A THREE DIMENSIONAL VIEW OF CERTAIN IMPORTANT

ASPECTS OF THE INDUSTRIAL DISPUTES ACT 1947

[By. Prof. H.A.C .POPPEN (hcpoppen@gmail.com) ]

I. NATURE & SCOPE OF CERTAIN TERMS USED IN THE ACT

A. INDUSTRY [SN.2(J)]1) A new definition was introduced in 1984 , But the same has not been notified for

implementation .2) The scope of the old definition was amplified by the supreme court in the

Bangalore water supply case [1978(2)SCC213] .3) For becoming industry following ingredients should combine:

Systematic Activity + Organised Cooperation between employer & Employees + For Production and/or Distribution of Goods & Services + For Satisfying Human Needs.

4) However the following are excluded from the term Industry:a) Sovereign Functions of the Government.b) Spiritual and Religious activities geared towards achieving Celestial Bliss for Humans.

B. WORKMAN [Sn2(s)]1) The term excludes the following 3 categories:

a. Managerial or Administrative Staffb. Supervisory Staff drawing wages above Rs 10,000/- p.m.c. Personnel of the armed forces & Police.

2) It includes the following categories even if they draw salary above Rs10,000/ p.ma)Manual (b)Unskilled (c)Skilled (d)Technical (e)Operational (f)Clerical & supervisors drawing salary up to Rs 10,000/- p.m.s & Terminated workmen doing any of the above functions.

3)The S.C. In H.R.Adayanta VS Sandoz [1994(5)SCC 737] held that an employee cannot become a workman by merely showing that he is not falling in the 3 excluded categories. Only if it is proved that he is performing one of the inclusive functions would he become a WORKMAN.

4) An employee cannot be excluded by merely giving him designations of Manager|Administrator|Supervisor etc.

5) Even if a portion of the job is supervisory, If the dominant activity is any one of the inclusive fucntions, the employees would be counted as workman.[S.K Maini vs Carona Sahu 1994(3)SCC 510]

6) Teachers do not fall within the 6 inclusions and hence not workman. [Karthiani Vs Union of India[1984(1) LLJ 259]

7) In Baselius Medical Hospital case 2007(2) LLJ 925, The Kerala HC quoting the SC Judgement in Sonapet Coop Mills Case [2005(1) LLJ 1122] held a doctor doing mere medical consulting with no supervisory function is a workman. However the Delhi HC in Multan Eye Hospital Case [2012(133) FLR 675] Took the opposite view on the Ground that doctors, Lawyers charted accountants have to follow a code of ethics and hence cannot be treated as workman under I.D Act.

(C) INDUSTRIAL DISPUTE [Sn2(k)]

1. THE INGREDIENTS ARE:a) Parties to the dispure should be. Employer Vs Employer

OR Employer Vs WorkmEn

ORWorkmEn Vs WorkmEn

Therefore only a Group of WorkmEn/Union can raise an industrial dispute and not a single workman.

b) Subject matter of the dispute should be connected with.

Employment or Non Employment

Terms of Employment

Conditions of labour

c) The definition further says that the workmen can raise disputes about ANY PERSON , Who may or not be a workman. In the Indian bank case 1997(51)FJR76 the Madras HC clarified that, the any person should be an employee of that establishment and not be a stranger.

d) The Definition does not allow an individual workman to raise an industrial dispute. If he has a dispute, He can raise it only if it is sponsored/espoused by his co-workmen.

e) However, under section 2-A an individual workman can raise his own dispute by himself if it pertains only to his termination. He cannot on his own raise disputes about his Non- Promotion , Suspension, Transfer, lesser Punishments etc.

f) Though contractors workmen do not come under the definition of “workman” for the principal employer, the regular workmen of the principal employer can raise a dispute against him about the service conditions and absorption of contract labour using the ANY PERSON clause referred in the definition .

D) STRIKE [Sn2(q)]

1. INGREDIENTS ARE:a) Concerted refusal to work or accept work.b) By a group of workmen.c) To press their demand against the employer.

