PERSONAL LAW AND MANAGEMENT

MHRDM: 2010- 2013

Industrial
Disputes Act
1947
By:

Gayatri Bhosale - 01

Abhishek Mishra - 23

Dharav Parikh - 28

Parijat Pushp - 30

Parveen Shaikh - 37
 INTRODUCTION

Prior to the year 1947, industrial disputes were being settled under the provisions of the Trade
Disputes Act, 1929. Experience of the working of the 1929 Act revealed various defects which
needed to be overcome by a fresh legislation. Accordingly the Industrial Disputes Bill was
introduced in the Legislature. The Bill was referred to the select committee. On the
recommendations of the Select Committee amendments were made in the original Bill.
The Industrial Disputes Bill having been passed by the Legislature received its assent on 11th
March, 1947. It came into force on first day of April, 1947 as THE INDUSTRIAL DISPUTES
ACT, 1947 (14 of 1947).
The Industrial Disputes Act, 1947 extends to whole of India. It came into operation on the first
day of April, 1947. This Act replaced the Trade Disputes Act of 1929. The Trade Disputes Act
imposed certain restraints on the right of strike and lockout in Public Utility Services. But no
provision existed for the settlement of Industrial Disputes, either by reference to a Board of
Conciliation or to a Court of Inquiry. In order to remove this deficiency, the Industrial Disputes
Act, 1947 was passed.
The Act is administered by the Ministry of Labour through its Industrial Relations Division. The
Division is concerned with improving the institutional framework for dispute settlement and
amending labour laws relating to industrial relations. It works in close co-ordination with the
Central Industrial Relations Machinery (CIRM) in an effort to ensure that the country gets a
stable, dignified and efficient workforce, free from exploitation and capable of generating higher
levels of output. The CIRM, which is an attached office of the Ministry of Labour, is also known
as the Chief Labour Commissioner (Central) [CLC(C)] Organisation. The CIRM is headed by
the Chief Labour Commissioner (Central). It has been entrusted with the task of maintaining
industrial relations, enforcement of labour laws and verification of trade union membership in
central sphere. It ensures harmonious industrial relations through:-
• Monitoring of industrial relations in Central Sphere;
• Intervention, mediation and conciliation in industrial disputes in order to bring about
settlement of disputes;
• Intervention in situations of threatened strikes and lockouts with a view to avert the
strikes and lockouts;
• Implementation of settlements and awards.

STATEMENT OF OBJECTS AND REASONS

Experience of the working of the Trade Disputes Act, 1929, has revealed that its main defect is
that while restraints have been imposed on the rights of strike and lock-out in public utility
services no provision has been made to render the proceedings institutable under the Act for the
settlement of an industrial dispute, either by reference to a Board of Conciliation or to a Court of
Inquiry, conclusive and binding on the parties to the dispute. This defect was overcome during
the war by empowering under Rule 81A of the Defense of India, Rules, the Central Government
to refer industrial disputes to adjudicators and to enforce their awards. Rule 81A, which was to
lapse on the 1st October, 1946, is being kept in force by the Emergency Powers (Continuance)
Ordinance, 1946, for a further period of six months; and as industrial unrest in checking which
this rule has proved useful, is gaining momentum due to the stress of post industrial re-
adjustment, the need of permanent legislation in replacement of this rule is self-evident. This Bill
embodies the essential principles of Rule 81A, which have proved generally acceptable to both
employers and workmen, retaining intact, for the most part, the provisions of the Trade Disputes
Act, 1929.

The two institutions for the prevention and settlement of industrial disputes provided for in the
Bill are the Works Committees consisting of representatives of employers and workmen,
Industrial Tribunal consisting of one or more members possessing qualifications ordinarily
required for appointment as Judge of a High Court. Power has been given to appropriate
Government to require Works Committees to be constituted in every industrial establishment
employing 100 workmen, or more and their duties will be to remove causes of friction between
the employer and workmen in the day-to-day working of the establishment and to promote
measures for securing amity and good relations between them. Industrial peace will be most
enduring where it is founded on voluntary settlement, and it is hoped that the Works Committees
will render recourse to the remaining machinery provided for in the Bill for the settlements of
disputes infrequent. A reference to an Industrial Tribunal will lie where both the parties to an
industrial dispute apply for such reference and also where the appropriate Government considers
it expedient so to do. An award of a Tribunal may be enforced either wholly or in part by the
appropriate Government for a period not exceeding one year. The power to refer disputes to
Industrial Tribunals and enforce their awards is an essential corollary to the obligation that lies
on the Government to secure conclusive determination of the disputes with a view to redressing
the legitimate grievances of the parties thereto, such obligation arising from the imposition of
restraints on the rights of strike and lock-out, which must remain inviolate, except where
considerations of public interest override such rights. The Bill also seeks to re-orient the
administration of the conciliation machinery provided in the Trade Disputes Act. Conciliation
will be compulsory in all disputes in public utility services and optional in the case of other
industrial establishments. With a view to expedite conciliation proceedings time limits have been
prescribed for conclusion thereof14 days in the case of conciliation officers and two months in
the case of Board of Conciliation from the date of notice of strike. A settlement arrived at in the
course of conciliation proceedings will be binding for such period as may be agreed upon by the
parties and where no period has been agreed upon, for a period of one year, and will continue to
be binding until revoked by a 3 month's notice by either party to the dispute.

Another important new feature of the Bill relates to the prohibition of strikes and lock-outs
during the pendency of conciliation and adjudication proceedings of settlements reached in the
course of conciliation proceedings and of awards of Industrial Tribunals declared binding by the
appropriate Government. The underlying argument is that where a dispute has been referred to
conciliation for adjudication a strike or lock-out, in furtherance thereof, is both unnecessary and
inexpedient. Where, on the date of reference to conciliation or adjudication a strike or lock-out is
already in existence, power is given to the appropriate Government to prohibit its continuance
lest the chances of settlement or speedy determination of the dispute should be jeopardized.

The Bill also empowers the appropriate Government to declare, if public interest or emergency
so requires, by notification in the Official Gazette, any industry to be a public utility service, for
such period, if any, as may be specified in the notification.

The objects of the industrial relation's legislation in general are to maintain industrial peace and,
to achieve economic justice. The prosperity of any industry very much depends upon its growing
production. Production is possible when the industry functions smoothly without any
disturbances. This means industrial peace through harmonious relationship between labour and
management. Therefore every industrial relations legislation necessarily aims at providing
conditions congenial to the industrial peace.

Economic justice is another objective of industrial legislation. Almost all industrial interruptions
in production are due to industrial disputes. Dissatisfaction with the existing economic
conditions is the root cause of industrial disputes. The labour demands for fair return is expressed
in varied forms; e.g. increase in wages, resistance to decrease in wages and grant of allowance
and benefits etc. If a laborer wants to achieve these gains individually, he fails because of his
weaker bargaining power against the sound economic footing of the management. Therefore, the
economic struggle of labour with capital can be fought collectivity by organised labor’s. It is
with this object to provide economic justice by ensuring fair return to the labour, the State, being
the custodian of public interest, intervenes by 'State legislation' Economic justice has also been
ensured to the people of India by our Constitution.

Thus the main object of all labour legislation is to ensure fair wages and to prevent disputes so
that the production might not be adversely affected2. The principal objects of Industrial Disputes
Act as analyzed and interpreted by the Supreme Court are as follows:

(1) The promotion of measures for securing and preserving amity and good relations between
employers and workmen;

(2) Investigation and settlement of industrial dispute between employers and employers,
employers and workmen, or between workmen and workmen with a right of representation by a
registered Trade Union or Federation of Trade Unions or Association of Employers or a
Federation of Association of Employers.

(3) The prevention of illegal strikes and lock-outs;

(4) Relief to workmen in the matter of lay-oft, retrenchment and closure of an undertaking;

(5) Collective bargaining.

MAIN FEATURES OR CHARACTERISTICS OF THE ACT

Some of the important features of the Act may be summarized as below:

1. Any industrial dispute may be referred to an industrial tribunal by mutual consent of parties to
dispute or by the State Government, if it deems expedient to do so.

2. An award shall be binding on both the parties to the dispute for the operated period, not
exceeding one year.

3. Strike and lockouts are prohibited during:

(a) The pendency of conciliation and adjudication proceedings;

(b) The pendency of settlements reached in the course of conciliation proceedings, and

(c) The pendency of awards of Industrial Tribunal declared binding by the appropriate
Government.

