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Id Act Notes
Id Act Notes
Preliminary:
The Industrial Disputes Act, 1947 extends to whole of India. It came into
operation on the first day of April, 1947. This Act replaced the Trade Disputes Act
of 1929. The Trade Disputes Act imposed certain restraints on the right of strike
and lockout in Public Utility Services. But no provision was existing for the
settlement of Industrial Disputes, either by reference to a Board of Conciliation or
to a Court of Inquiry. In order to remove this deficiency, the Industrial Disputes
Act, 1947 was passed.
Scope and Objects (Sec. 1) ,
The objects of the industrial relation's legislation in general are to maintain
industrial peace and, to achieve economic justice. . .
The prosperity of any industry very much depends upon its growing
production. Production is possible when the industry functions smoothly without
any disturbances. This means industrial peace through harmonious relationship
between labour and management. Therefore every industrial relations legislatiqn
necessarily aims at providing conditions congeniel to the industrial peace.
Economic justice is another objective of industrial legislation. Almost all
industrial interuptions in production are due to industrial disputes. Dissatisfaction
with the existing economic conditions is the root cause of industrial disputes. The
labour demands for fair return is expressed in varied forms; e.g. increase in
wages, resistance to decrease in wages and grant of allowance and benefits etc.
If a labourer wants to achieve these gains individually, he fails because of his
weaker bargaining power against the sound economic footing of the
management. Therefore, the economic struggle of labour with capital can be
fought collectivity by organised labours. It is with this object to provide economic
justice by ensuring fair return to the labour, the State, being the custodian of
public interest, intervenes by 'State legislation' Economic justice has also been
ensured to the people of India by our Constitution.
Thus the main object of all labour legislation is to ensure fair wages and to
prevent disputes so that the production might not be adversely affected2. The
principal objects of Industrial Disputes Act as analyzed and interpreted by the
Supreme Court are as follows.3
(1) The promotion of measures for securring and preserving amity and
good relations between employers and workmen;
(2) Investigation and settlement of industrial dispute between employers
and employers, employers and workmen, or between workmen and workmen
with a right of representation by a registered Trade Union or . Federation of Trade
Unions or Association of Employers or a Federation of Association of Employers.
(3) The prevention of illegal strikes and lock-outs;
(4) Relief to workmen in the matter of lay-oft, retrenchment and closure of
an undertaking. .
(5) Collective bargaining.
Main Features or Characterstics of the Act::
Some of the important features of the Act may be summearised as
below:
1. Any industrial dispute may be referred to an industrial tribinal by mutual
consent of paries to dispute or by the State Government, if it deems expedient
to do so.
2. An award shall be binding on both the parties to the dispute for the
operated period, not exceeding one year;
3. Strike and lockouts are prohibited during:
(a) The pendency of conciliation and adjudication proceedings;
(b) the pendency of settlements reached in the course of conciliation
proceedings, and .
(c) the pendency of awards of Industrial Tribunal declared binding by
the appropriate Government.
4. In public interest or emergency, the appropriate Government has
power to declare the transport (other than railways), coal, cotton
textiles, food stuffs and iron and steel industries to be public utility
services for the purpose of the Act, for a maximum period of six
months.
5. In case of lay-oft or retrenchment of workmen, the employer is
requested to pay compensation to them. This provision stands in
the case of transfer or closure of an undertaking.
6. A number of authorities (Works Committees, Conciliation Officers,
Board of conciliation, Courts of Inquiry, Labour Courts, Tribunal and
National Tribunal) are provided for settlement of Industrial disputes.
Although the nature of powers, functions and duties of these
authorities differ from each other, everyone plays important role in
ensuring industrial peace.
Definitions (Sec.2) :
(a) Appropriate Government: The Central Government as well as the
State Government are vested with various powers and duties in
relation to matters dealt with in this Act. In relation to some
industrial disputes the Central Government and in relation to some
others, the State Government concerned are the appropriate
Government to deal with such disputes.
Under sub-section [(i) (a)] and [(i)(b)] of the Act,
Companies/Corporations/
Trusts/Boards/ Authorities, etc. established under the Act of
Parliament; the Central Government is the Appropriate Authority.
In all other cases, the Appropriate Government is the
State Government within whose territory the industrial dispute aries
Sub-section (ii).
(aa) Arbitrator - Arbitrator includes an umpire.
(aaa) Average Pay - "Average Pay" means the average of the
wages payable to a workmen, Average pay in the case of workmen
means:
(i) In the Case of monthly paid workman- The average of monthly
wages payable in three complete calendar months.
(ii) In the case of weekly paid workman - the average of the weekly
wages payable in four complete weeks.