E) LOCKOUT[Sn 2(l)]

• INGREDIENTS ARE:a) Employer refusing to employ or temporarily closing the place of employment,

to put pressure on workmen to climb down from their demand or prevent indiscipline at work place by group of workmen.

b) If it is an individual or small number of workmen , Employer should use the weapon of suspension pending enquiry.

F. RETRENCHMENT[Sn2(oo) ]

1) All kinds of termination barring the following 5 types:a) Voluntary Retirement ,b) Superannuation ,.c) Non- Renewal of a fixed term contract.,d) Termination on account of continued ill health,e) On account of disciplinary action [ Loss of lien termination is retrenchment]

G) LAY-OFF [Sn 2(kkk)]

1) Temporary inability of the employer to provide work to his workmen.

2) If it is for the following reasons only half wages need be paid:a) Shortage of Coal|Power|Raw material.b) Accumulation of stocks.c) Breakdown of machineryd) Natural calamitye) Any other connected reason.

3) If Non-Providing work is for any other reason workmen must be paid full wages

H) CLOSURE [Sn 2 (cc)]

Is the PERMANENT Closure of the business itself.[Lay of is the temporary closure of any place of the business]

I) PUBLIC UTILITY SERVICE [Sn2(n)+Sch. I]

1) Permanent Public Utility –Industries listed under section 2(n)(i) to(v)2) Temporary Public Utility –Industries listed under Sch-I if the government

has issued a gazette notification under Sn. 2(n)(vi)3) Such notifications only valid for 6 months4) If notification not renewed, Sch.-I industries will go back to non-public

utility category .

J) APPROPRIATE GOVERNEMENT [Sn2(a)]1) Labour law falls under the concurrent list of the constitution.2) Therefore, The Central as well as the State govts. can make labour laws ,

Rules and can have separate administrative & Implementation set ups.3) But both cannot have administrative control over your establishment at

the same time.4) Section 2(a) will help you decide whether you come under the state or

central administrative machinery .5) Therefore you may have to follow the central Act along with the state

rules and go to the state labour athority,if you are listed under the state in sn.2(a) or to Central if listed under Central list .

J. ALL ABOUT AGREEMENTS/SETTLEMENTS & AWARDS

1. Methods of dispute settlements.a) Through bi-partite negotiations, resulting in AGREEMENTS[sec

18(1)]b) Through the intervention of conciliation officers appointed by the

government, resulting in SETTLEMENTS [sec12(3) +18(3)]c) When conciliation fails ,parties can opt for choosing a mutually

acceptable mediator called ARBITRATOR and he gives his decision through an AWARD. Parties are not permitted to challenge HIS award in HCs or SC.

d) When parties do not choose arbitration the government refers the dispute for resolution to the LABOUR COURT ( on matters in sch-II) or to INDUSTRIAL TRIBUNALS (on matters in sch-III) for ADJUDICATION and they give their decisions called AWARDS. The adjudication awards can be challenged in higher courts, if they have not followed the proper legal procedure. No challenge is permitted on ERRORS OF FACT and challenge possible only on ERRORS OF LAW.

2. Validity period of settlements & awards.

(a) SETTLEMENTS are valid for the period indicated by the parties in the settlement itself or else for a minimum period for 6 months [sec 19(2)]

(b) AWARDS are initially valid for 12 months and government can extend their validity for two more spells of 12 months each taking it up to 36 months [sec 19(3)(4)]

3. Do the terms of settlements and awards cease to become enforceable after the validity period expires [sec 19(2)& 19(6)]

(a) They need to be terminated by issuing TERMINATION NOTICES under sec 19(2) or 19(6)

(b) The supreme court in LIC Of India vs D.J. Bahadur[1981(1) SCC 315] has clarified that settlements and awards will CONTINUE TO BE ENFORCEABLE even after their validity period expires and will REMAIN IN FORCE till the terms are ALTERED OR CANCELLED in subsequent settlements or awards.

