INDUSTRIAL RELATIONS

IN
GERMANY, UK & INDIA

AYESHA CHAHAL
INDUSTRIAL RELATIONS IN
GERMANY
 The German industrial relations system has been called "social
partnership model" because of the cooperative style and the strong
consensus orientation.

The German industrial relations system can be characterized by the

following elements:

 For the majority of employees, collective bargaining takes place in

autonomous negotiations between industrial unions and employers'
federation on the level of an industry or on a branch level. Such
negotiations produce collective bargaining agreements which are
applicable for all companies in the region which are affiliated to the
employers' federation and where workers are affiliated to the
respective union.
 At firms with more than four workers, works
councils at the plant level form an important part
of a system of co-determination.

 In large companies with more than 500 employees

a second and additional form of co-determination
comes into play: the representation of workers
representatives at the supervisory board.

 Unions and employers' federations are playing an

important role in the design and revision of labor
laws and in labor jurisdiction.
 More recently the government has started high-level
talks with trade unions and employers' federations under
the umbrella of an "Alliance for Jobs and Qualification" in
order to reestablish a basis of trust and consensus for
creating job opportunities and for reducing structural
unemployment.

 The efforts are towards having recourse to judicial

regulations not only as a general frame of reference for
negotiations but also as a guide for day-to-day decisions.

 The trade unions are mostly organized at industry level.

 The most of the trade unions in the Federal Republic of
Germany are no longer organized as occupational associations
but represent all employees within an industrial branch.

 Certain rights have been established enabling every employee

to participate through his elected representatives at plant level
in some areas of management activity.

 The trade unions institutionally are not present within the

undertaking. Their influence is indirect; operating mainly
through personal link between Works Council members and
union members on account of the fact that many Works
Council members hold union office.
 Management has to report to the Works Council about
the economic situation of the undertaking every three
months. The Works Council remains the main
institution for shaping workers activities towards
greater participation at the plant level.

 Work Council influence management’s decisions while

management’s decisions making power is not affected.

 Works Councils have the right for instance to demand

dismissal in case of anti-social and unlawful behavior
on the part of an employee.
 Works Council has the right to appeal to the Labour
Court in the event that the management does not take
into account its objections to a planned regrouping or
transfer of employees.

 Works Council has the right to obtain a hearing from

management in the case of every dismissal.
Trade Unions
 The existence of industry federations means that
workers’ associations are organised around specific
industries regardless of the nature of work.

 12 such industrial unions belong to the German

Confederation of Trade Unions (Deutscher
Gewerkschaftsbund - DGB).

 The member unions of the DGB consider themselves to

be ”unitary unions” and claim to have no partisan or
ideological attachments.

 The DGB plays more a co-ordinating role than a

negotiating role.
Employers’ Associations

 The BDA (Bundesvereinigung der Deutschen Arbeitgeberverbnde)

is composed of 65 federations.

 Approximately 1,000 employers’ associations in Germany are

affiliate members through the 65 federations.

 The BDA represents some 80% of all private enterprises in

Germany. With its subdivisions the BDA controls a wide network of
regional and local offices and institutions.

 The main function of the BDA is to represent employers’ interests

in the area of social policy.
Active participation of unions and
employers' federations in legal affairs
 Unions and employers' federation are an integral part of the norm
setting machinery through active participation in formulating new
laws. They are regular contributors to parliamentary hearings on
labor law reforms.
 They contribute through participation in working groups in ministries
and governmental agencies. They have developed powerful
machineries to influence the public debate.
 They are as well active participants in the labor law jurisdiction.
They have an important role in the implementation of the labor law
jurisdiction by nominating persons for being honorary judges in the
labor courts.
 Furthermore, they play an important role in the running of the
unemployment benefit scheme, and they have established roles in
the various pillars of social security. Consensus seeking is therefore
taking place at all these levels on a permanent basis.
 On top of that the "Alliance for Job Creation and Qualification" has
opened another informal but effective channel for the social partners
to participate in financial, economic and social policy making.
Collective Bargaining
 Collective bargaining between employer’s and worker’s association
occupies an important place in the social and economic life of the
country because the wide degree of autonomy in negotiation allows
these associations a relatively free hand.