4. In public interest or emergency, the appropriate Government has power to declare the
transport (other than railways), coal, cotton textiles, food stuffs and iron and steel industries to
be public utility services for the purpose of the Act, for a maximum period of six months.

5. In case of lay-oft or retrenchment of workmen, the employer is requested to pay

compensation to them. This provision stands in the case of transfer or closure of an
undertaking.

6. A number of authorities (Works Committees, Conciliation Officers, Board of conciliation,

Courts of Inquiry, Labour Courts, Tribunal and National Tribunal) are provided for settlement
of Industrial disputes. Although the nature of powers, functions and duties of these authorities
differ from each other, everyone plays important role in ensuring industrial peace.

INDUSTRIAL DISPUTES

According to Section 2(k) of the Industrial Disputes Act, 1947 "industrial dispute" is defined as,
"Any disputes or differences between employers and employers, or between employers and
workmen, or between workmen and workmen, which is connected with the employment or non-
employment or the terms of employment or with the conditions of labour, of any person."
Industrial dispute is disagreement and difference between two disputants, namely, labour and
management. This disagreement or difference could be on any matter concerning them
individually or collectively. It must be connected with employment or non-employment or with
the conditions of labour.

“Industrial disputes are symptoms of industrial unrest in -the same way that boils are a
symptom of a disordered body” (Patterson)

CAUSE OF INDUSTRIAL DISPUTES

The disputes between the management and the workers may arise on account of the following
factors:
1. Economic Cause: These causes may be classified as:
a. Demand for increase in wages on account of increase in all-India Consumer Price Index
for Industrial Workers.
b. Demand for higher gratuity and other retirement benefits.
c. Demand for higher bonus.
d. Demand for certain allowances such as:
• House rent allowance
• Medical allowance
• Night shift allowance
• Conveyance allowance
• Demand for paid holidays.

2. Political Causes: Various political parties control Trade unions in India. In many cases,
their leadership vests in the hands of persons who are more interested in achieving their
political interests rather than the interests of the workers.

3. Personnel Causes: Sometimes, industrial disputes arise because of personnel problems

like dismissal, retrenchment, layoff, transfer, promotion, etc.

4. Indiscipline: Industrial disputes also take place because of indiscipline and violence on
the part of the workforce. The managements to curb indiscipline and violence resort to lock –
outs

5. Misc. Causes: Some of the other causes of industrial disputes can be:

Workers' resistance to rationalization introduction of new machinery and change of place

• Non- recognition of trade union
• Rumors spread out by undesirable elements
• Working conditions and working methods
• Lack of proper communication
 • Behavior of supervisors

CAUSES CONSEQUENCES AND SETTLEMENT OF INDUSTRIAL DISPUTES OR

MACHINERY FOR HANDLING DISPUTES

Industrial Disputes Act provides for machinery for just and equitable settlement of Industrial
disputes by ways of adjudication (settlement), negotiation and conciliation (reunion). It
promotes measures for securing and preserving peace, harmony and good relations between
employer and workmen. It helps prevention of illegal strikes and lockouts, and provides
provision for relief to workmen in the case of layoff and retrenchment. It promotes a base or
collective bargaining also.

Causes of Industrial Disputes

The problem of industrial unrest is natural in the industrial system. The main features of
industrial work anywhere are that
(a) It involves division of labour;
(b) It is a group activity;
(c) It is carried under control.

Broadly speaking, the causes of industrial disputes can be classified as:

1. Economic causes
2. Management causes, and
3. Political causes

A brief description of each is given below:

1. Economic causes
Economic causes include questions pertaining to wages, bonus and allowances, retrenchment of
workmen by the employer rationalization and automation, faulty retrenchment system, leave and
so on. Low wages, irrespective of rising prices, demand for a rise in D.A., intolerable working
and living conditions, issues pertaining to hours of work, etc. are some other economic causes
that forced a number of strikes in India.

The worker factors responsible for industrial unrest have been: (1) Inter union rivalries, (2)
Economic and political environment that exercise adverse effects on workers attitudes, and (3)
Indiscipline amongst workers.

2. Managerial causes
Some of the causes of discontent are inherent in the industrial system, itself such as:

(1) Workers do not get any opportunity for self-expression; or

(2) Their social needs are not fulfilled; that is the position of workers within in informal groups
formed in industrial undertakings and problems of conflict within the groups may not be taken
into account.
(3)Lack of communication on one hand, between the workers and management may turn petty
quarrels into industrial unrest and on the other the problem of discipline in industrial units may
assume serious dimensions.

The other managerial factors responsible for industrial unrest have been as:

1. Mental disinterest on the part of management and labour.

2. Management's general attitude of hatred towards their workers,

3. Lack of competence of the supervisor and other managers in human relations.

4. Management's desire to pay comparatively lesser amount of bonus or dearness allowance

against the desire of workmen.

5. Efforts to introduce modernization without prior or appropriate environment.

6. Excessive work load and inadequate welfare facilities.

7. Defective policy of lay-off.

8. Denial of the workers right to recognize union.

9. Unfair practices like victimization or termination of services without assigning any

reasons.

10. Lack of definite wage policy and stabilization of prices.

11. Lack of a proper policy of union recognition.

12. Denial of worker's right to organize, etc.

Political causes
Industrial disputes are partly political also. Some important political strikes are organized by
industrial workers in India. Prior to independence, as early , there was a mass strike in Mumbai
against the sentence of imprisonment strikes occurred on account of actions taken against, for
participating in demonstrations, trial of political leaders, etc. After the independence also, some
strikes have occurred owing to agitation of political parties on questions like re-organization
action of States, National Language, etc. Percentage distribution of industrial disputes by causes
as published by the Ministry of Labour,
Consequences of Industrial Disputes
The consequences of Industrial disputes are many. A brief description is given

1. Demand for increase in wages on account of increase in all- India Consumer Price
Index for Industrial Workers

2. Demand for higher gratuity and other retirement benefits.

3. Demand for higher bonus.

4. Demand for certain allowances such as:

a) House rent allowance

b) Medical allowance
c) Night shift allowance
d) Conveyance allowance
e) Demand for paid holiday etc.

Impact/Effect of Industrial Disputes

(1) Disturb the economic, social and political life of a country: When labour and equipment
in the whole or any part of an industry are rendered idle by strike or lockout, national
dividend suffers in a way that injures economic welfare.

(2) Loss of Output : Loss of output in an industry which is directly affected by a dispute, but
other industries are also affected adversely, as stoppage of work in one industry checks
activity in other industries too.

(3) Decline in the demand for goods and services: Strikes reduces the demand for the goods
that other industries make, if the industry in which stoppage has occurred is one that
furnishes raw materials semi-finished goods or service largely used in the products of other
industries.

(4) Lasting loss to the workers: There is a lasting injury to the workers in the form of work
being interrupted due to the strikes which involves a loss of time which cannot be replaced.
The wages are lost and the workers can least afford to lose them especially when the
average earning of a worker is not very high.

(5) Increase in indebtedness: This increases the indebtedness among the workers and not only
the old debts become heavier but fresh debts may also be incurred.

(6) Loss of health of family members: The workers and their family members also suffer
from loss of health due to mental warriors resulting from loss of wages.

(7) Problem to consumers: Strikes and lockouts create problem to consumers also. Articles of
their requirements are not available in time, and the prices of such articles reach high due
to black marketing activities.
 (8) Loss to the management/employer: When workers stop working, the plant and machinery
remain idle. The fixed express are to borne by the employer even when the production
stops. This way the employer suffers from great loss.

(9) Bad effect on labour relations: Strikes and lockouts bring bad effects on industrial
relations. With the result the workmen and the employer always be in mental tension.

(10) Obstruction to economic growth: Strikes creates many kinds of violence which
obstruct the growth of economy.

Examples of Industrial Disputes:

1. While Tata Motors has decided to move its Nano factory out of Singur after violent protests by
farmers, this isn't the first time that there has been a standoff between industry and farmers
unwilling to surrender land.

2. In August, the Supreme Court gave South Korean steel firm POSCO the use of large swathes
of forestland in Orissa for a $12-billion plant that protesting farmers said would displace
thousands of people. The protests delayed the start of construction on the plant, which could be
India's single biggest foreign investment to date.

3. In the same month, the Supreme Court allowed Vedanta Resources to mine bauxite in hills
considered sacred by tribal people in Orissa. The mining would feed an alumina refinery, part of
an $800-million project that has been widely opposed. Environmentalists say the open-cast mine
will wreck the rich biodiversity of the remote hills and disrupt key water sources vital for
farming.

