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Industrial Dispute Settlement Machinery

MASTERS OF BUSINESS ADMINISTRATION (2011-2013)

Submitted to: Dr. Ran Singh Dhaliwal

Submitted by: Rubinder Kaur MBA II(Sec C) Roll No. 6294

SCHOOL OF MANAGEMENT STUDIES


PUNJABI UNIVERSITY PATIALA

What is Industrial Dispute? Industrial disputes may be said to be disagreement or controversy between management and labor with respect to wages, working conditions, other employment matters or union recognition. Machinery For Handling Industrial Disputes

PREVENTIVE MACHINERY The preventive machinery has been set up with a view to creating harmonious relations between labor and management so that disputes do not arise. It comprises of the following measures: 1. Schemes of workers participation

2. Collective bargaining 3. Grievance procedure 4. Tripartite bodies 5. Code of discipline 6. Standing orders. 1. Workers' Participation in Management It is a method whereby the workers are allowed to be consulted and to have a say in the management of the unit. The important schemes of workers' participation are : Works committee, joint management council (JMC), shop council and joint council. 2. Collective Bargaining According to Dale Yoder, "Collective bargaining is the term used to describe a situation in which essential conditions of employment are determined by a bargaining process undertaken by representatives of a group of workers on the one hand and of one or more employers on the others. 1 Collective bargaining not only includes negotiation, administration and enforcement of the written contracts between the employees and the employers, but also includes the process of resolving labour-management conflicts. The role of collective bargaining fore solving the issues arising between the management and the workers at the plant or industry level has been widely recognised. Labour legislation and the machinery for its implementation prepare a framework

according to which industrial establishments should operate. But whatever labour laws may lay down, it is the approach of employers and trade union leaders which matters. Unless both are enlightened, industrial harmony is not possible. Therefore, the solution to common problems can be found directly through negotiation between both parties and in this context, the scope of collective bargaining is very wide. 3. Grievance Procedure Grievances are symptoms of conflicts in the enterprise. So they should be handled very promptly and efficiently. Coping with grievances forms an important part of a manager's job. The manner in which he deals with grievances determines his efficiency in dealing with the subordinates. A manager is successful if he is able to build a team of satisfied workers by removing their grievances. This would help in the prevention of industrial disputes in the organisation. 4. Tripartite Bodies Industrial relations in India have been shaped largely by principles and policies evolved through tripartite consultative machinery at industry and national levels. The aim of the consultative machinery is "to bring the parties together for mutual settlement of differences in a spirit of cooperation and goodwill." Indian Labour Conference (ILC) and Standing Labour Committee (SLC) have been constituted to suggest ways and means to prevent disputes. The representatives of the workers and employers are nominated to these bodies by the Central Government in consultation with the All-India organisations of workers and employers.

The agenda for ILC/SLC meetings is settled by the Labour Ministry after taking into consideration the suggestions sent to it by member organisations. These two bodies work with minimum procedural rules to facilitate free and fuller discussions among the members. The ILC meets once a year, whereas the SLC meets as and when necessary. The functions of ILC are : (a) to promote uniformity in labour legislation; (b) to lay down procedure for the settlement of industrial disputes; and (c) to discuss matters of all-India importance as between employers and employees. The ILC advises the Government on any matter referred to it for advice, taking into account suggestions made by the state governments and representatives of the organisations of workers and employers. The Standing Labour Committee's main function is to consider and determine such questions as may be referred to it by the Plenary Conference or the Central Government and to render advice, taking into account the suggestions made by various state governments, and the organisations of workers and employers. 5. Code of Discipline Code of Discipline is a set of self-imposed mutually agreed voluntary principles of discipline and good relations between the management and the workers in industry. In India, Code of Discipline was approved by the 16th Indian Labour Conference held in 1958. It contains three sets of codes which have already been discussed later in this book. According to the National Commission on Labour, the Code in reality has been of limited use.When it was started, very favourable hopes were thought of it; but soon it started acquiring rust. Main reasons for the lapses on the part of the employers and employees to secure harmonious relations through the Code