4. On whom are settlements & awards binding [sec18]

(a) It is binding on the parties who raised the dispute(b) It is also binding on the parties summoned to attend the conciliation or adjudication process(c) It is also binding on unions/workers who were invited to the CONCILIATION TALKS but failed to participate or refused to sign the SETTLEMENT.(d) It is also binding on future workmen and successors and assignees and legal heirs of the employers.

III. Procedure for altering existing service conditions [sec 9-A & SCH. IV] & Sec 33(1)(a)]

(a) Schedule IV contains ELEVEN items of service conditions which cannot be altered unilaterally by the employer

(b) For altering any one of the ELEVEN Items a notice of change in form-EE under section 9-A is to be issued at least 21 days in advance.

(c) In case of opposition by the workmen, the change cannot be enforced until the dispute is settled through conciliation/arbitration or adjudication.

(d) Section 9-B gives power to the government to exempt employers from going through this procedure.

IV. Power of the labour courts & tribunals to reduce disciplinary punishments awarded by the management [sec11-A]

1. The LC & IT can use this power only if the punishment awarded is a DISCHARGE or DISMISSAL

2. It cannot be invoked if the punishment awarded is not termination.

3. The SC in South India Cashew workers case [2006(2) LLJ-772] and the Karnataka HC in Bangalore Metro Transportation corporation case [2011(4) LLJ-400] has ruled that courts CAN NOT re-appreciate evidence or reduce punishments in case the original punishments awarded by management is less than termination and in non-termination cases they can interfere only if they find:

(a) Want of good faith, victimisation or unfair labour practice resorted to by management.

(b) Labour courts/ IT have power to cancel the dismissal orders and order reinstatements with or without back wages & consequential benefits.[With consequential benefits will mean as if there never was termination ]

(c) The LC/IT can instead of reinstatement, order payment of adequate compensation [ the SC in the OP Bhandari case [1986(53) FLR752] and the DIVISION BENCH of Karnataka HC in the Bharat Fritz Werner Case [2011(128) FLR653] has clarified that in no case can the compensation ordered be more then 40 months last drawn salary]

(d) If the Labour Court comes to the conclusion that the disciplinary procedure is ok, they cannot reduce the quantum of punishment unless they give reasons to show that the quantum of punishment is SHOCKINGLY DISPROPORTIONAL to the gravity of the offence committed [see SC ruling in LIC vs Dhandapani 2006(1)LLJ329]

(e) The SC in U.P.S.R.T.Corporation case [2007(3)LLJ171] & Charanjit Lamba vs Commanding officer [2010(126)FLR989] has made it clear that mere statements by the courts that the punishment is “shockingly disproportionate” would not be enough, they will have to give cogent reasons for their coming to that conclusion. If it is not a speaking order it could be challenged and got struck down in the High Courts.

V. Can the management challenge the Labour court’s orders for reinstatement in the High Courts [sec17B]

(a) Though sec 17(2) of the ID Act says that the awards/orders of the LC & ITS are final and shall not be challenged. It can be challenged in the high courts under article 226 of the constitution.

(b) High courts cannot accept the challenge if it is to challenge it on “mistake of facts”.

(c) Challenge can be taken up only if there is scope for arguing, there is “Mistake Of Law” in the lower court’s judgment.

(d) If mistake of law is established, HC will send the case back to the LC to take a fresh a decision based on the correct law.

(e) In case the management decides to challenge the reinstatement order of the LC in the HC the management will have to pay the workman the LAST DRAWN WAGES till the disposal of the case by the High court [if in the mean time superannuation takes place, payment can be discontinued from that date]

(f) The rate of “Last Drawn Wages” will not undergo change during the HC trial even if there is pay revision or annual increments are drawn by other workmen. [see SC ruling in Dena bank case 1999(2) SCC 106 & Rajaram Maize case 1999 SCC(L&S)641]

(g) The payment under sec 17-B is not payable if the dismissed workman is gainfully employed in some other establishment during the HC trial period. [sec Kerala HC ruling in south India workers congress 2010(1) LLJ 276 & Delhi HC ruling in Sathya Sai Vidya Vihar 2010(2)LLJ249

