Business Studies

HSC Course
Topic 4: Employment Relations
Section 4.5:Industrial Confict
Section Overvie:
4.5.! Defnition and causes wage demands, working conditions,
management policy, political goals and social issues
4.5." Perspectives on confict unitary, pluralist, radical
4.5.# Types of industrial action
overt lockouts, pickets, strikes, bans, work-to-rule
covert absenteeism, sabotage, turnover, eclusion from
decision-making in business
4.5.4 !oles of stake"olders in resolving disputes
4.5.5 Dispute resolution processes conciliation, arbitration,
grievance procedures, negotiation, mediation, common law
action, business#division closure
4.5.$ $osts and benefts of industrial confict
fnancial, personal, social, political, international
!
Section 4.5
Industrial Confict
I%&'STRI() CO%*)ICT is caused by a clas" between employers
and employees% T"e (ustralian Bureau o+ Statistics &(BS' defnes
an industrial dispute as a wit"drawal from work by a group of
employees, or a refusal by an employer to allow workers to work%
(enerally, t"e causes of industrial confict fall into categories suc" as
a,e demands, or-in, conditions, mana,ement policies,
political disputes and social concerns%
(. /a,e &emands
)age rates are a cost to employers but are income for
employees% *or t"is reason t"ey are an obvious source of
confict% T"ere are a number of main reasons w"y unions and
employees may fg"t for wage increases%
i. +f a business is ac"ieving a "ig" proft &i%e% 0antas' at t"e
epense of employees, t"en unions could agitate for a pay
rise%
ii. ,lso, employees may argue t"at a wage increase is fair if
eecutive salaries "ave increased faster t"an employee
wage levels%
,t a minimum, employees and unions are keen to see wages
keeping pace wit" infation so t"at t"eir real living standards
are maintained%
B. /or-in, Conditions
Disputes under t"is category include t"ose concerning issues
suc" as protective clot"ing, frst-aid services, uncomfortable
working conditions, s"ortage or condition of e-uipment, lack of
amenities, new production met"ods and e-uipment, and
4.5.! &e1nition and Causes 2 /a,e &emands3
/or-in, Conditions3 4ana,ement 5olicy3
5olitical 6oals and Social Issues
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Section 4.5
Industrial Confict
arduous p"ysical tasks% Depending on t"e industry, it is t"e
responsibility of management to ensure t"at workers are
provided wit" safe and reasonably comfortable working
conditions%
,n industrial dispute may arise if workers feel t"at management
is neglecting t"e safety of employees, or if t"ey feel t"at t"eir
working conditions are generally sub-standard and
uncomfortable%
C. 4ana,ement 5olicies
.anagerial policy decisions "ave become t"e ma/or cause of
industrial disputes in recent years% .anagement decisions can
create industrial confict, especially w"en ma/or c"anges to t"e
business0s structure or operations are announced wit"out
consultation wit" employees% *or E7ample: as frms
restructure to increase productivity or e1iciency, confict often
occurs w"en managers "andle retrenc"ments poorly and leave
t"e remaining sta1 wit" increased workloads%
.anagement can reduce t"e potential for industrial confict by
ensuring t"at sta1 are notifed of any c"anges in policy t"at will
a1ect t"eir working conditions% ,n even better solution is to
consult sta1 before making c"anges to policy%
&. 5olitical &isputes 8 Social Concerns
2nions "ave become directly involved in non-industrial issues,
t"at is, political and social issues% T"is involvement "as been
controversial bot" wit"in t"e union movement and in t"e
general community% +ssues range from conscription, apart"eid,
rainforest conservation and support of indigenous people%
T"ese disputes are targeted towards people or situations ot"er
t"an t"e employer#employee relations"ip%
4.5." 5erspectives on Confict 9 'nitary3
5luralist3 Radical
#
Section 4.5
Industrial Confict
People involved in employment relations may di1er in t"eir beliefs
about confict3 "ow it is caused, w"o is involved, and "ow it s"ould be
resolved% T"is "as resulted in t"e following views or perspectives on
