2.6. Industrial/employee relations (HL only)

Industrial/employee relations

Trade Unions

The existence of a strong and recognized trade union is a pre-requisite to industrial peace. Decisions taken through the process of collective bargaining and negotiations between employer and unions are more influential. Trade unions play an important role and are helpful in effective communication between the workers and the management. They provide the advice and support to ensure that the differences of opinion do not turn into major conflicts. The central function of a trade union is to represent people at work. But they also have a wider role in protecting their interests. They also play an important educational role, organizing courses for their members on a wide range of matters. Seeking a healthy and safe working environment is also prominent feature of union activity.

Trade unions help in accelerated pace of economic development in many ways as follows:

• by helping in the recruitment and selection of workers.
• by inculcating discipline among the workforce
• by enabling settlement of industrial disputes in a rational manner
• by helping social adjustments. Workers have to adjust themselves to the new working conditions, the new rules and policies. Workers coming from different backgrounds may become disorganized, unsatisfied and frustrated. Unions help them in such adjustment.

Trade unions are a part of society and as such, have to take into consideration the national integration as well. Some important social responsibilities of trade unions include:

• promoting and maintaining national integration by reducing the number of industrial disputes
• incorporating a sense of corporate social responsibility in workers achieving industrial peace

Task 1: What conclusions can you come to about trade union membership in the UK & Europe from interpreting the four graphics below

Employer associations

Many industries in different countries have employer associations, employer federations or trade associations. Businesses join together to form their own association or federation. An employers' association could be described as a counterpart to a trade union in that it organises employers and represents them in collective bargaining, offers them specialist advice and services and represents them before certain bodies such as the Employment Appeals Tribunal or the Labour Court. There are a number of such organisations in Ireland, the main one being the Irish Business and Employers Confederation (IBEC), recently created through a merger of the Federation of Irish Employers and the Confederation of Irish Industry. There are also associations for certain sectors of industry, the biggest one being the Construction Industry Federation. Under the Trade Union Act 1941 all employers' associations are technically classified as trade unions and must hold a negotiation licence.

Advantages of joining an employer association

· They represent employers and negotiate with the trade unions on behalf of their members

· They give advice to members on issues such as employment law, the effect of trade agreements, health and safety regulations and taxation laws.

· They act as a pressure group and have greater strength, because they are a large group, to put arguments to government when changes are requested.

· Sometimes these organisations share ideas and they will help each other, usually when they are not in direct competition or in different sectors of the market. They may share research facilities when one small firm alone could not afford to do this research

· They sometimes organise bulk-buying for their members and can therefore obtain a discount on the goods purchased.

The major employers' associations in Ireland play an influential role. They are frequently called upon to nominate members to various State bodies, they are consulted on the major questions of economic and social policy, and within the current tripartite arrangements they are parties to national negotiations on these matters. Leading officials of the IBEC in particular are prominent in public affairs.

On the other hand, to some extent employers' associations, and the IBEC in particular, have suffered a decline in recent years with the arrival of increasing numbers of multinational and other companies refusing to bargain with trade unions. Such companies are sometimes reluctant to join an employers' association. However, the main associations have an important role in Irish public life and will probably continue to attract reasonable numbers of members.

Industrial disputes

Definition: A disagreement between management and the trade union representatives of the workforce that is serious enough for industrial action to be considered.

Industrial action

Definition: Measures taken by the workforce that will halt or slow output, in order to put pressure on management during an industrial dispute, e.g.: strike, work-to-rule, overtime ban and go-slow.

Methods

1: Collective Bargaining

Collective bargaining is the process of negotiation by which collective agreements are reached. Such agreements are compromises which reflect the relative bargaining power of the parties. The term was originally used by Beatrice and Sidney Webb (and coined by Beatrice Webb) to describe the process in which groups of workers combine together and send representatives to conduct the bargaining over the sale of their labour on behalf of the whole group. Thus instead of a number of individual bargains between employer and worker , one single agreement was reached. A later definition described the process as that of joint regulation. Collective bargaining necessarily involves negotiation, as distinct from the process of consultation in which the employer is not obliged to reach agreement with the workforce or its representatives.

