Everything you need to know about the concept of industrial relations. The concept of industrial relations has been extended to denote the relations of the state with employers, workers and their organisations.

The subject, therefore, includes individual relations and joint consultation between employers and work people at their work place; collective relations between employers and their organisations and trade unions and the part played by the state in regulating these relations.

Industrial relations form the core of industrial management. It aims at maintaining and developing employee motivation as well as employee morale.

Through motivation only a worker can be made to work willingly. The morale of the worker should be boosted up and this can be done by ensuring personal contentment and social satisfaction.


The needs of workers must be carefully analyzed because it is on the satisfaction of their personal needs that industrial relations can be improved.

Learn about the concept of industrial relations as put forward by leading encyclopaedia, institutions and eminent authors.

Concept of Industrial Relations in HRM: According to Eminent Institutions and Authors

Concept of Industrial Relations – According to Encyclopaedia Britannica and ILO

According to Encyclopaedia Britannica, “The concept of industrial relations has been extended to denote the relations of the state with employers, workers and their organisations. The subject, therefore, includes individual relations and joint consultation between employers and work people at their work place; collective relations between employers and their organisations and trade unions and the part played by the state in regulating these relations.”

Before the evolution of the concept of “industrial relations”, two concepts, namely “personnel administration” or “personnel management” and “labour relations”, were widely prevalent in industrial organisations. The term “personnel administration” laid emphasis on management’s relationships with a focus on individual employees.


The main areas of its operation comprised the following – recruitment and selection, remuneration, working conditions, promotions and transfers, termination of service and welfare amenities at the place of work. The relationships between the management and organised “labour relations” represented by unions came under the arena of “labour relations”.

The main areas covered under “labour relations” comprised the following – union recognition, collective bargaining, labour contract, industrial disputes, work-stoppages, day- to-day relationships with union representatives and governmental intervention regulating such relationships. In many organisations, “industrial relations” combined the activities and coverage of both “personnel administration” and “labour relations.”

Whatever might have been the differences in organisational arrangements, all the terms have come into usage even to date. At present, “industrial relations” is considered synonymous to “labour relations”, implying the relationships of the management with the organised labour or unions combined with governmental measures in regard to the regulation of such relationships.

Thus, “industrial relations” may be conceived of as “employees/union(s)-employers(s)/management-government relationships in industrial employment.” Some of major areas under its coverage include the following – union recognition, day-to-day dealing with union representatives, collective bargaining and collective agreements, industrial disputes and strikes, grievance settlement and union’s participation in joint bodies.


Growth of Some Other Related Concepts:

In recent years, certain new concepts have emerged in regard to the relationships of management with employees, whether as individuals or with their organisations, and also in the approaches related to managing manpower; these are employee relations, employment relations and human resource management.

One of the main reasons behind the adoption of the term “employee relations” or “employment relations” has been increasing the importance of non-industrial employment relationships in many areas of economic activities.

As management-employees relationships have come to exist in several non-industrial employments such as business, trade and commerce, insurance and other service sectors, the use of the term “human resource management” combining in itself, the functions of “personnel administration” and “labour or industrial relations” appears to be more appropriate and comprehensive.

The term “employee relations”, which also comes within the arena of human resource management as in practice now, refers to the relationships of the management with individual employees.

The ILO has used the term “employment relationship” in a wider perspective, stating that it exists “when a person performs work or services under certain conditions in return for remuneration.” The ILO also adopted Employment Relationship Recommendation No. 198 in 2006, which inter alia provides guidelines pertaining to formulation and application of a national policy on the subject, determination of such a relationship and the establishment of an appropriate mechanism.

Whatever the differences in the pattern of organisational arrangements for managing work-­people, whether present or prospective, there is common acceptance of the assertion that “industrial relations” involve relationships between management and organised workforce along with the government agencies influencing such relationships.

Concept of Industrial Relations – In U.S.A

The term “Industrial Relations” is now used in two senses. In its narrow sense, it means labour re­lations, but in its broader sense it includes employ­ee relations, labour relations, public relations, cus­tomer relations etc. In this sense it covers all the relations of an industrial undertaking that it maintains with all the parties with whom it deals.