confict3 'nitary, 5luralist or Radical%
(. 'nitary
T"e unitary view of confict likens a business to a team or unit%
+t assumes t"at all employees wit"in t"e business s"are t"e
goals of t"e business as defned by senior management% $onfict
wit"in t"e team or unit is seen as disloyalty t"e work of
stirrers or agitators% 4uman !esource .anagement, wit" its
focus on improving t"e management of employment relations,
"as close ties wit" t"is unitary perspective on confict%
B. 5luralist
Pluralists take t"e view t"at organisations are comple, are
made of many parts and "ave a number of di1erent
stake"olders% ,s a result, everyone will not s"are identical
interests% *rom t"is perspective, confict is to be epected% +t is
even viewed as positive by t"e pluralists% T"e c"allenge for
managers is to develop an e1ective system of communications
t"at allows employees to epress t"eir views and to resolve
t"em wit"out damaging t"e organisation and its performance%
C. Radical
T"e radical left view of confict was infuenced by t"e writings of
5arl .ar% +t focuses on t"e imbalance of power between
employers and employees% T"is imbalance is believed to be so
great t"at employees feel t"ey "ave to overt"row t"eir
employers, w"om t"ey see as t"eir masters% T"ose wit" a
radical perspective on confict see t"e employment relations"ip
as part of a social structure of classes% $onfict is caused by t"e
class war in capitalist economies between workers and business
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Section 4.5
Industrial Confict
owners% (overnment is seen to be on t"e side of business and
t"us unable to resolve confict% , total c"ange in t"e economic
system and social structure is re-uired%
.any disputes t"at arise in t"e workplace can be resolved t"roug"
negotiation between t"e employees and employers% 6ometimes,
"owever, communications between workers and management break
down and eit"er party may resort to industrial action, suc" as strikes,
lockouts or absenteeism% 7mployees may protest against t"e actions
of an employer if t"ey feel t"ey are being treated unfairly% 7mployers
may take action if t"ey believe employees are not acting in t"e
interests of t"e business% 7it"er way, industrial action is a sign of
poor employment relations%
(enerally, industrial action can be divided into two groups3 O:ERT
and CO:ERT%
(. Overt *orms o+ Industrial (ction
Overt Industrial (ction refers to open, obvious industrial
action taken by workers or management including stri-es,
or- ;ans, pic-ets, loc-outs and or-<to<rule%
i. Stri-es
T"e most publicised type of industrial action is t"e strike%
, strike involves t"e wit"drawal from work of a group of
employees to disrupt business operations as a means of
epressing dissatisfaction wit" some aspect of
employment relations% 6trikes are also used to draw
4.5.# Types o+ Industrial (ction
< Overt 2 )oc-outs3 5ic-ets3 Stri-es3 Bans3
/or-<to<rule
< Covert 2 (;senteeism3 Sa;ota,e3 Turnover3
E7clusion +rom &ecisions
5
Section 4.5
Industrial Confict
community attention to t"e employees grievances and
t"ereby place greater pressure on management &alt"oug"
sometimes strikes can annoy t"e public and reduce
sympat"y for workers'%
ii. 5ic-ets
Pickets are protests t"at occur outside or at t"e gates of a
workplace, and are generally associated wit" strike action%
2nion members and ot"er workers form a picket line to
prevent ot"er workers or supplies from entering t"e
building in an attempt to disrupt business% Pickets are
t"erefore anot"er dramatic way for workers to epress
t"eir dissatisfaction wit" management and can cause
signifcant production losses for a business if prolonged%
iii. /or- ;ans
, work ban is a situation w"ere workers refuse to perform
some task t"at is usually not specifed in t"eir legal
contracts% T"e most common form of work ban is t"e
refusal to do overtime% 8t"er types of ban include t"e
black ban, w"ic" prevents workers from using e-uipment
or performing a task t"at "as been banned% T"is may be
due to safety concerns or because t"ere is a dispute over
pay -uotas or t"e introduction of new tec"nology t"at
displaces workers%
iv. )oc-outs
, lockout is an etreme measure w"ere employers
