Chapter 8: Industrial Relation and Disciplinary System

Concept of discipline
Discipline is the situation where employees follow the rules and regulation, norms of the orgn. Employee discipline
is essential for effective HRM in orgn. No orgn. can be effective without promotion and maintenance of discipline at all
levels of employees. Discipline regulates the behavior of employees. Discipline regulates the behavior of employees. It
is a necessary condition of orderly behavior. The purpose of discipline is to encourage employees to follow the rules
and regulation.

The term discipline refers to a condition in the orgn. where employees conduct themselves in accordance with the
orgn’s rules and standard of acceptable behavior. For the most part employees discipline themselves by confirming to
what is considered proper behavior because they believe it is the reasonable things to do. Once they are made aware
of what is expected of them, and assuming they find these standards or roles to be reasonable they seek to meet those
expectations.

According to Decenzo and Robbins “Discipline refers to a condition in the orgn. when employees conduct
themselves in accordance with the orgn. rule and standard of acceptable behavior”

According to Gary Dessler “Discipline is a procedure that correct or punishes subordinates because a rule or
procedure has been violated”

In conclusion, Discipline orderliness, it means adherence to rules regulations, procedures and standards of
acceptable behavior to achieve goals. The word discipline indicates that the member of a group reasonably or highly
confirm to the rules and regulation which have been framed for it or by it. Orderly behavior is essential for achieving the
orgn. objective

Disciplinary policies (policy (guideline) in managing discipline):

Not all employees will accept the responsibility of self discipline. There are some employees for whom the
motivational concepts are not enough to draw out the accepted norms for responsible employee’s behavior. This
employee will require some degree of disciplinary actions. For this certain guideline has to applied, they are s follow:

1. Make the disciplinary action corrective (not punitive): The objective of disciplinary action is not to deal on
punishment. The objective is to correct an employee’s undesirable behavior. While punishment may be necessary
means to that end, one should never lose sight of the eventual (ultimate) objective.
2. Make the disciplinary action progressive: Type of disciplinary action has to be varies depending upon the situation. It
is generally desirable for disciple to be progressive. Only the most serious violations will be dismissed after the first
offence. Typically a progressive disciplinary action begins with an oral warning and proceeds through a written
warning and only in the most serious cases can be dismissal.
3. Follow the “hot stove” rule: One of the very popular guideline managers can follow re hot stove rule. According to
this principle, discipline should be:
 Immediate: Just like touching a hot stove, where feedback is immediate, there should be no misunderstanding
about why discipline was imposed.
 With warning: Small children know that if they touch a hot stove, they will be burned. Employees must know very
clearly what the consequences of undesirable work behavior will be. They must be given adequate warning
beforehand.
 Consistent: Every time a person touches a red-hot stove, he gets burned. Likewise for indiscipline must be
administered consistently, given similar circumstances surrounding the undesirable behavior. Consistency among
individual managers across s the org is essential.
 Impersonal: A hot stove is blind to who touches it. Similarly, managers should not play favorites by disciplining
subordinates they do not like while allowing the same behavior to go unpunished for those who they like.

Comprehensive policies in administering discipline are:

1. Location of responsibility (who): The responsibility for maintaining discipline should be entrusted to a responsible
person.
2. Disciplinary action should be taken in private (where): If a disciplinary action is taken in the presence of other
employees, it may harm the dignity of the employee and degrades his social standing with his colleagues.
3. Get the facts (why): Before taking any disciplinary action, it should be made sure to get and keep adequate records
of offences and warnings. It is always better to let the subordinate fully explain what happened and why it happened.
4. Behave in a normal manner (how): After a disciplinary a disciplinary action has already been taken the supervisor
should treat his subordinate in a normal manner. The attitude of the supervisor should be forgive and forget.
5. Do not back down when you are right: When the supervisor knows he is right and rule was broken, that adequate
warning is given and the penalty is not severe he should not back down or comprise on penalty especially once the
decision is announced.
6. Handle in a positive manner: The philosophy behind administering a disciplinary action is that a negative motivation
should be handled in appositive manner. That is it should be properly convinced to the employee that a negative
approached does not pay.
7. Action should be taken in a cool atmosphere: The action should be taken, when the anger has “cooled off” a bit so
that rational and sensible judgment could be taken or applied.
8. Follow the “hot stove rule”:

Procedure of managing discipline

Discipline regulates the behavior of employees. But all employees not follow the rules and regulation then orgn has to
take action against those employees who always behave in unacceptable behavior, but while taking action some
procedure has to follow:
1. An accurate statement of the disciplinary problem: Firstly managers has to ascertain answer of following question
before taking action:
 Does this case call for a disciplinary action?
 What exactly is the nature of the violation or offence?
 Under what condition did it occur?
 Which individual were involved in it?
 When or how often did the violation occur?
2. Collection of data or facts bearing on the case: Before any action is taken in a case, it is essential to collect all the
facts about it. Detail examination of the case should be made within the given time limit. The facts gathered should
be realistic which can be produced before a higher authority.
3. Selection of tentative penalties: The kind of penalty to be imposed for an employee should be determined in a
planned manner. Should it be a simple reprimand, a financial or non-financial penalty, or should be demotion,
temporary lay-off or discharge?
4. Choice of the penalty: When a decision has been taken to impose a penalty, the punishment to be applied should be
such as which would prevent a recurrence of the offence. If the punishment is lighter than it should be, it may
encourage the violation of the same again. If the grater than it should be, it may lead to a grievance.
5. Application of the penalty: The application of the penalty demand a positive and assured attitude on the part of the
mgmt. if the disciplinary action is a simple reprimand, the executive should calmly and quickly apply the action. But
when severe action has to be imposed serious and determined attitude is highly desirable.
6. Follow-up of the disciplinary action: A disciplinary action should be evaluated in terms of its effectiveness after it has
been taken. In other words, there should be a more careful supervision of the person against when a disciplinary
action has been taken.

Type of Disciplinary Actions (Process of disciplinary action)

Disciplinary Action should aim to correct undesirable behavior. It should not be punitive (designed to punish). It
should be progressive. It should be based on severity and frequency of the offence. It should be applied consistently in
an impersonal manner.

