Indian Legal System > Civil Laws > Labour Laws > Industrial Disputes Act, 1947 > Introduction to Industrial Disputes Act
Industrialization in a country has always contributed to employment, contribution to national income, per capita income, exports and economic development on one side and industrial disputes on the other. For the industrial growth, there must be peace and harmony is a prerequisite. The Conflict between the employees and employers is inherent in industrial society. The Industrial Disputes Act was enacted to provide machinery and forum for the settlement of such conflicting and seemingly irreconcilable interests without disturbing the peace and the harmony in industry. The Act provides social justice to both employees and employers.
The Directive Principles of State Policy enshrined in Part IV of our Constitution, the supreme lex, are not “pious declarations” but “instruments of instructions” which command every government in power to promote the wellbeing and the interests of the underdog, namely, the working class. Many of these Directive Principles seek to establish a social order where “Justice-social, economic and political” shall be assured to all, especially, the working class. Consequently, the labour laws enacted to protect and promote the interests of the workers should be accorded a pivotal position in our Legal System.
According to Section 2(k) of the Industrial Disputes Act, “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.
Thus, Industrial disputes may be among following different parties:
- Employers and employers,
- Employers and workmen and
- Workmen and Workmen.
Historical Background of Industrial Disputes Act:
The first enactment dealing with the settlement of industrial disputes was the Employers’ and Workmen’s Disputes Act, 1860. Prior to the year 1947, industrial disputes were being settled under the provisions of the Trade Disputes Act, 1929. Experience of the working of the 1929 Act revealed various defects, which needed to be overcome by fresh legislation. Accordingly, the Industrial Disputes Bill was introduced in the Legislature. The Bill was referred to the select committee. On the recommendations of the Select Committee amendments were made in the original Bill.
Industrial Disputes Act, 1947 is meant for settling disputes, if any, between workers and the industrialists or factory owners. It is the principal central legislation for settlement of industrial disputes.
The main labour laws prior to the Industrial Disputes Act, 1947, were:
- The Bengal Regulation VII of 1819.
- The Workmen’s Breach of Contract Act, 1859
- The Employments & Workmen’s (Disputes) Act, 1860
- The Trade Disputes Act, 1920
- The Indian Trade Unions Act, 1926
- Trade Disputes Act, 1929
- Bombay Trade Disputes (Conciliation) Act, 1934
- The Trade Disputes (Amendment) Act, 1938.
The major shortcomings of these Acts were that the settlements or awards under these Acts were not binding or conclusive.
General Information of the Act:
- An Act to make provision for the investigation and settlement of industrial disputes and for certain other purposes.
- It is applicable to the whole of India w.e.f. On the first day of April 1947.
- The Act consists of 7 Chapters consisting of 40 sections, 5 Schedules, and Appendix.
- Other related rules are The Industrial Tribunal (Procedure) Rules, 1949, The Industrial Tribunal (Central Procedure) Rules, 1954, and The Industrial Disputes (Central) Rules,1957.
The Preamble of the Act:
The preamble to the Industrial Disputes Act, 1947 mentions that this Act makes provision for the investigation and settlement of Industrial Disputes and certain other purposes. The words “for certain purposes” essentially refer and include prevention of Industrial Disputes also as is clear from the Statement Objects and Reasons. Thus two institutions prescribed for the prevention and settlement of Industrial Disputes, provided for in the Bill are the Works Committees consisting of representatives of employers and workmen and Industrial Tribunals.
Objects of the Industrial Disputes Act:
The preamble to the Industrial Disputes Act, 1947 reads thus, ‘an act to make provision for the investigation and settlement of industrial disputes and for certain other purposes.’ On the basis of various judgments given from time to time by the supreme court, the principal objective of the act may be stated as below:
- to make provision for the investigation and settlement of industrial disputes and for certain other purposes.
- To ensure social justice to both employers and employees and advance the progress of the industry by bringing about harmony and cordial relationship between the parties.
- To provide machinery for settling disputes arising between the capital and the labour by peaceful methods and through the machinery of conciliation, arbitration and if necessary, by approaching the tribunals constituted under the act.
- To promote measures for securing and preserving amity and good relations between the employer and workmen.
- To enable workmen to achieve their legitimate demands by means of the legitimate weapon of strikes, and thus promote collective bargaining.
- To prevent illegal strikes and lockouts.
- To provide relief to workmen in cases of layoff, retrenchment, and closure.
- To enable the State to play a constructive role in employer workmen relationship. Thus the concept of Welfare State is maintained.
In Dimakuchi Tea Estate v. Dimakuchi Tea Estate, 1958, AIR SC 353, case, the Supreme Court laid down following objectives of the Act:
- Promotion of measures of securing and preserving amity and good relations between the employer and workmen.
- Investigation and settlement of industrial disputes between employers and employers, employers and workmen, or workmen and workmen with a right of representation by registered trade union or federation of trade unions or an association of employers or a federation of associations of employers.
- Prevention of illegal strikes and lock-outs.
- Relief to workmen in the matter of lay-off and retrenchment.
- Promotion of collective bargaining.
Similar observations are made in the cases Steel Authority of India v. Union of India, AIR 2006 SC 3229,
In Workmen, Hindustan Lever Limited v. Hindustan Lever Limited, AIR 1999 SC 525 case, The Court opined that the Court by the interpretative process must strive to reduce the field of conflict and expand the area of agreement and show its preference for upholding agreements sanctified by mutuality and consensus in the larger public interest, namely, to eschew industrial strife, confrontation, and consequent wastage.
