lawyers in India

Industrial Disputes: How to be settled?

Written by: Deepak Miglani - LL.M. Final Year, M.D. U. Rohtak
Constitutional Lawyers in India
Legal Service
  • We are always must reluctant to put any interpretation upon labour legislation is likely to prejudice the rights or welfare of Labour. We are fully conscious of the fact that our legislature has put labour legislation on the statue book primarily for the purpose of redressing the balance between employers and employees and that we would not, unless we are compelled to do so by the clear language used by the legislature put any construction upon any provision of labour legislation which will in any way prejudicially affect their rights.1 - Chagla C.J.

    State intervention in industrial relations is essentially a modern development . With the emergence of the concept of welfare state, new ideas of social philosophy, national economy and social justice sprang up with result that industrial relation no longer remains the concern of labour and management alone. Many countries realized that for general progress to be assured, economic progress was a must. In no country is a complete laissez faire attitude now adopted in the matter of labour management relations.

    In all the countries, over a period of time, the state has assumed power to regulate industrial relations. It is the state which is now the most significant element in determining the legal environment within which industrial relations operate.2 Bean regarded state as an actor within industrial relations performing a number of distinct roles3 The distinct role that state performs are broadly, categorized by him as five. Firstly, it acts as a third party regulator promoting a legal framework which establishes general ground rules for union-management inter-action, particularly in the procedure for collective bargaining4 . Secondly, and additionally, as a means of supporting and underpinning collective bargaining or as a supplement to it the law can be used establish minimum standards while collective bargaining exploits particular advantages to secure higher standards whenever it can.5 The third well established function in many countries is the provision of state service for conciliation, mediation and arbitration with a view to facilitating the settlement of industrial disputes. A fourth aspect of the role of the state that has become increasingly important is that of a direct and primary participation as a major employer in the public sector. In this respect, it influences the pattern of industrial relations by its own behaviour and example. A fifth role that the state has come to play in many countries is that of a regulator of incomes. As a result, direct and active state involvement in the industrial relations has become much more pronounced in recent years.

    The concern of state in matters relating to labour is product of its obligations to protect the interest of industrial community , while at the same time fostering economic growth in almost all countries. State has assumed powers to regulate labour relations in some degree or the other. In some , has taken the form of laying down bare rules or observance by employers and workers; in others, the rules cover a wider area of these rules6. So far as our country is concerned , State intervention in labour matter can be traced back to the enactment of the Employers and Workmen’s Disputes Act 1860 which provided for the speedy disposal of the dispute relating to the wages of workmen engaged in railways, canals and other public works, by Magistrates. After World War-1 however, State intervention in Dispute Resolution became more systematic and effective.

    The Trade Dispute Act was passed providing for constituting courts of Inquiry and Conciliation Boards and forbidding strikes in public utility services without notice. The Act 1920 was replaced by the Trade Dispute Act 1929 incorporating provisions relating to general strikes as well. Thereafter Bombay Trade Dispute (Conciliation) Act 1934 was passed providing for permanent cadre for conciliators in selected industries. In the Year 1938 , Trade Dispute Act 1929 was amended authorizing and Central and Provincial Govts. to appoint Conciliation Officers. In the same year, Bombay Industrial Dispute Act 1938 was passed providing for setting up of an industrial Court and prohibiting strikes and lockouts under certain conditions. Thereafter, during the emergency caused by World War II , under Rule 81A of the Defence of India Rules , power was given to the appropriate Govt. to appoint industrial tribunals and enforce the awards passed by them.

    Later on Bombay Industrial Disputes Act was replaced by the Bombay Industrial Relations Act 1946. Little later in the year 1947, the Industrial Dispute Act 1947 (here after referred as the Act) was passed providing for appointing /constituting conciliation officers, boards of conciliation, courts of inquiry and industrial tribunals.

    The Act was amended in the year 1956 providing for constituting labour courts and national industrial tribunals. The subject labour having been in the concurrent list of the Constitution of India, both the centre and states have the power to legislate on labour matters. Several states have amended the Central Act 1947 so as to suit to them while others have enacted their own Acts.