4. Goa, famous for its beaches and tourist industry, in January dropped plans to build special
economic zones for industry after protests from political and environmental groups.

5. West Bengal last year aborted a plan for a special economic zone for a chemicals complex in
Nandi gram after fierce protests. At least 35 villagers were killed in clashes between locals and
communist party workers and the state government put all SEZs on hold in the state.

Prevention and Settlement of Industrial Disputes:

Machinery for prevention of disputes in India:

The frequency with which the strikes took place and the serious industrial and social dislocation
which they cause has underlined the importance of preserving industrial peace. The methods for
prevention of industrial disputes include broadly all such measures which directly or indirectly
contribute towards improvement of Industrial relations. The prevention methods therefore cover
the entire field of relations between industry and labour which are described below:

1. Strong Trade Union

2. Profit Sharing and Co-partnership
3. Joint Consultation
 4. Industrial Employment Standing Orders
5. Code of Discipline
6. Collective Bargaining
7. Works Committees
8. Workers Participation in Management
9. Tripartite Bodies/ Machinery
10. Labour Welfare Officer
11. Wage Board

1. Strong Trade Union:

A strong trade union responsible to the welfare of workers must work to protect and promote the
interests of workers and the condition of their employment. It must provide advice and
information to management on personnel policies and practices. Unions also impress upon
workers the need to exercise restraint in the use of their rights. Unions assist employers in
maintaining discipline and in increasing productivity. Unions should act as a link between
employers and workers so as to develop mutual understanding and corporation between the two
sides. As a matter of fact a trade union is the most suitable and most effective agency to conduct
bargaining strong.

2. Profit Sharing and Co-partnership:

(a) Profit-Sharing: This method helps for maintenance of good industrial relations. Profit sharing
means that the employer gives to the workers a portion of profit of the business, in addition to
wages. It is usually based on an agreement between the employer and the workers.
Importance of profit sharing:
(1)The award to labour of a share of profits would create psychological Conditions favorable to
the restoration of industrial peace.

(2) Profit sharing is likely to strengthen the common interest of labour and capital and thereby
increase the productive efficiency of the workers.

(3) Profit sharing enhances social justice so far as labour, a primary factor of production, that
produces profits, is allowed to share in them.

(4) Profit sharing makes the worker responsible, creates a feeling of identity with business and
settles all disputes peacefully.

Limitations of profit sharing:

(1) Although the purpose of profit sharing is to lay foundation for harmonious industrial
relations, they often fail to gain the confidence of the worker since the amount of profits accruing
to the workers has not been very large. The workers suspect honesty and good faith on the part of
the employer in distribution of profits.

(2) There is possibility of conflicts since the employees contend that the increased profits are due
to their efforts.
(3) The workers often fear that employers may use the profit-sharing scheme to weaken the trade
unions and to make the workers dependent upon them.

(4) Profit sharing may make the workers sluggish and therefore, production instead of being
augmented may actually diminish.

Broadly speaking; until a climate of mutual trust and confidence is created between the two
sides, the success of profit sharing schemes in industry so far as industrial peace is concerned,
seems doubtful.

(b) Co-partnership:

Co-partnership has come to be a applied to schemes which include a system of profit sharing as
well as control in the management. It is necessary that in order to acquire control of business,
the workers may other acquire share-capital gaining thereby the rights and responsibility of
share-holders or may form a co-partnership committee having a voice in internal management of
the business. So far as India is concerned, acquiring of share capital or joining in a co-
partnership committee by workers seems difficult because of their low earnings and backward in
education. Therefore, in the context of Indian conditions, it is proper to lay emphasis on workers
participation in management.

(3) Joint consultation:

The industrial democracy necessitates joint consultation in industry between employer and
workers to eliminate most of the problems faced by them. Joint consultation involves a regular
and continuous relationship between workers and management, and therefore, pre-supposes the
willing acceptance by management of the participation of workers representatives in discussing
Common problems of interest to the enterprise. While full joint consultation can be expected
only after the establishment of a collective bargaining relationship, mutual consultation at the
plant level often helps to bring the parties together and to train them in the discussion of
common problems. Thus, there is tremendous scope of reducing industrial tension and
improving productivity through joint consultation in industry. The system of joint consultation
in India could not develop adequately before independence mainly because of the illiteracy,
migratory character and lack of proper organization of workers. After 1947, with the initiation
of Five Year Plans greater emphasis was laid on more production and workers interests began to
attract greater attention. The Act, provided for establishment of 'works committees' at the plant
level. Now the consultative machinery in this country exists almost at every levels i.e.
undertaking, industry, State and National levels. At the undertaking level, there are Joint
Committees or Joint Councils. At the industry level, there are Wage Boards and Industrial
Committees to deal with specific problems of workers that arose from time to time in particular
industries. At the State Level, the Labour Advisory Board functions, and at the national level
there are Indian Labour Committee, etc. The functions of Joint Consultative Machinery in India
have been the prevention of disputes, reduction in mutual differences and friction, and creation
of a proper work climate in industry.
4. Industrial Employment Standing Orders:

This is another constructive step towards the prevention of industrial disputes which determine
the terms and conditions of industrial employment. Every worker should have the knowledge
about the terms and conditions in which he has been employed. He is also expected to know the
rules of discipline that is supposed to be followed by him. This problem is solved by 'Standing
Orders' in which terms and conditions for employers and employees are prescribed. The
provision for 'Standing orders was for the first time, made in the Bombay Industrial Disputes
Act, 1938. Thereafter, in order to define the condition of employment and to make them known
to the workmen, the Government enacted the Industrial Employment (Standing Orders) Act,
1946. This Act applies to every industrial establishment wherein 100 or more workers are
employed or were employed on any day of the preceding 12 months.

5. Code of Discipline:

The Indian Labour Conference at its 15th Session in 1957 evolved a 'Code of Industrial
Discipline'. The Code voluntarily binds the employers and workers to settle all grievances and
disputes by mutual negotiations, conciliation and voluntary arbitration. The main features of
this Code include the following.

(1) Both, employers and employees should recognize the rights and responsibilities of each
other.

(2) Neither party will have recourse to coercion, intimidation, litigation and victimization, but
will settle all disputes through the existing machinery for the settlement of industrial disputes.

(3) A mutually agreed procedure will be set up and both the parties will abide by it without
taking arbitrary action.

6. Collective Bargaining:

It is a form of joint consultation, and a process in which the representatives of the employer and
of the employees meet and attempt to negotiate a contract governing the employer-employees
union relationship. It involves discussion and negotiation between the two groups as to the terms
and conditions of employment. The main object of collective bargaining is to protect the
interests of workers through collective action and by preventing unilateral action on the part of
the employer. It promotes industrial democracy.

7. Works committees:

Works committees are the most suitable agency for prevention of industrial disputes. In most of
the countries like India, works committees are required to the established through legislation.
According to Sec. 3 of the Industrial Disputes Act 1947, in the case of an industrial
establishment in which 100 or more workmen are employed or have been employed on any day
in the preceding 12 months, the appropriate Government may, by general or special order require
the employer to constitute a Works Committee consisting of representatives of employers and
worker engaged in the establishment, the number of representatives of workmen not being less
than that of the employers representatives, to be chosen in consultation with their trade union, if
any. The duties of the Works Committee are to promote measures for securing and preserving
amity and good relations between the employer and workmen and to comment upon matters of
their interest, and to endeavor to compose any material difference of opinion in respect of such
matters.

8. Workers participation in management:

These councils aim at enabling the workers to participate in management, help them to
understand the problems and difficulties of the industry concerned and bring about better
relationship between the management and labour.

9. Tripartite Bodies/Machinery:

Several tripartite bodies have been constituted at Central and State levels. The Indian Labour
Conference, Standing Labour Committees, Wage Boards and Industrial Committees operate at
the Centre. At the State Level, State Labour Advisory Boards have been set up. All these bodies
play important role in reaching at agreements on various labour matters. The recommendations
of these bodies are advisory in nature but carry a great weight on employers, trade unions and
the Government. All these bodies constitute the consultative machinery for the private sector.
 AWARDS:

Meaning of award (judgement) Award‘ means an interim or final determination of any industrial
dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National
Tribunal. It also includes arbitration award. [section 2(b)]. The award‘ is required to be published
by State/Central Government within 30 days. [section 17]. The award becomes effective 30 days
after its publication. [section 17A].