VI Determination of Legality & Illegality of Strikes & Lock outs

[Sn: 22,23,24,26,27,28]

Factors To Be Considered In Public Utility Services In Non-Public Utility Services

Is issue of strike notice in form -O or Lock out notice in Form P mandatory

Yes (Without proper notice will be illegal)

& Sn 22(1) & Sn 22(2)

Not required [Sn 23] [Unless the standing order or any agreement requires such notice]

If indulged in during pendency of conciliation proceedings before an officer

Illegal [Sn 22(d)] Not Illegal [Sn 23 & 24]

If indulged in during conciliation proceedings before a Board

Illegal [Sn 23(a)] Illegal [Sn 23(a) & 24]

Factors To Be Considered In Public Utility Services In Non-Public Utility Services

If indulged in during the pendency period of adjudication & arbitration proceedings

Illegal [Sn 23(b) &(bb)] Illegal [Sn 23(b) & (bb) & 24]

A legally commenced strike, lock out, if continued after government issues a ban order under Sn10(3) or 10-A(4A)

Illegal from the date of such ban [Sn24(1)(ii) ]

Illegal from the date of ban [Sn24(1)(ii) ]

If lock out is in retaliation for an illegal strike or vice-versa

No notice is required and the Retaliatory strike/ lock out shall not be illegal [Sn24(3)] even if without notice

No notice is required and the Retaliatory strike/ lock out shall not be illegal [Sn24(3)] even if without notice.

Consequences of participating/instigating illegal strike or /lock out

Punishable under Sn. 27 Punishable under Sn. 27

1) Can the restrictions on strike in public utility services under 22(1) be invoked on the striking contract workmen [who are not employees of the principal employer] by the principal employer has been answered in the affirmative by Karnataka H.C in IOC v/s Petroleum workers union[2013(137)FLR 875]

2) Normally provisions of the I.D Act are not applicable to non-workmen [Managers & Supervisors] But the restrictions on strike under Sn 22(1) apply to all categories of employees including managers & supervisors and even they can be punished under Sn26 for going on illegal strike. [see Delhi HC ruling in Indian Oil Corporation V/s Officer Association [2000(85)FLR144]

3) In Syndicate bank case[ 1994(2)LLT 836] The Supreme court held that workmen on a legal strike would be eligible to claim wages only if they establish in the labour court that their strike was both legal & justified.

VII I.D. Act Provisions Regulating Lay off & Payment of Compensation [Sn 2 (kkk) &CH. V

SL No. Factors Applicability to Smaller establishments

Falling Under Chapter V-A

Applicability to Larger establishments falling under Chapter V-B [more than 100

woekmen]

1

Applicability of the Definition or "Industrial Establishment" under section 2(Ka) to lay off provisions under Chapter VA & VB [2(Ka), 25A, 25-L]

(a) The general definition under 2(Ka) is not applicable (b) The definition for the purposes of Chapter V-A is the definition given in section 25-A [Factory +Mines+ Plantations employing less than 100 workmen ] (c) Provisions of Lay-off will not apply if the average attendance in the month immediately preceding the start or lay off was less than 50 workmen

(a) The general definition under 2(Ka) is not applicable (b) The definition for the purposes of chapter V-B is the definition given in section 25-L [Plantations +Mines +Factoriys employing 100 or more workmen will be governed by Ch. V-B sections]

SL No. Factors

Applicability to Smaller establishments Falling

Under Chapter V-AApplicability to Larger establishments falling under Chapter V-B [more than 100 workmen]

2Is prior government permission to be taken for declaring lay off [Sn. 25M(1)]

No permission is required if the average attendance of workmen in the establishment in the previous 12 months was less than 100

(a) Permission of the government is required if the average attendance of the workmen in the preceding 12 months was 100 or more (b) If the lay off is for shortage of power or coal or natural calamity post -facto approval is required (c) For other reasons like accumulation of stocks or break down of machinery prior approval must be taken from government (d) In case of mines prior permission is not required if lay off is due to: Fire, flood, excess of inflammable gas or explosion; but post incident permission should be taken