Industrial relations, therefore, should be regarded as a vast complex of relationships ob­taining between management and employees, union and management, union and workers and between worker and worker.


In the modern industrial society, industrial re­lations constitute one of the most delicate and com­plex problems. This can be attributed to the emer­gence of “Industrial Revolution”. In the pre-industrial revolution period, the worker himself was the employer and the owner of the industrial unit, so there was practically no problem.

Industri­al Revolution, involving investment of huge capi­tal, led to a complete segregation of ownership and management of industry. This resulted in the complex industrial relations.

Industrial relations, as they mean today, in countries like the U.S.A covering all parties in an organisation, call for co-operation from all persons in the organisation to improve industrial rela­tions. Even in countries like U.K and India, where industrial relations more or less mean labour rela­tions only, the problems are no less complicated.

The capitalists as a class are becoming more and more powerful with immense wealth at their dis­posal and workers are weak and such a situation encourages the industrialists to exploit workers which may lead to a bitter relation between labour and capital. But the actual industrial scene is not so dismal for the workers, since they are unit­ed. Their unions are strong and sometimes militant to press their demands and get them satisfaction.


The ideal industrial relations should not be one where one party will forcefully realise its de­mands from the other but there should be a cordial and happy relation between labour and capital. The areas of conflicts should carefully be avoided and the policy that prevention is better than cure should be followed.

Industrial relations today are not so peaceful. Mutual distrust between labour and capital pre­dominates industrial relations. Though manage­ment is in a stronger position because of power and wealth, the workers are not simply passive on­lookers. With the powerful weapon of strikes in their hands, they are now able to bargain with the industrialists.

Employers, or the industrial­ists, too, are making all efforts to resist the demands of the workers. The conflicting interests have resulted in industrial friction and unrest. Such industrial unrest is reflected in the form of indiscipline, low morale, strikes, lock-outs, go- slow tactics, increased absenteeism, high labour turnover etc.

Such a situation is highly undesira­ble. Neither the employer nor the workers and not the state benefits anything and the country, as a whole, suffers. So, state participation in the regu­lation of labour management relations has been constantly growing.


In this context, we can very well quote Encyclopedia Britannica where it is stated “the subject of industrial relations includes individual relations and joint consultation be­tween employers and work people at the place of work, collective relations between employers and their organisations and trade unions and the part played by the state in regulating these relations”. The ILO also holds a similar view.

Industrial relations meaning human relations are as old as industry itself. The nature and extent have changed with the growing complexities in the industrial world but the human relationships in industry were there, still they are and they will remain so long as industry will remain.

Through ages, changes have been taking place in industrial relations with the changes in the nature of indus­trial management. At a time the relations between the employer and the employees were direct and simple but, with the emergence of the factory sys­tem of production, the situation has changed.

The changes that have crept into the relation­ships between man and man and amongst men in an industrial organisation are the natural consequenc­es of the change in the pattern of industrial organ­isation, the divorce between ownership and man­agement. Considerable distance has been created between management and labour because of modern large-scale operations.

A psychological change is evident both in the employer and in the employ­ees. Mutual trust has become a matter of past; dis­trust, misunderstanding and conflicts have become the order of the day in the industrial world. The employer thinks he is giving more than what is due to the worker and the worker thinks he is be­ing deprived of his legitimate dues.

In the early stage of industrialisation, since the contact be­tween labour and capital was direct, any problem could be solved amicably before any complication could develop. But the fact remains, the problem of industrial relations was still there but solutions were not far to seek out nor was it very difficult to restore amity between the employer and the em­ployees. So, it is a correct statement to say that in­dustrial relations are as old as industry itself; only the character has changed.


With the changes in industry and industrial re­lations, the scope of industry has widened. All men in an organisation are parties to industrial re­lations and this new concept of industrial relations has thrust upon management new areas to tackle. It is absolutely necessary to win workers’ co­operation. Discipline amongst workers has to be enforced. Organised labour have to be tackled with tact and prudence and finally, for an overall improvement of industrial relations, workers’ par­ticipation in management have to be sought for.

