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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
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
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
,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
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
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
< Covert 2 (;senteeism3 Sa;ota,e3 Turnover3
E7clusion +rom &ecisions
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
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
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
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,
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
$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
(. %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
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
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
Section 4.5
Industrial Confict
be "eig"tened if workers are not being paid for long periods of
&. 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%
+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
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%
(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
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
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%
Section 4.5
Industrial Confict
(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
(ctivity #: $omplete t"e (ctivities >uestions ? @ on P%@BC of t"e
(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%
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%