p"ysically prevent t"eir employees from working by
locking t"e gates to t"e work premises% 9y denying
access to t"e building, managers e1ectively cut o1 t"e
workers0 source of income and t"ereby force t"em to
accept a management decision, negotiate or face a drawn-
out dispute and fnancial di1iculties%
v. /or-<to<rule
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Section 4.5
Industrial Confict
)orking to rule is -uite similar to a work ban and involves
workers following t"e strict terms of t"eir employment
contract% During a period of work-to-rule, employees will
not perform any task t"at is not specifed wit"in t"e terms
of t"eir employment, w"ic" tends to decrease productivity%
,gain, t"is aims to put pressure on management to listen
to workers0 grievances%
B. Covert *orms o+ Industrial (ction
Covert Industrial (ction refers to actions by workers or
management w"ic" are not immediately obvious suc"
a;senteeism, sa;ota,e, turnover or e7clusion +rom
;usiness decision<ma-in,%
i. (;senteeism
,bsenteeism can be defned as t"e percentage of
employees, on an average day, w"o are away from work or
on sick leave wit"out leave being approved in advance%
T"e level of absenteeism in a workplace can act as a guide
to "ow satisfed workers feel in t"eir /obs% +f employees
are un"appy wit" t"eir work conditions or t"eir
employers, t"ey are more likely to take days o1 work%
9usinesses wit" e1ective employment relations usually
eperience lower levels of absenteeism among t"eir
employees%
ii. Sa;ota,e
6abotage is t"e deliberate damaging of p"ysical items
suc" as mac"inery and deliberate interference wit"
products, systems and procedures% ,n employee wit" a
grievance may be tempted to carry out an act of sabotage%
6abotage can cost businesses millions of dollars in lost
revenue, production and reputation%
iii. Turnover
:ike "ig" levels of absenteeism, "ig" voluntary labour
turnover &resignations' often indicate poor sta1 morale or
confict in t"e workplace% 2nskilled workers w"ose /obs
o1er little variety or interest are far more likely to resign;
management mig"t want to take steps to increase /ob
satisfaction%
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Section 4.5
Industrial Confict
iv. E7clusion +rom &ecisions
.aking decisions about w"at will "appen in a business is
an important issue for bot" employers and employees in
t"at business% Decisions "ave to be made on a wide range
of issues% $onfict can certainly result w"en employees
believe t"at t"ey "ave not been given t"e opportunity to
"ave t"eir say%
T"e main stake"olders involved in a dispute are or-ers and
mana,ement% +n ,ustralia, a strong emp"asis "as been given to t"e
role of representative bodies suc" as trade unions and employer
associations% 4owever, over recent years, declining union
members"ip and a decline in industrial confict "as increased t"e role
of individual employees and employers in resolving disputes -uickly at
t"e workplace%
.any disputes can be resolved at t"e workplace wit"out t"e need for
intervention by unions or industrial tribunals% T"is is becoming more
common as employers and employees gain eperience at resolving
disputes% 71icient dispute resolution "as t"e beneft of being less
costly to bot" employee and employer% .any businesses are
recognising t"is and "ave formal grievance procedures%
)"en a dispute becomes more serious, employees often use unions to
represent t"eir interests in meetings wit" employers or in industrial
tribunals% T"e union0s role is to represent employees in conciliation
or arbitration in t"e industrial tribunal%
7mployer associations are rarely as involved as unions in industrial
disputes% 8nly once conciliation and arbitration procedures are
initiated do employer associations become involved% +t is t"eir role to
represent employers in t"e industrial tribunal% 8t"erwise, employer
associations tend to provide general assistance to employers in
"andling workplace confict%
6everal government organisations can play a role in resolving
industrial disputes% Traditionally, t"e (ustralian Industrial
4.5.4 Roles o+ Sta-e>olders in Resolvin,
&isputes
?
