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