 In Germany, under the Collective Agreements Act, the validity of a

collective agreement is not conditional upon government approval. The
German statute law has nothing to say regarding the actual process of
collective bargaining or settlement of dispute arising in that connection.
Rules in this respect have largely been worked out in the past twenty-
five years by court decisions mainly by the Federal Labour Court and
Federal Constitutional Court.

 The another way by which the central organizations have been playing
role is through top level meetings at which representatives of both sides
come together, interact and exchange views on issues of common
concern.
 For the majority of employees in German companies, collective
bargaining takes place between trade unions, which are organized on
an industrial or sectoral level, and employers' federations which are
organized in a similar manner.

 The autonomy of employers' federations and trade unions in the

conclusion of collective agreements is constitutionally guaranteed, and
especially excludes the state from intervening in the bargaining
process.

 Collective agreements include wage and salary agreements, general

agreements and skeleton agreements. The agreements are applicable
to all companies of the respective industry or branch in the respective
region affiliated to the employers' federation and where workers are
represented by the respective trade union which signed the collective
bargaining agreement. In practice, agreements apply not only to those
workers belonging to the union but to non-union members as well.
 Currently there are more than 30.000 collective agreements in place,
every year more than 9.000 collective agreements are negotiated.
Collective agreement
(Flaechentarifvertrag)
Labour Participation in Management
– The West German Model
 German management operates within the confines of the most
structured schemes of worker participation in management currently
operating in any western industrialized country.

 Legislation prescribes a system of works councils with strongly

defined rights and responsibilities in social, personnel and economic
areas. Works Councils and workers representation on supervisory
boards were introduced after the First World War under the new
Weimar Republic.

 From the very beginning co-determination has been a political issue.

Workers participation in management was the declared objective of
the German labour movement during the early 1920’s. In the
intermediate post-war years, the iron and steel industry, because of
the role it had played during the war, was placed under special
trustee administration, and parity between workers and
shareholders representative on the supervisory board was
introduced.
 The position now is that all companies in the coal, iron and steel
industries with over 1000 employees are subject to co-determination
law of 1951. All other companies with 500 to 2000 employees are
subject to the Works Constitution Act of 1952, and those with over
2000 employees (except coal, iron and steel) must adhere to the co-
determination Act of 1976.

 General Features of Co-Determination

The system is based on three main institutions:

(i) Works Council - A Works council must be set up in every

establishment with five or more employees. It is a body of workers
representatives only elected by the entire work force whether union
members or not. Its size varies according to the number of
employees in the establishment. The following rights of the works
council are considered:
a.) the right to co-determination,
b.) the right to consultation and participation,
c.) the right to information.
 (ii) Workers representatives on the supervisory boards; - This is a statutory
body under company law, situated somewhere between the shareholders
assembly and the management board. Its membership is not a full-time job.
It deals only with broad economic and financial issues. This board appoints
the members of the management board, overseas its activities and
approves decisions of major importance as provided by the laws of the
company concerned. Normally, supervisory board meets four times a year.
Worker’s representatives have been on supervisory boards in Germany for
over 50 years.

 (iii) Labour directors on the management boards - It is appointed by the

supervisory board and comprises three directors, representing technical,
commercial, and personnel functions. One of the three directors should be a
nominee of the workers. In coal, iron and steel industries, the appointment
or dismissal of the workers director should have the consent of the workers
representatives on the supervisory board. The Act, which extended co-
determination to all companies with more than 20,000 employees, also
provides for the position of a worker director but puts him on the same
footing as the other members of the management board, that is, he is
appointed by the majority of the supervisory board.
 Central aspects of the on-going modernization of the industrial relations
systems are:

 The introduction of more flexible elements into the collective bargaining

system.

 The strengthening and adaptation of mechanisms of co-determination at the

plant level.