Settlement:

1. Meaning of settlement: Settlement‘ means a settlement arrived at in the course of

conciliation proceedings. It includes a written agreement between employer and
workmen arrived at otherwise than in course of conciliation proceedings (i.e. outside
the conciliation proceedings).
2. Duration of settlement: The settlement is binding during the period it is in force.
Even after that period is over, it continues to be binding, unless a 2 month notice of
termination is given by one party to another. [section 19(2]. If no period has been
specified, settlement is valid for 6 months and an award is valid for one year.
3. Difference between settlement and award: The difference is that settlement arrived
at in course of conciliation or an arbitration award or award of labour court or
Tribunal binds all parties to industrial dispute including present and future workmen
and all parties who were summoned to appear in the proceedings. [section 18(3)]. If
settlement is arrived at by mutual agreement, it binds only those who were actually
party to agreement. [section 18(1)].

Form of report or award

Form of report or award.-
(1) The report of a Board or Court shall be in writing and shall be signed by all the members
of the Board or Court, as the case may be: Provided that nothing in this section shall be deemed
to prevent any member of the Board or Court from recording any minute of dissent from a
report or from any recommendation made therein.
(2) The award of a Labour Court or Tribunal or National Tribunal shall be in writing and shall
be signed by its presiding officer.
Publication of reports and awards
Publication of reports and awards. –
(1) Every report of a Board or Court together with any minute of dissent recorded
therewith, every arbitration award and every award of a Labour Court, Tribunal or National
Tribunal shall, within a period of thirty days from the date of its receipt by the appropriate
Government, be published in such manner as the appropriate Government thinks fit.
(2) Subject to the provisions of section 17A, the award published under sub-section shall
be final and shall not be called in question by any Court in any manner whatsoever.
Commencement of the award
17A. Commencement of the award.-
(1) An award (including an arbitration award) shall become enforceable on the expiry of thirty
days from the date of its publication under section 17:
Provided that--
(a) if the appropriate Government is of opinion, in any case where the award has been given
by a Labour Court or Tribunal in relation to an industrial dispute to which it is a party; or
(b) if the Central Government is of opinion, in any case where the award has been given by a
National Tribunal, that it will be inexpedient on public grounds affecting national economy
or social justice to give effect to the whole or any part of the award, the appropriate
Government, or as the case may be, the Central Government may, by notification in the
Official Gazette, declare that the award shall not become enforceable on the expiry of the
said period of thirty days.
(2) Where any declaration has been made in relation to an award under the proviso to sub-
section (1), the appropriate Government or the Central Government may, within ninety days
from the date of publication of the award under section 17, make an order rejecting or
modifying the award, and shall, on the first available opportunity, lay the award together with
a copy of the order before the Legislature of the State, if the order has been made by a State
Government, or before Parliament, if the order has been made by the Central
Government.
(3) Where any award as rejected or modified by an order made under sub-section (2) is
laid before the Legislature of a State or before Parliament, such award shall become
enforceable on the expiry of fifteen days from the date on which it is so laid; and where no
order under sub-section (2) is made in pursuance of a declaration under the proviso to
sub-section (1), the award shall become enforceable on the expiry of the period of ninety
days referred to in sub-section (2). Subject to the provisions of sub-section (1) and sub-section.
Enforceability of an award: The award shall come into operation with effect from such date as
may be specified therein, but where no date is so specified, it shall come into operation on the
date when the award becomes enforceable under sub-section (1) or sub- section (3), as the case
may be.
Payment of full wages to workman pending proceedings in higher courts
Under sec 17B, payment of full wages to workman pending proceedings in higher courts.-
Where in any case, a Labour Court, Tribunal or National Tribunal by its award directs
reinstatement of any workman and the employer prefers any proceedings against such award in
a High Court or the Supreme Court, the employer shall be liable to pay such workman, during
the period of pendency of such proceedings in the High Court or the Supreme Court, full wages
last drawn by him, inclusive of any maintenance allowance admissible to him under any rule
if the workman had not been employed in any establishment during such period and an
affidavit by such workman had been filed to that effect in such Court.

Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that
such workman had been employed and had 24 been receiving adequate remuneration during
any such period or part thereof, the Court shall order that no wages shall be payable under
this section for such period or part, as the case may be.
 Persons on whom settlements and awards are binding
Persons on whom settlements and awards are binding.-

(1) A settlement arrived at by agreement between the employer and workman otherwise than
in the course of conciliation proceeding shall be binding on the parties to the agreement.

(2) Subject to the provisions of sub-section

(3) An arbitration award which has become enforceable shall be binding on the parties to the
agreement who referred the dispute to arbitration.

(4) A settlement arrived at in the course of conciliation proceedings under this or an

arbitration award in a case where a notification has been issued under sub-section (3A) of
section 10A or an award of a Labour Court, Tribunal or National Tribunal which has become
enforceable] shall be binding on—

(a) All parties to the industrial dispute;

(b) All other parties summoned to appear in the proceedings as parties to the dispute,
Unless the Board, arbitrator, Labour Court, Tribunal or National Tribunal, as the case
may be, records the opinion that they were so summoned without proper cause

(c) where a party referred to in clause (a) or clause (b) is an employer, his heirs,
successors or assigns in respect of the establishment to which the dispute relates;

(d) where a party referred to in clause (a) or clause (b) is composed of workmen, all
persons who were employed in the establishment or part of the establishment, as the
case may be, to which the dispute relates on the date of the dispute and all persons
who subsequently become employed in that establishment or part.

Period of operation of settlements and awards

Period of operation of settlements and awards.-

(1) A settlement shall come into operation on such date as is agreed upon by the parties to
the dispute, and if no date is agreed upon, on the date on which the memorandum of the
settlement is signed by the parties to the dispute.

(2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no
such period is agreed upon, for a period of six months from the date on which the
memorandum of settlement is signed by the parties to the dispute and shall continue to be
binding on the parties after the expiry of the period aforesaid, until the expiry of two months
from the date on which a notice in writing of an intention to terminate the settlement is given
by one of the parties to the other party or parties to the settlement.

(3) An award shall, subject to the provisions of this section, remain in operation for a period of
one year from the date on which the award becomes enforceable under section 17A provided
that the appropriate Government may reduce the said period and fix such period as it
thinks fit: further that the appropriate Government may, before the expiry of the said period,
 extend the period of operation by any period not exceeding one year at a time as it thinks
fit so, however, that the total period of operation of any award does not exceed three years
from the date on which it came into operation.

(4) Where the appropriate Government, whether of its own motion or on the application of any
party bound by the award, considers that since the award was made, there has been a material
change in the circumstances on which it was based, the appropriate Government may refer the
award or a part of it to a Labour Court, if the award was that of a Labour Court or to a
Tribunal, if the award was that of a Tribunal or of a National Tribunal] for decision whether the
period of operation should not, by reason of such change, be shortened and the decision of
Labour Court or the Tribunal, as the case may be on such reference shall be final.

(5) Nothing contained in sub-section (3) shall apply to any award which by its nature, terms or
other circumstances does not impose, after it has been given effect to, any continuing obligation
on the parties bound by the award.

(6) Notwithstanding the expiry of the period of operation under sub-section (3), the award shall
continue to be binding on the parties until a period of two months has elapsed from the date on
which notice is given by any party bound by the award to the other party or parties intimating its
intention to terminate the award.

(7) No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given
by a party representing the majority of persons bound by the settlement or award, as the case
may be.

Commencement and conclusion of proceedings

(1) A Conciliation proceeding shall be deemed to have commenced on the date on which a
notice of strike or lock-out under section 22 is received by the conciliation officer or on the
date of the order referring the dispute to a Board, as the case may be.

(2) A Conciliation proceeding shall be deemed to have concluded—

(a) Where a settlement is arrived at, when a memorandum of the settlement is signed by the
parties to the dispute;

(b) Where no settlement is arrived at, when the report of the conciliation officer is received by
the appropriate Government or when the report of the Board is published under section 17, as
the case may be; or

(c) when a reference is made to a Court, Labour Court, or National Tribunal] under section 10
during the pendency of conciliation proceedings.