may be listed as below : 1. There was absence of self-imposed voluntary restraint on the part of the parties. 2. The worsening of economic situation led to the erosion of real wages of the workers. 3. The rivalry among labour representatives. 4. Conflicts between the Code and the law. 5. The state of indiscipline in the body politic, that is, the whole set up is charged with indiscipline and the Code could not work. 6. The employers could not implement the Code in many respects for reasons beyond their control. 6. Standing Orders The terms and conditions of employment have been a bone of contention between labour and management since the advent of factory system. To prevent the emergence of industrial strife over the conditions of employment, one important measure is the Standing Orders. Under the Industrial Employment Standing Orders Act, 1946, it was made obligatory that Standing Orders would govern the conditions of employment

Industrial Dispute Settlement Machinery


This machinery has been provided under the Industrial Disputes Act, 1947. It, in fact, provides a legalistic way of settling the disputes. As said above, the goal of preventive machinery is to create an environment where the disputes do not arise at all. Even then if any differences arise, the judicial machinery has been provided to settle them lest they should result into work stoppages. In this sense, the nature of this machinery is curative

for it aims at curing the ailments. This machinery comprises following organs : 1. Conciliation 2. Court of Enquiry 3. Voluntary arbitration 4. Adjudication (Compulsory arbitration). 1. Conciliation "Conciliation is a method of resolving the industrial conflict with the help of third party, who intervenes in the dispute situation upon a request by either or both the parties. It is a procedure in which the decision-making function remains the prerogative of the parties to the dispute as in collective bargaining. The conciliator simply assists them in their negotiations and decision-making, he resolves the impasse and removes the bottlenecks."2 Conciliation, thus, is a form of mediation. Mediation is the act of making active effort to bring two conflicting parties to compromise. Mediation, however, differs from conciliation in that whereas conciliator plays only a passive and indirect role, and the scope of his functions is provided under the law, the mediator takes active part and the scope of his activities are not subject to any statutory provisions. Conciliation is the "practice by which the services of a neutral party are used in a dispute as means of helping the disputing parties to reduce the _ extent of their differences and to arrive at an amicable settlement or agreed solution." The Industrial Disputes Act, 1947 provides for conciliation, and can be utilised either by appointing conciliation officers (permanently or for a

limited period) or by constituting a board of conciliation. This conciliation machinery can take a note of a dispute or apprehend dispute either on its own or when approached by either party. Under the Act, conciliation is compulsory in all disputes in public utility services and optional in other industrial establishments. Over the years, the optional provisions appear to be acquiring compulsory status in non-public utilities also. With a view to expediting conciliation proceeding, time limits have been prescribed14 days in the case of conciliation officers and two months in the case of a board of conciliation. A settlement arrived at in the course of conciliation is binding for such period as may be agreed upon between the parties or for a period of 6 months and will continue to be binding until revoked by either party. The Act prohibits strike and lock-out during the pendency of conciliation proceedings before a Board and for seven days after the conclusion of such proceedings. Conciliation Officer The law provides for the appointment of Conciliation Officer by the Government to conciliate between the parties to the industrial dispute. The Conciliation Officer is given the powers of a civil court, whereby he is authorised to call and witness the parties on oath. It should be remembered,however, whereas civil court cannot go beyond interpreting the laws, the conciliation officer can go behind the facts and make judgement which will be binding upon the parties. The Conciliation Officer is appointed by the appropriate government by notification in the Official Gazette. At the State level, the Commissioner of