Therefore, industrial relations today encompass the following within its scope (a) Industrial unrest (b) Industrial discipline (c) Trade unionism (d) Workers’ participation in management, and (e) Employees motivation.

Industrial relations form the core of industrial management. It aims at maintaining and developing employee motivation as well as employee morale. Through motivation only a worker can be made to work willingly. The morale of the worker should be boosted up and this can be done by ensuring personal contentment and social satisfaction. The needs of workers must be carefully analysed because it is on the satisfaction of their personal needs that industrial relations can be improved.

The employees need have been classified into four categories – physical needs, security needs, social needs and self-expression needs. Physical needs can be fulfilled by financial rewards; they are economic in nature. Other needs are non-economic and, to fulfil them, non-economic approaches are appropriate.

Morale and motivation should be used as tools to fulfil the needs of worker. Morale is concerned with personal contentment. When needs are met, the satisfaction that is derived gives immense pleasure and contentment and thus better and higher work-morale is created amongst workers. But good morale is not a good motivator of behaviour.

Where wants are satisfied and morale is created workers do not feel the urge to work more, productivity suffers. So, it is not good morale but motivation that increases productivity. Unsatisfied needs provide motivation.


However, it can be said that for better industrial relations through various devices, both morale and motivation should be encouraged. The onus of improving morale and motivation is primarily on the employer since management is the dominant party. All the devices and tools at the disposal of the management should be adopted and used to improve industrial relations to fulfil the aims and objectives of the organisation as a whole.

Concept of Industrial Relations – With Important Features Pertaining to Industrial Relations

Industrial relations is the study of employee-employer relationship and the outcome of such relationship and the outcome of such relationship. The basic thrust of the discussion is to examine the relationship between the management, workers and the trade unions representing the firm’s workforce.

Further, it studies the industrial relations in manufacturing and service sectors and omits the industrial relations situations found in small-scale, agriculture and other sectors of the economy though; they provide employment to more workers in comparison with the organised sector.

Some of the important features pertaining to industrial relations may be listed thus:

1. Employment Relationship Essential:

Industrial relations do not emerge in vacuum; they are born out of “employment relationship” in an industrial setting. Without the existence of two parties, i.e., labour and management, this relationship cannot exist. It is the industry which provides the environment for industrial relations.


2. Conflict and Cooperation Characterise Industrial Relations:

Industrial relations are characterised by both conflict and cooperation. This is the basis of adverse relationship. So the focus of industrial relations is on the study of the attitudes, relationships, practices and procedures developed by the contending parties to resolve or at least minimise conflicts.

3. The Scope of ‘Industrial Relations’ Fairly Large and Covers Lot of Ground:

As the labour and management do not operate in isolation but are part of a larger system, so the study of industrial relations also includes vital environmental issues like technology of the workplace, country’s socio-economic and political environment, nation’s labour policy, attitude of trade unions, workers and employers and impact of the new wave of global markets, global supply demand and economy.

4. Measures for Healthy Labour Management Cooperation Put to Close Examination:

Industrial relations also involve the study of conditions conducive to the labour, management cooperation as well as the practices and procedures required to elicit the desired cooperation from both the parties.


5. The Legalistic Part of Industrial Relations Need to be Examined Closely:

Industrial relations also study the laws, rules, regulations, agreements, awards of court, customs and traditions, as well as policy framework laid down by the government for eliciting cooperation between labour and management and defining rights obligation of both the parties. Besides this, it makes an in-depth analysis of the interference patterns of the executive and judiciary in the regulation of labour-management relations.

6. All Encompassing Examination of Multifarious Issues Affecting Labour- Management Relations:

The concept of industrial relations is very broad-based, drawing heavily from a variety of disciplines like social sciences, humanities, behavioural sciences, laws etc.