SL No. Factors

Applicability to Smaller establishments Falling

Under Chapter V-A

Applicability to Larger establishments falling under Chapter V-B [more than 100

workmen]

3

Should Governments prior Permission be awaited before laying off the workmen [Sn 25M(6)]

No application for permission required

(a) Application for permission to be submitted at least 90 days in advance (b) In the case of mines for fire, floods, explosion etc. should apply within 30 days of the occurrence of the incident (c) If no reply is received from the government within 60 days it can be presumed that permission is granted (d) If permission is denied workmen who were laid off should be paid full wages

4Normal rate of compensation payable [Sn 25 M(10)]

50% of Basic + D.A(1) 50% of Basic +D.A. (2) If permission denied 100% of wages

SL No. Factors

Applicability to Smaller establishments Falling

Under Chapter V-A

Applicability to Larger establishments falling under Chapter V-B [more than 100

workmen]

5What is the rate of compensation payable when the willing workmen are laid off due to strike or slow down by another Section of workmen [Sn 25E(iii)]

Nil 50% of Basic + D.A

6Are casual or Badli workmen who are not regular workmen eligible for lay off compensation [Sn 25-B]

Eligible if they meet the attendance requirements of 240 days/12 months prescribed under section 25-B

Must meet attendance requirement of 240/12 months under Sn 25-B

7 Who is the permission granting authority state or central? [Sn 25L(b)] No permission required

In case of central PSUS in a state permission has always to be taken from central labour department [25L(b)] others from the state govt.

8 Penalty for laying off without permission [Sn 25Q] Not Applicable

Imprisonment up to one month or fine of Rs. 1000 or both + Pay full wages to workmen [25Q]

VIII I.D.Act provisions regulating Retrenchment

1. What is the scope of the term retrenchment

(25F and 25N) According to the new definition introduced in 1984 (Section 2(oo)) retrenchment means

all types of termination of workman’s service barring the following 5 exceptions:(a) Termination for indiscipline after proper enquiry (b) By way of resignation or voluntary retirement by the workman(c) Retirement on reaching the age of superannuation(d) Termination resulting from non-renewal of a fixed term contract of employment(e) Termination on account of continued ill health

2. After 1984,terminations under the standing order provisions of “loss-of-lien” or simple discharge using one month/3 months clauses in the appointment letter of confirmed workmen would amount to illegal retrenchment/termination as held by the S.C in West Bengal electricity board case(1995(50)FLR 456)

3.Casual workmen who satisfy the attendance test of 240 days/12 months prescribed in section 25-B are eligible for retrenchment compensation benefits

4. Probationary workmen are not eligible for compensation if their services are terminated before issue of a confirmation letter.

5. Rate of compensation payable is 15 days wages for each completed year of service

6. Prior permission from the government is required if the average attendance of the workmen in the establishment is 100 or more (apply 90 days in advance)

7. For smaller establishments the notice to workmen should be one month and for larger establishments it would be 3 months or pay in lieu there of.

8. The principle of last to come in go out first should be adopted category or designation wise. (deviations with proper reasons could be made,if it could be justified before courts)

9. If work is restarted at a future date, the retrenched workmen should be re-called (if they have not crossed the age of superannuation) (Sn 25 H)

10. If the services are terminated under a voluntary retirement scheme (VRS) the workmen will lose their right of re-employment

11.If workmen’s services comes to an end after a fixed term employment of say 5 years, he will not be eligible for compensation as his termination does not meet the requirements of section 2(oo)

(X ) RECOVERY OF MONEY DUE FROM THE EMPLOYER (SN 33C)(1 )WHEN CAN THE WORKMAN INVOKE THIS

PROCEDURE?(a)He should have become entitled for some amount: (i)Under a settlement or award (ii) For lay off /retrenchment/closure compensation

under chapter V-A or V-B.(2) TIME LIMIT FOR CLAIMING(a) Claims should be submitted to the government within

one year of it falling due(b) Government can condone delay, if proper reasons are

given.