(iii) In the case of daily paid workman - the average of the wages for
twelve full working days.
(b) Award - 'Award' means an interim or final determination of any'
industrial
dispute or of any question relating thereto. The determination must be
made by any Labour Court, Industrial Tribunal or National Tribunal.
Enforcement of an award - An award may be enforced in the
following ways:
(1) The aggrieved party may apply to Appropriate Government for
prosecuting the defaulting party under Sec. 29 or 31 of this Act.
(2) Where the work man 'isto claim money from the employer, the
workman may move the Appropriate Government for recovery of
the money due to him under the award.
(3) The party in whose favour the award has been granted may file
a suit and obtain a decree, which shall be enforced extension under
provisions of the Civil Procedure Code.
Where the interim order did not determine any part of the industrial dispute or
any other question relating there to, but only determined whether the Industrial
Tribunal has been properly constituted to which the industrial dispute could be
referred for adjudication, such order cannot be said to be an award as defined in
Sec. 2(b)2
(bb) Banking Company - 'Banking Company' means a banking company
as defined in Sec.5 of the Banking Companies Act, 1949.
(c) Board - 'Board' means a Board of Conciliation constituted under this
Act.
(cc) Closure - 'Closure' means the permanent closing down of a place of
employment or part thereof
Penalty for closure (Sec. 25R)
1. Any employer who close down an undertaking without complying with
the provisions of the Sub-Sec. (1) of Sec. 25-0 shall be punishable
with imprisonment up to 6 months, or with fine up to Rs. 5,000 or
with both.
2. Any employer, who contravenes a direction given under Sub-sec. (2)
of Sec. 25-0 or Sec. 25-P, shall be punishable with imprisonment up
to one year, or with fine up to Rs. 2,000 for every day during which
the contravention continues after the conviction.
3. Any employer who contravenes the provisions of Sub Sec. 25-0 shall
be punishable with imprisonment up to one month, or with fine up
to Rs. 1000 or with both.
(d) Conciliation Officer - 'Conciliation Officer' means a conciliation
officer appointed under the Act. .
(e) Conciliation Proceeding - 'Conciliation Proceeding' means any
proceeding held by a Conciliation Officer or Board under the Act.
(ee) Controlled Industry - "Controlled Industry" means any industry the
control of which, by the Union has been declared by any Central Act
to the expedient in the public interest. That is, an industry which is
controlled by the Central Government. But it must also be declared
by the Central Act to be controlled by the Union.
(f) Court - "Court" means a Court of Inquiry constituted under this Act. (g)
(g) Employer - "Employer" means, in relation to industries carried on
by or under the authority of (i) Central Government, (ii) State
Government, or (iii) Local Authorities.
(h) Executive - "Executive", in relation to a Trade Union means the body
by whatever name called, to which by management of the affairs of
the Trade Union is entrusted.
(i) Independent - Means, for the purpose of appointment of a person as
Chairman or other member of a Board, Court or Tribunal. In order
that a person may be eligible for his appointment to these bodies,
he must possess the following qualifications:
(i) . He must be unconnected with industrial dispute in question, or.
(ii) He must be unconnected with any industry directly affected by
such dispute.
(j) Industry- Industry means any business, trade, undertaking, manufacture
or any service, employment, handicraft or industrial occupation or
vocation of workmen.
In a Case In Banglore Water.Supply v. A Rajappa 1 a bench of the
Supreme Court consisting of seven judges exclusively considered the scope of
industry and laid down the following test which has practically reiterated as
under:
"Where there is (i) systematic activity, (ii) organised by co-operation between
employer and employee, (iii) for the production and/or distribution of goods and
services calculated to satisfy human wants and wishes, prima facie, these is an
"Industry" in that enterprise." This is known as Triple Test.
The Following points were also emphasised in the said case:
(1) Industry does not include spiritual or religious services or services geared to
celestial bliss, e.g. making on a large scale, "parsed" or food.
(2) Absence of profit motive or gainful objective is irrelevant but, be the
venture in the public, joint, private or other sector.
(3) The true focus is functional and the decisive test is the nature of the
activity with special emphasis on the employer-employee relations.
(4) If the organisation is a trade or business, it does not cease to be one because
of philanthropy animating the undertaking.Therefore, the consequences of the
decision in this case are that professions, clubs, educational institutions, co-
operatives research insthtions, charitable projects and other kind of adventures, if
they fulfil the triple test stated above cannot be exempted from the scope of
industry.'
(k) Industrial Disputes - Industrial Dispute is : (1) a dispute or difference
between (a) employers and employers, or (b) employers and
workmen,
(c) workmen and workmen; . .
