The purpose of this lesson is to provide a review of labour relations (employee relations. It deals with a summary of the elements of employee relations and the developments in industrial relations. It concludes with the various types of third party dispute resolution in industrial relations.
9.1 The Elements of Employee Relations
The elements of employee relations consist of:
- The formal and informal employment policies and practices of the organization.
- The development, negotiation and application of formal systems, rules and procedures for collective bargaining, handling disputes and regulating employment. These serve to determine the reward for effort and other conditions of employment, to protect the interests of both employees and how the latter are expected to behave at work.
- Policies and practices for employee voice and communications.
- The informal as well as the formal processes that take place in the shape of continuous interactions between managers and team leaders or supervisors on the one hand and employee representatives and individuals on the other. These may happen within the
framework of formal agreements but are often governed by custom and practice and the climate of relationships that has been built up over the years.
- The philosophies and policies of the major players in the industrial relations scene; the government of the day, management and the trade unions.
- A number of parties each with different roles. These consist of the state, management, employer’s organizations, the trade unions, individual managers and supervisors, HR managers, employee representatives or shop stewards and employees.
- The legal framework
- A number of institutions such as the Advisory, Conciliation and Arbitration Service (ACAS) and the employment tribunals.
- The bargaining structures, recognition and procedural agreements and practice which have enrolled to enable the formal system to operate.
9.2 Industrial Relations as a System of Rules
Industrial relations can be regarded as a system or web of rules regulating employment and the ways in which people behave at work. The systems theory of industrial relations, as propounded by Dunlop (1958), states that the role of the system is to produce the regulations and procedural rules that govern how much is distributed in the bargaining process and how the parties involved,
or the ‘actors’ in the industrial relations scene, relate to one another. According to Dunlop, the output of the system takes the form of:
The regulation and policies of the management hierarchy; the laws of any worker hierarchy; the regulations, degrees, decisions, awards or order of governmental agencies: the rules and decisions of specialized agencies created by the management and worker hierarchies; collective bargaining arrangement and the customs and traditions of the work place. The system is expressed in many more or less formal or informal guises: in legislation and statutory orders, in trade union regulations, in collective agreements and arbitration awards, in social conventions, in managerial decisions, and in accepted ‘custom and practice’. The ‘rules’ may be defined and coherence, or ill-defined and incoherent. Within a plant the rules may mainly be concerned with doing no more than defining the status quo which both parties recognize as the norm from which deviations may be made only by agreement. In this sense, therefore, as industrial relations system is a normative system where a norm can be seen as a rule, a standard, or a patter for action which is generally accepted or agreed as the basis upon which the parties concerned should operate. Systems theory, however, does not sufficiently take into account the distribution of power between management and trade unions, nor the impact of the state. Neither does id adequately explain the role of the individual in industrial relations.
9.2.1 Types of Regulations and Rules
Job regulation aims to provide a framework of minimum rights and rules. Internal regulation is concerned with procedures for dealing with grievances, redundancies of disciplinary problems and rules concerning the operation of the pay system and the rights of shop stewards. External regulation is carried out by means of employment legislation, the rules of trade unions and employer’s associations, and the regulative content of procedural or substantial rules and agreements.
Procedural rules are intended to regulate conflict between the parties to collective bargaining, and when their importance is emphasized, a premium is being placed on industrial peace. Substantial rules settle the rights and obligations attached to jobs. It is interesting to note that in the U.K., the parties to collective agreements have tended to concentrate more on procedural than on substantive rules. In the USA, where there is greater emphasis on fixed-term agreements, the tendency has been to rely on substantive rules.
9.3 Collective Bargaining
The Industrial relations system is regulated by the process of collective bargaining, defined by Flanders (1970) as a social process that ‘continually turns disagreements into agreements in an orderly fashion’. Collective bargaining aims to establish by negotiation and discussion agreed rules and decisions on matters of mutual concern to employers and unions as well as methods of regulating the conditions governing employment. It therefore provides a framework, often in the form of a collective agreement, within which the views of management and unions about disputed matters that could lead to industrial disorder can be considered with the aim of eliminating the causes of the disorder. Collective bargaining is a joint regulating process, dealing with the regulation of employment. It has a political as well as an economic basis – both sides are interested in the distribution of power between them as well as the distribution of income.