(3) Who can file?(a) The workman/his heirs/anybody authorized by him.(4) Two types of claim petitions(b) If the workman knows the exact entitlement amount the

petition should be under 33(C)(1)(c) If the entitlement is known, but the quantum is not known ,the

petition should be under 33(C)(2)(5) Procedure for claiming(d) Rule 62 outlines the procedure and the forms to be used for

filing(e) The government will forward the petition to the labour court for

issuing necessary orders(f) After receiving the orders, government will send it to the

collector for attaching the employer’s property and then pay it to the claimants.

NOTE: if the workman’s salary is below Rs 18,000/-pm, he could also file a claim under section 15 of the payment of wages act 1936

XI Temporary restriction on employer’s powers to alter service condition or take disciplinary action against workmen during the pendency periods of conciliation/adjudication or arbitration (Sn 33)-

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(1) Restrictions are temporary(a) The restrictions imposed under Sn 33 is only during

the period of pendency(b) The restrictions will not apply outside the pendency

period.(c) These temporary restrictions are imposed for

preventing actions by employer which may escalate the conflict and reduce the prospect of an amicable resolution of the dispute.

(2) WHAT IS MEANT BY PERIOD OF PENDENCY(a) Conciliation is deemed to commence and conclude

when contingencies mentioned in sec 20(1) and 20(2) are satisfied

(b) Adjudication and arbitration are deemed to commence and conclude when contingencies mentioned in sec 20(3) are satisfied

(c) The period intervening the commencement and conclusion are called period of pendency.

(3) RESTRICTIONS ON ALTERATION OF SERVICE CONDITIONS [ Sns. 33(1)(a) &33(2)(a)

Section no Contingency Restriction

33(1)(a) 1.some matters are in dispute and pending conciliation/arbitration

2.management wants to alter one or more of the disputed items

3. against workmen who are concerned in the dispute

Any change in service condition can be done only with the express written permission of the authority before whom the issue is pending

33(2)(a) The workmen are concerned in the dispute,but the matter proposed to be altered is not connected with any of the disputed items

(a)no permission or approval required

(b) management can take the required action as stipulated in the standing orders or appointment letter.

(4) RESTRICTIONS ON TAKING DISCIPLINARY ACTION AGAINST NON-PROTECTED WORKMEN (SN 33(1)(B) AND SN 33(2)(B))

Section no contingency Restriction 33(1)(b) The workman has committed a

misconduct in connection with the pending dispute

No discharge or dismissal orders shall be issued without taking express written permission from the authority

33(2)(b) The workman has committed a misconduct which is not connected with the pending dispute

(a)no restriction on issuing punishments less than termination

(b) IF IT IS TERMINATION must pay one month’s salary and apply for approval of the discharge/dismissal

(c) if not approved must reinstate.

(5) RESTRICTIONS ON PUNISHING PROTECTED WORKMEN

(SN 33(3) AND SN 33(4))(1) No kinds of punishment can be issued against

protected workmen without taking advance written permission from the authority concerned.

(2) WHO IS A PROTECTED WORKMAN(a) All union office bearers cannot claim protected status(b) Every union can claim up to 1 percent of its strength,

subjecte to a minimum of 5 union office bearers(Rule 61)

(c) If they claim more, the management should write to the union to spell out for whom they would like to give the protected status within 15 days

(d) As per the rules each year the union should communicate to the management by or before 30th April the names of the person to be declared as protected workmen

(e) Such protection is for a maximum period of 12 months and limited to periods when there are disputes pending

(f) If there is any dispute on this matter it should be referred to the labour commissioner

NOTE: in the HIL life care LTD vs Hindustan latex labour union (2011(128) FLR 653) the division bench of the Kerala HC over ruling the single bench as well as the labour commissioner’s decision held that the management can refuse to grant status to nominated union leaders if disciplinary proceedings are pending against them

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