Abstract: The study was carried out to assess labout conflict and its management in the local government system in Nigeria with particular reference to Enugu state. Descriptive Research Method was adopted, data were collected and analysed. Essentially, the findings revealed that the organizational framework for management of conflict and grievances is poor. The problem is as a result of leadership ineffectiveness which according to the study had resulted to disputes and consequently to strike actions. Management scarcely bargains with staff in resolving conflict situations. Management does not always explain its reasons for taking a particular position in resolving conflicts. The study further revealed that other factors that heightened labour conflict include low participation of employees in taking key decisions, especially matters affecting them. The local government of Enugu state of Nigeria is believed to be poorly funded. This information was furnished by a key respondent, the poor funding is peculiar to the following local governments; Enugu North, Igbo-Eze North and Nsukka local government areas. The aforementioned local government areas were consistently on zero allocation which the resultant effect was epileptic payment of salaries and allowances of workers. Flowing from the findings, the following recommendations among others were proffered. A democratic leadership style should be imbibed in Enugu state local government councils to ensure congenial work relationship, the reign of democracy as a style would ensure reduction of labour conflict. In spite of the fact that funding was not identified as a major problem that led to labour conflict funding of the local government in Nigeria should be strengthened. Management and staff of the local government should strive to see labour conflict as a process to change and thus try to resolve it in such a way that both parties are winners. Labour conflict should be resolved through the instrumentality of collective bargaining which involves negotiation, dialogue or mediation by a third party or through statutory framework which involves Trade Dispute Act No. 7 of 1976 as amended in 1977.