Collective bargaining in Ireland is a voluntary process (see voluntarism ) in that there is no obligation on either party to enter into negotiations. From this comes the concept of "free" collective bargaining. The only possible exception to this is in the case of collective redundancy the Protection of Employment Act 1977 imposes a legal requirement on employers to consult with workers' representatives.

The vast majority of workers in Ireland have their pay and conditions determined by collective bargaining, although an increasing number of employers are moving to new management techniques such as human resource management, which advocates, among other things, non-recognition of trade unions.

Four phases of collective bargaining

1. Planning - spending time surveying employees, looking at statistics, demographics and problem areas in the demographic - preparation to bargain fully
2. Face to face negotiations - parties sit down and discuss contract language
3. Coming to an agreement - parties reach an agreement and write up a memorandum of settlement or go to interest arbitration where the arbitrator makes an award
4. Living with and implementing the agreement. This becomes the backbone of the Labour-Relations relationship.

2: Go-Slows

Industrial action by employees which takes the form of a collective non-performance or poor performance of the contractual obligation to work, i.e. in which they slow down their pace of work or deliberately work badly, is known as a go-slow. Meticulous observance of work regulations and safety provisions to the point of seriously disrupting the establishment's normal practice or bringing it to a standstill is also classed as a go-slow. This latter form, which is called a work-to-rule, occurs almost exclusively in the public service, not least because strikes by career public servants ("Beamte") are prohibited. The go-slow is deemed to be an unlawful form of industrial action, even in circumstances where a total withdrawal of labour in the form of a strike would be lawful.

3: Work to Rule

In a Work to Rule, workers stick rigidly to the rules and regulations laid down by the company. For example, there may be several checks that should be made to a delivery lorry before it goes out on delivery. All these checks may take a very long time and therefore some checks will normally not be carried out every time the lorry goes out. If the employees want to slow down the amount of work done, they could stick rigidly to the rule book and carry out all the checks necessary every time the lorry goes out.

4: Overtime bans

An overtime ban is a form of industrial action where employees limit their working time to the hours specified in their contracts, refusing to work any overtime. Overtime bans are less disruptive than strike action, and since there is no breach of contract by the employees there is less chance of disciplinary action by the employer than there is with strikes. However, an overtime ban can have a significant impact on industries, which normally operate outside of regular office hours, such as emergency services, public transport, or retail.

An overtime ban is similar to a work-to-rule, in that both involve employees refusing to do more than is strictly required of them. However, and in contrast with a work-to-rule, when an overtime ban is in place workers may still perform duties not required of them, providing they do not go outside their contracted hours.

5: Strike action

Strike action may take the form of:

(a) A token strike: a short stoppage of half a day, one day or even an hour to indicate the strength of feeling about the claim.

(b) A selective strike: only a few selected workers walk out, these will be chosen by the trade union in order to cause a lot of disruption to the workplace.

(c) An all-out strike: all members of the union stop working and leave the workplace until the dispute is resolved.

Picketing is usually carried out to support strike action. Workers, who are on strike, stand outside the factory gates and try to persuade the other workers not to go to work. If they are successful then production at the factory may be halted altogether. The strikers gain publicity for their grievances and can give the firm a bad image. This puts pressure on the firm to settle the dispute.

The methods used by employers to put pressure on employees

Action by management against employees can take a number of forms. Sometimes sanctions can be imposed by individual managers. Some for example may include close supervision of employees’ work, tight work discipline, discrimination against certain groups, lay offs, demoting workers or speeding up work practices.

1: The withdrawal of overtime and benefits

A business could withdraw all overtime that it offers to workers. This is likely to reduce workers’ earnings. The business might also withdraw other benefits it offers employees, including flexitime, vouchers or other benefits such as gym membership.

2: Lock-outs

A lockout is a form of industrial action open to employers. As the name suggests, a lockout occurs when an employer closes a worksite or premises and refuses entry to employees to work.

An employer will usually stage a lockout in response to industrial action taken by employees or to compel employees to accept particular terms or conditions of employment. A lockout does not terminate an employee's contract of employment and as such continuity of employment is not affected.

A lockout may be 'protected action' for the purposes of the Fair Work Act 2009 if it occurs during a bargaining period for an enterprise agreement and the other appropriate procedures and conditions are adhered to.

3: Changing standards and piecework rates

Management may change work standards or alter piece-work rates when in dispute with employees. This can have the effect of making the employees’ tasks more difficult or reducing the earnings of employees unless they work a lot harder.

