INDUSTRIAL DISPUTES

ACT 1947
 Purpose of the Act
• The Industrial Disputes Act, 1947 came
into existence in April 1947.
• It was enacted to make provisions for
investigation and settlement of industrial
disputes .
• for providing certain safeguards to the
workers in case of lay off, retrenchment,
wrong full dismissals .
 Definitions
• "industry" means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, service, employment, handicraft, or industrial
occupation or a vocation of workmen;

• (a) "industry" means any systematic activity carried on by co-operation between

an employer and his workmen (whether such workmen are employed by such
employer directly or by or through any agency, including a contractor) for the
production, supply or distribution of goods or services with a view to satisfy
human wants or wishes (not being wants or wishes which are merely spiritual or
religious in nature), whether or not, -

(i) any capital has been invested for the purpose of carrying on such activity; or
(ii) such activity is carried on with a motive to make any gain or profit, and
includes -
(1) any activity of the Government relatable to the sovereign
functions of the Government including all the activities carried on
by the departments of the Central Government dealing with
defence research, atomic energy and space; or
(2) any domestic service; or
(3) any activity, being a profession practised by an individual or body
of individuals, if the number of persons employed by the
individuals or body of individuals in relation to such professional
is less than ten ; or
(b) "industrial dispute" means any dispute or difference 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;
AUTORITIES UNDER THE ACT

• Various methods & machinery under the Industrial

Disputes Act can be classified as:
• I CONCILIATION
• Works Committee
• Conciliation Officer
• Board of Conciliation
• II ARBITRATION
• Court of Inquiry
• III Adjudication
• Labour Court
• Tribunals
• National Tribunals
 AUTHORITIES UNDER THE ACT
I CONCILIATION
• Conciliation is an important method for
settlement of disputes through third-party
intervention
• Conciliation is a friendly intervention of a
neutral person in a dispute to help parties
settle differences peacefully
• Various methods of conciliation are as
under:
 AUTHORITIES UNDER THIS ACT
I CONCILIATION

Works Committee
(1) In the case of any industrial establishment in which one hundred or more
workmen are employed or have been employed on any day in the preceding twelve
months the appropriate Government may by general or special order require the
employer to constitute in the prescribed manner a Works Committee consisting of
representatives of employers and workmen engaged in the establishment so however
that the number of representatives of workmen on the Committee shall not be less
than the number of represen-tatives of the employer.

(2) It shall be the duty of the Works Committee to promote measures for securing and
preserving amity and good relations between the employer and workmen and, to that
end, to comment upon matters of their common interest or concern and endeavor to
compose any material difference of opinion in respect of such matters.

3) Works Committee is set up with limited powers and for this reason they have been
mere instruments without teeth
 Conciliation officers( Section 4)
• The appropriate Government may, by notification in the Official
Gazette, appoint such number of persons as it thinks fit, to be
conciliation officers, charged with the duty of mediating in and
promoting the settlement of industrial disputes.

• The Act provides that if a dispute arises in a public utility industry,

the conciliation officer shall obligatory hold conciliation
proceedings. In case of other industry, his power is discretionary.

• If a settlement is reached, conciliation officer has to submit its report

within 14 days. If no settlement is reached, conciliation officer has to
send the full report citing reasons of failure
•
 Boards of Conciliation ( Section
5)
(1) The appropriate Government may as occasion arises by notification in the
Official Gazette constitute a Board of Conciliation for promoting, the settlement
of an industrial dispute.

(2) A Board shall consist of a Chairman and two or four other members, as the
appropriate Government thinks fit.

(3) The Chairman shall be an independent person and the other members shall be
persons appointed in equal numbers to represent the parties to the dispute and
any person appointed to represent a party shall be appointed on the
recommendation of that party:

(4) A Board, having the prescribed quorum, may act notwithstanding the absence
of the Chairman or any of its members or any vacancy in its number:
AUTHORITIES UNDER THE ACT
II ARBITRATION
• Arbitration is the process in which a neutral third
party listens to disputing authorities, gathers
information about dispute and makes a decision
which is binding on both parties.
• It differs from conciliation in the sense that in
arbitration , arbitrator gives a decision on dispute
while in conciliation, conciliator merely facilitates
disputing authorities disputing parties to arrive at
a decision.
 Courts of Inquiry
(1) The appropriate Government may as occasion arises by notification in the
Official Gazette, constitute a Court of Inquiry for inquiring into an matter
appearing to be connected with or relevant to an industrial dispute.

