From disputes to resolutions: Navigating Industrial disputes legally
- Legal Journey
- May 28
- 7 min read
Updated: Jun 14
Generally, a dispute means a quarrel or disagreement between two individuals. It can be solved in many ways, but if it escalates, either party can approach the court if their cause has locus standi. Similarly, after the rise of Industrialization in India, more and more businesses entered the market, which gave rise to increasing demands and an increasing labour force. As more and more people started working in factories and industries, it gave rise to industrial disputes too.
Since time immemorial, industrial disputes have been a significant issue in India. Not only do they affect productivity and the spirit of the workmen, but they also affect the workflow and the mentality of the workmen and the industry owners. Disputes in the workplace can range from inadequate wages, overtime working hours or conflicts between employees. In India, labour is a critical part of every industry, so disagreements affect the workplace significantly and must be resolved. Hence the Industrial Disputes Act, 1947 (Hereinafter referred to as “Act”) was enacted.
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Industrial Disputes Act, 1947
The law, which went into effect in March 1947, governs all employees in a sector, including both individual employees and trade unions, and it is applicable across India. This Act's primary goals are to maintain harmony within an industry, bring parties together, and resolve labor disputes in a timely and amicable way. The regulation of the Indian labor force is the primary goal of this Act. It also offers techniques and tools for resolving conflicts in a cooperative manner. The ultimate goal of this legislation is to preserve a harmonious workplace culture across India's industries, which would in turn preserve peace and harmony among employees.
This Act contains clauses pertaining to the payment of workers' compensation in the event that an industry announces layoffs, closures, or retrenchments. The topic of unfair labor practices and how to stop them is also covered. Later on, the INDUSTRIAL RELATIONS CODE 2020 took the role of this statute. One law that unites and updates the rules governing employment in trade unions and industrial entities is the Industrial Relations Code 2020. It also emphasizes the examination and resolution of labor conflicts.
Resolution of disputes under the Industrial Disputes Act, 1947
To ensure industrial harmony and peace in the industries, the Act provides for a robust mechanism for the resolution of disputes.
Disputes under this Act can be referred by the discretion of the appropriate State Government or through mutual agreement to a Tribunal. Various dispute resolution authorities are provided by the Act namely-
Conciliation Officers:
A Conciliation Officer is appointed by the Centre, State or Local appropriate government. He/she is tasked with acting as a mediator between the parties. He/she must promote a fair settlement. In the Act, it is given under Section 4. The number of conciliation officers to be appointed are at the discretion of the Central/State/local government. Such an officer can be appointed temporarily or permanently.
Board of Conciliation:
The relevant government can create a Conciliation Board to resolve the conflicts. It shall consist of a Chairman and representatives of both employers and workmen. It is provided under Section 5 of the Act. The main function of the Board is to promote the amicable settlement of disputes. The Board has similar powers as the civil Court.
Works Committee
The Works Committee and its provisions are given under Section 3 of the Act. It is constituted of equal members of employers and workmen. The Committee's primary duty is to advocate for policies that will protect and maintain positive union-employer relations.
Note :- They are a consultative body NOT an adjudicatory body.
Court of Inquiry:
Section 6 of the Act provides for the establishment of a Court of Inquiry whose purpose is to inquire into industrial disputes. It is a fact-finding committee, so it does not have the powers of adjudication or settlement.
Labour Courts:
The Act mentions to constitute Labour courts for the adjudication of industrial disputes.
Industrial and National Industrial Tribunals:
The legislation permits the central or competent government to establish national and regional tribunals. The Act's Sections 7A and 7B provide this.
Key Features of the Act
Prohibition of Illegal Strikes and Lockouts- The Act gives clear procedures and conditions where strikes and lockouts are considered lawful. It prohibits any industrial action taken without prior notice or during the pendency of any dispute proceedings.
Compensation to workers- The workers who are laid off or have been retrenched or have been affected by the closure of the industry are compensated fairly. In this way, employees are protected in case of sudden loss of earnings.
Establishment of dispute resolution authorities- A structured mechanism of dispute resolution system is established. This helps employees to submit their grievances.
Maintenance of harmony – Co-operation through various bodies established seek to build a harmonious relationship between workers and employers.
Creation of a supportive work environment- It is ensured that the employers provide their workmen with safe and supportive work surroundings by providing recourse in case of mismanagement etc.
Layoff and retrenchment guidelines specifically provided- The Act specifies conditions under which the workers can be laid off or retrenched. It also provides procedures and compensation in those cases.
Appropriate penalties- There are appropriate penalties under the Act for all violations which act as a deterrent against misconduct.