(2) the dispute or difference should be connected with (a) employment or .
non-employment, or (b) terms of employment, or (c) conditions of
labour
of any person; .
(3) the dispute may be in relation to any workman or workmen or any
other
person in whom they are interested as a body.
(ka) Industrial Establishment or Undertaking - It means an
establishment or undertaking in which any industry is carried on; provided that,
where several activities are carried on in an establishement or undertaking and
only one or some of such activities is or are an industry or industries:
(kk) Insurance Company - According to this sub-section, an insurance is
one, which company is defined in Sec. 2 of the Insurance Act, 1938,
having branches or other establishments in more than one State.
(kka) Khadi - "Khadi" has the meaning assigned to it in clause ( d) of Sec.
2 of the Khadi and Village Industries Commission Act, 1956.
(kkb) labour Court.- It means a Labour.Court constituted under Sec. 7 of
the Industrial Disputes Act, 1947.
(kkk) lay Off - Means putting aside workmen temporarily. The duration of
lay off should not be for a period longer than the period of
emergency. The employer-employee relationship does not come to
an end during the
period of lay-off but is merely suspended during the period of
emergency.
Any such refusal or failure to employ a workman may be on account of:
(i) shortage of coal, power or raw materials or
(ii) the accumulation of stock; or
(iii) the breakdown of machinery; or
(iv) natural calamity; or
(v) any other connected reasons.
Prohibition of lay-off (as substituted by Amendment Act; 1984)
According to Sec. 25M of Industrial Disputes Act, 1947, no workman
whose name is borne on the muster rolls of an industrial establishment shall be
laid off by his employer except with the prior permission of the appropriate
Government or such authority, as may be specified by that Government.
1. Economic causes
Economic causes include questions pertaining to wages, bonus and
allowances, retrenchment of workmen by the employer retionalisation and
automation, faulty retrenchment system, leave and so on. Low wages,
irrespective of rising prices, demand for a rise in D.A., intolerable working and
living conditions, issues pertaining to hours of work, etc. are some other
economic causes that provoked a number of strikes in India.
The worker factors responsible for industrial unrest have been: (1) Inter
union rivalries, (2) Economic and political environment that exercise adverse
effects on workers attitudes, and (3) Indiscipline amongst workers.
2. Managerial causes
Some of the causes of discontent are inherent in the industrial system,
itself
such as:
(1) Workers do not get any opportunity for self-expression; or
(2) Their social needs are not fulfilled; that is. the position of workers within in
informal qroups formed in jndustrial undertakings and problems of conflict within
the groups may not be taken into account.
(3)Lack of communication on one hand, between the workers and management
may turn petty quarrels into industrial unrest and on the other, the problem of
discipline in industrial units may assume serious dimensions.
The other managerial factors responsible for industrial unrest have been as
1. Mental inertia on the part of management and labour.
2. Management's general attitude of hatred towards their workers,
3..Lack of competence on the supervisor and other managers in human
relations.
4..Management's desire to pay comparatively lesser amount of bonus or
dearness allowance against the desire of workmen.
5. .Efforts to introduce modernisation without prior or appropriate environment.
6. Excessive work load and inadequate welfare facilities.
7. Defective policy of lay-off.
8. Denial of the workers right to recognize union.
9. Unfair practices like victimization or termination of services without
assigning any reasons.
10.Lack of definite wage policy and stabilization of prices.
12. Lack of a proper policy of union recognition.
13.Denial of worker's right to organise, etc.
Political causes
Industrial disputes are pertly political also. Some important political strikes I
organized by industrial workers in India. Prior to independence, as early , there
was a mass strike in Mumbai against the sentence of imprisonment strikes
occurred on account of actions taken against, for participating in
demonstrations, trial of political leaders, etc. After the independence also, some
stirkes have occurred owing to agitation's of political parties on questions like
re-organisation ation of States, National Language, etc. Percentage distribution
of industrial disputes by causes as published by the Ministry of Labour,
Impact/Effect/Consequences of Industrial Disputes
The consequences of Industrial disputes are many. A brief description is given
(1) Disturb the economic, social and political life of a country: When labour
and equipment in the whole or any part of an industry are rendered idle by
strike or lockout, national dividend suffers in a way that injures economic
welfare.
Loss of Output:
(2)Loss of Output : Loss of output in an industry which is directly affected by a
dispute, but other industries are also affected adversely, as stoppage of
work in one industry checks activity in other industries too.
(3) Decline in the demand for goods and services: Strikes reduces the
demand for the goods that other industries make, if the industry in which
stoppage has occured is one that furnishes raw materials semi-finished
goods or service largely used in the products of other industries.