Labour, Additional Commissioner or the Deputy Commissioner of Labour may be appointed as conciliation officer for disputes arising in an undertaking employing more than 20 workmen. Labour Officers act as conciliation officers for disputes arising in undertakings employing less than 20 workmen. The conciliation proceedings for disputes arising in industries for which the Central Government is the appropriate authority are undertaken by the State Branch Officers of the Central Labour Commissioner's Office. The job of a Conciliation Officer is to persuade both the parties to the dispute to come to a fair and amicable settlement. For this purpose he goes from one camp to the other and finds out the greatest common measures of agreement. The term `mediation' is sometimes used for conciliation but this is not correct because the two terms have different connotations. In mediation the disputants negotiate with each other on the basis of the proposals made by the mediator whereas in conciliation they negotiate on the basis of their own proposals. In neither case can the third party impose a settlement. Board of Conciliation In case Conciliation Officer fails to resolve the differences between the parties, the government has the discretion to appoint a Board of Conciliation. The Board is tripartite and ad hoc body. It consists of a chairman and two or four other members. The chairman is to be an independent person and other members are nominated in equal numbers by the parties to the dispute.

Conciliation proceedings before a Board are similar to those that take place before the Conciliation Officer. The Government has yet another option of referring the dispute to the Court of Inquiry instead of the Board of Conciliation. The machinery of the Board is set in motion when a dispute is referred to it. In other words, the Board does not hold the conciliation proceedings of its own accord. On the dispute being referred to the Board, it is the duty of the Board to do all things as it thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement. The Board must submit its report to the government within two months of the date on which the dispute was referred to it. This period can be further extended by the government by two months. Appraisal of Conciliation Machinery. The ineffectiveness of conciliation machinery can be attributed largely to inefficient conciliation officers. Either they do not have the necessary educational background, training and experience, and knowledge of industrial relations since most of them are promoted from the ranks of clerks and labour inspectors, or they lack interest and initiative because conciliation is devoid of the attractions that are usually present in the other jobs. Partly, the failure of conciliation machinery is because of the parties' casual attitude towards it. Very often, conciliation is looked upon as merely a hurdle to cross to reach the next stage(namely, adjudication).Besides, the weakening of conciliation machinery is also caused by the political pressures on the conciliators. Both employers and workers have expressed dissatisfaction over

certain aspects of functioning of this machinery such as the delays involved, the casual attitude of one or other party to the procedure and lack of adequate background of the officer himself for understanding major issues. To enhance the effectiveness of conciliation machinery, the National Commission on Labour (1969) made the following recommendations : (1) The effectiveness of conciliation officers can be increased by (i) prescribing proper qualifications for them and improving their quality by proper selection and training; (ii) enhancing their status appropriately for dealing with persons who appear before them; (iii) giving additional power to the conciliators; and (iv) keeping them above political interference. (2) The conciliation machinery should be a part of the proposed Industrial Relations Commission so that the former is adequately staffed and is free from outside influence. The independent character of the machinery will inspire greater confidence in the conciliation officers, and, in the due course, improve the attitude of the parties towards the working of the conciliation machinery, also it will be possible to evoke more co-operation from the parties. 2. Court of Inquiry In case of the failure of the conciliation proceedings to settle a dispute, the government can appoint a Court of Inquiry to enquire into any matter connected with or relevant to industrial dispute.The court is expected to submit its report within six months. The court of enquiry may consist of one or more

persons to be decided by the appropriate government. The court of enquiry is required to submit its report within a period of six months from the commencement of enquiry. This report is subsequently published by the government within 30 days of its receipt. Unlike during the period of conciliation, workers' right to strike, employers' right to lockout, and employers' right to dismiss workmen, etc. remain unaffected during the proceedings in a court of enquiry. A court of enquiry is different from a Board of Conciliation. The former aims at inquiring into and revealing the causes of an industrial dispute. On the other hand, the latter's basic objective is to promote the settlement of an industrial dispute. Thus, a court of enquiry is primarily a fact finding machinery. Appraisal of Court of Enquiry. The performance of conciliation machinery cannot be said to be heartening. Only 25% of cases are annually handled. Besides a very large number of disputes are filed and then withdrawn later on by the workers or unions. It means petty issues are taken up for conciliation. Similarly a large number of cases are rejected as untenable, not satisfying the legal provisions. This shows lack of the understanding of legal provisions. Finally, a substantial number of cases remain pending. 3. Voluntary Arbitration On failure of conciliation proceedings, the conciliation officer may persuade the parties to refer the dispute to a voluntary arbitrator. Voluntary arbitration refers to getting the disputes settled through an independent person chosen by the parties