Latest reform: The Industrial Relations Code, 2020
In the ever-complex realm of Indian labor regulations, the Industrial Relations Code, 2020 seeks to provide some clarity and order. The three primary statutes that were previously distinct—the Industrial Employment (Standing Orders) Act of 1946, the Trade Unions Act of 1926, and the Industrial Disputes Act of 1947—are made simpler by it.
On September 22, 2020, the Rajya Sabha approved the bill, and on September 23, 2020, the Lok Sabha did the same. More severe provisions relating to strikes and layoffs are included in the Code. Layoffs and employee strikes are more challenging. A casual departure of more over 50% of employees would also be legally considered a strike, changing the basic definition of strikes. Given everything, this code emphasizes and upholds India's labor regulations.
Cases
Bangalore Water Sewer Supply and Sewage Board v/s A. Rajappa – Mr. Rajappa was an employee of the former company i.e. Bangalore Water Supply and Sewage Board. There was a labour dispute between the employees and the Board. The issue in question was that employees including A. Rajappa had been severely penalized by the Board for misbehavior. Unreasonably large sums were recovered as a fine. Rajappa then brought a petition in the Labour Court, questioning if the Bangalore Water Supply and Sewerage Board qualified as an industry under Section 2(j) of the Act and whether the company's conduct were warranted in imposing such a large fine.
The Supreme Court dismissed the petition of the Bangalore Water Supply and Sewerage Board, stating that the organization was covered by the industrial definition.
Workmen of Dimakuchi Tea Estate v/s Management of Dimakuchi Tea Estate AIR 1958 – In this case, a dispute was raised by the workmen of the estate concerning the dismissal of an Assistant medical officer. The Assistant medical officer was dismissed as he was not classified as workman under the definition of Workman under the act. The issue was whether this ordeal could be classified as an industrial dispute. The Court held that although the term “any person” appears in Section 2(k), it must be interpreted to mean a person whose employment or non-employment the workmen have a direct or substantial interest in. Since Dr. Banerjee was part of the technical staff and not a workman, and the workmen had no such direct or substantial interest in his termination, the dispute could not be considered an industrial dispute. The appeal was therefore dismissed, and the Court emphasized that industrial disputes must reflect a genuine and collective interest of workmen connected to their employment conditions or those of similarly situated employees.
Syndicate Bank v/s Umesh Nayak AIR 1995- As we saw, a strike or lockout has a new and stricter definition. In this case, the main issue before Supreme Court was if workmen were entitled to compensation of wages for the duration of strikes/lockout, even if such strike or lockout was legal or illegal. The Supreme Court held that a strike would be deemed illegal if it violates the provisions laid down under the Industrial Disputes Act. Whether a strike is considered justified or unjustified depends on factors such as the nature of the demands made by the workmen and the prevailing service conditions. Before making such a determination, a thorough inquiry based on the specific facts and circumstances of each case must be conducted. Furthermore, the Court observed that a strike is often the culmination of prolonged conflict between employers and employees and serves as a measure of last resort, where workers cease to render their services to the employer. Recognizing that a strike is an extraordinary action, the Industrial Disputes Act seeks to regulate its occurrence without completely curbing the workers' fundamental right to strike.
Conclusion
The Industrial Disputes Act, 1947 serves as a cornerstone of India's labor legislation, aiming to establish a fair and balanced relationship between employers and employees. By promoting mechanisms for the peaceful resolution of disputes, regulating industrial actions, and ensuring the protection of workers’ rights, the Act plays a crucial role in maintaining industrial harmony and stability.
Its emphasis on conciliation, adjudication, and the prevention of unfair labor practices highlights the government’s commitment to both economic progress and social justice. In a rapidly evolving industrial landscape, the Act continues to be an essential tool for managing conflicts, securing workers' welfare, and fostering a conducive environment for industrial growth and cooperation.
Frequently Asked Questions
Q) What is the legislation that governs industrial disputes?
A) The Industrial disputes Act 1947 is the legislation that governs industrial disputes.
Q) What is an industrial dispute?
A) An Industrial dispute refers to any disagreement between employers and workers over issues related to inadequate wages, unfair conditions of employment or strikes and lockouts etc.
Q) Which Acts are consolidated under the Industrial Relations Code, 2020?
A) Under the Industrial Relations Code, 2020, there are Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946, Industrial Disputes Act, 1947 consolidated under it.
Q) What is the main objective of the Industrial Disputes Act, 1947?
A) The main objective of this Act is to bring peace and maintain harmony in an industry, between parties and resolution of industrial disputes in a timely and peaceful manner.
Q) What are the various ways under the Act as to dispute resolution?
A) The various ways of dispute resolution under the Act is to approach any of the following:- Conciliation Officers, Works Committees, Boards of Conciliation, Courts of Inquiry, Labour Courts, Industrial Tribunals, etc.
This Article is written by Tanaya Moholkar, a final year law student at Yashwantrao Chavan Law College, Pune.
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