The general purpose of the study was to assess the practices and related challenges of employee relations in the Grade-1 contractors mainly focusing on the variables of employee voice, employee communication, conflict management, employee engagement, quality of work life of the organizations, and roles of external stakeholders. The study built the conceptual and empirical basis of employee relations practices by reviewing sources relevant to the current realities and prospects of the construction industry in ever growing business context in the country. As far as methodology of the study was concerned, the mixed approach of descriptive survey style was adopted. As such, both primary and secondary sources were adopted. 485 respondents were selected through stratified sampling of which 414 fully responded to the questionnaire, which was the main data collection instrument of the study. The study used multi-regression analysis model to test the hypotheses whether the six variables (employee voice, employee communication, conflict management, employee engagement, quality of work life of the organizations, and roles of external stakeholders) had statistically significant positive relationship with employee relations practices in the Grade 1 construction firms in Ethiopia. The findings of the study showed that as far as the model analysis results are concerned, all six variables have been tested through multiple linear regression and all have had had statistically significant positive relationship with employee relations practices in the Grade 1 construction firms in Ethiopia. Based on the efforts stated above, the study drew on conclusions regarding the determinants of the employee relation practices in order to forward feasible recommendations to address the identified potential problems. As such, it was recommended that employee voice could be enhanced through increasing union membership or better worker councils; alternate conflict management techniques should be used such as negotiation techniques; two way and participatory communication system has to be adopted to improve information flow to employees; compensation and safety standards have to be improved to increase work life quality; motivation and trust as well as performance based system need to be applied to increase employee engagement; and policy as well as administrative support must be significantly provided from stakeholders such as trade union confederations and ministries of labour and social affairs and construction to improve the employee relations practices in the Grade 1 construction firms in Ethiopia.