Disciplinary Action generally follow progressive sequence of six steps (given by Decenzo and Robbins), same
sequence is followed to control discipline in Nepal with some alteration according to the size of orgn. They are as
follows:

1. Oral Warning
2. Written Warning
3. Suspension
4. Payout
5. Demotion
6. Dismissal
 Oral Written Suspension Pay-out Demotion Dismissal
Warning Warning

1. Oral Warning: This is the mildest forms of disciplinary action for minor offences. The employee is reprimanded orally
in a private and informal environment. The oral warning are:
a) The employees should be informed of the role that has been violated and the problems caused by it.
b) The employees should be given chance to provide explanation including the plan for correction.
c) Both the manager and employees should agree about solution to the offence to prevent it from recurring
including potential consequence of future violations.
d) A record is made of the oral warning and place in the employees file.
2. Written Warning: The second step in the progressive discipline process is the written warning. In fact, it is the first
formal stage of the disciplinary procedure. This is because the written warning becomes part of the employee’s
official personal life. The written warning includes:
a) The employees is advised in writing of the violation its effect, and potential consequence of future violations.
b) The employee is given a chance to give explanation, including the plans for correction.
c) The copy of written warning becomes a part of the employee’s life.
d) The HRD is provided a copy of the written warning.
3. Suspension: It is a short lay-off from work without pay. The employee is prohibited from performing the tasks
assigned to him. It generally follows written warning. The duration of suspension can be one day to several weeks. It
can also be the first disciplinary action for serious violations.
Suspension provides a rude awakening to problem maker employees. They may start adherence follow to rules
and standards of acceptable behavior.
4. Pay-Out: The offender (problem maker) employee is either denied annual increment or his pay is out. It has
demoralizing affect on the employees. If the employee alters his behavior, the pay cut is withdrawn. This disciplinary
action rarely applied in practice. It is temporary in nature.
5. Demotion: A demotion is reduction in job grade accompanied in pay. This action is used where mgmt. want to avoid
dismissal of the problem employees.
Demotion action demoralize not only to the problem creator but also the co-workers. It is of permanent nature. It
gives a loud message to the concerned employees to shape up for discipline.
6. Dismissal: It is the ultimate disciplinary action for the most serious offences. The employee is dismissed from the
job, when all other action fail, dismissal is the answer.
 It provides emotional trauma to the offending employees. An employee tends to resort to legal action to fight
dismissal.
 Generally theft, misconduct, drug abuse, for significant of information and employment application, lack required
qualification and job elimination result in dismissal.
 Dismissal is costly. It can have adverse effect on other employees.

Grievance handling
Concept
Every orgn. faces problem related to employees grievances not matter how they are planned or organized. This
grievances represent the classification or feeling of injustice in connection with the employment of people in the orgn.
Grievances are employee’s perception for unfair treatment as the job manifested in feeling of discontent or
dissatisfaction. They mainly result from differences in employees expectation and managerial practices relating to
condition of employment, when employee’s complaint and brought to the notice of mgmt. it become grievances.
A complaint becomes a grievance when dissatisfaction is brought to the notice of the mgmt. employees grievances
re situation in which the employees are dissatisfied with the company. In common usage grievances refers to any
discontent or dissatisfaction, whether expressed or not and whether valid or not arising out of anything connected with
the company that an employee thinks, believes or feels in unfair and inequitable.
According to the Keith Davis “Grievances is any real or implies feeling of personal injustice that an employee has
about the employment relationship”
According to the Wendell French “Grievances is a formal complaints field by an employee following an established
grievances procedures”
According to dale S. Beach “A grievance ia any dissatisfaction or feeling of injustice in connection with ones
employment situation that is bought to the attention of mgmt”.
 Therefore, Employee grievances are a matter of important concern for HRM. Grievances are employee’s
perception for unfair treatment on the job manifested in feeling of discontent or dissatisfaction. It mainly results from
differences in employee expectation and mutual practices relating to conditions of employment.

Causes of Grievances
1) Interpretation Differences
2) Mgmt. practices
3) Labor union practices
4) Personality traits
5) Orgn. culture
6) General working condition
7) Concerning wages
8) Concerning supervision
9) Concerning individual advancement

Methods and mechanism of grievance handling / Steps in Grievances procedure

Grievances method and mechanism popularly known as grievances procedures differ from firm to firm. It is
necessary that employees know the channels through which employees can express grievances. There re two
methods of mechanisms for the settlement of grievances. They are:
1. Open-door policy (method and mechanism): Some companies have an informal and open door policy for grievance
handling. In this approach, employees free to go up the top level executives with their grievances for settlement.
2. Step-ladder procedure (process): In large orgn open-door policy is not suitable. Most companies have introduced a
step ladder procedure for the settlement of grievances. Grievance procedures are typically designed to resolve
grievances as possible and at the lowest level possible in the orgn. Grievances procedures follow five successive
steps. They are:

Step One Grievant-Supervisor Satisfied

Grievant-Departmental Head
Step Two
Satisfied
(Verbal complaint)

Grievant-Grievance Committee
Step Three Satisfied
(Appeal for Revision)

Grievant-Top Mgmt
Step Four Satisfied
(Appeal for Revision)

Voluntary Arbitration
Step Five No need
(Referred for Arbitration)

Decision binding for all

The various steps are as follow:

1) Step one (Grievant – Supervisor): The grievant employees orally conveys his grievances to the immediate
supervisor. The supervisor decides about the grievances within a fixed time period. This step is most suitable for
“give and take” approach.
2) Step two (Grievant – Department Head): If the grievant is not satisfied with decision of the supervisor, he appeals
o the higher level of mgmt. For e.g. department head in writing. The department head gives a decision within a
fixed time period.
3) Step three (Grievant – Grievance committee): if the grievant is not satisfied with decision of the department head,
he appeals to a grievance committee. This committee comprises of the representative of employer and
employees. The committee gives a decision within a employees. The committee gives a decision within a fixed
time period.
4) Step one (Grievant – Chief Executives): If the grievant is not satisfied with the decision of the grievance
committee he appeals to the top mgmt. of the orgn. for revision. The top mgmt. gives a decision with a fixed time
period. Union officials can accompany the grievant for discussion with mgmt.
5) Step one (Grievant – voluntary Arbitration): if the grievant is not satisfied with the decision of the chief executive,
the grievance is referred for voluntary arbitration. The arbitrator is an independent third party.
The arbitrator follows a quasi-judicial process. Both parties present evidence and are cross examined. The
decision of the arbitrator is binding on both parties. This is the last step in grievance procedure.