    The main object of the enactment of the Act is to ensure social justice to both the employees and employers and advance the progress of industry by bringing about the existence of harmony and cordial relationship between the parties so as to bring about industrial peace which would accelerate procedure activity of the country. The Act provides for prevention and settlement of industrial disputes. Industry means a business (as a merchant), a trade ( as a culter), a manufacture (as a flour mill), an undertaking ( as a gas company), a calling as a engineer, or service ( as a carrier) or an employment ( a general term like calling embracing some of the others; and intended to extend to vocations which might not be comprised in any of the rest), all these expressions so far indicating the occupation in which the principle,... is indicated whether on land or water.. if the occupation so described is one in which persons are employed for pay, hire, advantage or reward , that is as employees, then , with the exceptions stated, it is an industry with in the meaning of Act.7 . Industrial Peace and industrial harmony may have the same meaning; but we are inclined to think that the concept of industrial peace is somewhat negative and restrictive. It emphasis absence of strife and struggle. The concept of industrial harmony is positive and comprehensive and it postulates the existence of understanding cooperation and a sense of partnership between the employers and the employees. That is why we prefer to describe our approach as one is quest of industrial harmony.8

    Industrial Dispute means any dispute or difference between employer and employees , or between employer 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, or any person9. The Scope the definition of Industrial Dispute is very wide. The words employment and non employment in the definition are of widest amplitude and have been but in juxtaposition to make the definition comprehensive . Any dispute concerned with employment or non-employment’ constitute the subject matter of one class or industrial disputes. The matters which can form subject matter industrial dispute are enumerated in Second, Third and Fourth Schedule given at the end of Industrial Dispute Act.10

    There are two types of Industrial Disputes-interest disputes and rights disputes. Interest disputes relate to determination of new wage level and other condition of employment while rights disputes on the other hand relate to interpretation and application of existing standards and usually involve and individual worker or group of workers. Under category of rights disputes, claim is made that the workmen have not been treated in accordance with the rules, individual contracts of employment, laws and regulations and as per collective agreements. Such disputes are also described as grievance disputes. Such grievances may be regarding retrenchment ,dismissal, payment of wages, working time, overtime, demotion , promotion, transfer, seniority, job classification, work rules and fulfillment of obligation relating to safety and health laid down in an agreement. The definition of Industrial Dispute as given in the Act has a wide coverage. All disputes relating to employment or non- employment, or the terms of employment or with the condition of labour are covered under the definition.
    Settlement means a settlement arrived at in the course of conciliation proceeding and included a written agreement between employer and workmen arrived at otherwise than in course conciliation proceeding where such agreement has been signed by the parties there to in such manner as may be prescribed and a copy thereof has been sent to the officer authorized in this behalf by the appropriate government and the conciliation officer.11

    The definition envisage two categories of settlement.
    (1) Settlement arrived at in the course of conciliation and
    (2) Settlement arrived at privately or otherwise than in the course of conciliation.

    The settlement arrived at in the course of conciliation stand on a higher plane than the settlements arrived at otherwise than in the course of conciliation. The legal effect of both these settlements is not identical . The settlement arrived at otherwise than in the course conciliation binds only the parties to settlement and none else. In any case it does not stand on higher plane than the settlements arrived at in the conciliation and that makes the two distinct and different from each other.

    Procedures for settling labour dispute: Collective Bargaining, Negotiation, Conciliation and Mediation, Arbitration and Adjudication are well known methods for settlement of industrial disputes.

    Collective Bargaining

    Collective Bargaining is a technique by which dispute as to conditions of employment, are resolved amicably, by agreement, rather than by coercion. The dispute is settled peacefully and voluntarily, although reluctantly, between labour and management.12 In the context of present day egalitarian society, with its fast changing social norms, a concept like ‘collective bargaining’ is not a capable of a precise definition. The content and Scope collective bargaining also varies from country to country. Broadly Speaking Collective bargaining is a process of bargaining between employers and workers, by which they settle their disputes relating to employment or non-employment , terms of employment or conditions of the labour of the workman, among themselves, on the strength of the sanctions available to each side .13 Occasionally, such bargaining results in an amicable settlement, arrived at voluntarily and peacefully , between the parties. But quite often, the workers and employers have to apply sanctions by resorting to weapons of strike and lockouts, to pressurize one another, which makes both the sides aware of the strength of one another and that finally forces each of them to arrive at a settlement in mutual interest . It is thus the respective strength of the parties which determine the issue, rather than the wordy duals which are largely put on for show, as an element of strength in one party is by the same token, an element of weakness in another.14