(4) Lasting loss to the workers: There is a lasting injury to the workers in the
form of work being interrupted due to the strikes which involves a loss of
time which cannot be replaced. The wages are lost and the workers can
least afford to lose them specially when the average earning of a worker is
not very high.
(5) Increase in indebtedness : This increases the indebtedness among the
workers and not only the old debts become heavier but fresh debts may
also be incurred.
(6) Loss of health of family members : The workers and their family members
also suffer from loss of health due to mental warrious resulting from loss of
wages.
(7) Problem to consumers : Strikes and lockouts create problem to consumers
also. Articles of their requirements are not available in time, and the prices
of such articles reach high due to black marketing activities. ..
(8) Loss to the management/employer : When workers stop working, the plant
and machinery remain idle. The fixed express are to borne by the employer
even when the production stops. This way the employer suffers from great
loss.
(9) Bad effect on labour relations: Strikes and lockouts bring bad effects on
industrial relations. With the result the workmen and the employer always
be in mental tension.
(10) Obstruction to economic growth: Strikes creates many kinds of
violence which obstruct the growth of economy.
PREVENTION AND SETTLEMENT OF INDUSTRIAL DISPUTES:
Machinery for prevention of disputes in India: The frequency with which the
strikes took place and the serious industrial and social dislocation which they
cause has underlined the importance of preserving industrial peace. The
methods for prevention of industrial disputes include broadly all such measures
which directly or indirectly contribute towards improvement of Industrial relations.
The prevention methods, therefore cover the entire field of relations between
industry and labour which are described below:
(1) Strong Trade Union
(2) Profit Sharing and Co-partnership
(3) Joint Consultation
(4) Inrlustrial Employment Standing Orders
(5) Code of Discipline
(6) Collective Bargaining
(7) Works Committees
(8) Workers Participation in Management
(9) Tripartite Bodies/ Machinery
(10) LabourWelfare Officer
(11 ) Wage Board
1. Strong Trade Union: A strong trade union responsible to the welfare of
workers must work to protect and promote the interests of workers and the
condition of their employment. It must provide advice and information to
management on personnel policies and practices. Unions also impress upon
workers the need to exercise restraint in the use of their rights. Unions assist
employers in maintaining discipline and in increasing productivity. Unions should
act as a link between employers and workers so as to develop mutual
understanding and co orporation between the two sides. As a matter of fact a
trade union is the most switable and most effective agency to conduct bargaining
strong.
2. Profit Sharing and Co-partnership: (a) Profit-Sharing: This method helps for
maintenance of good industrial relations. Profit sharing means that the employer
gives to the workers a portion of profit of the business, in addition to wages. It is
usually based on an agreement between the employer and the workers.
Importance of profit sharing:
(1) The award to labour of a share of profits would create psychological
conditions favourable to the restoration of industrial peace.
(2) Profit sharing is likely to strongthen the common interest of labour and
capital and thereby increase the productive efficiency of the workers.
(3) Profit sharing e"nhances social justice so far as labour, a primary
factor
of production, that produces profits, is allowed to share in them.
(4) Protit sharing makes the worker responsible, creates a feeling of
identity
with business and settles all disputes peacefully.
Limitations of profit sharing:
(1) Although the purpose of profit sharing is to lay foundation for
harmonious industrial relations, they often fail to gain the confidence
of the worker since the amount of profits accruing to the workers has
not been very
large. The workers suspect honesty and good faith on the part of the
employer in distribution of profits.
(2) There is possibility of conflicts since the employees contend that the
increased profits are due to their efforts.
(3) The workers often fear that employers may use the profit-sharing
scheme to weaken the trade unions and to make the workers
dependent upon them.
(4) Profit sharing may make the workers sluggish and therefore,
production instead of being augmented, may actually diminish.
Broadly speaking; until a climate of mutual trust and confidence is created
between the two sides, the success of profit sharing schemes in industry so far
as industrial peace is concerned, seems doubtful.
(b) Co-partnership:
Co-partnership has come to be a applied to schemes which include a system of
profit sharing as well as control in the management. It is necessary that in order
to acquire control of business, the workers may other acquire share-capital
gaining thereby the rights and responsibility of share-holders or may form a co-
partnership committee having a voice in internal management of the business.
So far as India is concerned, acquiring of share capital or joining in a co-
partnership committee by workers seems difficult because of their law earnings
and backward in education. Therefore, in the context of Indian conditions, it is
proper to lay emphasis on workers participation in management.