Method of reducing employee complaints/ grievances

An individual may have complaint on many subjects. Knowing what makes employees unhappy is half the
problem when managers are serious about it. In this situation managers have to listen to their employees and provide
opportunities for them to communicate the problem with concerned managers. Popular methods to reducing employee
employee’s complaints are:
1. Right man at the right job: A major source of complaint from employee’s side is about the job itself. If there is
mismatch between demand of the job and ability and interest of the employee the complaint will increase naturally.
So, one way to reduce the employee complaint is place right man at right job.
2. Education and training: Most of the repetitive type of complaints concerning job, supervision, rewards,
organizational culture can be reduced y the way of systematic and repetitive education and training.
3. Proper supervision: A major source from complaint from employee’s side is about supervision like autocratic style,
too much or two low supervision, harassment, one way communication etc. so, proper, timely and friendly
supervision can reduce employee complaint.
4. Employee survey: Hr Managers with the help of other line managers need to organize employee survey at a
specific interval of time. This technique helps to identify the source of complaints. So, managers can install
preventive measures to minimize the complaints.
5. Participative technique: Participative decision techniques promote source of ownership, motivation and morale of
the employees. When they are involved in decision making that affects them naturally there will be less chances of
complaints.
6. Proper communication: It helps employees to understand expected behavior, performance standards, policies etc.
all these activities ultimately help to increase the employee motivation. As the motivation increases complaints are
sure to decrease.
7. A system of equity and fairness: Other major source of employee complaints is unfair and equitable treatment in
term of pay, promotion and other types of activities. So managers can reduce complaints by applying equity and
fairness in the orgn. as far as possible.
Industrial Relation
Concept
The term labor system is popularly used in firm or industry where union has been established. Labor relation is
the product of industrialization. Traditionally, they were concerned with the relations that existed between employer
and labor. Labor relation is very important to reduce conflict. It is concerned with managing interrelationship between
the three factors:
a) Workers, represented by union.
b) Employees represented by employer association.
c) Society represented by the govt. and various pressure groups.
These three factors and their interplay constitute the study of industrial relations. Industrial relation denote the
relationship between “workers and employees, between worker, orgn and employers and between the respective
orgn. and public authorities.
Managing or harmonizing the sectoral, divergent or even conflicting interest of these three factors with the goals
of development is essence of industrial relation. Failure to harmonize such divergent interests and would have
adverse effects on developments efforts and it would result in work stoppage, disruption of essential services, social
tension even investments climate, low productivity and loss of faith in the democratic system. it is therefore of almost
relevance to development evoke or build a system of industrial relation which would harmonize and at the same time,
enhance the interest of the govt., employees and the workers. Thus, the basic missions of the industrial relation
system are:
 To promote and develop healthy labor mgmt. and govt. relations.
 To minimize industrial conflict and tensions.
 To establish effective and meaningful communication system and participative culture at the national,
Industrial and shop floor levels so as to provide a favorable work climate.
According to John T. Dunlop “Labor Relation are the complex of interaction relation among workers, managers
and govt.”
According to Kochan “Industrial relation practices and outcomes are shaped by the interaction of environment,
forces along with the strategic choices and values of managers, union leader, workers and public policy decision
maker”
In conclusion, Industrial relation is multidimensional affected by economic, social cultural, political, legal,
technological and occupational forces. The desire for harmonious relation is considered natural and wide spread.
Higher productivity quality of work life, readiness to change and sound organizational climate is the outcome of labor
mgmt. relation. It refers to the system in which employers, workers and their representatives, directly or indirectly, the
govt. interact to set the ground rules for the governance of work relationships. Industrial relations system reflects the
interaction between the main actors in it, the employers (association), worker (trade union) and the society.

Actors and Process of industrial relation

Actors
There are many actor which has direct or indirect influence on the labour relation but main actor are employer,
employees and society.

Worker/ trade
union

Employer /Employer Society /Govt. /

association Pressure group
 1. Workers: They are the first and foremost actors of industrial relation. They are the sellers of labor and skills and
valuable time to industry for wages and salary. They directly affect the productivity and efficiency of the orgn. They
constantly pressurize the mgmt. to fulfill their demand by giving them the appropriate wage, reward and other types
of benefits to fulfill for their working. Industrialization and the recent growth in service industry have greatly
increased the number of workers. They are representative:
 Unions: Workers are represented by trade unions. A union is an organization of workers, acting collectively,
seeking to promote and protect mutual interests through collective bargaining. Unions represent labor in
collective bargaining.
2. Employers: Employer is the major component of the labor relation. Employers are the provider of work. They are
the buyer of labor and skills and they hire the labor and skills and knowledge. They compensate the employees for
their skills, knowledge, and time devotion and in some case hire and fire workers. They are represented by:
 Employers association: Employers are represented by employers association. They promote and protect the
interest of the employers. They represent employers in the collective bargaining.
3. Society: They tries to regulate the relationships of employer and employees and keep an eye on both group to keep
both on track. They lay down principles, norms, rules, and regulation and give awards. Society in industrial relations
is represented by:
 Government: The govt. can be national or local level. It regulates the relationships between workers and
employers. It promoted and protects the interests of both groups through labor legislation, regulations, labor
courts, tribunals, wage boards etc. it enforces the compliance of laws in labor relations.
 Pressure groups: They are special interest groups. They lobby and pressurize govt. to enact or withdraw laws to
protect the interest of labor or employers.

Process of industrial relations

Industrial relation is a system which creates rules and regulations to maintain industrial democracy and peace in the
orgn. While making rules the govt. plays a vital role. The process of industrial relations consists of the following steps:
1. Legal existence of mgmt. and union: The fundamental activity of a industrial relation is a existence of the
association and union in the orgn. and there should be recognition of the labor union and employer association.
2. Unionization: A union is an orgn. of workers. The process of labor relations begins with the formal establishment of
labor union and its recognition by employer. The unionization process should have legal basis, organizing drive,
registration, election and recognition.
3. Dispute or conflict: Disputes are the conflicts between employees and mgmt. They serve as the starting point for
labor relations. The key issues which lead to dispute or conflict relate to right and interests. The cause of disputes
can be managerial and political. Example of dispute or conflict are as:
 Wage, befits, services.
 Working conditions
 Terms and conditions of employment
 Discipline and grievance procedure
 Political interference.
4. Collective bargaining: It refers to negotiation of agreements between two parties. The unions and mgmt. negotiate
at the bargaining table. Union put their list of demands. Through negotiation, a compromise is reached between
union and employer. Collective bargaining is a means of setting issues or problems relating to terms and conditions
of employment.
5. Contract settlement: Collective bargaining process usually starts with a list of demands being presented to the
mgmt. by the union’s behalf of their workers. Ultimately both of the parties come to a negotiation or they settle a
contract. These contracts have legal and moral values to the conflicting parties. The comprise between union and
employer is converted into a written contract, this contract is approved by union members.
6. Implementation (contract administration): The agreed upon contract is administered by:
 Communicating the contract to all union members and mgmt. personnel.
 Implementing the contract.
 Interpreting the contract and grievance resolution
 Monitoring activities during the contract period.
Contract administration is the primary responsibility of mgmt.
7. Follow-up of contract: Both mgmt. and union should strictly implement the promises stated in contract. The contract
must be properly communicated. Lack of proper communications can lead to misunderstanding and even to strike.
Sometimes managers and supervisors who are ill-informed may adversely mislead the workers about the
implementation and follow-up. Proper implementation and follow-up likely to ensure greater acceptance.

