What is Industrial Relation?

Industrial relations refers to a relationship between employers and employees. It also refers to a field of study that examines these types of relationships, especially groups of workers in unions.

Industrial relations has become one of the most fragile and complex problems of modern industrial society. Industrial progress is impossible without the cooperation of employee-employer harmonious relationships. Therefore, it is in the best interest of all to create and maintain good relations between employees (labor) and employers. The HR (Employee Relations) Manager directs the organization’s employee relations function. They develop employee relations policies and ensure consistent application of company procedures. Read this blog to know about what is industrial relation

Importance of Industrial Relation:

Healthy industrial relations are the key to progress and success. Their significance may be discussed as follows–

  • Uninterrupted work– The most important benefit of industrial relations is that this ensures continuity of work. This means continuous employment for all managers and workers. The resources are fully utilized, resulting in the maximum possible work. There is an undisturbed flow of income for all. The smooth running of the industry is of importance for several other industries
  • Reduction in Industrial Disputes — Good industrial relations reduce industrial disagreement. Disagreements and disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction from work which are fully cured by good industrial relations. Strikes, lockouts, and grievances are some of the reflections of industrial unrest and disputes which do not spring up in an atmosphere of industrial peace. Industrial relation helps to promote cooperation and increase production.
  • High morale — A good industrial relation improves the morale of the employees. Employees work with great zeal with the feeling in mind and the interest of employers and employees is the same, i.e. to increase production. Every worker or employee should feel that he/she is a co-owner of the gains of the industry.
  • Gains — The employer in his turn must realize that the gains of the industry are not for him alone but they should be shared equally and generously with his employees. In other words, complete unity of thought and action is the main achievement of workspace peace. It increases the place of workers in society and their ego is satisfied. It naturally affects production because only mighty co-operative efforts alone can produce great results.
  • Mental Revolution — The main object of industrial relations is a complete mental revolution of workers and employees. The industrial peace lies ultimately in a transformed outlook on the part of both, the employees and the employer. It is the business of leadership between the ranks of workers, and employees to work out a new relationship in consonance with a spirit of true democracy.
  • Reduced Wastage — Good industrial relations are maintained on the foundation of cooperation and recognition of each other. It will help increase production. Wastage of man, material, and machines is reduced to the minimum and thus both the party’s interest is protected.

Thus, it is proved that good industrial relations are the foundation of higher production with minimum cost and higher profits. It also results in increased efficiency of workers. New projects may be introduced for the welfare of the employees and to promote the morale of the people at work.

Parties Involved in Industrial Relations

The persons or associations which are directly associated with or influenced by the functions of industrial relations are as follows:


They are the workers who provide their services to the organization or company. They are the main resource and contribute to generating the desired output.

Following are some of the reasons for which employees find maintaining sound industrial relations to be useful for their benefits:

  • Sharing their views, suggestions, and ideas with the management to improve the business;
  • Becoming a part of organizational decision-making and ensuring the betterment of the working conditions;
  • Speaking out their problems or grievances and seeking for the redressal of the same.


Employers are responsible for providing a basic work environment for the employees. They have many rights and powers like laying off inefficient employees anytime, taking strategic decisions such as mergers, acquisition or shutdown of the organization, and adapting technological changes in the operations.

Following are the different ways in which managers can benefit from sound industrial relations in the organization:

  • Motivating the employees to give their best and gaining their trust;
  • Improving the overall efficiency and ensuring effective communication channel among the employees and the management;
  • Dealing with problems of trade union along with negotiation of employment terms and conditions with such employee representatives.


Before the 19th century, the government didn’t intervene in the conflicts between the employer and the employee. Later on, there was a change in the attitude of the governments throughout the world, they started regulating industrial relations through labor courts and tribunals, for the following reasons:

  • Safeguarding the interest of both the parties;
  • Ensuring that both the employer and the employee, abide by the legal terms and conditions.

Role of Industrial Relation

Before the industrial revolutions, organizations paid very little attention to the workers’ relationship with the management and with each other. They treated the labor as machines or slaves and concentrated only on their production capability and profits.

Later, in the year 1920, John R. Commons introduced the concept of industrial relations, which emphasized the impact of labor or employee relations with the management and the employer on the productivity of the organization.

In the modern-day business world where the companies are becoming more people-oriented and work continuously for achieving employee satisfaction and retention, the study of industrial relations plays a significant role in the organizations.

For more interesting blogs on Applicant Tracking System and current happenings in the HR, world follow us here and onLinkedIn!

Start For Free!

Suchismita Panda