Changing Face of Industrial Relations in a Knowledge-Driven Economy

The world of work is changing. Increasing globalization is constantly reshaping the contours of knowledge-driven economies and also belying the importance of Industrial Relations (IR). The changes have also brought along with it a number of strategic opportunities to improve prospects of both enterprises and employees. However, to seize the opportunities and for a beneficial relationship, organizations require a strategy directed to improving employee relations, seeking changes in attitudes and behaviour in the workplace and addressing the key issues of skills development, compensation and benefits, workplace structures and flexibility, and diverse workforce management.

The SHRM Mumbai Forum held on May 16, 2013 raised and addressed this critical issue. The panelist speakers - Dipak Gadekar, Senior. General Manager, Corporate HR, Voltas Ltd. and Vikram Shroff, Head-International HR Law, Nishith Desai Associates - led the discussion with their enlightening perspectives.

As a step forward towards SHRM’s vision of doing ground breaking work in the field of ER/IR, this session marked the launch of a white paper titled Challenges in Building Proactive Solutions in Employee Relations. The white paper has been authored by SHRM India’s Subject Matter Expert (SME) Panel members on IR. The members include K.A. Narayan - President, Human Resources, Raymond Group; Dipak Gadekar- Head-HR, International Operations Business Group, Voltas Ltd, a Tata Group Company; Vikram Shroff – Head, International HR Law, Nishith Desai Associates; Vijayan Pankajakshan – Dean, Human Resources at WE School, Mumbai; and Sushil Tayal- Managing Director, TWES.

The white paper focuses on the identification of trends, challenges and potential solutions in the current scenario and takes a predictive approach to the future of IR in India.

The first speaker of the evening was Dipak Gadekar, who began with a brief description of evolution of our economic development – from an agricultural economy (pre-Industrial Age, largely the agrarian sector) to industrial economy (with the Industrial Age, largely the manufacturing sector) to post-industrial/mass production economy (mid-1900s, largely the service sector) to knowledge economy (late 1900s – 2000s, largely the technology/human capital sector). He also highlighted how economic development has brought about changes in the society with respect to:

• Better life expectancy (from 59 in 1991 to 65 in 2011)
• Faster urbanization (30% stay in urban areas in 2011 as against 11% in 1901):
• Higher literacy rates (increased from 52 in 1991 to 74 in 2011)
• Breakdown of joint families (40% of households have a nuclear family as of 2011):
• Live-in relationships and same sex marriages
• Special groups (Poor infrastructure for differently abled such as special staircase, lifts, washrooms, etc)

Explaining the definition of knowledge worker as those who “think for a living”, he also highlighted how managing money and machine added value earlier while handling and distributing information add value in today’s service driven economy. He moved on to elucidate on the changing priorities at the workplace, largely driven by knowledge workers. A knowledge worker is educated, has a need to control his/her workspace, and is paranoid about obsolescence, thus the jobs need to be challenging, and focus should be on innovation and upgrading their current skill set. With rising number of women stepping out for work, we need to tailor our benefits for them. A work environment that is gender friendly, safe and secure is not just an ‘add-on’, rather it should be a given. An inclusive policy will go a long way in winning over special groups. We need to provide the employees an engaged work environment where they are cushioned from burn out and stress. Creating social networks and virtual teams within the infrastructure will take care of their ‘need to affiliate’ and also help them collaborate beyond work. To empower employees and help them tailor their schedule according to their convenience, flexi-working should be the mantra of the day. The workspace is progressively becoming more complex; to survive and soar in such a scenario companies and HR managers need to use a combination of both emotional and logical approach.

Gadekar said the changes in workplace has also fostered better connect because of the combination of logical and emotional approach in the symbiotic relationship. Increasing levels of trust between the employee and the employer has resulted in enhancing the learning curve. The workplace is no longer a power game like it used to be as and managing knowledge workers require high calibre of ‘knowledgeable leaders.’

Gadekar left the audience with some questions to ponder upon -

• With better life expectancy, most employees have longer living parents and will have a longer life post retirement- have we taken care of their post retirement needs or that of their dependents?
• Do we help our employees better manage the chaos outside of the workspace- the chaos emanating from traffic, pollution, etc.?
• With an increased affinity towards social media and with smart phones becoming the favourite gadget, how are we managing their need to connect? Can we survive by policing their net space? Have we adapted our policies and infrastructure for it?
• With nuclear families becoming the norm of the day and a spike in the number of single parents, the stress for employees is bound to rise. How are we managing their stress?
• With relationships that were once considered as taboo, becoming more frequent (such as live in relationships and same sex relationships), have we analysed the issues and implications of it? Are we being inclusive and extending benefits to them?
• How are we managing the demands of special groups?