Issues of industrial relation

Current issues in labor relation in Nepal
The history of labor relation in Nepal is about half a century old only. The following are the key issues in Nepal’s
labor relation:
1) Suspicious mgmt.: The Nepalese mgmt. has remained suspicious of trade union and their activities. It has taken a
confrontation oriented reactive approach to labor relations, whenever there is industrial unrest or strike, mgmt react.
They lack a strategic vision to labor mgmt.
The important issue in labor relations therefore is now to persuade Nepalese mgmt. to adopt a proactive strategy,
toward labor relations. This strategy requires careful anticipation and prediction of the moves of labor unions to
respond effectively.
2) Union rivalry: Nepalese trade unions are highly politicized through their affiliation to political parties. This has
divided trade unions on ideological lines. Multiplicity of trade unions is a common feature of large Nepalese orgn.
Inter-union rivalries have adversely affected the effectiveness of labor unions.
The issues therefore are now to get rid of the unions of political influences, so that labor can take a united stand
to promote and protect its interest and welfare.
3) Collective bargaining: Collective bargaining in Nepal lacks good faith. Mgmt. regard it as an encroachment in its
method to manage. Both labor and mgmt. don’t make every reasonable effort to arrive at settlement. Labor union
as well as mgmt. lack professional bargainers. The agreement also remains poorly implement.
The issues therefore are how to make collective bargaining the hallmark of labor relation in Nepal.
4) Legal framework: Nepal lacks a comprehensive legal frame work for labor relations. It is still in starting stage. The
individual unrest and disputes are growing. Govt. mediation has become place in setting labor disputes though a
“fire bridge approach”.
The issue therefore is how to effectively implement the existing law and how to develop a comprehensive legal
framework.
5) Labor policy: Nepal lacks a comprehensive labor policy. The five year development plans provide piecemeal
approach to labor relations.
The issue therefore is urgent formulation of a comprehensive labor policy to manage labor-relations. It should be
in conformity with the development needs and socio-cultural realities of a country. it should also cover migration of
labor.
6) Quality of work life: Nepalese trade unions are obsessed with wage increase demands. Economic considerations
dominate their actions. Quality of work life is the least considered matter in labor relations. Unacceptable labor
practices such as child and bonded labor are present.
The issue therefore is now is to give proper importance to quality of life issue in labor relations.
7) Grievance handling: Nepalese labor relations lack effective and comprehensive grievance handling procedure labor
tends to resort to strikes, mgmt. tends to resort to lock-out. Indiscipline is widespread.
The issues therefore are urgent development of grievance handling procedure in Nepalese labor relations.
8) Education and training: Both labor and mgmt. in Nepal lack education and training, about managing labor relations.
This led to the lack of professional approach to labor issues.
The issue therefore is to provide education and training to both labor union and employers association in mgmt. of
labor relations. This is essential to foster a culture of harmonious labor relations.
9) Misuse of trade union funds: This critical issue in industrial relation systems. Trade union funds are collected under
two major heads a) membership fee, (b) monthly levy. Moreover, leader of trade unions misuse it for personal
purpose as well. Funds are not made transparent.
10) Big brother attitudes of employers: It can be attributed to the absence of a partnership business culture among
investors in many orgn. There has always been a big brother attitude towards labor as a permanently dependent
small brother. Due to this reason workers have generated the feeling that mgmt. do not listen to them.
11) Outside leadership
12) Terrorist bargaining
13) Poor attitude or mental laziness
14) lack of proper business environment
Emerging concepts in Industrial Relations
1) Mutual hostility and suspicious: Mutual suspicion, hostility and hostilities reside between three actors of industrial
relation. The psychological distance between mgmt., employee and the govt. it is very much in a confused state
and cannot persuade its role between facilitators, regulator, promoter, arbitrator or that of a controller.
2) Strikes and lockout as ultimate resolution of disputes: There is a general feeling that the right and interest of the
worker can and should be secured from mgmt. through strikes and confrontation. Strikes and lockout are thought to
be one and the ultimate weapon in the hand of trade union and mgmt. respectively.
3) Politicization of labor issues and multiplicity of union: There is heavy politicization of labor issues because of
politicization of labor issues, there is vertical division and fragmentation of the trade union. Both govt. and mgmt.
have used “divide and rule” policy there by weakening the position of labor unions.
4) Legalistic orientation of industrial relation: the industrial relation is too much pre-occupied with legalistic orientation.
Simply having rules of the game need not guarantee a fair game. The players, their attitudes and behavior they do.
5) Unacceptable labor practices: The labor policy has different acts which is unacceptable. The Nepal there is a
practice like bonded labor, child labor and labor discrimination.

Trade union
A union is an orgn. of workers, acting collectivity seeking to promote and protect its mutual interests through
collective bargaining. Union are an integral and important part of the internal environment of orgn. A trade union is any
combination of persons, whether temporary or permanent. The primary purpose of a trade union is to regulate the
relations between workers and employers or between workers and workers. A trade union of workers is an orgn.
formed by workers to protect their interest and improve their working conditions. All trade union have objectives or
goal to achieve which are contain in their constitution aand each has its own strategy to reach those goal. Objective or
is an orgn. They greatly affect the important sector of the orgn. A union objectives are as follow:
i) Improve working condition and work for social economic program of workers.
ii) Try to maintain good labor relationship.
iii) Increase production and assist in orgn. development.
It is useful for making the workers lawful and disciplined. A union in orgn. has the legal authority to bargain and
negotiate with the employees on the various issues such as wages, working hours and other condition of employment.
Union have a major impact on wage structure, wage level and individual wage determination, regardless of whether
specific orgn. are organized or not. Thus union comprises of:
a) Collective employees efforts to join together with a view to bargain with mgmt.
b) The changed to ends in terms of membership influence and recognition.
According to Decenzo and Robbins “Union is an orgn. of workers acting collectively seeking to promote and
protect its mutual interest through collective bargaining”
According to G.D.H. Cole “A trade union means an association of workers in one or more profession, an
association carried mainly for the purpose of protecting and advancing the members economic interest in connection
with their daily work”
Therefore, a trade union is advice which enables a group, class in industry or trade to bargain with any other class
or group on equal footing. Such a union is economically oriented, an instrument of defense against exploitation an
outcome of industrialization and implies distinction.

Why do employees join union?

Union are goal-directed. The goals serve as the reason’s for employees to join unions. The reason individual join
union are as diverse as the people themselves. Just what are they seeking to gain when they join a union? The
answer to tis question varies with the individual and the union contract but the following captures the most common
reasons. They are as follows:
1) Higher wages and benefits: There are power and strength in numbers. As a result, union sometimes are able to
obtain higher wages and benefit package for their members than employee would be able to negotiate individually,
one or two employees walking off the job over a wage dispute is unlikely to significantly affect most business but
 hundred of workers going out on strike can temporarily disrupt or even close down the company. Additionally
professional bargainer employed by the union may be able to negotiate more skillfully than any individual could on
his or her own behalf.
2) Greater job security: Union provide its member with a sense of independence from mgmt. power to arbitrarily hire,
promote or fire. The collective bargaining contract will stipulate rules that apply to all members, thus providing
fairer and more uniform treatment.
3) Influence work rules: Where a union exists, workers are provided with an opportunity to participate in determining
the conditions under which they work and an effective channel through which they can protect condition they
believe are unfair. Therefore, a union is not only a representative of the worker but also provides rules that define
channels in which complaints and concerns of workers can be registered. Grievance procedures and rights to third
party arbitration of disputes are examples of practice that are typically defined and regulated as a result of union
efforts.
4) Obtain political power: Union is lobbying groups. In practice, they tend to be aligned with a given political party.
This helps them exert political muscles.
5) Better working conditions: Unions influence the administration of work rules. They influence the conditions of work.
They are channels for protesting unfair conditions. They define the regulat grievance procedures. They help
improve quality of work life of employee.
Employer Association
When we think of union, one usually think of a manual workers. This was fairly accurate in the early years of the
union movement, more recently the concept of union has spread to include employer as a association. This
association performs same function as trade union. Employer association is rarely found in the business circle but
this trend is increasingly day to day due to benefit that derives from the power of coalition and the gain that can be
achieved. Employer association helps the different employer to reduce competition of their product and service by
cartel and combination. Employer association and union often perform similar function but association prefers to
avoid the union title. This association imposes formal penalties and informal pressure on member of association who
do not follow the association code of conduct. In the political front, employer association is one of the most active
powerful and effective lobby group in the country and it organize impressive lobby efforts anywhere that legislative
bodies seek to make changes affecting the economic need of the orgn. Every year before the budget finalization, the
finance minister look on the thought and their expectation from the budget.
In Nepal, enterprise and business houses are organized into their respective district-wise chamber of commerce
and industry which in turn are affiliated to the federation of Nepalese chamber of commerce and industry (FNCCI) at
the national level. Through this orgn. the employers are consulted in the formulation of economic and social policies
of the govt. They are gain due participation in various bodies of the national levels. Their pre-occupation have thus
been to watch over their members commercial and financial interests.
The employer’s orgn. in Nepal have not yet paid attention to assuming their industrial relation functions. Hence,
they are not acting as employer’s association for purposes of industry-wise bargaining with labor and for making
uniform policies of personal administration. but association are getting popularity in business sector.