Collective bargaining can be regarded as an exchange relationship in which wage-work bargains take place between employers and employees through the agency of a trade union. Traditionally, the role of trade unions as bargaining agents has been perceived as being to offset the inequalities of individual bargaining power between employers and employees in the labour market.
Collective bargaining can also be seen as a political relationship in which trade unions, as Chamberlain and Kuhn (1965) noted, share industrial sovereignty or power over those who are governed, the employees. The sovereignty is held jointly by management and union in the collective bargaining process. Above all, collective bargaining is a power relationship that takes the form of measure of power
sharing between management and trade unions (although recently the balance of power has shifted markedly in the direction of management).
9.3.1 Bargaining power
The extent to which industrial sovereignty is shared by management with its trade unions (if at all) depends upon the relative bargaining powers of the two parties. Bargaining power can be defined as the ability to induce the other side to make a decision that it would otherwise not make. As Fox and Flanders (1969) commented: ‘Power is the crucial variable which determines the outcome of collective bargaining’. It has been suggested by Hawkins (1979) that a crucial test of bargaining power is ‘whether the cost to one side is accepting a proposal from the other is higher than the cost not accepting it. Singh (1989) has pointed out that bargaining power is not static but varies over time. He also notes that:
Bargaining power is inherent in any situation where differences have to be reconciled. It is, however, not an end in itself and negotiations must not rely solely on bargaining power. One side may have enormous bargaining power, but to use it to the point where
the other side feels that it is impossible to deal with such a party is to defeat the purpose of negations.
Atkinson (1989) asserts that:
- What creates bargaining power can be appraised in terms of subjective assessments by individuals involved in the bargaining process.
- Each side can guess the bargaining preferences and bargaining power of the other side;
- There are normally a number of elements creating bargaining power.
9.3.2 Forms of collective bargaining
Collective bargaining takes two basic forms, as identified by Chamberlaid and Kuhn (1965).
Conjunctive bargaining, which ‘arises from the absolute requirement that some agreement – any agreement – may be, reached so that the operations on which both are dependent many continue’, and results in a ‘working relationship in which each party agrees,
explicitly or implicitly, to provide certain requisite services, to recognize certain responsibilities in respect of each other’.
Cooperative bargaining, in which it is recognized that each party is dependent on the other and can achieve it objectives more effectively if it wins the support of the other. A similar distinction was made by Walton and McKersie (1965), who referred to distributive bargaining as the ‘complex system of activities instrumental to the attainment of ones party’s goals when they are in basic conflict with those of the other party’ and to integrate bargaining as the ‘system of activities which are not in fundamental conflict with those of the other party and which therefore can be integrated to some degree’. Such objectives are said to define ‘an area of common concern, a purpose’.
9.4 The HRM Approach to Employee Relations
9.4.1 The HRM model
The philosophy HRM has been translated into the following prescriptions, which constitute the HRM model for employee relations:
- A drive for commitment – wining the ‘hearts and minds’ of employees to get them to identify with the organization, to exert themselves more on its behalf and to remain in it, thus ensuring a return on their training and development;
- An emphasis on mutuality – getting the message across that ‘we are all in this together’ and that the interests of management and employees coincide
- The organization of complementary forms of communication, such as team briefing, alongside traditional collective bargaining – i.e. approaching employees directly as individuals or in groups rather than through their representatives.
- A shift from collective bargaining to individual contracts.
- The use of employee involvement techniques such as quality circles or improvement groups.
- Emphasis on teamwork;
- Harmonization of terms and conditions for all employees.
9.5 The Parties to Industrial Relations
The parties to industrial relations are
- The trade unions
- Shop stewards or employee representatives
- The Trade Union Congress (the TUC)
- Employer’s Organizations
- The Confederation of British Industry
- Various institutions, agencies and officers
The Trade Union
Traditionally the fundamental purpose of trade unions is to promote and protect the interests of their members. They are there to redress the balance of power between employers and employees. The basis of the employment relationship is the contract of employment. But this is not a contract between equals. Employers are almost always in a stronger position to dictate the of the contract than individual employees. Trade Unions, as indicated by Freeman and Medoff (1984), provide workers with a ‘collective voice’ to make their wishes known to management and thus bring actual and desired conditions closer together. This applies not only to terms of employment such as pay, working hours and holidays, but also to the way in which individuals are treated in such aspects of employment as the redress of grievances, discipline and redundancy. Trade Unions also exist to let management know what there will be time to time, an alternative view on key issues affecting employees. More broadly, unions may see their role as that of participating with management on decision making on matters affecting their members’ interests.