    The final outcome of bargaining may also depend upon the art, skill and dexterity of displaying the strength by the representatives of one party to the other.
    Negotiation: Negotiation is one of the principal means of settling labour disputes. However, due to lack of trust between the employers and workmen or their trade unions or inter-rivalry of the trade unions and the employers being in a commanding position, many a time negotiations fail. Through Amendment in the Act by Act 46 of 1982 Chapter II B providing for reference of certain individual disputes to Grievance Settlement Authority has been inserted in the Act. Under this Chapter, section 9 C has made it obligatory for the employers to make provision for Grievance Settlement Authority for settlement of industrial disputes connected with an individual workman employed in an establishment in which fifty or more workmen are employed or have been employed on any day. In the preceding twelve months. This amendment however even inspite of having been made twenty one years back has not seen the light of the day.
    Conciliation & Mediation: Through conciliation and mediation a third party provides assistance with a view to help the parties to reach an agreement. The conciliator brings the rival parties together discuss with them their differences and assist them in finding out solution to their problems. Mediator on the other hand is more actively involved while assisting the parties to find an amicable settlement. Sometimes he submits his own proposals for settlement of their disputes.

    Conciliation may be voluntary or compulsory. It is voluntary if the parties are free to make use of the same, while it is compulsory when the parties have to participate irrespective of whether they desire to do so or not. Section 4 of the Act provides for appointment for conciliation officers and Section 5 for constitution of Boards of Conciliation. The Board of conciliation is to consist of an independent Chairman and two or four member representing the parties in equal number. While the former is charged with the duty of mediating in and promoting the settlement of industrial disputes, the latter is required to promote the settlement of industrial disputes. The act generally allows registered trade unions or a substantial number of workers/ employees and also in certain cases individual workman to raise disputes. The performance of conciliation machinery, though it does not appear to be unsatisfactory15, causes delays due to casual attitude of the parties towards conciliation, defective processes in the selection of personnel and unsatisfactory pre-job training and period-in-service-training16. Delays in conciliation are attributed partly to the excessive work-load on officers and partly to the procedural defects.

    Since conciliation officer has no powers of coercion over labour and management , he can only persuade them to climb down and meet each other. The settlements that are claimed to result from conciliation are increasingly the result of political intervention17. Success of conciliation depends upon the appearances and their sincere participation in conciliation proceedings of the parties before the conciliation officers. Non-appearance and non- participation of the parties in conciliation proceedings poses a serious hindrance in this direction. On the attitude of the parties National Commission on Labour observed conciliation is looked upon very often by the parties as merely hurdle to be crossed for reaching the next stage. The representatives sent by the parties to appear before him are generally officer who do not have the power to take decisions or make commitments: they merely carry the suggestion to the concerned authorities on either side.

    This dampens the spirit of a conciliator. We have been told by the employer’s and workers, organizations alike that the conciliation machinery is weakened because of its falling into this type of disuse in recent years,18 Section 11 of the Act has clothed the conciliation officers with the power to enter premises occupied by any establishment and also has been invested with the powers of civil court under the Civil Procedure Code, 1908 when trying a suit for enforcing the attendance of any person and examining him on oath, compelling the production of documents and material objects and issuing commission for examination of witness for the purpose of inquiry in to any existing or apprehended industrial dispute. These provisions are seldom enforced. Moreover, conciliators most often do not have requisite information on the employers and trade unions, up to date wage/productivity, information and relevant up to date case laws which affect his capability to conciliate effectively . The National commission on labour in this context laid emphasis for pre job and on the job training of conciliation officers.

    Arbitration: The resort to arbitration procedure may be compulsory or arbitrary . Compulsory arbitration is the submission of disputes to arbitration without consent or agreement of the parties involved in the dispute and the award given by the arbitrator being binding on the parties to the dispute. On the other hand in case of voluntary arbitration, the dispute can be referred for arbitration only if the parties agree to the same. Section 10 A of the Act, however, provides only for voluntary reference of dispute to arbitration. This system, however, has not been widely practiced so far. One of the main reasons for not gaining popularly of this procedure is lack of arbitrators who are able to command respect and confidence of the parties to the dispute. Inter Union rivalry also sometimes makes it difficult in arriving at an agreement on settlement of an arbitrator who is acceptable to all the trade unions in the industry.

    The Apex court in case Kurnal Leather Employess Union vs Liberty Footwear Co.19 has held that the remedy under section 10K is voluntary and alternative for settlement of industrial dispute but if the parties to the dispute have agreed in writing for settlement of their disputes through arbitrator, then the Govt. cannot refer the dispute to the Tribunal for adjudication.