4: Closure

Management may close down factories and offices or remove plant and machinery from their premises. Some people might not view such activities as industrial action. They may see them as the normal rights of management to shut down uneconomic enterprises or force uncooperative workers to comply with employers’ needs in the workplace.

5: Threats of dismissal/redundancy

In some cases, employers might threaten employees with dismissal. Employers, however, have to be aware that if they take this action, they must fully comply with the law governing employment relations.

6: Public Relations

Organisations may be able to call on vast financial resources that can be used to finance a positive public relations exercise. If the public are likely to be detrimentally affected by a strike (railway workers) then public support for strikers can dissipate quickly and become more conciliatory towards the “wronged firm”.

7: No work as directed, no pay

An employer is entitled, at common law, to refuse payment to employees if the employees refuse to perform the work they have been contracted or directed to perform. The concept of 'no work as directed, no pay' is generally applicable to award/agreement employees as well as employees working under common law contracts and other contracts that may be regulated by legislation.

Employers generally adopt the 'no work as directed, no pay' tactic in response to employee action such as work bans or go-slows.

The Fair Work Act prohibits strike pay, and employers must dock pay for industrial action regardless of whether the action is protected or unprotected.

For protected action, the amount of pay deducted is the actual period of the action. For unprotected industrial action, the minimum deduction is four hours’ pay.

Task 2: (a) Watch the three videos on striking workers - are there any commonalities in the reasons why the workers are striking?

(b) What are the suggestions made as to how employers should respond to workers striking?

Sources of conflict in the workplace

Conflict in an organisation will certainly make it less efficient and may even result in a complete halt in production. Strike action is an extreme example of conflict but there are other indicators of conflict existing in an organisation. Factors like the levels of absenteeism amongst employees, labour turnover, the number of rejects produced, even customer complaints are indicators of possible conflict. Examples of sources of conflict include:

• Poor wage rates, conditions of employment and poor working conditions
• Rigid and authoritarian management where orders are issued and those at the bottom of the chain of command tend not to know what is happening. This can cause problems to build up as people become frustrated
• Rapid change or poorly planned change in the business, where employees find themselves downgraded or moved from one position to another without consultation
• Lack of involvement in the decision-making process. If employees do not feel their contribution to the business is important, they can get bored or feel alienated. They will not care about the business as it doesn’t care about them.
• Decline in the business’ market share. This may cause employees to worry about losing their jobs.

See - Bell and Hart's Eight Causes of Conflict - https://www.mindtools.com/pages/article/eight-causes-conflict.htm

Task 3: Question on Conflict in the Workplace

The data on sales performance in Alidube Company has shown a significant downward trend over the last year. The Marketing and Sales Department is blaming the Finance Department for the poor performance, since it was the pressure from the Finance Department that led the Marketing and Sales Department to increase the product price.

The Marketing and Sales Department staff say that, in current market conditions, this was inappropriate and was the main reason for the loss of market share. They feel that the Finance Department staff are short sighted, too focused on costs in pricing decisions and do not appreciate that there are other factors that should be considered in product price setting. However, the Finance Department thinks that the Marketing and Sales Department has been complacent and has not had an aggressive marketing and sales strategy in place.

Perhaps not surprisingly, communications and cooperation between the staff in the two departments is at an all time low and in meetings there is constant in-fighting and disagreements. To make matters worse, a consequence of the drop in sales has been that the senior management is proposing that there will need to be job losses in the Production Department. The trade union which represents the production workers is now threatening to take industrial action.

Compare and contrast the different types and sources of conflict occurring in LS Company

Approaches to conflict resolution - See https://smallbusiness.chron.com/five-approaches-dealing-conflict-894.html

Task 4: Question on management of conflict

John Hahn, the Managing Director of Fortune Company, recently announced to the workforce that the Board had agreed to the establishment of a set of new working practices which should lead to improved productivity. The new working practices will mean the introduction of weekend working and the rotation of shifts for all workers.

The senior management of NWP Company consider the changes to be necessary if the company is to survive the very difficult operating conditions it is currently facing. However, the announcement has led to conflict between management and workers, and the workers are now threatening industrial action.

Discuss the different strategies that LG could use to manage the conflict occurring in NWP Company.