Within this overall role, trade unions have had two specific roles, namely to secure, through collective bargaining, improved terms and conditions for their members, and to provide protection, support and advice to their members as individual employees. An additional role that of providing legal, financial and other services to their members, has come into prominence more recently.
Trade Union Structure
Trade unions are run by full-time central and usually district officials. There may be local committees of members. National officials may conduct industry-wide or major employer pay negotiations while local officials may not be involved in plant negotiations unless there is a ‘failure to agree’ and the second stage of a negotiation procedure is invoked. Major employers who want to introduce significant changes in agreements or working arrangements may deal direct with national officials. The trade union movement is now dominated by the large general unions and the merged craft and public service unions.
Shop stewards or employee representative may initial be responsible for plant negotiations, probably with the advice of full-time officials. They will certainly be involved in settling disputes and resolving collective grievances and in representing individual employees with grievances or disciplinary matters. They may be members of joint consultative committees, which could be wholly or partly composed of trade union representatives. At one time, shop stewards were the ogres of the industrial relations scene. Undoubtedly there were cases of militant shop stewards, but where there are recognized trade unions, managements have generally recognized the value of shop stewards as points of contact and channels of communication.
International Union Organizations
The two main international union organizations are the European Trade Union Confederation and the International Trade Union Confederation. At present neither of these makes much impact on the UK, but this could change.
Staff association may sometimes have negotiating and /or representational rights but they seldom have anything like the real power possessed by a well organized and supported trade union. They are often suspected by employees as being no more than management’s poodle. Managements have sometimes encouraged the development of staff association as an alternative to trade unions but this strategy has not always worked. If fact, in some organizations the existence of an unsatisfactory staff association has provided an opportunity for a trade union to gain membership and recognition. Staff association have their uses as channels of communication, and representatives can play a role in consultative processes and in representing colleagues who want to take up grievances or who are being subjected to disciplinary proceedings.
The Role of Management
The balance of power has undoubtedly shifted to management who now have more choice over how they conduct relationships with their employees. But the evidence is that there has been no concerted drive by managements to de-recognize unions. As Kessler and Bayliss (1992) point out: If managers in large establishments and companies wanted to make changes they looked at ways of doing so within the existing arrangements and if they could produce the goods they used them. Because managers found that the unions did not stand in their way they saw no reason for getting rid of them. ‘They argued that management’s industrial relations objectives are now
- Control the work progress
- Secure cost-effectiveness
- Reassert managerial authority
- Move towards a more unitary and individualistic approach
As Storey (1992) found in most of the cases he studied, there was a tendency for managements to adopt HRM approaches to employee relations while still coexisting with the unions. But they gave increasing weight to systems of employee involvement in particular communication, which bypass trade unions.
Traditionally, employer’s organizations have bargained collectively for their members with trade unions and have in general aimed to protect the interests of those members in their dealings with unions. Multi-employers or industry-wide bargaining, it was believed, allowed companies to compete in product markets without undercutting their competitors’ employment costs and prevented the trade unions ‘picking off’ individual employers in a dispute. The trend towards decentralizing bargaining to plant level has reduced the extent to which employers’ organizations fulfill this traditional role, although some industries such as building and electrical contracting with large numbers of small companies in competitive markets have retained their central bargaining function, setting a floor of terms and conditions for the industry.
Institutions, Agencies and Officers
There are a number of bodies and people with a role in employee relations, as described below The Advisory Conciliation and Arbitration Service (ACAS)
ACAS was created by the government but function independently. It has three main statutory duties:
- To resolve disputes
- To provide conciliatory services for individuals in, for example, unfair dismissal cases
- To give advice, help and information on industrial relations and employment issues.
ACAS helps to resolve disputes in three ways: collective conciliation, arbitration and arbitration services declined considerably. But the individual conciliation case load has been very heavy and the ACAS advisory work has flourished. These are aimed at encouraging non adversarial approaches to preventing and resolving problems at work by facilitating joint working groups of employers, employees and their representatives.