The second speaker for the day, Vikram Shroff chose to speak on the changing scenarios in IR. He began with the definition of IR. “Industrial Relations represent the collective relationships between management and the employees/workers,” he said, adding that IR further deals with management of conflicts arising out of such relationships.

He then proceeded towards debunking the following myths:

Myth 1:

Traditional Labour laws do not apply to knowledge-sector workers.

Fact: ID Act applies equally to both knowledge workers and the workers doing manual workers.

Myth 2:

The employment contract overrides everything else to the contrary.

Fact: Employment contract should be consistent with law, if it is not, law will override.

Myth 3:

Knowledge-sector workers are not considered as “workmen”.

Fact: Definition of worker is very wide, according to law. It includes both workmen and knowledge workers. Today, even technical workers have multiple roles to play such as supervisor, lead, manager, etc.

Myth 4:

Once designated as a ‘manager’ or paid high salary, knowledge-sector workers are not protected under the labour laws.

Fact: Managers are protected under labour law. According to the Supreme Court, the designation of an employee does not matter; the authority and job role have to be considered.

Myth 5:

Knowledge-sector workers need not be paid overtime.

Fact: In the services sector, clients encourage employees to spend more time at office by providing facilities such as cafeteria, gymnasium, television, etc. According to Shroff, the biggest risk today for employee practices in services industry is overtime. Even though employees spend more than stipulated time i.e. prescribed work hours, no overtime is paid.

Myth 6:

It is possible to terminate their employment ‘at will’.

Fact: ‘At will’ termination of employment is allowed in the United States but not in India.

Myth 7:

Knowledge-sector workers cannot approach the labour courts.

Fact: Knowledge workers can seek legal recourse. Shroff’s company is currently representing one such case at the labour court where an outsourcing company fired an employee. The employee sued the company for unfair labour practices under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act.

Myth 8:

Knowledge-sector workers are not aware of their legal rights.

Fact: Knowledge workers are learned and aware of their legal rights. Employees are not shy of learning more about their rights and duties.

Myth 9:

Knowledge-sector workers fear litigating against the employer.

Fact: Not true. To substantiate his statement, Shroff cited an example where an employee was once found at office with his friends on a Sunday in an inebriated condition. The employer issued a charge sheet against the employee and suspended him for misconduct. The employee was not terminated though. In this case employee issued a legal notice to employer for harassment, clearly not afraid of litigating against the employer.

Next, Shroff spoke about the applicability of labour laws to knowledge sector workers. IT and ITES companies come under the purview of the Industrial Employment Standing Orders Act. There is The Shops & Establishments Act, which provides for working hours and overtime along with annual/privilege leave, sick leave, and casual leave. But at the same time, Shroff lamented that that labour laws are inadequate to deal with new ways of working such as work from home or telecommuting. To explain, he cited the dilemma of a foreign company, which is trying to set up business in India. The employees of this company need to work from vendor location and hence the company does not have a physical establishment in India but law demands for a physical establishment in India for the purpose of registration.

The new challenges in dealing with employee grievances include introduction of HR policies in multinational companies (MNCs, building conflict resolution mechanism for grievance redressal. The recent technological advancements have changed the scope of IR, extending its limit from the purview of workplace. Now, employees have access to social networking websites such as LinkedIn, Facebook, Twitter, etc. They are allowed to access personal email and in some organisations, employees are allowed to bring their own device. The downside to this sort of openness and access to information are issues pertaining to confidentiality, protection of intellectual property, data theft, etc.

Towards closing, Shroff touched upon the new labour law pertaining to prevention of sexual harassment at workplace that has replaced Vishaka Guidelines - Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. It is the first ever codified law as regards sexual harassment. Until now, there were only guidelines issued by the Supreme Court regarding the same in India. This law has caused amendments to Indian Penal Code, making sexual harassment punishable with imprisonment for one to three years or with fine or both. Shroff cleared the air with his interpretation of the judgement. The scope of what constitutes sexual harassment at workplace has been broadened and moreover, the law is applicable to both organized and unorganized sector. The employer needs to institute an Internal Complaints Committee (ICC) or report complaints to Local Complaints Committee, in cases where employees are less than 10. The complainant can seek interim relief in terms of leave up to three months or get herself/accused transferred to another location. Moreover, it is the responsibility of the employer to provide a safe working environment to women.

When the floor was opened for questions, most queries revolved around this new law- ranging from the definition of workplace as per the act to the liability of the principal employer as far as this law is concerned.

In the coming years, there will be a renewed expectation from organisations to adapt to change even quicker than ever before. The task of an HR professional is only getting difficult in a knowledge driven economy where employees are educated, opinionated, ambitious and connected. The employee relations policies need to be malleable enough that it can transcend geographies, age groups and situations and yet be strong enough to drive a culture. The key challenge for organisations will be to transform constraints into opportunities for improved employee relations. The forum was a definite step in this direction, and the audience took with them a better perspective on the changing face of employee relations.