(3) Proceedings before an arbitrator under section 10A or before a Labour Court, Tribunal or
National Tribunal] shall be deemed to have commenced on the date of the reference of the
dispute for arbitration or adjudication, as the case may be] and such proceedings shall be
deemed to have concluded on the date on which the award becomes enforceable under section
17A.
Certain matters to be kept confidential

Certain matters to be kept confidential. - There shall not be included in any report or award
under this Act any information obtained by a conciliation officer, Board, Court, Labour
Court, Tribunal, National Tribunal or an arbitrator] in the course of any investigation or
inquiry as to a trade union or as to any individual business (whether carried on by a person,
firm or company) which is not available otherwise than through the evidence given before
such officer, Board, Court, Labour Court, Tribunal, National Tribunal or arbitrator, if the trade
union, person, firm or company, in question has made a request in writing to the conciliation
officer, Board, Court, Labour Court, Tribunal, National Tribunal or arbitrator, as the case may
be, that such information shall be treated as confidential; nor shall such conciliation
officer or any individual member of the Board, or Court or the presiding officer of the
Labour Court, Tribunal or National Tribunal or the arbitrator] or any person present at or
concerned in the proceedings disclose any such information without the consent in writing of
the secretary of the trade union or the person, firm or company in question, as the case may
be:
Provided that nothing contained in this section shall apply to a disclosure of any such
information for the purposes of a prosecution under section 193 of the Indian Penal Code (45 of
1860).

SETTLEMENT

A settlement arrived at, in the course of conciliation proceedings comes into operation - on such
date as is agreed upon by the parties to the dispute: and Where no such date is agreed upon, on
the date on which the memorandum of settlement is signed by the parties to the dispute.

The settlement shall be binding - for the period agreed upon by the parties: and where no such
period is agreed upon, for a period of six months from the date on which the memorandum of
settlement is signed.

The settlement shall remain binding for a further period until the expiry of two months from the
date on which a notice in writing for termination of the settlement is given by any one party to
the other party or parties.

LOCK OUT

If an employer shuts down his place of business as a means of payback or as an Instrument of

force or as a mode of exerting pressure on the employees, or, generally speaking, when his act
is what may be called an act of belligerency there would be a lockout. If, on the other hand, he
shuts down his work because he cannot for instance get the raw materials or the fuel or the
power, necessary to carry on his manufacturing or because he is unable to sell the goods he has
made or because his credit is exhausted or because he is losing money that would not be a
considered as lockout.

A lockout is a work stoppage in which an employer prevents employees from working. It is

declared by employers to put pressure on their workers. This is different from a strike, in which
employees refuse to work. Thus, a lockout is employers’ weapon while a strike is raised on part
of employees. According to Industrial Disputes Act 1947, lock-out means the temporary
closing of a place of employment or the suspension of work or the refusal by an employer
to continue to employ any number of persons employed by him.

A lockout may happen for several reasons. When only part of a trade union votes to strike, the
purpose of a lockout is to put pressure on a union by reducing the number of members who are
able to work.

Example - if a group of the workers strike so that the work of the rest of the workers becomes
impossible or less productive, the employer may declare a lockout until the workers end the
strike. Another case in which an employer may impose a lockout is to avoid slowdowns or
intermittent work-stoppages. Occupation of factories has been the traditional method of
response to lock-outs by the workers' movement.

PROHIBITION OF LOCKOUT

Employers who are carrying on a public utility service can not lockout any of their employees
without giving them a prior notice within six weeks before the lock out or within the fourteen
days of giving such a notice. Moreover, the notice of strike or lockout is to be given in a
prescribed manner showing the number of persons involved in the strike/lockout.

The notice of strike or lockout is not necessary when there is already a strike or lockout going
on in the company. However, a notice should be issued on the day on which the lockout is
declared just to intimate the appropriate authorities about the lockout. The employer is supposed
to report the number of notices of strikes received by him to the appropriate Government or the
authority prescribed by the government within the five days of receiving such notices.

No workman who is employed in any industrial establishment shall go on strike in breach of

contract and no employer of any such workman shall declare a lock-out –

(a) during the pendency of conciliation proceedings before a Board and seven days after the
conclusion of such proceedings;

(b) during the pendency of proceedings before a Labor Court, Tribunal or National Tribunal and
two months after the conclusion of such proceedings;

(c) during the pendency of arbitration proceedings before an arbitrator and two months after the
conclusion of such proceedings, where a notification has been issued under sub-section (3A) of
section 10A; or

(d) during any period in which a settlement or award is in operation, in respect of any of the
matters covered by the settlement or award.
ILLEGAL LOCKOUTS

A lock-out is illegal if it is declared in noncompliance with the section 22 of Industrial Disputes

Act 1947, that is, if the notice period is not served or if the strike is held within the fourteen
days of issuing the notice of strike. If a strike or lockout has already taken place and is being
referred to a Board, the continuance of such a strike or lock out is not illegal provided it is in
compliance with the provisions of act. Moreover, a lockout declared in consequence of an
illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be
illegal.

PENALTY FOR LOCKOUTS

A workman or an employer who initiates and continues a lockout is punishable with

imprisonment extendable to a month or with a fine of one thousand rupees or both. According
to Section 25 of Industrial Disputes Act 1947, no person should provide any sort of financial aid
to any illegal strike or lock-out. Any person who knowingly provides such a help in support of
any illegal strike or lock-out is punishable with imprisonment for a term which may extend to
six months, or with fine which may extend to one thousand rupees, or with both.

(1) Any workman who commences, continues or otherwise acts in furtherance of, a strike
which is illegal under this Act, shall be punishable with imprisonment for a term which may
extend to one month, or with fine which may extend to fifty rupees, or with both.

(2) Any employer who commences, continues, or otherwise acts in furtherance of a lock-out
which is illegal under this Act, shall be punishable with imprisonment for a term which may
extend to one month, or with fine which may extend to one thousand rupees, or with both

CLOSURE

An Employer who intends to close down an undertaking or an industrial establishment should

serve, for previous approval, at least ninety days before the date on which the intended closure
is to become effective, a notice. But it shall not apply to an undertaking set up for the
construction of buildings, bridges, roads, dams, canals or for any other construction work.

Closure under section 2(cc) of the Industrial Disputes Act of 1947 is defined as the
permanent closing down of a place of employment or a part thereof, and is taken as one
which may have occurred due to industrial disputes or also because of reasons other than
industrial disputes such as financial stringency, shortage of power or raw material or coal,
inter / intra union rivalries, accumulation of stocks, lack of demand, breakdown of
machinery, indiscipline, violence etc. The closure do not include off season closures

If the government is satisfied for the reasons being intended closure of the understanding are
not adequate and sufficient, direct the employer not to close down such undertaking. If the
government does not communicate the Permission or the refusal to grant the permission to the
employer within the period of two months from the date on which application is made , the
permission applied for , shall be deemed to have been granted on the expiration of the said
period for two months. If the permission for closure is refused the closure of the undertaking
shall be deemed to illegal.

In case of closure every workman who has put up one year of continuous service shall be
entitled to notice and compensation as if the said workman had been retrenchment.

The closure must be real whether bonafide or malafide, it must be genuine in a sense that it
should be a real closure and not a pretension of closing the work place

PENALTY FOR CLOSURE

(1) Any employer who closes down an undertaking without complying with the provisions of
sub-section (1) of section 25-O shall be punishable with imprisonment for a term which may
extend to six months, or with fine which may extend to five thousand rupees, or with both.

(2) Any employer, who contravenes an order refusing to grant permission to close down an
undertaking under sub-section (2) of section 25-O or a direction given under section 25P shall
be punishable with imprisonment for a term which may extend to one year, or with fine which
may extend to five thousand rupees, or with both, and where the contravention is a continuing
one, with a further fine which may extend to two thousand rupees for every day during which
the contravention continues after the conviction.

(3) Omitted

PENALTY FOR CLOSURE WITHOUT NOTICE

Any employer who closes down any undertaking without complying with the provisions of
section 25FFA shall be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to five thousand rupees, or with both.

LAY-OFF

According to the sec (2(kkk)), "lay-off" (with its grammatical variations and cognate
expressions) means the failure, refusal or inability of an employer on account of shortage of coal,
power or raw materials or the accumulation of stocks or the breakdown of machinery [or natural
calamity or for any other connected reason] to give employment to a workman whose name is
borne on the muster rolls of his industrial establishment and who has not been retrenched.

Explanation.--Every workman whose name is borne on the muster rolls of the industrial
establishment and who presents himself for work at the establishment at the time appointed for
the purpose during normal working hours on any day and is not given employment by the
employer within two hours of his so presenting himself shall be deemed to have been laid-off for
that day within the meaning of this clause:

Provided that if the workman, instead of being given employment at the commencement of any
shift for any day is asked to present himself for the purpose during the second half of the shift for
the day and is given employment then, he shall be deemed to have been laidoff only for one-half
of that day:

Provided further that if he is not given any such employment even after so presenting himself, he
shall not be deemed to have been laid-off for the second half of the shift for the day and shall be
entitled to full basic wages and dearness allowance for that part of the day.