7. The National Commission on Labour:

According to NCL, industrial relations affect not merely the interests of the two participants— labour and management, but also the economic and social goals to which the State addresses itself. To regulate these relations in socially desirable channels is a function, which the State is in the best position to perform. In fact, industrial relation encompasses all such factors that influence behaviour of people at work.

A few such important factors are below:

(i) Institutions:

They include government, employers, trade unions, union federations, employers’ federations or associations, government bodies, labour courts, tribunals and other organisations which have direct or indirect impact on the industrial relations system.

(ii) Characters:

It aims to study the role of workers, unions and employers’ federation officials, shop stewards, industrial relations officers / manager, mediator / conciliators / arbitrator, judges of labour court, tribunal, etc.

(iii) Methods:

Here, the focus is on collective bargaining, workers’ participation in the industrial relation schemes, discipline, procedure, grievance redressal machinery, dispute settlement machinery, working of closed shops, union recognition, organisation of protests through methods like strikes, gheraos, bandhs and lockouts, formulation and revision of existing rules, regulations, policies, procedures, decisions of labour courts, tribunals, etc. in defining the rights and obligations of the parties.

(iv) Contents:

They include matter pertaining to employment conditions like pay and other monetary non-monetary demands of the workers hours of work, leave with wages, health, and safety disciplinary actions, lay-off, dismissals, retirement etc., laws relating to such activities, legislation governing labour welfare, social security, industrial relations, issues concerned with workers’ participation in management, collective bargaining, sharing gains of productivity profits.

Concept of Industrial Relations – As Defined by Armstrong

Industrial Relation is used to describe the relations between the management of a firm and its employers. Industrial relation is a set of phenomena, both inside and outside the workplace, concern with determining and regulating employment relationship.

“Industrial relation is a set of functional interdependence involving historical, economic, social, psychological, demographic, technological, occupational, political and legal variables.” Dale Yoder- “Industrial relation is whole field of relationship that exists because of the necessary collaboration of men and women in the employment process of an industry.”

ILO- “Industrial relations deal with either the relationship between the state and employers and workers organization or the relation between the occupational organizations themselves.” John T. Dunlop- “Industrial societies necessarily create Industrial Relations defined as the complex of interrelations among workers, management and the government.”

If Industrial relations are good employees will be well motivated and as a result morale and productivity will be high. If industrial relations are poor employees will be a less motivated and productivity low with a high labor turnover.

The concept of industrial relations (IR) refers a dynamic and complex relationship between employers and employees which is a web of much more complex than the simple concept of handling labour-capital conflict. Other term which is used to denote this relationship is ‘human relations’.

Armstrong has defined IR as follows:

“Industrial relations is concerned with the systems and procedures used by unions and employers to determine the reward for effort and other conditions of employment, to protect the interests of the employed and their employers, and to regulate the ways in which employers treat their employees.”

Based on the above definition, we can identify the scope of industrial relations activities as follows:

1. The relationship between employers and employees as groups.

2. The role of various parties – employers, employees and their unions, and State, in maintaining this relationship through different ways.

3. The mechanism of handling conflicts between employers and employees in case such conflicts arise.

Concept of Industrial Relations – With Impact and Future Requirements

Industrial Relations can be defined as including those problems of the workers which the related to three types of situations:

i. His fellow workers.

ii. His employees.

iii. The public.

The field of Industrial Relations got a theoretical foundation by the work of John T. Dunlop in 1958 that defined the scope and boundaries of Industrial Relations though a model of Industrial Relations system. The model highlighted that the IR system at any one point of time in its development is regarded as and is comprised of certain actors, certain contexts, an ideology, which binds the system together, and rules created to govern the system.

In a wider sense, Industrial Relations indicates relations between an employee and an employer and may transgress to the areas of quality control, marketing, price fixation and distribution of profits, among others.

It may also be called functional interdependence involving a set of historical, economic, social, psychological, demographic, technological occupational, political and legal variables.

Mainly the theme revolves around three actors of the Industrial Relation System viz. employees, employer and Government.