Section 4.5
Industrial Confict
Relations Commission &(IRC' a body set up by t"e *ederal
(overnment "as played a very important role% 4owever, it0s role "as
been reduced in recent years% .ost of t"e recent laws passed by t"e
government "ave been aimed at decreasing t"e role of <t"ird parties0
in industrial disputes%
, number of ot"er bodies "ave also been establis"ed by t"e
government to resolve disputes3
T>e Employment (dvocate provides information to employees
and employers about t"eir rig"ts and responsibilities under
employment contracts%
T>e Human Ri,>ts and E@ual Opportunities Commission
&at t"e federal level' and T>e (nti<&iscrimination Board &at
t"e state level' are involved in resolving disputes t"at involve
discrimination%
$ourts are also playing an increasingly important role in
industrial disputes as t"ey enforce some aspects of t"e
/or-place Relations (ct%
4aving eamined t"e role of eac" of t"e stake"olders in t"e resolution
of disputes, we now must look at t"e procedures t"at are usually
followed to resolve disputes% +n Section 4.#.", grievance procedures
were discussed as t"ey were t"e frst formal level of dispute
resolution% +n ,ustralia, a compre"ensive system "as been developed
to deal wit" disputes t"at cannot be solved by workplace grievance
procedures%
(. %e,otiation
.any of t"e issues t"at cause confict in t"e workplace are part
of t"e employment contract t"e ,ward, a $ertifed ,greement
or ,ustralian )orkplace ,greement% Disputes usually arise
4.5.5 &ispute Resolution 5rocesses 2
Conciliation3 (r;itration3 6rievance
5rocedures3 %e,otiation3 4ediation3 Common
)a (ction3 BusinessA&ivision Closure
B
Section 4.5
Industrial Confict
w"en suc" contracts are being renegotiated% 8nce a dispute
arises, a number of steps may be taken to resolve a dispute%
B. 4ediation
+f t"e parties in a dispute are unable to reac" an agreement
t"roug" negotiation on t"eir own, mediation may be t"e net
step% 4E&I(TIO% is t"e intervention into a dispute by a
neutral t"ird party suc" as an employment relations specialist or
a lawyer% T"e mediator0s role is simply to encourage t"e parties
to come toget"er to reac" common ground, and neit"er party is
bound by t"e mediator0s suggestions%
C. Conciliation
CO%CI)I(TIO% is t"e same as mediation ecept t"at it is t"e
(IRC &an I%&'STRI() TRIB'%()' w"o acts as t"e mediator%
+f t"e conciliation meetings fail to bring about an agreement,
t"en t"e parties will enter t"e fnal stage of arbitration%
&. (r;itration
(RBITR(TIO% is t"e process t"at occurs w"en an industrial
commissioner evaluates t"e arguments of bot" parties and
comes to a decision w"ic" is legally binding% T"e decision made
can be appealed%
E. Common )a (ction
)"ere t"ere is no federal or state legislation about a particular
employment matter, t"e common law will apply% T"is means
t"at certain disputes may be settled by court action%
*. BusinessA&ivision Closure
+f a dispute is impossible to resolve it may result in t"e business
or t"e division closing altoget"er% Disputes cost businesses
money in lost working time and legal epenses% 8bviously, if a
!C
Section 4.5
Industrial Confict
business is not producing its goods and services, eventually it
cannot a1ord to pay its bills% Prolonged disputes can force
business closure for fnancial reasons%
+ndustrial confict "as t"e potential to be very costly for bot"
employees and employers% 71ective employment relations is crucial
to avoiding confict in t"e frst place, and ensuring t"at any disputes
are resolved -uickly and inepensively% +t is important "owever, to
consider t"e 1nancial, personal, social, political and international
costs and benefts of industrial confict%
(. *inancial
T"e primary cost of confict is t"e fnancial damage to bot"
employees and employers% $onfict can result in lost
production, increased costs of production, lost revenue and
reduced profts% T"e employees will forego pay and reduce t"eir
/ob security if t"ey go on strike%
B. 5ersonal
Personal costs are more di1icult to identify and almost
impossible to measure% ,ny level of industrial confict must
increase t"e level of tension wit"in t"e workplace% T"is tension
is eperienced by workers and management alike, and could
lead to furt"er breakdowns in communication% :ow morale is a
very real problem and a ma/or result &and cause' of confict%
C. Social
Personal costs could lead to social problems t"at, at frst, seem
totally unrelated% Tension and dissatisfaction at t"e workplace
could be epressed in t"e "ome t"roug" increased family
breakdown, and even domestic violence% T"ese problems could
4.5.$ Costs and Bene1ts o+ Industrial Confict
9 *inancial3 5ersonal3 Social3 5olitical3
International
!!