(2) A Court may consist of one independent person or of such number of

independent persons as the appropriate Government may think fit and where a
Court consists of two or more members, one of them shall be appointed as the
chairman.

(3) A Court, having the prescribed quorum, may act notwithstanding the absence of
the chairman or any of its members or any vacancy in its number:

Provided that, if the appropriate Government notifies the Court that the
services of the Chairman have ceased to be available, the Court shall not act
until a new chairman has been appointment
AUTHORITIES UNDER THE ACT
III ADJUDICATION
• Adjudication refers to the process of
interventions in a dispute by a third party
appointed by government.
• Adjudication is the final stage for setting
industrial disputes when disputing parties
do not have a recourse.
 Labour Courts
(1) The appropriate Government may, by notification in the Official Gazette, constitute
one or more Labour Courts for the adjudication of industrial disputes relating to any
matter specified in the Second Schedule and for performing such other functions as
may be assigned to them under this Act.

(2) A Labour Court shall consist of one person only to be appointed by the appropriate
Government.

(3) A person shall not be qualified for appointment as the Presiding Officer of a Labour
Court, unless -
(a) he is, or has been, a Judge of a High Court; or
(b) he has, for a period of not less than three years, been a District Judge or an
Additional District Judge; or]
(c) he has held any judicial office in India for not less than seven years ; or
(d) he has been the Presiding Officer of a Labour Court constituted under any
Provincial Act or State Act for not less than five years.]
 Tribunals
(1) The appropriate Government may, by notification in the Official Gazette,
constitute one or more Industrial Tribunals for the adjudication of industrial
disputes relating to any matter and for performing such other functions as
may be assigned to them under this Act.

(2) A Tribunal shall consist of one person only to be appointed by the

appropriate Government.

(3) A person shall not be qualified for appointment as the presiding officer of a
Tribunal unless:

(a) he is, or has been, a Judge of a High Court; or

(b) he has, for a period of not less than three years, been a District Judge or an
Additional District Judge.

(4) The appropriate Government may, if it so thinks fit, appoint two persons as
assessors to advise the Tribunal in the proceeding before it.
 National Tribunals
(1) The Central Government may, by notification in the Official Gazette,
constitute one or more National Industrial Tribunals for the adjudication of
industrial disputes which, in the opinion of the Central Government, involve
questions of national importance or are of such a nature that industrial
establishments situated in more than one State are likely to be interested in,
or affected by, such disputes.

(2) A National Tribunal shall consist of one-person only to be appointed by the

Central Government.

(3) A person shall not be qualified for appointment as the presiding officer of a
National Tribunal unless he is, or has been, a Judge of a High Court.

(4) The Central Government may, if it so thinks fit, appoint two persons as
assessors to advise the National Tribunal in the proceeding before it.
 Disqualifications for the Presiding Officers of Labour
Courts, Tribunals and National Tribunals

• No person shall be appointed to, or continue in,

the office of the Presiding Officer of a Labour
Court, Tribunal or National Tribunal, if -
(a) he is not an independent person; or
(b) he has attained the age of sixty-five years.
 Notice of change
• Section 9 A prohibits employer to make any change in
conditions of service of any workman, in respect of matter
specified in fourth schedule.
• The conditions of service for change of which notice is to be
given are specified in fourth schedule which are as under:

• Wages
• Hours of Work
• Classification by Grades
• Withdrawal of any concession
• Compensatory and other Allowance
 Award and Its
Commencement
• According to the Act, Award means,” any
interim or a final determination of any
industrial dispute or question there to by
any labour court, industrial or national
tribunal and includes arbitration award.
• Award shall be in writing and signed by its
presiding officer.
 Power of Government to
exempt
• Where the appropriate Government is of opinion that the
application of the provisions of section to any class of
industrial establishments or to any class of workmen
employed in any industrial establishment affect the
employers in relation thereto so prejudicially that such
application may cause serious repercussion on the
industry concerned and that public interest so requires,
the appropriate Government may, by notification in the
Official Gazette, direct that the provisions of the said
section shall. not apply, or shall apply, subject to such
conditions as may be specified in the notification, to that
class of industrial establishments or to that class of
workmen employed in any industrial establishment.
 PROVISIONS REGARDING
STRIKES
• Strike has been defined in Section 2(q ) of
the Industrial Disputes Act in the following
words:
• Strike means a cessation of work by a
body of persons employed in any industry,
acting in combination or a refusal under
common understanding, of any number of
persons who have been employed to
continue to work or to accept employment.
Prohibition of Strikes and Lockouts
(
Section 22 (1)
• Strikes & lockouts are prohibited in public utility services without
fulfilling following conditions:
• A statutory notice of strike/lockout must be given to employer or
workmen within six weeks before striking or lockout.
• There must be no strike/ lockout within 14 days of giving such
notice.
• Where any conciliation proceedings are pending, no strike or
lockout declared during pendency of any conciliation proceedings
and seven days after conclusion of proceedings.
General Prohibition Of Strikes and
Lockouts- Section 23
• According to Section 23, no workman who is employed
in any industrial establishment shall go on strike and no
employer shall declare a lockout:
• During the pendency of conciliation proceedings before a
board & seven days after conclusion of proceedings
• During pendency of proceedings before labour court,
industrial or national tribunal and two months after
conclusion of such proceedings.
• During pendency of arbitration proceedings before an
arbitrator and two months after conclusion of such
proceedings.
 Illegal Strikes and Lockouts
• Strikes and Lockouts are legal when they
are declared in compliance with provisions
of Act.
• A strike is illegal when it is commenced in
contravention of Section 22 or Section 23
of the Act.
 Offences and Penalties for Illegal
Strikes and Lockout Section 26
• Any worker who commences or acts in
furtherance of illegal strike shall be punishable
with imprisonment up to one month or fine up to
Rs.500 or both.
• Similarly, if any employer who indulges in an
illegal lockout will entail a liability for payment of
wages during lockout. He will also be punishable
with imprisonment up to one month or fine up to
Rs. 1,000 or both
 LAY OFF, RETRENCHMENT
AND CLOSURE
• LAY OFF: According to Industrial Disputes
Act, 1947, lay off means failure, refusal or
inability of an employer to hire workmen
on account of shortage of coal, power, or
raw materials
Procedure for Lay Off ( Rule 75-
A)
• Before resorting to lay off, employer must see that
following conditions are fulfilled:
• Refusal for employment of workmen can only be for
reasons specified in Section 2(k) of Standing Orders.
• Lay off always occur due to some thing beyond control of
employer.
• It should result in temporary non-employment of
workman whose name appears on muster-rolls of
industrial establishments
• Employer expects that within a reasonable time, industry
would continue and workmen will be restored their rights.
 Lay Off Contd…
• Prohibition of Lay off: No worker whose name is borne on muster
rolls of industry shall be laid off by employer except with previous
permission of authority specified by government.
• Lay off Compensation: ( Section 25 C) Workers who are being laid
off are entitled to compensation, the eligibility for it is:
• Worker must have completed not less than one year of continuous
service and
• His name should be the muster rolls of establishment.
• Normally, amount of compensation comes to 50 % of basic wages &
dearness allowance
 RETRENCHMENT
• The Act defines retrenchment as
termination by employer of services of
workmen, for any reason whatsoever, than