Continuous service: According to Sec 25-B of Industrial Dispute Act, a workman shall be said
to be a continuous service for a period if he is for that period in uninterrupted service, including
service which may be interrupted on account of sickness or authorized leave or an accident or a
strike which is not illegal, or a lock-out or cessation of work which is not due any fault on the
part of the workman.

Where a workman is not in continuous service for a period of one year or six months, he shall be
deemed to be in continuous service under an employer if,

(a) for a period of one year, if the workman, during a period of twelve calendar months
preceding the date with reference to which calculation is to be made, actually worked under the
employer for not less than -

(i) One hundred and ninety days in the case of a work man employed below ground in a mine;
and

(ii) Two hundred and forty days in any other case ;

(b) for a period of six months, if the workman, during a period of six calendar months
preceding the date with reference to which calculation is to be made, has actually worked under
the employer for not less than -

(i) ninety five days, in the case of a workman employed below ground in a mine; an

(ii) one hundred and twenty day, in any other case.

Explanation: For the purposes of clause (2) the number of days in which a workman has
actually worked under an employer shall include the days on which -

(i) He has been laid-off under an agreement or as permitted by standing orders made under the
industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under this Act or under any
other law applicable to the industrial establishment ;

(ii) He has been on leave with full wages, in the previous year ;
 (iii) He has been absent due to temporary disablement caused by accident arising out of and in
the course of his employment ; and

(iv) In the case of a female, she has been on maternity leave; so however that the total period
of such maternity leave, does not exceed twelve weeks.

Right of workman laid-off for compensation – According to section 25-C

(1) Whenever a workman (other than badli workman or a causal workman) whose name is
borne on the muster-rolls of an industrial establishment and who has completed not less than one
year of continuous service under an employer is laid-off, whether continuously or intermittently,
he shall be paid by the employer for all days during which he is so laid-off, except for such
weekly holidays as may intervene, compensation which shall be equal to fifty percent of the total
of the basic wages and dearness allowance that would have been payable to him had he not been
so laid-off.

Provided that if during any period of twelve months, a workman is so laid-off for more than
forty-five days no such compensation shall be payable in respect of any period of the lay-off
after the expiry of the first forty-five days, if there is an agreement to that effect between the
workman and the employer.

Provided further that it shall be lawful for the employer in any case falling within the foregoing
proviso to retrench the workman in accordance with the provisions contained in section 25-F at
the time after the expiry of first forty-five days of the lay-off and when he does so, any
compensation paid to the workman for having been laid-off during the preceding twelve months
may be set off against the compensation payable for retrenchment.

Explanation. - "Badli Workman" means a workman who is employed in an industrial

establishment in the place of another workman whose name is borne on the muster-rolls of the
establishment, but shall cease to be regarded as such for the purpose of this section, if he has
employed one year of continuous service in the establishment.

Duty of an employer to maintain muster-rolls of workmen –

As per Sec 25-D, Not withstanding that workman to any industrial establishment have been laid-
off it shall be the duty of every employer to maintain for the purposes of this, a muster roll, and to
provide for the making of entries by workmen who may present themselves for work at the
establishment at the appointed time during normal working hours.

Workman not entitled to compensation in certain cases:

According to sec 25-E, no compensation shall be paid to a workman who has been laid-off.

(i) if he to accept any alternative employment in the same establishment from which he has
been laid-off, or in any other establishment belonging to the same employer suitable in the same
town or village or situate within a radius of five miles from the establishment to which he
belongs, if , in the opinion of the employer, such alternative employment does not call for any
special skill or previous experience and can be done by the workman :
 Provide that the wages which would normally have been paid to the workman are offered for
the alternative employment also;

(ii) if he does not present himself for wok at the establishment at the appointed time during
normal working hours at least once a day ;

(iii) if such laying-off is due to a strike or showing down of production on the part of
workmen in another part of the establishment.

Conditions precedent to retrenchment of workmen:

According to sec 25-F, no workman employed in an industry who has been in continuous service
for not less than one year under an employer shall be retrenched by that employer until

(a) The workman has been given one months's notice in writing including the reasons for
retrenchment and the period of notice has expired or the workman has been paid in lieu of such
notice, wages for the period of the notice.

(b) The workman has been paid at the time of retrenchment, compensation which shall be
equivalent fifteen days' average pay for every completed year of continuous service or any part
thereof in excess of six months; and

(c) Notice in the prescribed manner is served on the appropriate Government, or such
authority as any be specified by the appropriate Government by notification in the Official
Gazette.

Compensation to workmen in case of transfer of undertakings:

According to 25-FF, Where the ownership of management of an undertaking transferred whether

by agreement or by operation of law, from the employer in relation to that undertaking to a new
employer, every workman who has been in continuous service for not less than one year in that
undertaking immediately before such transfer shall be entitled to notice and compensation in
accordance with the provisions of section 25-FF as if the workman had been retrenched :

Provided that nothing in this section shall apply to a workman in any case where there has
been a change of employers by reason of transfer, if -

(a) The service of the workman has not been employed by such transfer;

(b) The terms and conditions of service applicable to the workman after such transfer are not
in any way less favourable to the workman than those applicable to him immediately before the
transfer ; and

(c) The new employer is, under the terms of such transfer or otherwise legally liable to pay to
the workman, in the event of his retrenchment, compensation on the basis that his service has
been continuous and has not been interrupted by the transfer.
 (1) An employer who intends to close down an undertaking shall serve, at least sixty days
before the date on which the intended closure is to become effective, a notice in the prescribed
manner, on the appropriate Government stating clearly the reason for the intended closure of the
undertaking:

Provided that nothing in this section shall apply to -

(a) An undertaking in which -

(i) Less than fifty workmen are employed, or

(ii) Less than fifty workmen were employed on an average per working day in the preceding
twelve months.

(b) An undertaking set up for the construction of buildings, bridges, roads, canals, dams or for
other construction work or project.

(2) Notwithstanding anything contained in sub-section(1), the appropriate Government may,

if it is satisfied that owning to such exceptional circumstances as accident to the undertaking or
death of the employer or the like it is necessary so to do, by order, direct the provisions of sub-
section (1) shall not apply in relation to such undertaking for such period as may be specified in
the order.

(1) Where an undertaking is closed down for any reason whatsoever, every workman who has
been in continuous service for not less than one year in that undertaking immediately before such
closure shall, subject to the provisions of sub-section (2) be entitled to notice and compensation
in accordance with the provisions of section 25-F as if the workman has been retrenched.

Provided that where the undertaking is closed down on account of unavoidable circumstances
beyond the control of the employer the compensation to be paid to the workman under clause (b)
of section 25-F shall not exceed average pay for three months .

Explanation: An undertaking which is closed down by reason merely of -

(i) financial difficulties including financial loss, or

(ii) accumulation of undisposed off stocks; or

(iii) the expiry of the period of the lease or licence granted to it ; or

(iv) in a case where the undertaking is engaged in mining operations, exhaustion of the
minerals in the area in which such operations are carried on, shall not be deemed to have been
closed down on account of unavoidable circumstances beyond the control of the employer within
the meaning of the proviso to this sub-sections.

(1-A) Notwithstanding anything contained in sub-section (1) where an undertaking engaged in

mining operations in closed down by reason merely of exhaustion of the minerals in the area in
 which such operations are carried on, no workman referred to in that sub-section shall be entitled
to any notice or compensation in accordance with the provisions of section 25-F, if

(a) the employer provides the workman with alternative employment with effect from the date
of closure at the same remuneration as he was entitled to receive, and on the same terms and
conditions of service as were applicable to him, immediately before the closure;

(b) The service of the workman has not been interrupted by such alternative employment; and

(c) the employer is, under the terms of such alternative employment or otherwise, legally to
be pay to the workman, in the event of his retrenchment, compensation on the basis that his
service has been continuous and has not been interrupted by such alternative employment.

(1-B) For the purpose of sub-sections (1) and (1-A), the expressions "minerals" and "mining
operations" shall have the meaning respectively assigned to them in clauses (a) and (b) of section
3 of the Mines and Minerals (Regulation and Development) Act, 1957.]

(2) Where any undertaking set up for the construction of building, bridges, canals, dams or
other construction work is closed down on account of the completion of the work within two
years from the date on which the undertaking had been set up, no workman employed therein
shall be entitled to any compensation under clause (b) of section 25-F but if the construction
work is not so completed within two years, he shall be entitled to notice and compensations
under that section for every completed year of continuous service or any part thereof excess of
six months.

