workers is exceptional and reflects either misunderstanding (resolvable through better communication) or the activities of trouble-makers (resolvable through removal). Trade unions are viewed as outside agitators rather than as legitimate representatives of worker interests.

The unitarist perspective has been extensively criticised for its inadequate treatment of structural conflict but continues to inform some management practice, particularly in non-union settings.

35.2.2 Pluralist Perspective

NoteThe Pluralist Perspective

The pluralist perspective, also elaborated by Alan Fox in Beyond Contract: Work, Power and Trust Relations (1974) and by John Dunlop in Industrial Relations Systems (1958), treats the enterprise as comprising multiple groups with distinct interests, with conflict between groups treated as legitimate and to be managed through negotiation, collective bargaining, and institutional dispute resolution.

The pluralist view recognises trade unions as legitimate representatives of worker interests, treats collective bargaining as the principal mechanism for resolving conflicts of interest, and supports the institutional architecture for dispute resolution.

The Indian Industrial Disputes Act, 1947 framework substantially reflects the pluralist perspective.

35.2.3 Radical Perspective

The radical perspective, drawing on Marxist analysis and elaborated in the work of Richard Hyman in Industrial Relations: A Marxist Introduction (1975), treats industrial relations as one expression of the broader structural conflict between capital and labour. On this view, the institutional dispute resolution mechanisms (including collective bargaining and adjudication) operate within a fundamentally unequal framework that systematically favours capital, and substantive change requires transformation of the underlying economic structure.

The radical perspective has been influential in some Indian trade union thought but has been less consequential in shaping the formal regulatory framework.

35.2.4 Systems Theory

NoteDunlop’s Industrial Relations System

John Dunlop’s Industrial Relations Systems (1958) proposed a systems framework in which industrial relations comprises four elements:

  1. Actors — managers, workers, trade unions, employer associations, and government agencies;

  2. Contexts — the technological, market, and power contexts within which the actors operate;

  3. Ideology — the shared body of ideas and beliefs about the appropriate roles of the actors and the appropriate procedures for their interaction;

  4. Web of rules — the body of substantive and procedural rules that govern the workplace.

The systems framework provides an integrated analytical lens for examining industrial relations across different national contexts and over time.

The Dunlop framework remains the dominant theoretical foundation of contemporary industrial relations scholarship.

35.3 Principal Stakeholders

35.3.1 Employers and Employer Organisations

Employers are the principal counterparty in the industrial relations system. In India, employers are organised through several principal organisations:

  1. Confederation of Indian Industry (CII) — the largest national employer organisation, with sectoral and regional chapters;

  2. Federation of Indian Chambers of Commerce and Industry (FICCI) — the oldest national employer organisation;

  3. Associated Chambers of Commerce and Industry of India (ASSOCHAM) — focused on a broader business community;

  4. Sectoral organisations — including the Society of Indian Automobile Manufacturers, the Indian Textile Industry Federation, and many others;

  5. Regional employer organisations — operating at the state and city level.

The employer organisations engage with industrial relations through advocacy, collective representation in tripartite consultations, and support for member companies in negotiations and disputes.

35.3.2 Workers and Trade Unions

Workers are organised through trade unions, with the Indian trade union movement comprising several major federations affiliated with political parties or operating as independent federations:

  1. Indian National Trade Union Congress (INTUC) — affiliated with the Indian National Congress;

  2. All India Trade Union Congress (AITUC) — historically affiliated with the Communist Party of India;

  3. Centre of Indian Trade Unions (CITU) — affiliated with the Communist Party of India (Marxist);

  4. Bharatiya Mazdoor Sangh (BMS) — affiliated with the Bharatiya Janata Party and the Sangh Parivar;

  5. Hind Mazdoor Sabha (HMS) — independent socialist federation;

  6. Self-Employed Women’s Association (SEWA) — focused on unorganised women workers;

  7. Several other federations and independent unions.

The Indian trade union movement is characterised by its political diversity, the relatively small share of organised workers represented (approximately 5 to 10 per cent of the total workforce), and its concentration in the organised sector and in specific industries (textile, banking, transport, public sector).

35.3.3 The State

The state is the third principal stakeholder, performing roles of legislator (enacting labour laws), administrator (operating the inspection and adjudication machinery), employer (in the public sector), and policy-maker (shaping the broader framework). The state’s roles are exercised through the central and state governments, with substantial division of responsibility under the constitutional allocation between central, concurrent, and state subjects.

