Ever since the need for the department has become prominent, it has made great strides and has evolved completely, the functions that we see any human resources department performing today are very different from the functions that it performed 2 or 3 decades ago, this is ample evidence to judge the importance of the role that human resources departments now perform in any given company. Employment relations means the relationship that exists between the employer and the employees and the factors that affect this bond are some institutional factors which would be discussed in detail later on in the paper, these factors are basically the economic, political and the cultural factors and how they affect the relationship of the employer and the employee and the role of the human resources department in tackling the various issues that may arise due to the impact of these factors is looked into in detail. The employment relation also looks into the rights that the employees have over the employer and the rights that the employer have over the employee, it also defines what needs to be done in different situations when a breach has been made by either party.
Economic factors can also have an effect on the employment relation of the firm, for example in the micro economic context if the demand for the firms products goes down rapidly due to substitutes being now available at a cheaper market price then the firm would have to react to this negative factor in the environment and reply by having either lower prices or higher quality goods, but if the price has to be decreased some of the labor might have to be laid off and that can really hurt the relationship between the firm and its employees. If a labor union is involved then it would definitely protest against laying off for this reason and might threaten to halt all labor activities if the decision of the firm is not taken back. These are some decisions that the firm has to make very carefully and take the union into full confidence before announcing any such decision. On the other hand macroeconomic factors can also have a bearing on the firm and its relationship with the employees or trade unions, if the inflation level is extremely high and the company finds that it needs to cut down on costs or close a wing down then the same problems would ensue as those that have been mentioned above, but with measures such as negotiations and direct dialogue between the company and the trade unions such barriers can be overcome but there might be times when the issue would have to be resolved by putting the foot down, in that case the firm might have to pay a hefty price in the short term but in the long run it would be beneficial for the firm (Ed. 2008). Employees of any company have the right to join a labor union and that labor union has the right to represent that employee. Demand factors may reduce the facilities that are given to employees by the employer as this would translate into lower costs for the employee, this might be an alternative solution for laying off people and there have been examples where labor unions have accepted or brokered such deals where the whole labor force would accept a lower wage when economic conditions are bad so that no one from the organization is laid off.
Another factor is the political scenario or the political situation of the country that the firm is