involved mutually and voluntarily. In other words, arbitration offers an opportunity for a solution of the dispute through an arbitrator jointly appointed by the parties. The process of arbitration saves time and money of both the parties which is usually wasted in case of adjudication. Voluntary arbitration became popular as a method of settling differences between workers and management with the advocacy of Mahatma Gandhi, who had applied it very successfully in the Textile industry of Ahmedabad. However, voluntary arbitration was lent legal identity only in 1956 when Industrial Disputes Act, 1947 was amended to include a provision relating to it. For the purpose of reference of a dispute to arbitration, the parties must enter into a written agreement called the "arbitration agreement" to refer the dispute to an arbitrator or arbitrators whose name they must specify in the agreement. The agreement must be in the form prescribed and must be signed by the parties jointly, and a copy sent to the appropriate government and the conciliation officer. The Industrial Disputes Act enjoins on the appropriate government to publish the arbitration agreement within one month from the date of its receipt in the Official Gazette. The parties are free to appoint one or more arbitrators but in case their number is even, the parties should provide for the appointment of another person as umpire who may give the award if the arbitrators are equally divided in their opinion. The award of the umpire is then deemed as the `arbitration award'. The Act also prescribes certain guidelines for the conduct of arbitration proceedings. First, in case the government is satisfied that persons making reference to arbitration represent the majority of each party, it may within the time limit prescribed for publication of the `arbitration agreement' issue a notification

giving an opportunity to the employers and workers who are not parties to the arbitration agreement but are concerned with the dispute, to present their case before the arbitrator or arbitrators. When a notification is issued, the Government can, by order, prohibit the continuance pf any strike or lock-out in connection with a dispute referred to arbitration. The provision for voluntary arbitration was made because of the lengthy legal proceedings and formalities and resulting delays involved in adjudication. It may, however, be noted that arbitrator is not vested with any judicial powers. He derives his powers to settle the dispute from the agreement that parties have made between themselves regarding the reference of dispute to the arbitrator. The arbitrator should submit his award to the government. The government will then publish it within 30 days of such submission. Award becomes enforceable on the expiry of 30 days of its publication. Under the Industrial Disputes Act, the award remains in operation for such period as may have been mentioned by it or in its absence for a period of one year from the date on which it becomes enforceable. The appropriate government has the power to extend the period of operation by any period not exceeding one year at a time. However, in such a case, the period of operation cannot be extended for more than 3 years from the date on which it came into operation. An award would continue to be in operation even after the expiry of the prescribed period unless advance notice of two months is given by either of the parties to the opposite party. Appraisal of Arbitration. Regarding the performance of voluntary arbitration as a method of resolving disputes, it can be said at the very outset that it has failed to make much progress. There exists general indifference among parties to use voluntary

arbitration as a method of settling disputes. Hardly 2 to 3 per cent of the disputes not settled by conciliation are referred to voluntary arbitration. The National Commission on Labour (1969) observed that voluntary arbitration has not taken root in spite of the influential advocacy for it in different policy making forums. Factors which have contributed to its slow progress are : easy availability of adjudication in case of failure of negotiations; dearth of suitable arbitrators who command the confidence of both the parties;(iii) absence of recognized unions which could bind the workers to common agreements;(iv) legal obstacles;(v) absence of a simplified procedure to be followed in voluntary arbitration; and cost to the parties, particularly workers 4. Adjudication - The ultimate remedy for the settlement of an industrial dispute is its reference to adjudication by labour court or tribunals when conciliation machinery fails to bring about a settlement. Adjudication consists of settling disputes through intervention by the third party appointed by the government. The law provides the adjudication to be conducted by the Labour Court, Industrial Tribunal or National Tribunal. A dispute can be referred to adjudication if both the employer and the recognised union agree to do so. A dispute can also be referred to adjudication by the Government even if there is no consent of the parties in which case it is called `compulsory adjudication'. As mentioned above, the dispute can be referred to three types of tribunals depending on the nature and facts of dispute in question.These include :