RETRENCHMENT:

According to section 2(oo) of the Industrial Disputes Act, 1947, retrenchment means:
the termination by the employer of the services of a workman for any reason whatsoever,
otherwise than as a punishment inflicted by way of disciplinary action, but does not include:-

a) voluntary retirement of the workman; or

b) retirement of the workman on reaching the age of superannuation if the contract of

employment between the employer and the workman concerned contains a stipulation in
that behalf; or

bb) termination of the service of the workman as a result of the non-renewal of the
contract of employment between, the employer and the workman concerned, on its
expiry, or such contract being terminated under a stipulation in that behalf contained
therein: or

c) Termination of the service of a workman on the ground of continued ill-health.

Procedure for Retrenchment:

Section 25-G provides:-

 Where any workman in an industrial establishment, who is a citizen of India, is to be
retrenched and he belongs to a particular category of workmen in that establishment, in the
absence of any agreement between the employer and the workman in this behalf, the employer
shall ordinarily retrench the workman who was the last person to be employed in that category,
unless for reasons to be recorded the employer retrenches any other workman.

According to Section 25-N:

1. No workman employed in any industrial establishment to which this chapter applies,

who has been in continuous service for not less than one year under an employer shall be
retrenched by that employer until:

a) the workman has been given 3 months' notice in writing indicating the reason for
retrenchment and the period of notice has expired, or the workman has been paid in lieu of
such notice wages for the notice, and

b) the prior permission of the appropriate Government or such authority as may be

specified by the Government by the notification in the Official Gazette has been obtained or
an application made in this behalf.

2. An application for permission under sub-section (1) shall be made by the employer in the
prescribed manner stating clearly the reasons for the intended retrenchment and a copy of
such application shall also be served simultaneously on the workmen concerned in the
prescribed manner.

3. Where an application for permission under sub-section (1) has been made the appropriate
Government or the specified authority, after making such enquiry as it thinks fit and after
giving a reasonable opportunity of being heard to the employer, the workmen concerned and
the persons interested in such retrenchment, may, having regard to the genuineness and
adequacy of the reasons stated by the employer, the interests of the workmen and all other
relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant
such permission and a copy of such order shall be communicated to the employer and the
workmen.

4. Where an application for permission has been made under sub-section (1) and appropriate
Government or the specified authority does not communicate the order granting or refusing
to grant permission to the employer within a period of sixty days from the date on which
application is made the permission applied for shall be deemed to have been granted on the
expiration of the said period of sixty days.

5. An order of the appropriate Government or the specified authority granting or refusing to

grant permission shall, subject to provisions of sub-section(6),be final and binding on all the
parties concerned and shall remain in force for one year from the date of such order.

6. the appropriate Government or the specified authority may, either on its own motion or
on the application made by the employer or any workman, review its order granting or
refusing to grant permission under sub-section(4) or refer the matter or, as the case may be,
cause it to be referred, to a Tribunal for adjudication.
 7. Where no application for permission under sub-section (1) is made, or where the
permission for any retrenchment has been refused, such retrenchment shall be deemed to be
illegal from the date on which the notice of retrenchment was given to the workman and the
workman shall be entitled to all the benefits under any law for the time being in force as if no
notice had been given to him.

8. Notwithstanding anything contained in the foregoing provisions of this section the

appropriate Government may, if it is satisfied that owing to such exceptional circumstances
as accident in the establishment or death of the employer or the like it is necessary so to do,
by order, direct that the provisions of sub-section (1) shall not apply in relation to such
establishment for such period as may be specified in the order.

9. where permission for retrenchment has been granted under sub-section(3) or where
permission for retrenchment is deemed to be granted under sub-section(4),every workman
who is employed in that establishment immediately before the date of application for
permission under this section shall be entitled to receive, at the time of retrenchment,
compensation which shall be equivalent to fifteen days’ average pay for every completed
year of continuous service or any part thereof in excess of six months.

Issues of Retrenchment

 Changing market conditions

 Growth beyond an entrepreneur's vision
 Merging of two or more firms
 Economic crisis
 Change in management
 Outsourcing practice
 Increase in efficient work flow and computerized services
 Owner’s ill health

Consequences of Retrenchment

Positive effects on the organization:

 Reduction in the labour cost
 Enhanced corporate image

Negative effects on the organization:

 Decrease in the employee morale
 Excessive pressure to perform

An organization in such cases requires stimulus in the followng form:

 Offer workplace challenges
 Build team spirit
 Bring process innovation

Consequences on Employee:

 Existing employees will feel insecure about their job

  Terminated employees might spread wrong information about company in market.

Measures taken by Employers to a void termination of Employees:

 To stop recruitment of new workers except for critical areas.

 To limit overtime work.
 To limit work on weekly rest days and public holidays.
 To reduce weekly working days or reduce the number of shifts.
 To reduce daily working hours.
 To conduct retraining programmes for workers.
 To identify alternative jobs and to transfer workers to other divisions/other jobs in the
same company.
 To implement temporary lay-off i.e. temporary shut down by offering fair salary and to
assist the employees affected in obtaining temporary employment elsewhere until normal
operation resumes.
 To introduce pay-cut in a fair manner at all levels and to be implemented as a last resort
after other cost cutting measures have been carried out.

Measures taken by Employers if reduction of the Workforce needs to be implemented:

 To immediately inform and discuss with the workers or the trade unions which represent
them regarding any impending retrenchment.
 To offer retrenchment/voluntary retirement scheme with the best possible compensation.
 To terminate workers who have attained normal retirement age.
 To assist workers in seeking alternative employment elsewhere before retrenchment with
the cooperation of Labour Department and Manpower Department under the Ministry of
Human Resources.
 To implement retrenchment in stages over a long period.
 To terminate the foreign workers first before terminating the local workers in the same
category.
 When the retrenchment involves local workers, the ‘LIFO’ principle (last-in- first-out)
must be practiced for the same category of work. However, employers may carry out
retrenchments in accordance with certain criteria's after consultation and the approval of
the workers and trade unions representing them.

Case1: Anand Behari V/S RSRTC 1991

The appellants were appointed as drivers and had put in a long service to the satisfaction of the
respondent Corporation. Subsequently on their medical examination it was found that they had
developed defective eye-sight i.e. they did not have the required vision for driving the buses. The
respondent Corporation issued notices to them and after considering their explanation,
terminated their services on the ground that they were unfit for driving buses. The appellants
filed Writ Petitions in the High Court challenging their termination order contending that their
termination was illegal because (i) the termination amounted 10 retrenchment within the
meaning of section 2(00) of the Industrial Disputes Act, 1947 and it was without compliance
with the mandatory provisions of Section 25-F of the Act; (ii) pursuant to the agreement between
the Workers' Union and the Corporation, the respondent-Corporation was bound to provide the
alternative jobs to the unfit drivers. The High Court dismissed the Writ Petitions. In the
connected appeal (C.A. No. 1862) the driver developed weak eye-sight on account of an accident
in the course of his employment. He was given employment as a helper but subsequently his
services as a helper were terminated. He filed a Writ Petition in the High Court challenging his
termination which was dismissed.

In the other connected appeal (C.A. No. 1863) the services of a driver were terminated on the
ground that he had lost vision of his right eye. He fried a Writ Petition in the High Court
challenging the order of termination contending that ever since the loss of sight of his one eye, he
was working as a helper and though he was not found unfit, yet his services were terminated.

Court said that Section 2(00) of the Industrial Disputes Act, 1947 has to be interpreted relatively
and in its context. It must have a bearing on the normal discharge of duties. It is not any illness
but that which interferes with the usual orderly functioning of the duties of the post which would
be attracted by the sub-clause. Conversely, even if the illness does not affect general health or
general capacity and is restricted only to a particular limb or organ but affects the efficient
working of the work entrusted it will be covered by the phrase. For it is not the capacity in
general but that which is necessary to perform the duty for which the workman is engaged which
is relevant and material and should be considered for the purpose. Therefore, any disorder in
health which incapacitates an individual from discharging the duties entrusted to him or affects
his work adversely or comes in the way of his normal and effective functioning can be covered
by the said phrase. The phrase has also to be construed from the point of view of the consumers
of the concerned products and services. If on account of a workman's disease or incapacity or
debility in functioning, the resultant product or the service is likely to be affected in any way or
to become a risk to the health, life or property of the consumer, the disease or incapacity has to
be categorised as all-health for the purpose of the sub-clause, otherwise, the purpose of
production for which the services of the workman are engaged will be frustrated and worse still
in cases such as the present one they will endanger the lives and the property of the consumers,
Hence the Court should place a realistic and not a technical or pedantic meaning on the said
phrase. Therefore, the said phrase would include cases of drivers such as the present ones who
have developed a defective or sub-normal vision or eye-sight which is bound to interfere with
their normal working as drivers. Accordingly the termination of the services of the drivers in the
present case being covered by sub-clause (c) of Section 2(00) would not amount to re-
trenchment within the meaning of Section 2(00) of the Act. Hence the termination per se is not
illegal because the provisions of Section 25-F have not been followed while effecting it. [63 ID-
H, 632A-D].