35.3.4 The Tripartite Framework

NoteThe Indian Tripartite Framework

Indian industrial relations operate within a tripartite framework involving employers, workers (typically through trade unions), and the state. The framework is institutionalised through:

  1. The Indian Labour Conference — the highest tripartite forum, comprising representatives of central and state governments, employers, and workers, meeting periodically to discuss labour policy;

  2. The Standing Labour Committee — a smaller standing tripartite body advising the central government on labour matters;

  3. Sectoral and regional tripartite bodies operating in specific industries and states.

The tripartite framework draws on the international tripartism of the International Labour Organization and is a distinctive feature of the Indian industrial relations system.

35.4 Historical Evolution of Indian Industrial Relations

35.4.1 The Pre-Independence Period

Indian trade unionism emerged in the early twentieth century, with the first major union being the Madras Labour Union founded in 1918. The All India Trade Union Congress (AITUC), established in 1920, was the first national federation. The Trade Unions Act, 1926 provided the first statutory framework for the registration and regulation of trade unions.

The pre-Independence period was characterised by substantial industrial unrest, the Bombay textile strikes of the 1920s and 1930s, the Royal Commission on Labour (1929-31), and the gradual expansion of trade union recognition.

35.4.2 The Post-Independence Consolidation

The post-Independence period (1947 to 1990) was characterised by:

  1. Expansion of the trade union movement, with INTUC formed in 1947, BMS in 1955, and CITU in 1970;

  2. Strengthening of the Industrial Disputes Act, 1947 framework through the major amendments of 1953, 1956, 1976, and 1982;

  3. Substantial industrial action, including major textile, transport, and engineering strikes;

  4. The emergency period (1975-77), during which trade union activity was substantially restricted;

  5. The progressive introduction of social security legislation alongside the industrial relations framework.

35.4.3 The Post-Liberalisation Period

The post-1991 economic liberalisation transformed the context of Indian industrial relations:

  1. The decline of the public sector as the dominant employer in the organised industrial segment;

  2. The growth of the services sector and the IT-enabled services segment, with limited trade union presence;

  3. The increasing share of contract, casual, and unorganised employment;

  4. The rise of the gig and platform economy after 2010;

  5. The Code on Industrial Relations, 2020 consolidation of the substantive framework.

TipIndian Trade Unionism Has Faced Substantial Structural Pressure

A practitioner observation worth emphasising is that Indian trade unionism has faced substantial structural pressure in the post-liberalisation period. The decline of the traditional industrial base, the growth of unorganised and contract employment, the rise of the IT sector with its non-union culture, and the emergence of the gig economy have all eroded the traditional union base. The contemporary trade union movement has responded with new strategies, including organising in unorganised sectors, engagement with platform workers, and policy advocacy through the tripartite framework.

35.5 Collective Bargaining in India

35.5.1 The Trade Unions Act, 1926

The Trade Unions Act, 1926 provides the foundational framework for the formation and operation of trade unions in India. The Act:

  1. Provides for the registration of trade unions;
  2. Specifies the rights and immunities of registered trade unions;
  3. Provides for the constitution of the executive of registered unions;
  4. Regulates the funds and accounts of registered unions;
  5. Provides for the dissolution and amalgamation of unions.

A registered trade union enjoys specific legal recognition, including the immunity of office-bearers from civil suit for acts done in furtherance of a trade dispute. The Trade Unions Act has been substantially preserved in the Code on Industrial Relations, 2020.

35.5.2 Recognition of Unions

A continuing weakness of the Indian framework has been the absence of a uniform statutory mechanism for the recognition of trade unions for the purposes of collective bargaining. The Industrial Disputes Act, 1947 and the Trade Unions Act, 1926 do not require employers to recognise particular unions, and the recognition framework has historically been left to state-specific legislation, employer policy, and voluntary practice.

The Code on Industrial Relations, 2020 introduces a formal recognition framework, providing for the negotiating union (where a single union has the support of 51 per cent of workmen) or the negotiating council (where multiple unions share representation), addressing one of the long-standing gaps in the Indian framework.

35.5.3 The Bargaining Process

NoteThe Stages of Collective Bargaining

  1. Preparation — both sides analyse the issues, develop positions, and prepare data;

  2. Negotiation — face-to-face discussion, exchange of proposals, and incremental movement towards agreement;

  3. Settlement — formal recording of the agreement, signed by representatives of both sides and (typically) the Conciliation Officer;

  4. Implementation — operationalisation of the agreement, with periodic review and adjustment;

  5. Renegotiation — typically every three to five years, depending on the term of the previous agreement.

The bargaining process operates within the framework of the Industrial Disputes Act, 1947, with conciliation, arbitration, and adjudication available as fallback mechanisms in case of breakdown.

35.5.4 Settlement Memoranda

Settlements arrived at through collective bargaining are typically formalised in settlement memoranda signed by the parties. Section 18 of the Industrial Disputes Act, 1947 distinguishes between settlements arrived at “in the course of conciliation proceedings” (binding on all workmen) and those arrived at “otherwise than in the course of conciliation proceedings” (binding only on the parties to the agreement and their nominees).