Structure of trade union

Major structure and types of trade union are as follows:
1. Craft union: The earliest form of trade union is craft union, whose membership is restricted to a particular category
of skilled or craft workers, for e.g. printers, carpenters and so on. Membership of craft unions is usually restricted
to those who have completed the recognized qualification for the craft or skill (apprenticeship). Closed union craft
unions may be quite small.
2. General union: A trade union which has no form of restriction on categories of worker who may join. There is no
limit on the industrial or occupational area of recruitment. Such unions are open unions and tend to be fairly large.
3. Industry union: A union which confines its recruitment to one particular industry or industrial sector and aims to
recruit all workers at all grades in that areas. There are very few pure industrial unions.
4. Occupational union: A union which confines its recruitment to particular occupational areas, many of which may
require the holding of certain qualification in the same way as craft unions. Occupational unions mainly exist in the
white-color areas, for teachers, civil servants, police, bank employees and so on. For e.g. membership of civil
 servant in Nepal is highly structured according to grade. Occupational unions also exist for workers in the health
services but these are more commonly referred as professional unions.
5. Professional union: It is the union whose membership is restricted to members of the same or similar professional
areas. Professional unions are another form of craft union but members of these unions would regard themselves
as being of a higher status. E.g. are professional unions are the national union of journalists and unions
representing health professional, such as those for doctors or nurses and teaching union.
6. Vertical union: A union which includes vertically through grades. In other words workers from the lowest level
grade to the mgmt. are included. Many professional unions are vertical union. The difficulty with vertical union is
the potential conflict between the grades. It may be conflicted in different view on what union policy should be in a
particular area, or event in cases where the mgmt structure means that the workers in dispute and the managers
against whom the dispute is taken are in the same union.
7. Open and closed union: An open is one which impose no restrictions on its area of orgn and will include all
workers in the occupations where the employers operate. A closed union, on the other hand, restricts its
membership to particular categories like members of a particular trade or profession or employees of a particular
employer or in a particular industry. The aims of the two categories of union are very different, an open union is
interested in increasing the numerical strength, while a closed union aims is to control the supply of labor to a
particular industry or occupation and other hand there is no interest in increasing numbers.

Functions of trade unions

1. Militant or protective functions: These functions include protecting the workers interest i.e. hike in wages, providing
more benefits, job security etc. Union fulfill those demands, through collective bargaining and direct action such as
strike, gheros etc.
Protective functions include the welfare schemes of unions. It includes improvement of activities like wages, rest
interval, sanitation, safety, continuity of employment and so on. All these functions of unions are termed as militant
functions as reliance to perform them is placed on the strike and other economic weapon in case of collective
bargaining fails.
2. Fraternal functions: These functions include providing financial and non-financial assistance to workers during the
periods of strikes and lock out, extension of medical facilities during sickness and casualties, provision of
education, recreational and housing facilities, provision of social and religious benefits.
They all are the functions of unions, which carried out to help the members in times of need and also include
provision of educational, recreational and housing facilities by the unions. The unions raise funds I the form of
subscriptions from their members to grant number of benefits to the members. It is important because it increase
the spirit of cooperation among the members.
3. Political functions: These functions include affiliating the union with a political party, helping the political party in
enrolling members, collecting donations, seeking the help of political parties during the periods of strikes and
lockouts. The history of trade unionism in this country records profound effects of political leaders. The political
colour given to the unions is to strive for realization of its economic objectives through legislative and
administrative measures. The unions are authorized to have a fund for political purposes which imply incurring of
expenditure on election of labor representatives and also holding of political meeting.
4. Social functions: These functions include carrying out social service activities, discharging social responsibilities
through various sections of the society.
5. Function in the Nepalese context: Primary function of Nepalese trade union is that they must work to protect and
promote the interest of the workers and conditions of their employment. Beside above mention primary function,
trade union in Nepal are committed to under-take under mention function also:
i. To secure better wages and living conditions for their members.
ii. Acquire the control of industry by workers.
iii. Provide workers self confidence and feeling of identity in the orgn.
iv. Enforce sincerity and discipline in workers
v. To make up welfare measures for improving morale of the workers.
vi. Provide greater job security
vii. Provide the better working conditions.
 Leadership in trade unions
The leadership of trade unions is dependent upon the structure of the trade union. Leadership is very important in
union mgmt and functioning of trade union, without dynamic and effective leader union will be paralyzed. As industrial
relation is a tripartite function among govt, employers and trade unions. So leadership can be categorized into three
groups:
1. Local unions and leadership: They serve the needs of the local trade unions. Every orgn. has its own trade union
and leader as well. All these units level leaders are elect one of them as district level union leader and team
members.
2. Regional unions and leadership: These are the leaders who look after the regional areas may be national regional
areas and regional union. There are some regional union offices and corresponding like in India. And in future it
may be in Nepal too, these regional unions are affiliated to control level unions.
3. National unions and leadership: These are apex (overall) orgn like GFONT, GCONT etc. They operate at national
level only. The leaders of these unions are national level representatives. These unions and leaders deal with
policy matters and macro level issues.
The leadership of trade union is mainly determined by the national trade union act or rules, election procedure
followed in trade union orgn and the political power and influence among others.