Till 1991, the State in India had regulated Industrial Relations through the following measures and policies:

i. Industrial relations Acts (Factory Act, 1948, Trade Union Act, 1926).

ii. Pro-labour stance and policies.

iii. Encouragement of Trade Unions.

iv. Setting up of machinery for settlement of Industrial Disputes.

v. Restriction on retrenchment/closure

vi. Minimum Wages Act.

vii. Promotion of measures for securing amity and good relations amongst actors.

viii. State becoming biggest employer of organized sector industrial force.

ix. Setting up Tripartite machinery.

Impact so Far:

i. State took recourse to law by viewing citizens as subjects and not as members of a free society.

ii. Compulsory Adjudication hampered the growth of collective bargaining.

iii. Conciliatory machinery is ineffective, expensive, time consuming and does not dispose of the cases expeditiously.

iv. Policies encouraged trade union multiplicity and politicisation.

v. Law has ineffective provisions to deal with illegal strikes, go-slow, work of rule tactics.

Future Requirements:

i. Labour Policy should anticipate the kind of unrest which is likely to come up as a result of micro-level restructuring.

ii. Labour policy should facilitate adequate enforcement of labour laws.

iii. Wage policy should link compensation with performance.

iv. Labour policy should provide for a safety net for labour redundancies.

v. New versions of Industrial Disputes Act and Trade Union Act should be passed soon.

vi. Should increase autonomy to the industrial enterprises in their functioning.

vii. Depoliticisation of Trade Unions.

viii. Speed – up the process of redeployment and retraining of workers.

Industrial Relations, previously bipartite in nature, have become tripartite. Gandhi’s approach to labour relations was based on moral principles of truth, non-violence and voluntary arbitration of disputes. The situation has now changed grossly. In fact, Industrial Relations today needs to widen its horizon to concern itself with the larger social and national interests. The system should curb its pre-occupation with wages, bonus and allowances.

Concept of Industrial Relations – Encyclopedia Britannica, Cassel Man’s Labour Dictionary, Dale Yoder, Bethel Smith and Few Other Popular Authors

Industrial relations mean the relationship between different parties within an industrial unit in the day-to­day working of industry. The term ‘industrial relations’ has been variously defined by different writers to suit their own needs and circumstances and the degree of industrialization in their country. It is commonly used to denote relations of all those associated in productive work including industry, agriculture, mining, commerce, finance, transport and other services.

“The concept of industrial relations has been extended to denote the relations of the state with employers, workers and their organisations. The subject, therefore, includes individual relations and joint consultation between employers and workers at their places of work; collective relation between employers and their organisations and trade unions and the part played by the State in regulating these relations”. (Encyclopaedia Britannica)

“The relations between employers and employees in industry. In the broad sense, the term also includes the relations between the various unions, between the State and unions as well as those between the employers and the government”. (Cassel Man’s Labour Dictionary)

“The term ‘industrial relations’ has been described as relationship between management and employees or among employees and their organisations that characterize grow out of employment.” (Dale Yoder)

“Industrial relations is that part of management which is concerned with the manpower of the enterprise whether machine-operator, skilled worker or manager.” (Bethel Smith and others)

“Industrial relation” refers to a dynamic and a developing concept which is not limited to the complex relations between trade union and management but also refers to the general web of relationships normally obtaining between employers and employees, a web much more complex than the simple concept of labour- capital conflict”. (Prof. T.N. Kapoor)

“The International Labour organisation has used the term ‘industrial relations’ in a wide sense to denote such matters as freedom of association and the right to organisation. The application of the principle of the right to organize and right of collective bargaining of conciliation and arbitration proceedings and the machinery for cooperation between the authorities and the occupational organisations at various levels of the economy”.

Prof. Dunlop added a new dimension to the definition of industrial relations. According to him, “Industrial societies necessarily create industrial relations defined the complex of inter-relation among workers, managers and government”.

Thus the term ‘industrial relations’ refer to “a set of relations arising out of the employee-employer relationship in the modern industrial society”. Such a relationship is however complex and multidimensional resting on economic, social, psychological, ethical, occupational, political and legal levels. State also plays a major role in shaping industrial relations in a country.