    Adjudication: If despite efforts of the conciliation officer , no settlement is arrived at between employer and the workman, The Industrial Dispute a provides for a three tier system of adjudication viz. Labour Courts , Industrial Tribunals and National Tribunals under section, 7 , 7A and under section 7B respectively. Labour Courts have been empowered to decide disputes relating to matters specified in the Second Schedule. These matters are concerned with the rights of workers, such as propriety of legality of an order passed by an employer under the standing orders, application and interpretation of standing orders, discharge or dismissal of workman including reinstatement of grant of relief to workman wrongfully discharged or dismissed, withdrawal of any customary concession or privilege and illegality or otherwise of a strike or lockout.

    The industrial tribunal are empowered to adjudicate on matters specified in both the Second and Third schedule i.e. both rights and interest disputes. The jurisdiction of the Industrial Tribunal is wider that the labour courts.

    In Paulos vs State of Kerala, per Mathew J.20 The government entrusted the work of selection of candidates for the appointment of presiding officers of industrial tribunals and labour courts to the advocate-general . This mode of selection of candidates was challenged by writ petition in High Court of Kerla on the ground that the government is bound to make appointment to this post after giving on opportunity to all eligible persons before considering for appointment by proper publiciy through advertisement in newspapers. In the absence of such opportunity being given to all the persons having such prescribed qualification to be appointed, the method was unfair and arbitrary, and, therefore, violative of Article 14 and 16 of the Constitution. A Single Judge of the Kerala High Court upheld the appointment holding that the action taken by the government was within the powers enjoined by law and it is not the requirement of law that for every recruitment to an office under state, there must be an advertisement in the public press. Therefore, it is not necessary that the state must in every case of public employment issue an advertisement or notice inviting applications for an office.

    In Shellac Industries Ltd v/s Their workmen , per Dutt J.21 A tribunal once appointed cannot be abolished by an executive act merely because the government chooses to put an end to it when a reference is pending before it , for the state cannot do indirectly what is not permissible to it to do expressly or impliedly under the Act. Hence, a dispute pending before such a tribunal cannot be referred to another tribunal under Sec 10 (1) (d) as that can be done only under Section 33 B.

    In case of disputes which in the opinion of the Central Govt. involve question of national importance or is of such nature that workers in more than one State are likely to be affected. The Act provides for constitution of National Tribunals.

    Industrial adjudication has undoubtedly played a conclusive role in the settlement of industrial disputes and in ameliorating the working and living conditions of labour class. In this context the National Commission of Labour observed:
    the adjudicating machinery has exercised considerable influence on several aspects of conditions of work and labour management relations. Adjudication has been on of the instruments for the improvement of wages and working conditions and for securing allowances for maintaining real wages, bonus and introducing uniformity in benefits and amenities. It has also helped to avert many work stoppages by providing an acceptable alternative to direct action and to protect and promote the interest of the weaker sections of the working class, who were not well organized or were unable to bargain on an equal footing with the employer.22

    The Act empowers the appropriate government to refer industrial disputes when the industrial disputes exist or are apprehended . The Apex court has also held in Shambu Nath vs Bank of Baroda 23 that the power conferred by Section 10 (1) on the Govt. to make reference can be exercised not only when an industrial dispute exists but when it is also apprehended. Kotwal J. Kashmir Ceramtics Ltd. v/s Labour Court 24 It is not permissible for the labour court to entertain more disputes than are contemplated in the reference not is it permissible for it to decline to adjudicate matters which clearly arise in the terms of the reference.
    In the case State of Madras vs C.P. Sarathi 25 and Secretary, India Tea Association vs Ajeet Kumar Bharat 26 , it was held that to make a reference is the administrative act of the Government and the same view has been taken in the case Telecom Conway Divers Mazdoor Sangh & authorities vs State of Bihar27 and in M/s Avon Services ( Production Agencies ) Pvt. Ltd vs Industrial Tribunal Faridabad 28 with the result that the State Government has little choice in referring to make references of the disputes after failure of conciliation proceedings . The adjudication system is not immune from its weakness. The adjudication is dilatory and expensive . The Apex Court in case Ajaib Singh vs Sirhind Co Op. Marketing Cum Processing Service Society Ltd 29.has also held that reference of industrial dispute to labour court is not subject to limitation under Article 137 of the limitation Act . Thus no period of limitation having been prescribed under the Act during which the industrial disputes can be raised and referred for adjudication sometimes state disputes which arose even 15 to 20 years back are referred for adjudication. Moreover the Labour court , Tribunal and National Tribunal do not posses power of executing the order/awards passed by them although they are presided over by highly qualified and experienced judicial officers such as District Judges and High Court Judges with the result that generally workmen, weaker sections of the society suffer on account of non-implementation of the order/awards. However, there is no viable alternative to this system. Stringent provisions, therefore are required for ensuring the time limit within which the orders /awards to be implemented and clothe the courts and tribunal with powers of contempt of court for non-implementation of orders /awards passed by them.