The distinction is significant because it determines the scope of the settlement’s binding force.

35.6 Contemporary Challenges

35.6.1 The Decline of Formal Trade Unionism

The share of the Indian workforce represented by formal trade unions has declined progressively over the past three decades. The reasons include:

  1. The decline of the traditional industrial base (textiles, engineering, and manufacturing) where unions were strong;

  2. The growth of the services sector with limited union presence;

  3. The increasing share of contract and casual employment, where union organising is more difficult;

  4. The fragmentation of the union movement across political affiliations.

The trend raises substantive questions about worker voice and representation in the contemporary economy.

35.6.2 The Gig and Platform Economy

The rise of the gig and platform economy has created a substantial workforce (estimated at several crore by 2024) that operates outside the traditional employee-employer framework. The classification of gig workers as independent contractors rather than employees excludes them from much of the industrial relations framework, including the Industrial Disputes Act, 1947.

The Code on Social Security, 2020 examined in Chapter 30 introduces specific provisions for gig and platform workers, but the broader question of their integration into the industrial relations framework remains open.

35.6.3 Workforce Diversity

The Indian workforce has become substantially more diverse over the past three decades, with increased participation by women, by workers from previously underrepresented regions and communities, and by workers with diverse educational backgrounds. The traditional industrial relations framework, designed around the male manufacturing worker of the mid-twentieth century, has not always adapted well to this diversity.

The Maternity Benefit Act, 1961 amendments of 2017, the Sexual Harassment Act, 2013, the Code on Wages, 2019 with its equal remuneration provisions, and other contemporary reforms address aspects of this diversity question, but substantive integration remains a continuing challenge.

35.6.4 The Code on Industrial Relations, 2020

The Code on Industrial Relations, 2020 consolidates the Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946. The Code introduces:

  1. Formal recognition of unions through the negotiating union or negotiating council framework;

  2. Raising of the retrenchment threshold from 100 to 300 workmen;

  3. Re-skilling fund for retrenched workers;

  4. Streamlined dispute resolution architecture;

  5. Refined definitions reflecting contemporary work patterns.

The Code’s substantive impact will become clear as it is fully implemented over the coming years.

35.7 Case Studies

35.7.1 Case Study 1: A Wage Settlement in a Public Sector Enterprise

A public sector engineering enterprise with 8,000 workers and four recognised trade unions enters into wage negotiations following the expiry of the previous five-year settlement. The negotiations involve representatives of the unions (with INTUC, BMS, AITUC, and CITU all having presence), management, and (in conciliation) the Conciliation Officer.

The negotiations focus on wage revision, dearness allowance, performance-linked variable pay, fixed allowances, working hours, leave, and grievance redressal. Each side prepares detailed positions supported by data on cost of living, comparable industry settlements, the enterprise’s financial position, and productivity benchmarks.

The negotiations extend over several months, with multiple rounds of discussion. Eventually a settlement is arrived at in the course of conciliation proceedings, signed by representatives of all four unions, management, and the Conciliation Officer. The settlement is binding on all 8,000 workers under Section 18.

Discussion Questions

  1. How should the management approach the negotiation when multiple unions with different political affiliations are involved?
  2. What features of the settlement should support its acceptance by the workforce and minimise the risk of subsequent dispute?
  3. How does the public-sector setting affect the dynamics of the negotiation compared to a private-sector setting?

35.7.2 Case Study 2: A Union Recognition Question

A new IT services company with 1,500 employees has not historically had union representation. A trade union begins organising employees and claims to represent more than 30 per cent of the workforce. The union seeks recognition by the company for collective bargaining.

Under the existing framework (pre-Code on Industrial Relations, 2020), the company is not legally required to recognise the union. The company’s response options range from voluntary recognition (potentially with a verification of membership), to engagement without formal recognition, to non-engagement.

The Code on Industrial Relations, 2020 introduces a more formal framework: the union with 51 per cent or more of workmen would be recognised as the negotiating union; multiple unions could form a negotiating council; the company would be required to engage with the recognised body.

Discussion Questions

  1. To what extent should companies in non-traditional segments such as IT services voluntarily recognise unions in advance of statutory compulsion?
  2. What features of the Code on Industrial Relations, 2020 negotiating union framework would change the company’s approach?
  3. How does the broader industrial relations strategy of the company interact with its talent management and corporate culture objectives?

35.7.3 Case Study 3: Gig Workers and Industrial Relations

A coalition of food delivery and ride-hailing platform workers organises and seeks recognition by the major aggregator platforms for collective bargaining. The platforms classify the workers as independent contractors and not as employees, and contend that the industrial relations framework does not apply to them.