Approaches to conflict resolution

1: Conciliation and Arbitration

Sometimes parties fail to reach agreements after consultation and negotiation. In this case they can opt to use a third party skilled in conciliation and arbitration.

(a) Conciliation: This independent third party can intervene in industrial disputes at the request of either management or unions. Its role is to try and encourage a settlement that all parties may agree to use procedures that both parties accept.

Advantages of Conciliation:

• Informality: The informal nature of conciliation is one of the processes biggest advantages. The process is considered the most relaxed and least adhering to the typical adversarial method of dispute resolution.
• Non face to face aspect: Enables parties to engage in a dispute resolution process which does not require the parties to come face to face. This is particularly beneficial when the parties have a particularly disharmonious or acrimonious relationship.
• Cost: As with most alternative dispute resolution processes, Conciliation is generally a cheaper option than litigation.
• Privacy/Confidentiality: At the beginning of a conciliation, parties generally enter into an agreement as with the majority of alternative dispute resolution processes, that ensures that the parties negotiations are conducted as confidential and private.
• Time: Conciliation is more efficient than going through a court process and often can be resolved within a week from the beginning of the process. This can vary however, depending on the complexity of the matter and the nature of the parties involved.
• Agreement: As with the mediation process, conciliation requires the parties to come to a mutual agreement for the process to be successful. The benefit of this is that the parties are more likely to walk away from the process satisfied with the decision that they have been involved in making than one which was handed down by an arbitrator or magistrate.
• No Binding Agreement: If the parties are unhappy with the way in which the conciliation is being carried out they can leave the process with no obligations other than to pay the costs already incurred from the process.
• Conciliator Involvement: The involvement of the mediator can be positive as a conciliator, whilst acting as an impartial third party can provide clarity on issues which are in dispute between the parties.

Disadvantages of Conciliation

• No Binding Decision: If no agreement can be made between the parties, each will be left in the same position as they started. There is no binding decision handed down which can be frustrating to parties who have invested time, money and effort into the process.
• Conciliator Involvement: Although the conciliator is meant to be an impartial third party, the ability for them to involve themselves in the proceedings through their ‘active’ involvement can question the unbiased nature of the conciliator.

(b) Arbitration: this is where both parties in a dispute put forward their case to the independent arbitrator. It then independently assesses each case and recommends a final decision.

The Advantages of Arbitration

Proponents of arbitration cite a number of advantages when compared to filing a lawsuit in a court of law. In general, arbitration is more flexible than litigation. The parties are often encouraged to participate in the resolution process. Negotiating within the framework of a cooperative process may well lead to a mutually beneficial solution to a disagreement. Some other perceived benefits of arbitration are as follows:

Arbitration is typically cheaper than traditional litigation. An arbitration case can also be resolved more quickly than a lawsuit. Arbitration hearings can be scheduled to meet the needs of busy participants, including evenings and weekends. Litigation in a public court of law is subject to the limitations of a rigid court calendar. Unlike traditional litigation, complex legal procedures and rules of evidence are not available in an arbitration case. Procedures such as discovery and depositions are often used to delay legal proceedings in a court of law. An arbitration case provides more privacy than litigation. Arbitration participants can agree to keep the final resolution and sensitive information completely private.

The Disadvantages of Arbitration

There are many reasons to avoid a mandatory arbitration clause in a consumer contract. Credit card companies, health care providers and car dealerships frequently include mandatory arbitration provisions in their consumer agreements. Consumers should consider the following qualifications prior to choosing arbitration:

• The final decision of an arbitrator is difficult to overturn. It may not even be possible to seek redress in a court of law. The extensive budget and legal staff of a major corporation may prove to be a significant disadvantage for the average consumer. Many consumers are only made aware of a mandatory arbitration provision toward the end of the buying process. Lengthy contracts are complex and difficult to comprehend. Arbitration services actively market their services to major vendors of consumer products and services. For this reason, the selection and allegiance of an arbitrator may lack objectivity. Though the arbitration process offers more privacy than litigation, arbitration may also impose a corresponding lack of transparency. Since arbitration proceedings are private and seldom reviewed in court, the possibility of bias is enhanced.
• The cost of arbitration has risen dramatically in recent years. In particular, the cost of initiating a lawsuit is much less than pursuing an arbitration claim. Arbitration fees, especially if a panel of arbitrators is involved, can be quite extensive.
• Consumers should carefully weigh the pros and cons of arbitration before signing any contract that mandates arbitration in the event of a dispute. Informed consumers may prefer to shop around rather than agree to a binding arbitration requirement. Watch out for unexpected changes to existing consumer contracts. The addition of mandatory arbitration is usually hidden in the fine print. Don’t be afraid to raise objections with management or attempt to negotiate away a mandatory arbitration provision.