 The reestablishment of consensus building mechanisms at the national level

through the formation of a so-called "alliance for job-creation and
qualification" which brings together government representatives with trade
union leaders and representatives of the employers' federations.
INDUSTRIAL RELATIONS IN UNITED
KINGDOM
 Industrial Relations system in UK occupies a unique place in the onward
of World Industrial Relations.

 Its development is associated with the rise and growth of trade

unionism.

 Since eighteenth century the system rests on voluntary arrangements

for negotiation and consultation agreed by the parties.

 However the autonomy which characterized the Industrial Relations

system in UK has suffered severe stresses and strains. The factors
which contributed to the assault on the autonomy of the system includes
changes in technology, growth in the scale of industrial organization,
emergence of small number of large and powerful unions, growing
wealth and increased Government intervention in economic affairs.
 Three distinctive characteristics of British industrial relations are:

 The tradition of voluntarism;

 The representation of workmen through trade union officers at

workplaces in the form of shop-stewards; and

 The organisation of trade union membership along occupational rather

than industrial lines.

 In Britain, industrial relations have come to mean the long-established

and well-tried system of bargaining between employers' organisations
and trade unions The rates of pay and other terms and conditions of
employment of a majority of employees are determined by collective
agreements, voluntarily entered into between trade unions and
employers or their representatives,
 Despite the general effectiveness of the voluntary machinery which
has been established in nearly all branches of industry, differences
are bound to arise in cases of failure in reaching settlements. The
state helps in preventing and settling such diffe-rences. This help is
rendered .by the Ministry of Labour under statutory powers derived
from different enactment. The normal method by which assistance is
given is:

 Conciliation,

 Arbitration and

 Investigation or formal inquiry.

Employer’s Associations
 In the historical perspective the employees association gear up as a
means of combating the growing strength of trade unions. These
organizations have been recognized as legal bodies under the
Trade Union and Labour Relations Act, 1974 and can obtain
registration Certificate from the certification officer.

 These have been formed on trade basis. A few are purely local in
character or deal with a section of an industry, others are national in
scope and are concerned with the whole of a particular industry.

 The principal function of the employers association is to negotiate

collective agreement with trade unions on an industry wise basis.
Most of the national federations are affiliated to a central federation
called the confederation of British Industry. This organization deals
with all matters including labour relations and represents them
nationally to the Government and the public.
Trade Unions
 The Trade Union movement in UK has grown from strength to strength over
last 225 years. Trade Union members mainly consist of manual workers in
larger firms in the main industries including transport and also include large
number of workmen and clerical, supervisory staff.

 Trade Unions of manual workers fall into three types namely craft, general
and industrial. There are also white collar unions. There is no single pattern
which is followed for the purpose of organization of workers. However, there
is a strong bias towards organization on an occupational basis and
negotiations are conducted on an industrial basis. At the national level
Trade Union Congress constitutes the national apex body organization of
British trade union movement.

 These trade unions are independent, voluntary association of employees

and are financed and run by their members primarily in order to protect their
interests as employees. This is done mainly by negotiating wages and other
terms of employment and also by promoting and influencing legislation and
official action.
Role of Government
 Due to pursuit of Laissez faire policy in economic affairs in the past
and faith in promoting autonomy in industrial management, the state
in UK has traditionally followed a policy of non-intervention in the
sphere of industrial relations.

 However, with the assumption of the role of a welfare state the

Government has increasingly assumed powers to regulate
employment relations between labour and management without
jeopardizing their autonomy in collective bargaining.

The State in UK has been guided by the following four principles in

the sphere of industrial relations:

 The principles of collective bargaining freely conducted with due

regard to the general interests of the community.
 The principle of developing and maintaining orderly procedures in industry
for the peaceful and expeditious settlement of disputes by negotiation,
conciliation and arbitration with due regard to the general interests of the
community.

 The principle of free association of workers in independent trade unions,

and of employers in employers’ associations, so organized as to be
representative, responsible and effective bodies for regulating relations
between employers and workers.