Trade union issues in Nepal

Over the years, trade unions in Nepal have been taken for a side by outside political leaders. In the process, the interest of
workers and their aspirations have been totally neglected. Major issues in Nepalese trade union system are as follow:
1. Outside leadership: The natural significantly influence the union-mgmt relationship and its functioning. The
leadership of most of the trade unions in Nepal has been outside leadership mainly drawn from political parties.
Outside leadership cannot understand the workers problems because they do not live the life of a worker.
2. Multiple unions: Multiple unions pose a serious threat to industrial peace and harmony in Nepal. The multiple unions
exist due to the existence of craft unions, formation of two or more unions in the industry. The nature of competition
and power tends to convert itself into a inter-union rivalry. The result is that there is deterioration of mutual interest,
trust and cooperation among leadership.
3. Union rivalry: The weakness found in trade union act of Nepal has led to the formation of multiple unions. This has
given birth to inter-union rivalry in different industries. Due to these reason trade unions basic purpose of collective
bargaining strength has become weak. Inter and intra-union rivalries have been a major cause of industrial dispute
in the country.
4. Financial position: better financial position is an essential factor for the functioning of trade unions. But in Nepal, over
the years, the financial positions of the unions are generally very weak and lack of transparency. This has affected
their functioning badly. This unsound financial position is mostly due to low membership and low rate of membership
fee. The general picture of finance of unions disappointing.
5. Declining trend of membership: The average membership figures of many unions are disappointing. Because of
decline in membership pattern, the sizes of the unions are small in nature. Therefore, union suffer from lack of
adequate funds, members trust and find it difficult to engage in members services. Because of it they are not able to
provide the services of experts and bargain with the employer effectively.
6. Heterogeneous nature of labor: The nature and needs of Nepalese labors are quite different. Workers come to the
factory or industry or enterprises with different backgrounds. So, it is difficult for trade unions to put a joint issue in
case of trouble. The ultimate result is that employers have become able to exploit the situation. In this situation
employers have tried to divide the works on the basis of race, religion, language, caste, economic backgrounds,
education etc.
7. Lack of interest: Due to rise in education and economic status in the societies and families many workers do not
prefer to join trade unions in Nepal. So, they have started avoiding union activities due to disinterestedness. Even
those who have become the part of the union do not participate in the union activities actively and eagerly. In such a
situation, outside political leaders are trying to exploit the scenario to fulfill their vested agenda.
8. Lack of paid officials: Weak financial position does not permit unions to engage the services of full-time paid office
bearers. Union activities, who work on a part time basis, neither have the time nor the energy to mobilize union
activities sincerely and professionally. This office bearers lack even the required level of educational standard.
Industrial Dispute
Industrial dispute is differences, conflict between worker and the employer. They manifest in the form of strikes,
lockout and other industrial actions. They can be individual disputes and collective disputes. They are related to rights
and interests of workers. Disputes can be between employers and workers between employers and employers,
between workers and workers and between employers and govt. in practice most disputes are between employer and
workers. Disputes re commons where unions exist. The absence of inadequacy of harmonious industrial relations in
the establishment of the nation will lead industrial/ labor unrest through increased industrial disputes. It will bring about
negative consequences and problems not only to the individual establishment but also to the national life.
According to Indian Industrial Dispute act 1947 “Industrial dispute means any dispute or difference between
employer and employees or between workmen and workmen, which is connected with the employment or non-
employment or term of employment or with the conditions of work of any persons”.
According to Black’s Law Dictionary “Gap regarding the terms and conditions of employment, fringe benefits, hours
of work,, tenure, wage being negotiated during collective bargaining between an employer and its employees”.
Hence, the term industrial dispute means friction or difference between capital and labor or employer (mgmt) and
workers (employees). It refers to conflict of interest and conflict of right between them. Disputes may be over the rights
of workers or interest of workers or in some condition both. Dispute can be categorized into:
1. Rights disputes: Disputes over rights concerned with interpretation and application of work standards.
2. Interest disputes: Disputes due to conflict of interests related to pay, benefits, conditions of work and working
conditions.

Nature/ Causes of dispute

The nature or causes of industrial disputes can be classified mainly into two category i.e. economic and non-
economic causes. The economic causes will include issues relating to compensation like bonus, wages, bonus,
allowances and conditions for work, working hour, leave and holiday without pay, unjust layoff etc. the non-economic
factors will include victimization of workers, ill treatment by staff members, strikes, political factor, indiscipline etc.
There are many and varies cause of labor disputes. It can be broadly divided into:
1. Economic Causes: Unfair distribution of the income, bonus or other benefits within the orgn. unhealthy working
condition or environmental, lack of drinking water, poor ventilation etc. since the cost of living index is increasing,
workers generally bargain for higher wages to meet the rising cost of living index.
 Compensation demands: They relate to pay, benefits and services. Inflationary pressures increase cost of living.
High cost of living leads to demand by labor for higher compensation. Employers want to pay the least and
workers want to get the most in terms of wages, benefits and services which lead to disputes.
 Bonus: No, less or insufficient bonus can lead to dispute. Labor expects a share in the profit. Employers link
bonus to productivity.
 Working conditions: Hours of work, working environment, safety, health and other factors related to working
conditions can lead to disputes.
 Conditions of employment: they are a major source of disputes due to differences in interpretation of work
standards.
 Industrial sickness: Economic recession, defective taxation polices and changing competitive forces makes
industries sick. This may require lay-off or downsizing of orgn.
2. Managerial causes: It is the result of unfair labor practices by employers. Not giving the recognition to the union or
trade union member by the managers. Defective recruitment policies. The defective promotion, transfer and
placement policies encourage dissatisfaction among workers.
 Non-recognition to labor union: Employers generally do not want labor unions. They even refuse to recognize the
legally registered unions. This causes disputes.
 Lack of consultation in recruitment and development: Employers do not consult labor unions for recruitment,
transfer, promotion and development of employees. Workers get annoyed by this practice and perceive unfair
treatment. Then disputes emerged when seniority is violated.
 Job security: Employers like to hire and fire employees at their will. Workers see this practice as a threat to their
job security. Most of the manufacturing industries hire workers on contract. The workers are supplied by labor
contractors. His adversely affects job security of workers. It also becomes a cause of dispute.
  Disciplinary actions: Disciplinary actions related to violence, attendance, job behavior, dishonesty and outside
activities of workers also result in disputes.
 Lack of communication: Employers are generally unwilling to talk over disputes with workers and unions. This
blocks communication and causes disputes.
3. Political causes: Political causes is another causes of disputes between the mgmt and the employers, they
are:
 Political interference: Most trade unions are affiliated to political parties. The politicization provides room to
politicians for political interference in labor affairs. Workers serve as activists for the political parties by
organizing strikes, lockout, and gheros in industries.
 Union rivalry: politicization divides he trade unions on ideological lines. Unions multiplicity, inter union rivalry
becomes cause of disputes.
 Collective bargaining: Political pressures influence collective bargaining. Settlement becomes difficult and
agreement does not materialize.
 Multiplicity of labor law: Labor legislation related to labor relations tends to be too many. Often they result in
various interpretations, conflicts and confusions.

Types of disputes
1. Rights disputes: Disputes over rights concerned with interpretation and application of work standards.
2. Interest disputes: Disputes due to conflict of interests related to pay benefits, conditions of work and working
conditions.
This dispute may take the form of:
i. Strikes: Strikes is the refusal of work by the workers in the orgn. It generally takes place when industrial disputes
are not settled in the normal way. It may be different form, stay way strikes, sit down strike, pen down, mouth shut
strikes, token or protest strikes, go slow, boycott, gheros, hunger strikes.
Nepal labor act requires that prior 30 days notice should be served to mgmt. before launching strikes in case of
failures to settle labor dispute. The notice should include demands or claims and their justifications. It should also
be forwarded to the labor dept. the concerned labor office and the local administration.
ii. Lock out: Lock out is also one form of industrial disputes. It is the refusal by the employers mgmt. to continue to
employ the workers in the orgn. according to Nepal labor act 1992, the mgmt. may with the prior approval of govt.
declare a lock out under following circumstances:
 In case a strikes is commenced or continued without fulfilling the legal formalities
 Increase of collective dispute is not settled through direct negotiation.
Beside this mgmt. may directly declare a lockout under intimation to the labor office and in case of continue
gheros, rioting or destructive activities from the side of the workers in course of strikes.