Case 2: Parry and Co. Ltd

In pursuance of its policy of reorganising its business by concentrating more on manufacturing

side than agency business, the appellant company gave up more than half of its agencies in
Calcutta and some agencies in other places including Madras. The Union representing the
workmen wrote to the Labour Commissioner to intervene stating that due to the company's said
policy it feared retrenchment. The company served notices on some of the employees for
retrenchment to take effect two days thereafter. Also notice was given to the Labour
Commissioner and the Conciliation Officer as required under s. 25F (c) of the Industrial Disputes
Act. On reference of the dispute to the Industrial Tribunal, the company justified the
retrenchment and the Manager of the Calcutta branch gave evidence that retrenchment was done
in pursuance of the said policy decision taken by the company. The Tribunal held that a good
case for retrenchment was not made out and ordered reinstatement. The Tribunal did not accept
the manager's evidence holding that the development on the manufacturing side of the company's
business should have been contemporaneous with the surrender of agencies in Calcutta. The
Tribunal also held that the policy decision was actuated by parochial considerations for
transferring the company's resources from Calcutta to Madras, that there was overload of work
on the remaining employees; that the retrenchment could have been avoided by transferring the
retrenched employees to other branches specially as their conditions of service included the
liability of being transferred; and that the retrenchment was in breach of a. 25F(c) as the notice of
retrenchment was two days prior to the date of the retrenchment and not with immediate effect,
the proviso to r. 77(1) of the West Bengal/ndustrial Disputes Rules, 1958, did not apply and a
notice of one month, as required by sub- el. (1) of that rule, was necessary.

Penalties and offenses

Penalty for lay-off and retrenchment without previous permission.

Penalty for lay-off and retrenchment without previous permission.-Any employer who
contravenes the provisions of section 25M or of section 25N shall be punishable with
imprisonment for a term which may extend to one month, or with fine which may extend to
one thousand rupees, or with both.

Penalty for closure

(1) Any employer who closes down an undertaking without complying with the provisions of
sub-section (1) of section 25-O shall be punishable with imprisonment for a term which may
extend to six months, or with fine which may extend to five thousand rupees, or with both.
(2) Any employer, who contravenes an order refusing to grant permission to close down an
undertaking under sub-section (2) of section 25-O or a direction given under section 25P,
shall be punishable with imprisonment for a term which may extend to one year, or with fine
which may extend to five thousand rupees, or with both, and where the contravention is a
continuing one, with a further fine which may extend to two thousand rupees for every day
during which the contravention continues after the conviction.

Penalty for committing unfair labour practices

25U. Penalty for committing unfair labour practices.-Any person who commits any unfair
labour practice shall be punishable with imprisonment for a term which may extend to six
months or with fine which may extend to one thousand rupees or with both.

PENALTIES

Penalty for illegal strikes and lock-outs

(1) Any workman who commences, continues or otherwise acts in furtherance of, a strike
which is illegal under this Act, shall be punishable with imprisonment for a term which may
extend to one month, or with fine which may extend to fifty rupees, or with both.

(2) Any employer who commences, continues, or otherwise acts in furtherance of a lock-out
which is illegal under this Act, shall be punishable with imprisonment for a term which may
extend to one month, or with fine which may extend to one thousand rupees, or with both.

Penalty for instigation, etc. Any person who instigates or incites others to take part in, or
otherwise acts in furtherance of, a strike or lock-out which is illegal under this Act, shall
be punishable with imprisonment for a term which may extend to six months, or with fine
which may extend to one thousand rupees, or with both.

Penalty for giving financial aid to illegal strikes and lock-outs

Penalty for giving financial aid to illegal strikes and lock-outs.- Any person who knowingly
expends or applies any money in direct furtherance or support of any illegal strike or lock-out
shall be punishable with imprisonment for a term which may extend to six months, or with
fine which may extend to one thousand rupees, or with both.

Penalty for breach of settlement or award

Penalty for breach of settlement or award.- Any person who commits a breach of any term of
any settlement or award, which is binding on him under this Act, shall be punishable with
imprisonment for a term which may extend to six months, or with fine, or with both, and where
the breach is a continuing one, with a further fine which may extend to two hundred rupees for
every day during which the breach continues after the conviction for the first] and the Court
trying the offence, if it fines the offender, may direct that the whole or any part of the fine
realised from him shall be paid, by way of compensation, to any person who, in its
opinion, has been injured by such breach.

Penalty for disclosing confidential information

 Any person who wilfully discloses any such information as is referred to in section 21 in
contravention of the provisions of that section shall, on complaint made by or on behalf of the
trade union or individual business affected, be punishable with imprisonment for a term which
may extend to six months, or with fine which may extend to one thousand rupees, or with
both.

Penalty for closure without notice

30A Any employer who closes down any undertaking without complying with the provisions
of section 25FFA shall be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to five thousand rupees, or with both.

Penalty for other offences

(1) Any employer who contravenes the provisions of section 33 shall be punishable with
imprisonment for a term which may extend to six months, or with fine which may extend to one
thousand rupees, or with both.

(2) Whoever contravenes any of the provisions of this Act or any rule made there under shall, if
no other penalty is elsewhere provided by or under this Act for such contravention, be punishable
with fine which may extend to one hundred rupees.

Offence by companies.

Where a person committing an offence under this Act is a company, or other body
corporate, or an association of persons (whether incorporated or not), every director, manager,
secretary, agent or other officer or person concerned with the management thereof shall,
unless he proves that the offence was committed without his knowledge or consent, be deemed
to be guilty of such offence.

Cognizance of offences

(1) No Court shall take cognizance of any offence punishable under this Act or of the abetment
of any such offence, save on complaint made by or under the authority of the appropriate
Government.

(2) No Court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first
class, shall try any offence punishable under this Act.

Offences and Penalties

OFFENCES PENALTIES
Any employer who resorts to lay-off or retrenches
Imprisonment upto one month or fine upto
1. workman without obtaining prior permission from
Rs. 1000/- or both
the Government.
Closure of an undertaking without obtaining priorImprisonment upto six months or fine upto
2.
approval of the Government. Rs.5000/- or both
3. Closure of an undertaking in contravention of anImprisonment upto one year or fine upto
order refusing to grant permission for closure, orRs.5000/- or both. In case of a continuing
 non-compliance of an order to reopen a closed
offence a further fine upto Rs.2000/- per day.
undertaking.
Closure of an undertaking without giving a notice toImprisonment upto six months or fine upto
4.
the workman under Section 25-FFA. Rs.5000/- or both
Any workmen who participates or acts inImprisonment upto one month or fine upto
5.
furtherance of an illegal strike Rs.50 or both
An employer who declares an illegal lock-out or actsImprisonment upto one month or fine upto
6.
in furtherance of the same. Rs. 1000/- or both
Any person who instigates or incites another person
Imprisonment upto six months or fine upto
7. to take part in or finances any illegal strike or lock
Rs.1000- or both.
out, or commits any unfair labour practice.
Imprisonment upto six months or fine or
Any person who commits a breach of any settlement
8. both. In case of a continuing breach an
or award binding on him.
additional fine upto Rs.200/- per day.
Any person who willfully discloses any information
Imprisonment upto six months or fine upto
9. which is declared to the Confidential under section
Rs. 1000/- or both
21.
Contravention of any other provision of the Act or
10. Fine upto Rs. 100/-
the rules made there under
 CONCLUSION

It ensures harmonious relations through:

a) Monitoring of industrial relations in Central Sphere.

b) Intervention, mediation and conciliation in industrial disputes in order to bring about

settlement of disputes.

c) Intervention in situations of threatened strikes and lockouts with a view to avert the strikes and
lockouts.

d) Implementation of settlements and awards.