 The principle of freedom and security for workers, protected by adequate

safeguard against unfair industrial practices whether on the part of the
employees or others.

 On the basis of above principles, the Government has passed legislation to

provide a minimum legal framework to develop industrial relations between
industry and labour under conditions of free collective bargaining.
Joint Consultation and Worker’s
Participation in management
 Voluntary joint consultation at the plant level between the employers and the
employed has long been a characteristic of the industrial relations system in
UK. The practice of joint consultation is generally traced back to the Whitley
Committee of 1916, which recommended the establishment of:
- joint industrial councils in well-organised industries
- works committees representative of the management and the workers
in individual establishments

 Joint consultation today is quite common in UK. These committees are

advisory in character, and their functions include consideration and
discussion of changes in methods of production, safety and welfare of
employees, training and education, work rules and personnel problems, etc.
except wages and other issues falling within the sphere of Collective
Bargaining.
COMPARISON IN INDIAN CONTEXT
Worker’s Participation
The objectives of worker’s participation differ from country to
country.

 In UK participation is practiced in the form of Joint Consultation.

These committees are advisory in character, and their functions
include consideration and discussion of changes in methods of
production, safety and welfare of employees, training and
education, work rules and personnel problems, etc. except
wages and other issues falling within the sphere of Collective
Bargaining.

 On the contrary workers’ participation has nothing to do with

productivity in Germany. The underlying idea of co-determination
is to provide a rational means of handling and settling disputes at
the enterprise level.
 The objectives of worker’s participation in India are yet to be clearly
specified. They differ from the point of view of Government,
managements, and workers’ unions. While workers wish to achieve
security of employment, better wages, etc. Trade union leader’s ego
satisfaction, and so on, employers set objectives like maximizing
productivity, profit, discipline of workers, etc. on the other hand,
Government is inclined to establish its control and influence on the
industrial arena on one hand and to gain industrial peace and
harmony on the other. Thus workers’ participation has a wide range
of objectives in India.
Labour Courts
 In Germany the Federal Labour Court "has become at least as
important as the legislator as far as regulations in the field of labour are
concerned." In that country the courts have been responsible for
formulating many of the rules relating to strikes. In India and UK a
labour court system, coupled with the pronouncements of appellate
courts, have had a significant impact on the formulation of the rules
applicable to the relations between employers and workers. In those two
countries thousands of court decisions have enunciated the rules
regarding such issues as the grounds on which termination of
employment may be considered fair or unfair; the principles of wage
fixation; when trade union action may be considered legal or illegal,
justified or unjustified; and even what forms of trade union action are
permissible or not permissible.

 The main difference between the labour force of India and that of
Germany is that the latter has highly skilled labour force in comparison
to India. Moreover the work force is more committed towards their
organization.
System of Recognition of Trade Unions
 UK is a major proponent of voluntarism. The British system of industrial
relations has traditionally accorded a priority to voluntary over
compulsory rules for collective bargaining. Yet now there is a move
towards regulation of the relationship by government through various
rules and regulations.

 India is very much influenced by British voluntarism and experiences a

high degree of multi-unionism and an extremely strong inter-union
rivalry. In 1958, the Code of Discipline in Industry was adopted by all
employers’ associations and trade unions at the Indian National Labour
Conference and represented a tripartite advisory venture for
improvement of industrial relations. Criteria for the recognition of unions
are contained in this code and employers are required to recognize
unions on this basis.

 Germany has introduced legislation which has made the recognition of

trade unions mandatory under certain conditions.
Collective Bargaining
 Collective bargaining between employer’s and worker’s
associations occupies an important place in the social and
economic life of Germany because the wide degree of autonomy
in negotiation allows these associations a relatively free hand.

 In UK, collective bargaining is an important element in union-

management relationship and trade unions have been able to
gain important considerations for their members.

 In India, collective agreements have not made much headway.

An important prerequisite of it is the encouragement to strong
and powerful trade unions and satisfactory arrangement for union
recognition by statutes as also the creation of conditions in which
such arrangement has a chance to succeed. All this is missing in
India.