Government regulation of relation relations/ Labor legislation in Nepal along with important provision
Concept
Laws constitute an important force in the external environment of HRM. They greatly affect HRM policies practices
and goal achievement. HR must comply with the legal provision in force.
Labor legislation refers to laws, rules regulation and judicial decision related to labor relations. It plays an important
part in the development of labor relation. Historically labor legislation appeared to rectify the evils of the factory system
brought by industrial revolution. “it created legal right and obligation between labor and mgmt. Its aim was to provide
social justice”. The establishment of international labor orgn (ILO) in facilitated the enactment of labor law.
Reference page no 237 D.R.Adhikari HRM in Nepal.
Labor legislation in Nepal
Nepal had no effective labor legislation till 1959. The important legal landmark are:
1) Nepal factory and factory worker Act 1959.
2) Bonus Act 1994.
3) Labor act 1992 (as Amended in 1998)
4) Trade Union Act 1993.
5) Foreign Employment Act 1992
6) Children Labor Act 2000.
1. Nepal Factory and Factory Worker Act 1959
It was the first labor law enacted in the country. it was amended three times. It covered factories employing 10 or
more workers. The important provision of this Act are:
a) Payment of wages, overtime and minimum wages to worker.
b) Provident fund provision for permanent workers.
c) Welfare provisions consisting of:
 Leave, working hour
 Pension, provident fund, marketing benefit
 Compensation for injury/disability/death
 Medical facilities
 Rest room for taking rest for workers.
 Children arrangement.
 Worker right to form union.
 Tribunal to settle dispute.
 Worker committee to harmonize about relation.
 Employment of foreign citizen.
 Right to strike and lockout etc.
This act has been replaced by labor act 1992. At present the legal environment of consist of:
2. Bonus Act 1994
Bonus Act regulates the payment of Bonus to employees and workers. It specifies:
a) The Bonus shall not exceed 10% of the net profit.
b) The amounts of Bonus to an individual depend on the amount of monthly salaries and wages paid,
but shall not exceed six month wages and salaries.
3. Labor Act 1992 (as amended in 1998)
This Act replaced the Nepal factory and factory workers Act 1959. The main provision of this act
relate to:
a) Employment and job security, firing of workers.
b) Working hours.
c) Remuneration and yearly pay increment.
d) Health and security.
e) Special provision for orgn. like tea garden, construction work, transport, hotel, travel and trekking etc.
f) Welfare provision.
g) Conduct and punishment.
h) Settlement of labor disputes.
The amendment of labor Act in 1998, brought companies within the scope of the act. It also specifies
the provision for employing non-citizen. It lays down condition under which workers can go on strike.
 In 1998 the govt. established a labor court to deal with labor disputes under the labor court
regulation act, 1995.
4. Trade Union Act 1993 (amended in 1999)
The provision of this are:
a) It provides legal basis for organizing the trade union. A minimum of 10 workers should get together
for unionization. They should constitute at least 25% of total worker in the orgn.
b) The specific objectives of trade union are:
 Improve working condition and work for socio-economic progress of workers.
 Try to maintain good labor mgmt. relation.
 Increase productivity and assist in orgn. development.
 Work for making the workers dutiful and disciplined.
c) It makes provision for recognition of authorized trade union for presenting demands to mgmt.
d) The provision has made for registration of trade union.
e) Orgn. level trade union confirm trade union, Association, trade union Federation.
 The framework for labor legislation in Nepal is still in early stage, policies,
laws and institutions are still evolving.

5. Foreign Employment Act 1992

This Act regulates foreign employment. Their major provisions are:
a) Licensing is required to operate foreign employment office. Deposit is needed to operate foreign
employment office.
b) Procedure is prescribed for selection of workers for foreign employment.
c) Contracting arrangement have been prescribed.
d) Mechanism for investigation and inspection of document related to foreign employment has been provided.
6. Children labor Act 2000
The child labor Act 2000, makes the following provision:
i) Children below 10 years have been defined as child.
ii) Children below 14 years must not be employed as labor.
iii) Children must not be employed in specified hazardous jobs like tourism-oriented jobs, tobacco-based work,
insecticides etc.
iv) Permission should be taken from the authorized govt. agency for employment of child.
v) Child labor must not be based from 6pm in the evening to 6 am in the morning.
vi) Child labor must not be employed for more than 6 hrs per day or 36hrs per weeks.
vii) There should be no discrimination in wage payment for child labor.
viii) Punishments ranging from 3 month imprisonment or Rs 10000/ fine or both are provided for violation of the
law.

Collective Bargaining
The term collective bargaining typically refers to the negotiation, administration and interpretation of a written
agreement between two parties that covers a specific period of time. This agreement or contract lys out ain specific
terms and conditions of employment tht is what is exoected of employees and any limits to mgmt. authority.One of the
motivations of employees to join union is to strengthen group effort to bargain with the mgmt. in order to increase the
pay and benefit to improve the working condition and to handle other employment relations problems. Collective
bargaining is the main element of industrial relation/employment relation. Outcomes of collective bargaining are not
only effective for a unionized firm but they equally have implication for the non-unionized firm society and economy as
a whole. For e.g. when a new wage rate is determined through the collective agreement of the union representative
and mgmt. such agreement also affects non-union and social orgn. Collective bargaining gave a systematic push to
employee to organize themselves. It is collective because unions represent the works as a bargaining agent.

Definition
According to Decenzo and Robbins “The term collective Bargaining refers to the negotiation, administration and
interpretation of a written agreement between two parties that covers a specific period of time”
According to Fossam, “A process by which the representative of the orgn. (the employer) meet one attempt to
work out a contract with representative of the workers (the employer)”
According to Marlow “The process of joint regulation of job control undertaken by mgmt. the trade unions who
negotiate to establish the terms and conditions which govern the employment relationship”
Hence, collective bargaining is the performance of the mutual obligation of the employer and the representative of
the employees to meet at reasonable times and confer in good faith with respect to wages, hours and terms and
conditions of employment or the negotiation of an agreement or any question arising thereafter and the execution of a
written contract incorporating any agreement reached if requested by either party but such obligation does not compel
either party to agree to a proposal or require the making of a concession.