The central arbitration committee (CAC)
The CAC is an independent arbitration body that deals with disputes. It arbitrates at the request of one party but with the agreement of the other. It does not handle many arbitrations but it deals more frequently with claims by trade unions for disclosure of information for collective bargaining purposes.
Employment tribunals are independent judicial bodies that deal with disputes on employment matters such as unfair dismissal, equal pay, sex and race discrimination and employment protection provisions. They have a legally qualified chair and two other members, one an employer, the other a trade unionist. The Employment Appeal Tribunal (EAT) The EAT hears appeals from the decisions of industrial tribunals on questions of law only.
9.6 Role Of The HR Function In Employee Relations
The HR function provides guidance and training and will develop and help to introduce and maintain formal processes; but it does not do line manager’s jobs for them. However, it is their role as industrial relations specialists. They are also likely to have a measure of responsibility for maintaining participation and involvement processes and for managing employee communications. They can and should play a major part in developing employee relations strategies and policies that aim to:
- Achieve satisfactory employment relationships, taking particular account of the importance of psychological contracts.
- Build stable and cooperative relationships with employees which recognizes that they are stakeholders in the organization and minimize conflict
- Achieve commitment through employee involvement and communications processes.
- Develop mutuality – a common interest in achieving the organization’s goals through the development of organizational cultures based on shared values between management and employees.
- Clarify industrial relations processes with trade unions and build harmonious relationships with them on a partnership basis.
In these capacities HR practitioners can make a major contribution to the creation and maintenance of a good employee relations climate.
9.7 Employee Relations Policies
Approaches to employee relations
Four approaches to employee relations policies have been identified by Industrial Relations Services (1994)
- Adversarial: the organization decides that what it wants to do, and employees are expected to fit in. employees only exercise power by refusing to cooperate.
- Traditional: a good day-to-day working relationship but management proposes and the workforce reacts through its elected representatives.
- Partnership: the organization involves employees in the drawing up and execution of organization policies, but retains the right to manage.
- Power Sharing: Employee are involved in both day-to-day and strategic decision making.
Adversarial approaches are much less common than in the 1960s and 1970s. The traditional approach is still the most typical but more interest is being expressed in partnership, as discussed later. Power sharing is rare.
9.7.1 Policy Areas
The areas covered by employee relations policies are:
- Trade union recognition – whether trade unions should be recognized or derecognized, which union or unions the organization would prefer to deal with, and whether or not it is desirable to recognize only one union for collective bargaining and/or employee representational purposes.
- Collection bargaining – the extent to which it should be centralized or decentralized and the scope of areas to be covered by collective bargaining.
- Employee relations procedures – the nature and scope of procedures for redundancy, grievance handling and discipline.
- Participation and involvement – the extent to which the organization is prepared to give employees a voice on matters that concern them.
- Partnership – the extent to which a partnership approach is thought to be desirable.
- The employment relationship – the extent to which terms and conditions of employment should be governed by collective agreements or based on individual contracts of employment (i.e. collectivism versus individualism).
- Harmonization – terms and conditions of employment for staff and manual workers.
- Working arrangements – the degree to which management has the prerogative to determine working arrangements without reference to trade unions or employee (this includes job-based or functional flexibility).
9.8 Third Party dispute resolution
The aim of collective bargaining is, of course, to reach agreement, preferably to the satisfaction of both parties. Negotiating procedures, as described in the next section of this chapter, provide for various stages of ‘failure to agree’ and often include a clause providing for some form of third-party dispute resolution in the event of the procedure being exhausted. The processes of dispute resolution as identified by IRS (2004d) are conciliation, arbitration and mediation.
It is an attempt, through informal discussions, to help parties in a dispute to reach their own agreement. The third party does not recommend or decide on a settlement. One advantage of this process is that it helps the parties to retain ownership of the resolution of the problem, which can, in turn, engender greater commitment to its implementation. Conciliation is the most frequently
used form of third party involvement.
The parties put the issue to an independent third party for determination. The parties agree in advance to accept the arbitrator’s decision as a means of finally resolving the matter. There is sometimes a reluctance to use this method as it removes control over the final outcome from employers, employees or trade unions.
Formal but non-binding recommendations or proposals are put forward for further consideration by the parties. The use of dispute mediation is rare, partly because it is seen as a halfway house. There is sometimes a feeling that if conciliation cannot succeed, it may be best simply to go all the way to arbitration .