Industrial relations conflict between your small business and its employees can lead to issues such as low employee morale, poor work performance and even legal issues if you don't handle them appropriately. Some common causes of industrial conflict range from how you compensate, reward and discipline employees to what type of work environment and schedule you provide them. Understanding these problem sources can help you make labor management decisions that reduce conflict and provide a better experience for your staff.


Causes of conflict in industrial relations include employee compensation, rewards and discipline, the work environment, working hours and staffing shortages.

Issues With Employee Compensation

One of the most common causes of industrial dispute relates to how the company pays its employees. When employees feel that their wages don't suffice for the work they're performing or that they don't receive regular wage increases that keep up with inflation, this can cause disputes with the company and the need to negotiate pay. At the same time, if your company offers new employees for a warehouse position a higher starting wage than some existing workers make after several years of service, this can create a conflict between employees and management.

There may also be conflict if your company doesn't compensate workers for all time worked, such as when employees find the need to work off the clock.

Disagreements on Rewards and Discipline

When employees disagree on how your company handles rewards and discipline, this can lead to industrial relations conflict that you have to address. For example, if your company promotes someone with less experience, skills and seniority over more tenured workers, this can lead to arguments that the decision was unfair.

The same is true when you reward and punish employees inconsistently, such as letting specific employees get away with being late or slacking off while giving others write-ups for the same behaviors. If such issues aren't resolved, your workers may feel there's no point in doing quality work.

Undesirable Working Hours

Working hours that significantly interfere with your employees' work-life balance or routine is another one of the causes of industrial conflict. If your employees were hired to work a regular day shift, forcing them to begin working nights can cause issues with their family schedule and can lead to industrial disputes.

Problems can also occur if you significantly shorten employees' work hours so that they can no longer afford to pay their bills, or you begin requiring longer shifts and overtime that take away time from employees' families.

Lack of Staff

Not having enough employees to handle the company's demand can cause disputes with workers who feel that they are overworked or have to perform tasks outside their job description. Such an issue may point to a problem in working conditions, job preparation or compensation that drives existing employees away, thus causing high turnover for your company.

This cause of labor relations conflict may also be due to your company not hiring the best employees due to a need to quickly provide staffing and not performing thorough enough screening as necessary.

Poor Work Environment

The work environment you provide for employees can cause industrial relations conflict when workers feel unsafe, unhealthy or uncomfortable doing their jobs. If you give workers substandard office equipment, don't keep the place clean or don't control the temperature properly, employees can become distracted and frustrated.

Other examples of a poor work environment that can cause industrial relations conflict is one where scheduling is not properly done or employees don't get sufficient breaks, leading to fatigue and lower morale.

Handling Industrial Relations Conflict

While creating a positive work environment, offering a fair compensation and reward system and being consistent with rules are good steps toward the prevention of industrial disputes, you can still expect disagreements to happen from time to time.

The key is to give your employees an easy way to share their grievances and handle them as early as possible to avoid bigger problems such as absenteeism, strikes or even legal issues. For some challenging or heated disputes, you might find it helpful to engage a neutral third party for mediation to allow for a fair outcome.