The state of Karnataka has enacted the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024, providing specific protections for platform workers including a welfare fund financed by aggregator contributions. Other states have introduced or are considering similar legislation.

The substantive question is the extent to which platform workers can be brought within the protections of the industrial relations framework, given their distinctive working pattern. The Code on Social Security, 2020 provides social security coverage; the Code on Industrial Relations, 2020 has yet to address platform workers comprehensively.

Discussion Questions

  1. How should the worker-employer-customer relationship in the platform economy be characterised for the purposes of industrial relations regulation?
  2. What lessons does the Karnataka legislation offer for the broader Indian framework on platform worker protections?
  3. To what extent should the platforms voluntarily adopt practices supporting worker voice and collective representation in advance of statutory compulsion?

Summary

Concept Description
Theoretical Perspectives
Unitarist Perspective Treats enterprise as unified entity with common purpose; conflict viewed as exceptional, reflecting misunderstanding or trouble-making; trade unions viewed as outside agitators
Pluralist Perspective Treats enterprise as comprising multiple groups with distinct interests; conflict legitimate and managed through negotiation, collective bargaining, and institutional dispute resolution
Radical Perspective Treats industrial relations as expression of broader structural conflict between capital and labour; institutional mechanisms operate within unequal framework favouring capital
Dunlop Systems Theory Industrial relations as system comprising actors, contexts, ideology, and web of rules; dominant theoretical foundation of contemporary IR scholarship
Principal Stakeholders
Employers as Stakeholder Principal counterparty in industrial relations system; organised through national and sectoral employer organisations for collective representation
CII, FICCI, ASSOCHAM Confederation of Indian Industry (largest), Federation of Indian Chambers of Commerce and Industry (oldest), Associated Chambers of Commerce of India (broader business)
Workers as Stakeholder Organised through trade unions with several major federations, characterised by political diversity and concentration in organised sector
INTUC, AITUC, CITU, BMS, HMS, SEWA Major Indian trade union federations: Indian National TUC, All India TUC, Centre of Indian TU, Bharatiya Mazdoor Sangh, Hind Mazdoor Sabha, Self-Employed Women's Association
State as Stakeholder Performs roles of legislator (labour laws), administrator (inspection and adjudication), employer (public sector), and policy-maker (broader framework)
Tripartite Framework Indian IR operates within tripartite framework involving employers, workers, and state, drawing on ILO tripartism
Indian Labour Conference Highest tripartite forum comprising representatives of central and state governments, employers, and workers, meeting periodically to discuss labour policy
Historical Evolution
Pre-Independence Trade Unionism Indian trade unionism emerged in early twentieth century, with Madras Labour Union (1918) and AITUC (1920); first statutory framework was Trade Unions Act, 1926
Trade Unions Act, 1926 First Indian statute providing for registration and regulation of trade unions; foundational framework for collective representation
Post-Independence Consolidation Post-Independence period (1947-1990) characterised by expansion of trade union movement, strengthening of IDA framework, and substantial industrial action
Post-Liberalisation Period Post-1991 liberalisation transformed context: decline of public sector dominance, growth of services sector, rise of contract and gig employment
Collective Bargaining
Trade Unions Act Framework Provides for registration, rights and immunities, executive constitution, funds and accounts, dissolution and amalgamation of trade unions
Recognition of Unions Historical Gap Continuing weakness in Indian framework: absence of uniform statutory mechanism for recognition of unions for collective bargaining
Negotiating Union Framework Code on Industrial Relations, 2020 introduces recognition where single union has support of 51% of workmen; addresses long-standing gap
Negotiating Council Framework Code on Industrial Relations, 2020 introduces negotiating council framework where multiple unions share representation, providing institutional response to fragmentation
Stages of Collective Bargaining Preparation, negotiation, settlement, implementation, and renegotiation; operates within IDA framework with conciliation, arbitration, adjudication as fallback
Section 18 Settlement Binding Force Settlements in conciliation proceedings binding on all workmen; settlements outside conciliation binding only on parties to agreement and nominees
Contemporary Challenges
Decline of Formal Trade Unionism Share of workforce represented by formal trade unions has declined progressively due to industrial base decline, services sector growth, contract/casual employment, and union fragmentation
Gig and Platform Economy Several crore workers operating outside traditional employee-employer framework; classified as independent contractors, excluded from much of IR framework
Workforce Diversity Workforce more diverse with increased participation by women and previously underrepresented groups; traditional IR framework not always adapted
Code on Industrial Relations, 2020 Consolidates IDA, Trade Unions Act, and Industrial Employment (Standing Orders) Act with refinements; introduces formal recognition framework and 300-worker retrenchment threshold