Section 4.5
Industrial Confict
be "eig"tened if workers are not being paid for long periods of
time%
&. 5olitical
Political costs of disputes can range from t"e matter of
c"allenged or damaged political reputations to internal political
party disagreement% Public opinion of political parties could be
damaged by t"e mis"andling of a dispute%
E. International
T"e international costs of industrial confict largely relate to t"e
lost markets and lost market s"are because t"e business and t"e
country gains a reputation as an unreliable supplier% +n t"e
past, disputes on t"e waterfront, for eample, "ave "eld up
s"ipments of eports, causing foreign buyers to -uestion t"eir
future dependence on ,ustralian supplies%
*urt"ermore, w"en employees and employers are caug"t up in
industrial confict, t"eir productivity falls and fnancial costs are
increased% ,ustralian businesses t"en become less competitive
internationally, compared to e1icient businesses overseas%
Bene1ts
+t must be remembered t"at industrial confict can bring a variety of
benefts% T"ese include3
+t provides an opportunity for workers to epress t"eir
dissatisfaction% )orkers can bring issues to t"e attention of
management before any long-term damage is done%
=ew met"ods of doing t"ings, w"et"er t"is involves t"e
decision-making process or c"anges in production tec"ni-ues,
can be introduced during negotiations%
Productivity can be increased t"roug" c"anges in work and
management practices%
=ew communication lines can be opened between workers and
management%
4ealt" and safety issues can be addressed%
!"
Section 4.5
Industrial Confict
T"e overall e1ect of improving communication and discussing
grievances leads to improved employee morale, and reduced labour
turnover and absenteeism% 9y using industrial confict positively, an
organisation can increase productivity, e1iciency and competitiveness%
&E*I%ITIO%S:
(r;itration T"e process t"at occurs w"en an industrial
commissioner evaluates t"e arguments of bot"
parties and comes to a decision w"ic" is
legally binding%
Conciliation , form of mediation ordered by an industrial
tribunal%
Covert Industrial (ction ,ctions by workers or management
w"ic" are not immediately obvious suc" as go
slows, sabotage, absenteeism or eclusion
from business decision-making%
Industrial Confict , clas" between employers and
employees%
Industrial Tri;unal , body establis"ed to settle certain types of
dispute, in t"is case industrial disputes%
4ediation , voluntary negotiation process w"ere a
neutral t"ird party assists t"e parties to try
and fnd a way to resolve t"eir dispute%
Overt Industrial (ction 8pen, obvious industrial action taken by
workers or management including strikes,
bans, pickets and lockouts%
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Section 4.5
Industrial Confict
HO4E/ORD (CTI:ITIES:
(ctivity !: $omplete t"e (ctivities >uestions ? @ on t"e bottom of
P%@AB of t"e tet%
(ctivity ": ET>ereFs no ay eFre ever ,oin, to ma-e a deal it>
t>ese t>u,s. T>e only ay to ,et a +air deal +or our
or-ers is to s>o t>e ;osses t>e poer o+ a united
or-+orce 9 and to 1,>t3 1,>t3 1,>tGH 7plain w"et"er
t"is refects a unitary, pluralist or radical view of industrial
confict%
(ctivity #: $omplete t"e (ctivities >uestions ? @ on P%@BC of t"e
tet%
(ctivity 4: )"at is t"e di1erence between overt and covert industrial
actionD +llustrate your answer wit" eamples of eac" type
of action%
(ctivity 5: $omplete t"e (ctivities >uestions ? E F on P%@GH#@G? of
t"e tet%
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Section 4.5
Industrial Confict
(ctivity $: )"at is t"e di1erence between t"e conciliation and
arbitration of a disputeD
(ctivity =: )"ic" met"od is more likely to ac"ieve a result t"at is
acceptable to bot" parties negotiation, conciliation or
arbitrationD Iustify your answer%
(ctivity ?: IIt may ;e costly3 ;ut sometimes a stri-e is a ,ood
t>in,.F Describe w"at benefts may come about from
industrial disputes%
(ctivity B: !ead t"e Case Study3 JT>e !BBB 9 "CCC BH5 5il;ara
&isputeK on P%@GC @GB of t"e tet and complete
>uestions ? C, E B%
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