In Hospital Employees Union v. Christian Medical College, (1987) 4 S.C.C. 691 case, the Court held that the Act applies to all industries irrespective of religion or caste of parties. It applies to the industries owned by Central and State Governments too.
In Claridge & Co. Ltd. v. Industrial Tribunal, Bombay, AIR 1951 Bom 100 case, the Court held that the purpose of the Act is to provide machinery for a just and equitable settlement by adjudication by independent Tribunals, by negotiations and conciliations of industrial disputes. It substitutes arbitration and fair negotiation, instead of the trial of strength by strikes and lock-outs.
In Hariprasad Shivshankar Shukla v. A. P. Divekar, AIR 1957 SC 121 case, the Court observed that the purpose of all labour legislation is to provide fair wages and prevent disputes so that production might not be adversely affected.
In Rajasthan State Road Transport Corporation v. Krishna Kant, AIR 1995 SC 1715, 1726 case the Court observed: “the policy of law emerging from the Act … is to provide an alternative dispute resolution mechanism to the workmen, a mechanism which is speedy, inexpensive, informal and un-encumbered by the plethora of procedural laws and appeals upon appeals and revisions applicable to Civil Courts….”
Causes of Industrial Disputes:
The main causes of industrial disputes are:
- Wages: Low wages of industrial workers constitute a major cause of industrial disputes in the country. Wages have not been rising in proportion to the rise in prices (inflation). Hence labourers to demand higher wages which management may deny and it consequently leads to disputes.
- Bonus: It is the second major cause of industrial disputes. The workers feel that they should have a greater share in the profits of the industrial concern and demand higher bonus which management may deny and it consequently leads to disputes.
- Working Conditions: The working conditions such as lesser working hours, the security of a job, better safety measures in the factory, restrooms, leave, canteen, gratuity facilities, etc. are important for workers for their motivation towards the job. Lack of or insufficient working conditions are also responsible for many industrial disputes.
- Trade Unions: Recognition of trade union and rivalry between different trade unions is also the main cause of industrial disputes.
- Retrenchment: Due to modern techniques and modern machinery, production is simplified and requires less labour. In such a case, the management tries to reduce the manpower by retrenchment. This may create insecurity in the minds of workers and may lead to an industrial dispute.
- Political Influence: Most of the trade unions are associated with one or another political party. To score political point politicians may indulge in creating disputes in the industry.
Classification of Industrial Disputes:
Interest Disputes:
These conflicts are also called ‘conflicts of interest’ or ‘economic disputes’. In most cases the disputes arise from the demands or proposals for improvement in wages, benefits, job security or terms or conditions of employment. Such disputes relate to the establishment of new terms and conditions of employment for the general body workers. Interest disputes must be properly negotiated or bargained or compromised through collective bargaining. These disputes should be settled through conciliation as far as possible. Such disputes are solved generally on ‘give and take’ basis.
Grievance or Rights Disputes:
These disputes are also known as ‘conflicts of rights’ or ‘legal disputes’. They involve individual workers or a group of workers in the same group. It is a protest by the workers against the act of management that deprives the rights of the employees. The grievance disputes arise out of payment of wages, fringe benefits, working hours, over time, promotions, demotions, seniority, safety, retirement benefits, seniority work-rules, leave rules and health related aspects, etc. In some cases, disputes arise especially over the interpretation and application of collective agreements. There are, more or less definite standard for resolving a dispute i.e., the relevant provision of the Act or collective agreement, employment contract, works rules or law, or customs or usage.
Disputes over Unfair Labour Practices:
The most common Labour type of dispute is the disputes over Unfair Practices in industrial relations. The management many times discriminates against workers on the ground that they are the members of the trade union and they participate in the activities of the union. Such disputes arise over the malpractices adopted by the management against a worker or trade union. The examples of such malpractices may be discrimination against workers for their being members of the trade union or their involvement in union activities; interference, restraint or coercion of employees from exercising their right to organize, join or assist a union; establishment of employer sponsored union and coerce the workers to join such union; refusal to bargain with the recognized union; recruiting new employees during a strike which is not declared illegal; failure to implement an award, settlement or agreement; indulging in acts of violence. Such disputes can be settled through conciliation or such disputes are settled according to the normal procedure laid down under the Industrial Disputes Act 1947.
Recognition Disputes: Recognition Disputes arises when the management of an organization refuses to recognize a trade union for the purpose of collective bargaining or to represent its member employees in case of a conflict or dispute. Issues under this category differ according to the cause that led the management to refuse recognition. Here the problem is that of attitude. A trade union victimization happens when there is already an existing trade union or it is a case of multiple trade unions and each making a claim for recognition. Recognition Disputes also arises when a particular trade union does not have sufficient representatives. Recognition disputes are settled through the guidelines given by the government for recognition of trade union or with the help of Code of Discipline which has been voluntarily laid down by the government.
Other Legal Measures for Industrial Peace:
- Industrial Disputes Act, 1947
- Factories Act, 1948
- Industrial Employment, (Standing Orders) Act, 1948
- Payments of Bonus Act, 1965
- Equal Remuneration Act, 1976
- Adoption of ‘Code of Discipline’, 1958
- Employees Provident Fund and Family Pension Act, 1952
- Employees State Insurance Act, 1948
- Payment of Gratuity Act, 1972
- Minimum Wages Act, 1948