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.

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.

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.

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.

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).

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.

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’.
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