Collective Bargaining process

The process of collective bargaining is complex. Normally steps in the process depend on the country specific
legal provision and the types of issues. Some of the important steps in the process are as follows:
1) Preparing for negotiate: This is the homework phase for the union and mgmt. Once a union has been certified as
the bargaining unit, both union and mgmt. begin the ongoing activity of preparing for negotiations, we refers to this
as ongoing activity because ideally it should begin as soon as the previous contract is agreed upon or union
certification is achieved. Realistically, it probably begins anywhere from one to six months before the current
contract expire. We can consider the preparation for negotiation as composed of three activities, fact gathering,
goal setting and strategy development.
Information is gathered from the following sources:
a) Internal sources: Grievances and accident record, job performance reports, overtime figures, transfer, turnover,
absenteeism, financial performance etc serve as internal sources of information.
b) External sources: Economic forecast, cost of living standard of recently negotiated contract in similar orgn.,
industry labor statistics etc serve as external sources.
Both parties formulate a strategy for negotiation by assessing other side’s power statistics. Negotiations
are designated from both parties. Bargaining issues are identifies.
2) Contract negotiation (Negotiating at the bargaining table): Both parties meet at the bargaining table union delivers
a list of demand to mgmt. The negotiation continues for many. But the real negotiation takes place behind the
closed doors. If settlement is reached by both the parties based on compromise it is an oral agreement.
3) Reduction of less important demands: In this stage normally both of the parties try to reduce their demands. Here,
each party reduces some of its demands to impress others. Severls rounds of discussions may required to reduce
the demands.
4) Agreement: The oral agreement is converted into a written agreement. The legal dimension is carefully taken care-
off.
5) Union Ratification: The union negotiations submit the agreement for approval from rank and file member of voted
for acceptance, the agreement is converted into a contract.
6) Contract Administration: Once the contract is agreed upon and ratified, it must be administered. This step involves
administering the contract by:
a) Informing union members and mgmt. about the contract.
b) Interpreting the contract and resolving grievances.
c) Implementing the contract.
d) Monitoring activities during the contract to provide feedback for next negotiation.
Mgmt. is primarily responsible for contract administration. The HR manager plays a crucial role in day to day
administration of the contract.
Probably the most important elements of contract administration relates to spelling a lot out a procedure for
handling contractual disputes. Almost all collective bargaining agreement contains formal procedures to be used in
resolving grievances of the interpretation and application of the contract. These contracts have provision for
resolving specific for many initiated grievances by employees concerning dissatisfaction with job-related issues.

Contract administration of collective bargaining

Once contract is agreed on and ratified it must be administered. Contract administration involves different stages:
1. Providing the agreement information to all union members and managers (Disseminating contract): Providing
agreement information to all concerned requires both parties ensure that changes in contract language are clearly
explained. It required both parties to ensure that a change in contract language is communicated. For e.g.
changes in hour, work rules and such must be communicated. if both sides agree to something not existence
before, such as mandatory overtime, all must be informed of how it will work. Neither the union nor the company
can simply hand a copy of the contract to each orgn. member and expect it to be understood. It will be necessary
to hold meeting to explain the new terms of the agreement. Any change that is required has to be agreed and
signed by both parties.
2. Implementing the contract: It ensures that all communicated changes take effect and that both sides comply with
the contract terms. One concept to recognize during this concept is mgmt. rights. This is the stage in the contract
demonstration process in collective bargaining. This step tires to ensure that the agreement is implemented. All
communicated changes now take effect. Now at this point, both sides are expected to comply with the contract
terms. Good HRM practices suggest that whether the contract requires it or not, mgmt. would be wise to notify the
union of major decisions that will influence its membership.
3. Interpreting the contract and grievances process: It is probably the most important element of contract
administration. Almost ll collective bargaining agreements contain formal procedures for resolving grievances of
contract interpretation and application. These contracts have provisions for resolving specific, formally initiated
grievances by employees concerning dissatisfaction with job-related issues. It is necessary for the contract to spell
out the procedures for handling contractual disputes. It relates to spelling out a procedure for managing
contractual disputes. It is well known to us that almost all collective bargaining agreement contain formal
procedures for resolving grievances of contract interpretation and application. Grievance procedure is a complaint
resolving process contained in union contract or agreement.
4. Monitoring activities during the contract period: It is the final stage in the process of contract administration. Both
the company and union will gather data on how the contract impacts the company and workers such as the effect
on productivity, employee turnover, and the number of grievances and concerns. By monitoring activities covered
by the contract, the company and union can assess the effectiveness of the current contract, recognize when
problems areas or conflict arose and indicate what changes might needs to be made in subsequent negotiations.
The mgmt. is primarily responsible for monitoring activities during the contract period. By monitoring contract
activities:
 Company and union can assess the effectiveness of the current contracts.
 When and where the conflict arises
 What changes might be needed in the next negotiations.

Trends and issues in collective bargaining in Nepal

Collective bargaining is a major tool to resolve disputed in organizational setting. Collective bargaining remains
surrounded by many problem and issues. Practicably speaking relevance to mgmt. and workers becomes subject,
matter or issues of collective bargaining.
The primary issues relating to collective bargaining is ensuring that the representative of both parties agree to the
settlement. It must also guarantee that the process addresses fundamental issues and address the relevance of
settlements. The major trends and issues related to collective bargaining in Nepal can be broadly categorized into:
1. Ensuring collectively: the primary challenges of collective bargaining lies in ensuring representation collectively. The
collective bargaining takes place with a group of negotiators representing the mgmt. on the one side and other
group representing the workers on the other side. Not all members and employees need be members of the trade
union. Not all workers need to subscribe to the demands presented by the group representing the employees. The
biggest issues in collective bargaining are ensuring consensus or agreement among the workers.
2. Resolving core issues: Even if a majority of workers accept the collective bargaining settlement, the underlying
issues may not be really settled. Collective bargaining is a satisfying all settlement in a given situation. The
settlement aims to bring a compromise by identifying a common ground between the two different interest groups.
Collective bargaining settlement depends on acceptance by both parties. But collective bargaining practices in
Nepal are not able to solve the core issues properly.
Hence, collective bargaining is concerned only with issues that affect the workforce in general. Matters
concerning individual employees may not be resolved through collective bargaining. But in reality such issues may
remain more important than in demands satisfied thigh collective bargaining exercise.
3. Sustainability of collective bargaining: Collective bargaining is a lengthy process and aims to effect a long term
agreement. This seems unsuitable to the present dy business environment. Businesses are bound to the make
frequent and fast changes in various aspect of their operations. Innovation in goods and services demanded by
society has led to new work activities. This may bring uselessness of existing work process. All this can drive the
collective bargaining agreement towards out of date or uselessness.
So, new realities have led to dominance of individual agreement or negotiation over collective bargaining.
4. Wage related issues: It is related with compensation or a reward that goes to employees for their contribution to the
orgn. They are related with equity and justice. These include topics like how to determine basic usage rates, cost of
living adjustment, wages differentials, overtimes rates, wage adjustment etc. this is the most common issues in
Nepal.
5. Issues of supplementary benefits: They are provided some extra benefits above the regular salary or wages. This
category includes issues like pension plans, paid vacations, paid holidays, health insurance plans, dismissal
 compensations, supplementary other benefits. But trade union blame that whatever provisions are contained where
not properly implemented.
6. QWL issues: Employees not only demand better salary and benefits rather they also demand QWL programs.
Demand include in this category are right and duties of employers, employees including recognition of union nd
their dignity, respect to the workers and their feeling, QWL programs, education, training and health programs,
rejecting divide and rule strategy etc.
7. HR and Industrial related issues: Important demands in this category are issues of seniority, employee discipline
and discharge procedure, employee health and safety technological change, work-rules, disputes settlement, job
security, training attendance etc.
8. Other various issues: It is not an easy task to list all the issues of collective bargaining in Nepal. It include all the
issues which are legal depending upon Nepalese labour law and Collective bargaining agreement mde between
parties. Any issues related to social and political issues and issues related to nationality are hot issues of collective
bargaining.

End of the 6th chapter and the syllabus

Best of luck