2: Employee participation and industrial democracy

This is a term used to denote the active participation of all stakeholders in the progress of an organisation or enterprise. The aim is to involve, at appropriate levels and in whatever way is feasible, all the organisation's members in decision-making processes. Advocates of industrial democracy cite the benefits associated with greater involvement, such as quality and productivity improvements attendant upon improved morale and a closer identification with the organisation's objectives. The term does not enjoy consistency of usage, however, and some authors use the term interchangeably with worker participation; it is also used occasionally to indicate mechanisms such as consultation machinery and even collective bargaining. Other examples of the process cited in the industrial relations literature include employee share option schemes, safety committees, suggestion schemes, and so forth.

Advantages

Democratic Companies are a Talent Magnet

Where would you rather work – a stifling, fear-driven workplace that may look great on a resume but makes your life miserable or one where you’re valued and your voice is heard? When given a choice, smart, creative, self-motivated people – the ideal employee – will choose the latter. Regardless of pay or prestige, people want to work where they feel appreciated and heard. Business owners and executives should look beyond motivational gimmicks and instead use democracy to attract the people needed to propel their businesses forward – and win the talent war in the process.

Democratic Companies Come Up With Smarter Ideas

Every business owner knows the maxim, “Innovate or die.” But coming up with ideas and acting on them isn’t enough. You need smart ideas. How to get them? As James Surowiecki writes, tap the wisdom of your crowd. Chances are the employees developing your products or services, fielding customer service calls or selling to clients have some great insights for your Next Big Idea – if only someone would listen.

Democratic Companies Work Fast

It may seem paradoxical to say that democratic companies know how to work fast but it’s true. Sure, the decision-making process, if it involves reaching a consensus, can take time. But the time and attention paid to everyone’s point of view only makes the execution phase faster once the decision is made. Typically, top-down decisions leave employees thinking, “Why are they doing that? Why didn’t they consult me? This will never work.” Most company’s best-laid plans fall apart in the execution phase because they didn’t have the democratic buy-in of the employees who would be executing on the decision. When employees have a say and understand the “why” behind a decision the execution is faster, more efficient and devoid of resistance.

Democratic Companies Have Happier Employees

The Gallup Organization recently reported that approximately three-fourths of the US workforce is disengaged at work, costing $300 billion annually. Employees report that not being engaged also impacts their emotional and physical health. Conversely employees who do feel engaged feel the opposite. A democratic system by definition is an engaging one, contributing to the physical and mental health of employees each day. Being engaged, having a say, and being treated as an intelligent human being makes people happy – and creates a happier place to work as well.

Democratic Companies Use Democracy to Boost the Bottom Line

Democracy impacts the bottom line because it attracts great talent, keeps turnover and absenteeism low and produces a more innovative workforce that executes on ideas quickly. A workplace with fewer layers of management due to a flatter, more decentralized system means that money can be used to hire great people — rather than manage underperformers. Democracy means a leaner, faster, happier and more innovative company –factors which give the bottom line a boost. So there you have it, five great reasons to become a democratic company. In my last article, I’ll explain exactly how to become a democratic workplace with real-work examples as well.

Disadvantages

Delayed Decisions

Workplace diversity can take many forms. At its extreme, employees may take part in virtually all decisions. This can delay quick responses to urgent situations and lead to more time spent on decision making than in taking action and producing results. The more voices involved in the decision process, the longer the delays and the more difficult it is to come to a resolution that works for all involved.

Strong Employee Power

Workplace democracy is intended to create an environment where employees have a recognized and influential voice. In some industries, employees form unions to ensure their voice is heard. The risk for employers is that a democratic workplace may go too far if employees demand authority to go along with their opinions. This can create a potentially harmful imbalance of power that leads to ineffective decisions or inner conflict that takes away from company focus.

