Industrial Disputes

Indian Legal System > Civil Laws > Labour Laws > Industrial Disputes Act, 1947 > Industrial Disputes

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.

Definition of Industrial Dispute:

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:

1. Employers and employers,
2. Employers and workmen and
3. Workmen and Workmen.

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.

Characteristics of Industrial Disputes:

• Industrial disputes may be among different parties: (i) Employers and employers, or (ii) Employers and workmen or (iii) Workmen and Workmen.
• Ordinarily, it arises when the workers or trade unions put up their demands before the employer and the latter refuses to consider them.
• In matter relating to industrial dispute interest either of the employer or the worker must be involved.
• Industrial dispute need not be written. It may be oral.
• Industrial disputes may manifest themselves in different forms, such as strikes, lock-outs, Gheraos, go slow tactics, pens down strike, etc.
• Major causes of industrial disputes are wages, bonus, working conditions, trade unions, Retrenchment, working conditions, etc.
• Industrial disputes are classified as interest disputes, grievance or rights disputes, disputes over unfair labour practices, and recognition disputes.
• It relates to employment of the worker, termination of employment, terms of employment, conditions of employment, etc. Matters relating to the personal life of the worker do not constitute industrial dispute.
• It belongs to an industry which is functioning. Disputes belonging to an industry that has since been closed down are not included in it.
• Industrial disputes should relate to matters which are clear. Unless, it is a transparent case its settlement is not possible. 

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.

Negative Impact of Industrial Disputes:

• Loss of production: Industrial dispute leads to reduction in production since the employees spend lesser time in active production process and a longer time in disagreements with the management.
• Loss of profit: Loss of production leads to the paralyzing of organizational activities. It leads to financial losses.
• Loss of market: Loss of production leads to less availability of the product in the market and less servicing facilities. There may be decrease in the quality of the product. Which leads to loss of market.
• Closure of the organization: Due to loss of profit and loss of market, the organization might not survive and hence might not be able to meet the running costs thus leading to shut down
• Loss of public image: A dispute may tarnish the name and image of the organization resulting in the loss of public confidence.
• Property destruction: When dispute is not settled earlier, it may result in a point of strikes or even demonstrations. The employees may turn violent and end up destroying properties of organization.
• High labour turnover: A grim picture of future of the organization and deteriorating environment in the organization leads to high labour turnover.
• Absenteeism: Unending disputes results in loss of employees’ motivation which results in absentism, poor communication, and production of poor-quality goods.
• Impact of economy: When labour and equipment in the whole or any- part of the industry are rendered idle by strike or lock-out, national dividend (income) suffers a lot. The result is loss in production, ultimately reduces the national income. Consequently, public expenditure on welfare of public is reduced. Development activities cannot be undertaken for want of finances.

Positive Impact of Industrial Disputes:

• Introduction of fair policies: With the help of collective bargaining, unfavorable polices are removed and fair polices are adopted by considering need of both the parties.
• Establishment of grievance redressal system: This helps to prepare the organization for future disputes which might threaten the stability of the organization.
• Creates awareness in employees: Dispute leads to involvement of employees in organization activities like decision making and policy formulation.
• Good working conditions: It leads to improvement in working conditions which are favourable for employees.
• Improvement in Standard of Living: It helps to improve allowances, wages, working environments and also safety and health procedures.
• Improved Communication: There is a possibility that the employees might have been reacting to miscommunication or untrue information passed to them hence the dispute provides a chance to improve the communication channels and even open up more communication channels to the employees.
• Recognition of trade union: It leads to recognition of trade unions; if the trade union comes in and settles the disputes between the employees and employers successfully, they stand a chance to win favour from the employers who would then desire to work hand in hand with them to enhance a good relationship and a harmonious working environment.

Case Laws:

In Sindhu Resettlement Corporation Ltd. v. Industrial Tribunal, AIR 1968 SC 529 case, the Court observed that an industrial dispute exists only when the same has been raised by the workmen with the employer. A mere demand to the appropriate Government without a dispute being raised by the workmen with their employer regarding such demand, cannot become an industrial dispute.

In Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318 case, the Supreme Court observed that it is enough if industrial dispute exists or is apprehended on the date of reference. Therefore, even when no formal demands have been made by the employer, industrial dispute exists if the demands were raised during the conciliation proceedings.

In Workmen v. Hindustan Lever Ltd., AIR 1999 SC 525 case, the Court held that when an industrial dispute is referred for adjudication the presumption is that, there is an industrial dispute.

In W.S. Insulators of India Ltd. v. Industrial Tribunal, Madras, (1977) IILLJ 225 Mad case, the Court held that unless there is a demand by the workmen and that demand is not complied with by the management, there cannot be any industrial dispute within the meaning of Section 2(k). Mere participation by the employer in the conciliation proceedings will not be sufficient.

Conclusion:

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. Industrial disputes include 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. Understanding industrial dispute is itself important for obtaining the solution to the dispute.