Major Stakeholders of Industrial Relations

10th July 2021 0 By indiafreenotes


The role of the government has been changing from time to time in the matter of IR. Till 19th century, the governments throughout the world adopted a policy of laissez faire and left the IR matters to be settled by the employers and employees. However, with the increasing conflicts between them even on tiny matters, the governments’ attitudes changed to some kind of intervention in IR matters towards the end of 19th century.

In the present context, everywhere, governments intervene in the HR system in different ways. In India, government has prescribed various laws dealing with employer-employee relations and set machinery for resolving conflicts labour courts, tribunals at state and national levels.

These courts and tribunals intervene in the solution of industrial disputes referred to these. While developing IR system, an organization has to take into account the role played by the government in IR activities.

Employers’ Associations:

Like employees’ associations, employers may also join associations at the local or national level. The major associations of employers at all-India level are Federation of Indian Chambers of Commerce and Industry (FICCI), Confederation of Indian Industry (CII), Associated Chambers of Commerce and Industry (ASSOCHAM), Federation of Indian Export Organizations (FIEO), etc.

Besides, there are associations at national level representing each major industrial sector and state/regional level associations.

The major functions of the employers’ associations with regard to IR are:

  • To represent employers in collective bargaining at the national or industry level.
  • To develop machinery for the avoidance of disputes.
  • To provide information on employee relations.
  • To advise member organizations on the issues related to IR.


The second party to IR is employers. Since in the corporate form of organization, management represents the owners/employers, it can be treated as the second party to IR. The management is an organization is responsible to various stakeholders including the employees. Therefore, employer-employee relationship is also termed as management-labour relations.

Management tends to see employee relations in terms of the following activities:

  • Creating and maintaining employee motivation.
  • Obtaining commitment from the workforce.
  • Establishing mutually beneficial channels of communication throughout the organization.
  • Achieving high level of efficiency.
  • Negotiating terms and conditions of employment with employees’ representatives.
  • Sharing decision making with employees.
  • Engaging in a power structure with trade unions.
  • Management’s role in determining the status of IR system is quite crucial.

The following factors related to the management are important for IR:

  1. Attitudes of management towards the employees and their unions.
  2. The extent to which the management wants to exercise absolute authority to enforce decisions affecting the interests of the employees.
  3. The extent to which the management has designed the procedures for handling grievances, claims, and demands of the employees.
  4. The extent of the effectiveness of management in dealing with the problems and disputes related to IR.
  5. The organization’s business strategy; Stagnating, Growing, or Declining. In different situations, different IR strategy will be adopted.


Employees are a party to IR as they are affected most by the IR outcomes. In an IR system, employees may be grouped into two categories- those who have been defined as workers/workmen under the Industrial Disputes Act, 1947 and those who are not covered by this Act.

Various characteristics of employees such as their commitment to the organization, their level of education and social background, their attitudes towards the management and the organization, and their commitment to the work determine the extent to which they will-

  1. Improve their conditions of employment
  2. Voice any grievances
  3. Exchange views and ideas with management
  4. Share in decision making.

Trade Unions:

Trade unions or other employees’ associations play crucial role in the effectiveness or otherwise of an IR system. The employees may have grievances, claims, and other demands on individual basis but they express these, often, on group basis. In order to strengthen their bargaining power, they form some kind of associations to voice their grievances.

According to Armstrong, trade unions/employees’ associations have the following broad objectives in relation to IR:

  1. To secure improved terms and conditions of employment for their members, and the maximum degree of security to enjoy these terms and conditions.
  2. To increase the bargaining advantage of the individual worker vis-a-vis the individual employer by joint or collective action for the individual action.
  3. To obtain improved status for the worker in his work.
  4. To increase the extent to which unions can exercise democratic control over decisions that affect their interests by power sharing at the national, corporate, and plant levels.

The role of unions in determining the status of IR in an organization depends on their membership, attitudes towards management, inter-union rivalry, and the strengths at the national or local level.