Cultural Tension

When employees have input, tension can arise within the ranks. Employees may find that their opinions conflict on various topics. This may go against a culture where teamwork and collaboration are emphasized. Some companies implement segmented teams and specific roles for employees to share their opinions to avoid these types of issues. However, the more democratic the workplace, the more difficult it is to get employees and leaders to agree on what to do.

Top-down Fallout

Critics of workplace democracy point out that it contradicts traditional top-down styles of leadership. Managers in a business usually attain their leadership positions based on education, experience and work for the company. By giving employees a strong voice, you may risk taking decisions out of the hands of those that are most qualified. Plus, employees may abuse their democratic voice and align against the influence of management and create a virtual mutiny.

3: No-strike agreement

This term was traditionally used to describe a collective agreement which contained a clause specifying that industrial action should not take place unless and until certain procedural steps had been taken first; in other words, strikes or other action should only occur when a disputes procedure had been fully exhausted.

More recently the term has taken on a more literal meaning. A no-strike agreement is now often taken to refer to an agreement which has entirely ruled out the taking of industrial action; sometimes the agreement will point to alternative methods of dispute resolution, such as arbitration or a reference to the Labour Relations Commission for conciliation , and the Labour Court for a recommendation. Such agreements are still comparatively rare, but there are increasing numbers of examples nonetheless, and they may become a trend in the future. The first widely publicised no-strike agreement in this sense was that pushed through, against strong trade union resistance, by Packard Electric Ltd in Tallaght, Co. Dublin.

4: Single union agreement

A single-union agreement gives one trade union sole bargaining rights in respect of all employees in an organisation. That trade union is the only one recognised by the employer in question. Single-union agreements are quite common in Ireland in the private sector and are usually associated with a greenfield site and a foreign firm locating in the country. In such cases, it is quite common for the recognition agreement to be drawn up before the company commences operation and before any employees are hired. Procedures such as those relating to discipline and grievance may also be agreed. Such agreements, known as pre-production or sweetheart agreements, are commonly associated with single-union deals. In Ireland most single-union agreements are with the general union SIPTU (Services, Industrial, Professional and Technical Union); its justification for this is that it claims to be the most prominent union in the areas of the country where Greenfield sites have been located: areas such as the Shannon Development and so on. Trade union recognition, and single-union agreements, used to be recommended highly to inwardly-investing companies by the Industrial Development Authority (IDA), the State sponsored body whose role it is to give advice to new companies, but in recent years the IDA has ceased recommending that new employers recognise trade unions. It is not yet clear whether this new approach has had the effect of reducing the number of new single-union agreements. See collective bargaining.

Advantages to employees of a single-union agreement

1. There is only one union to negotiate with management – discussions are clearer

2. Most employees are in one union and not spread across several unions and therefore have greater power

3. There are no disagreements between different unions

4. A better working relationship should develop between the management and the union

5. Disputes are probably solved more quickly as only one union is involved in negotiation

Advantages to employers of a single-union agreement

1. There is only one union to negotiate with management – discussions are clearer

2. A better working relationship should develop between the management and the union

3. Disputes are probably solved more quickly as only one union is involved in negotiation

4. It is easier to agree changes to the working conditions and less time is wasted in arguments

5. A better relationship between management and employees mean fewer industrial disputes which is better for both employees and employers.

Task 5: Question on conflict in the workplace and trade union intervention

Fortise Company is in the business of designing and printing bottle labels for soft drinks distributors. The company is, at present, facing very difficult times as recessionary economic conditions have had a negative impact on the demand for its customers' products, which in turn is having a knock-on effect on the demand for Fortise Company's labels. As a result, the senior management team has been investigating how the company can become more efficient to ensure its future survival.

Redundancies across the company have recently been announced. In addition, the current operating conditions mean that there will be some significant changes made to the contractual terms and conditions for management and administration staff working in the various functional departments, along with a restructuring of operations.

Of immediate concern to the senior management is the threat made by the trade unions to take industrial action to protect jobs and also the contractual terms and conditions of their members.

a. Discuss the different conflict handling strategies that could be used in managing the conflict in ZEZ Company

b. Explain the different stages of negotiation that should take place to ensure the negotiation process between senior management and the trade union representatives is effective

Resistance to Change