as a punishment inflicted by way of
disciplinary action but does not include
voluntary retirement or compulsory
retirement
 Retrenchment Contd..
• Conditions Precedent to Retrenchment of Workmen are:
• One month’s notice in writing has been given to workmen indicating
reasons for retrenchment.
• Workmen has been paid at the time of retrenchment, compensation
equivalent to fifteen day’s average wages for every completed year
of service.
• PROCEDURE FOR RETRENCHMENT- SECTION 25G
• Under the Act , it is required that for purpose of retrenchment,
workman must have been employed for a period of not less than 12
months.
• It is a well established principle that management should retrench
latest recruit and progressively retrench employees higher up in
seniority.
 Retrenchment Contd…
• Retrenchment Compensation- Section 25F
• Workmen is entitled to receive retrenchment
compensation, equivalent to fifteen days’ wages for
every completed year of service.
• Reinstatement of Workmen- Section 25H It
imposes statutory obligation on employer, to provide an
opportunity to retrenched workmen to offer themselves
for reemployment and they shall be given preference
over newcomers in matters of employment
 CLOSING DOWN OF
UNDERTAKING
• In context of closing of undertaking, the Act lays down
that:
• An employer who intends to close down an undertaking
of industrial establishment, shall apply for permission at
least sixty days before the date on which closure is to
become effective, from government
• Where an undertaking is permitted to be closed down,
every workman is entitled to compensation which shall
be equivalent to fifteen days’ average pay for every
completed year of continuous service. Section 25 FFF
 ASSESSMENT OF
INDUSTRIAL DISPUTES ACT
• Some of the glaring deficiencies of Industrial
Disputes Act are:
• Excessive Governmental Intervention in the
Field Of Industrial Relations :
The Act vests central
and state governments with extensive powers. In
practice, this power is often abused and in many
cases decisions are influenced by political
parties.
 ASSESSMENT OF
INDUSTRIAL DISPUTES ACT
• LIMITED EFFECTIVENESS OF AUTHORITIES
• Conciliation Authorities: The percentage of failure of conciliation
under Central Industrial Relations Machinery was 70 in 1988, 95 in
2001. A number of factors particularly multiplicity of unions, and
preoccupation of Conciliation Officers in enforcing other laws and
discharging other responsibilities have contributed to this.
• Adjudication Authorities: Adjudication is a long drawn battle for
settling industrial disputes which puts financial and emotional
pressures on both disputing parties. Method suffers from same
limitations which are applicable to judiciary system of country
• Arbitration: It has not worked well because disputing parties are
not very much convinced about fairness of arbitrators. Further,
arbitrators may not be competent.
 ASSESSMENT OF
INDUSTRIAL DISPUTES ACT
• Frequent violations of Provisions Relating to Strikes
& Lock out:
Most of the strikes taking place in India are illegal
under the Act. This is because of complex procedures
involved in deciding cases of violation and difficulties in
participation of workmen in illegal strikes
• Obstacle in Development of Collective Bargaining:
Although the Act leaves parties free to resolve their
differences by negotiations and bargaining, role of
government is such that parties find it difficult to resolve
disputes
 RECOMMENDATIONS OF
SECOND NATIONAL
•
COMMISSION ON LABOUR
I MACHINERIES FOR SETTLEMENT OF DISPUTES:
• Arbitration: It would be desirable if in every settlement,
there is a clause providing for arbitration by named
arbitrator or panel of arbitrators for resolving disputes.
• Adjudication: 1) Commission envisages a system of
Labour Courts, Lok Adalats and Labour Relations
Commissions as adjudicatory system.
2) Labour Relations Commission at the state and
Centre level will be bodies that will have as presiding
officers sitting or retired judges of High Court
 Recommendations Of Second
NCL
• Conciliation: Conciliation officers should be clothed with
sufficient authority to enforce attendance.
• II STRIKES AND LOCK OUT
1) Strike should be called only by recognized
negotiating agent and that too only after it had taken a
strike ballot among workers, of whom at least 51% of
them support strike. 2) Employer
will not be able to declare a lock out without the approval
of highest level of management, except in cases of grave
apprehensions of physical threat to establishment
 Recommendations Of Second
NCL
• LAY OFF, RETRENCHMENT AND
CLOSURE 1)
Management should provide for 60 days
notice for both retrenchment and closure.
2)
Adequate compensation should be paid
for retrenchment, closure and lay off