(3) Joint consultation:
The industrial democracy necessitates joint consultation in industry
between employer~ and workers to eliminate most of the problems faced by
them. Joint consultation involves a regular and continuous relationship between
workers and management, and therefore, pre-supposes the willing acceptance
by management of the participation of workers representatives in discussing
Common problems of interest to the enterprise. While full joint consultation can
be expected only after the establishment of a collective bargaining relationship,
mutual consultation at the plant level often helps to bring the parties together
and to train them in the discussion of common problems. Thus, there is
tremendous scope of reducing industrial tension and improving productivity
through joint consultation in industry.
The system of joint consultation in India could not develop adequently
before independence mainly because of the illiteracy, migratory character and
lack of proper organisation of workers. After 1947, with the initiation of Five Year
Plans greater emphasis was laid on more production and workers interests
began to attract greater attention. The Industrial Disputes Act, 1947 provided for
establishment of 'works committees' at the plant level. Now the consultative
machinery in this country exists almost at every levels i.e. undertaking, industry,
State and National levels. At the undertaking level, there are Joint Committees
or Joint Councils. At the industry level, there are Wage Boards and Industrial
Committees to deal with specific problems of workers that arose from time to
time in particular industries. At the State Level, the Labour Advisory Board
functions, and at the national level there are Indian Labour Committee, etc.
The functions of Joint Consultative Machinery in India have been the
prevention of disputes, reduction in mutual differences and friction, and creation
of a proper work climate in industry.
4. Industrial Employment Standing Orders: This is another
constructive step towards the prevention of industrial disputes which determine
the terms and conditions of industrial employment. Every worker should have
the knowledge about the terms and conditions in which he has been employed.
He is also expected to know the rules of discipline that is supposed to be
followed by him. This problem is solved by 'Standing Orders' in which terms and
conditions for employers and employees are prescribed. The provision for
'Standing orders was for the first time, made in the Bombay Industrial Disputes
Act, 1938. Thereafter, in order to define the condition of employment and to
make them known to the workmen, the Government enacted the Industrial
Employment (Standing Orders) Act, 1946. This Act applies to every industrial
establishment wherein 100 or more workers are employed or were employed on
any day of the preceding 12 months.
5. Code of Discipline: The Indian Labour Conference at its 15th Session
in 1957 evolved a 'Code of Industrial Discipline'. The Code voluntarily binds the
employers and workers to settle all grievances and disputes by mutual
negotiations, conciliation and voluntary arbitration. The main features of this
Code include the following.
(1) Both, employers and employees should recognise the rights and
responsibilities of each other.
(2) Neither party will have recourse to coercion, intimidation, litigation and
victimisation, but will settle all disputes through the existing machinery
for the settlement of industrial disputes.
(3) A mutually agreed procedure will be set up and both the parties will
abide by it without taking arbitrary action.
6. Collective Bargaining: It is a form of joint consultation, and a process
in which the representative of the employer and of the employees meet and
attempt to negotiate a contract governing the employer-employees union
relationship. It involves discussion and negotiation between the two groups as to
the terms and conditions of employment. The main object of collective bargaining
is to protect the interests of workers through collective action and by preventing
unilateral action on the part of the employer. It promotes industrial democracy.
7. Works committees: Works committees are the most suitable agency
for prevention of industrial disputes. In most of the countries like India, works
committees are required to the established through legislation.
According to Sec. 3 of the Industrial Disputes Act 1947, in the case of an
industrial establishment in which 100 or more workmen are employed or have
been
employed on any day in the preceding 12 months, the appropriate Government
may, by general or special order require the employer to constitute a Works
Committee consisting of representatives of employers and worker engaged in
the establishment, the number of representatives of workmen not being less
than that of the employers representatives, to be chosen in consultation with
their trade union, if any.
The duties of the Works Committee are to promote measures for securing
and preserving amity and good relations between the employer and workmen
and to comment upon matters of their interest, and to endeavor to compose any
material difference of opinion in respect of such matters.
8. Workers participation in management: These councils aim at enabling
the workers to participate in management, help them to understand the
problems and difficulties of the industry concerned and bring about better
relationship between the management and labour.
9. Tripartite Bodies/Machinery: Several tripartite bodies have been
constituted at Central and State levels. The Indian Labour Conference, Standing
Labour Committees, Wage Bounds and Industrial Committees operate at the
Centre. At the State Level, State Labour Advisory Bounds have been set up. All
these bodies play important role in reaching at agreements on various labour
matters. The recommendations of these bodies are advisory in nature but carry
a great weight on employers, trade unions and the Government. All these
bodies constitute the consultative machinery for the private sector.
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