    Under the Act, an award made by the adjudication authority is final as there is no appeal. However actual practice almost every award made against the employer is challenged in the High Court under Article 226 and 227 & in the Supreme Court under Article 136. It takes year before final orders are passed in writ petitions pending before the High Court/Supreme Court. If the period taken before the adjudicating authority is counted, it does not take less 10 to 20 years before the protracted litigation could be disposed off. It is the weaker sections who are inconvenienced and handicapped the most, by the delay.
    It is submitted that the need of the day is to evolve the frame-work in which workers and the management perceive the need to co-operate. Bilateral regulation is the most effective method of evolving norms which enjoy wide acceptance.

    It will be appreciate to recall the observation made by a jurist on the subject:

    No doubt, the state intervention in the form of compulsory adjudication has significantly contributed to the settlement of all sorts of industrial disputes between industrial employers and their employees. But its very success is the failure of the collective bargaining process as the normal method of settling industrial disputes. It follows that if collective bargaining has to gain ground, the state intervention through compulsory adjudication must wane to the vanishing point. It has outlive its utility . It is far better to leave the management and Trade unions to settle their differences and disputes among themselves than referring the issue to a third party settlement. Any attempt to solve socio-economic problems arising out of industrial relations within the old framework may have some limited usefulness, but cannot, in the nature of the case, achieve any, adequate solution. The frequent break-down in industrial relations must give way to constructive programmes. The State intervention through compulsory adjudication has often been directed to , in the words of Prof. Mathews, the peripheral area of legal pathology rather than to the healthy core of practical working cooperation.30

    The settlement of disputes, reached by mutual discussion, debate and negotiation, leaves no rancour behind and helps to create an atmosphere of harmony and co-operation.

    Foot Note:-
    1. Mahadeo Dhandu Jadhav vs Labour Appellate Tribunnal [1956] 1 LLJ 252, 254 (Bom)
    2. R. Bean , Comparative Industrial Relations: An introduction to Cross-National Perspectives, 100 (1985).
    3. Ibid.
    4. All modern states try to fix the rules of the game by, at a minimum, specifying tactics which are not permitted and by facilitating the coming-together of the parties for negotiation.
    5. H.A. Clegg , Trade Unionism under , Collective Bargaining: A Theory based on Comparisons of Six Countries,101 (1976)
    6. Government of India Gazette (1969) Report of the National Commission on Labour p. 307.
    7. Isaacs J, Jumbuna Coalmine, No liability vs Victoria Coalminer’s Association 6 CLR 309 , 370 ( High Court of Australia).
    8. Supra Note 6 , page 53.
    9. Section 2 (K) of Industrial Dispute Act.
    10. What Every Body should know about Labour Law by H.L. Kumar (Universal Publishing) p 104.
    11. Section 2(p) of Industrial Dispute Act.
    12. Jagannatha Shetty J Karnal Leather karamchari Sanhathan v/s Liberty Foot Wear Co 1990 Lab I C 301, 307 , ( SC),
    13. The Law of Industrial dispute volume I page 9 O.P. Malhotra. 2004 ed.
    14. K Alexander , Collective Bargaining in Industrial Labour in India , compiled by VB Singh , 1963 edn, pp 384-85.
    15. Supra No 6 page 322-23.
    16. E.A. Ramaswamy, Trade Unions, Rule Making and Industrial Relations, (1985) 20 Economic and Political Weekly 524.
    17. Ibid.
    18. Government of India Gazette (1969)page 323-446-7.
    19. A.I.R. 1990 S.C. 247.
    20. (1993)2 LLJ 491 (Ker)
    21. ( 1967) 1 LLJ 492, 495 ( Cal) (DB)
    22. Government of India Gazette (1969)page 325.
    23. A.I.R. 1978 S.C. 1088.
    24. 1980 Lab IC 192 ( J&K)
    25. A.I.R. 1953 S.C. 53.
    26. A.I.R. 2000 S.C. 507.
    27. 1989(FIR 73 ( SC)
    28. (1978), L.L.N. 503.
    29. ARR 199 SC 1351.
    30. Supra Note 13 Introduction, p. xxii-xxiii.

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