(a) Labour courts, (b) Industrial tribunals and (c) National tribunals The procedure, powers, and provisions regarding commencement of award and period of operation of award of these three bodies are similar. The first two bodies can be set up either by State or Central Government but the national tribunal can be constituted by the Central Government only, when it thinks that the adjudication of a dispute is of national importance. These three bodies are not hierarchical in nature. It is the Government's prerogative to refer a dispute to any of these bodies depending on the nature of dispute. (a) Labour Court A labour court consists of one person only, who is normally a sitting or an ex-judge of a High Court. It may be constituted by the appropriate Government for adjudication of disputes which are mentioned in the second schedule of the Act. The issues referred to a labour court may include : (a) The propriety or legality of an order passed by an employer under the Standing Orders. (b) The application and interpretation of Standing Orders. (c) Discharge and dismissal of workmen and grant of relief to them. (d) Withdrawal of any statutory concession or privilege. (e) Illegality or otherwise of any strike or lockout. (f) All matters not specified in the third schedule of Industrial

Disputes Act, 1947. (It deals with the jurisdiction of Industrial Tribunals). (b) Industrial Tribunal Like a labour court, an industrial tribunal is also a one-man body. The matters which fall within the jurisdiction of industrial tribunals are as mentioned in the second schedule or the third schedule of the Act. Obviously, industrial tribunals have wider jurisdiction than the labour courts. Moreover an industrial tribunal, in addition to the presiding officer, can have two assessors to advise him in the proceedings; the appropriate Government is empowered to appoint the assessors. The Industrial Tribunal may be referred the following issues : 1. Wages including the period and mode of payment. 2. Compensatory and other allowances. 3. Hours of work and rest intervals. 4. Leave with wages and holidays.Bonus, profit sharing, provident fund and gratuity 6. Shift working otherwise than in accordance with the standing orders. 7. Rules of discipline. 8. Rationalisation. 9. Retrenchment. 10. Any other matter that may be prescribed. (c) National Tribunal The Central Government may constitute a national tribunal for adjudication of disputes as mentioned in the second and third schedules of the Act or any other matter not mentioned therein

provided in its opinion the industrial dispute involves "questions of national importance" or "the industrial dispute is of such a nature that undertakings established in more than one state are likely to be affected by such a dispute." The Central Government may appoint two assessors to assist the national tribunal. The award of the tribunal is to be submitted to the Central Government which has the power to modify or reject it if it considers it necessary in public interest. It should be noted that every award of a Labour Court, Industrial Tribunal or National Tribunal must be published by the appropriate Government within 30 days from the date of its receipt. Unless declared otherwise by the appropriate government, every award shall come into force on the expiry of 30 days from the date of its publication and shall remain in operation for a period of one year thereafter. Appraisal of Adjudication Machinery. It is worth noting that the adjudication machinery has helped the workers to secure greater benefits and better conditions of work. That is why, trade unions have preferred adjudication as an important instrument for securing higher wages, allowances, bonus and other benefits. Adjudication has also helped in standardisation of these benefits and improving working conditions in the industrial establishments. It has protected the workers in several cases as the workers were not well-organised and had poor bargaining capacity. However, the functioning of adjudication machinery has not been very satisfactory,

particularly because of : (i) the delays involved, and (ii) the inefficient implementation of the awards.