SETTLEMENT OF INDUSTRIAL DISPUTES

Collective Bargaining

Employees join unions to gain some influence over their working conditions and
wages; that influence is achieved through the process called collective bargaining.
Thus, the Collective Bargaining is a process by which a union and employer meet and
confer with respect to wages, hours, and other terms and conditions of employment.
This process of meeting and discussing working conditions is actually a highly
stylized and regulated form of economic conflict. Within the limits of conduct
spelled out by the labor Act, the parties exert pressure on each other to force
some concession or agreement. The union’s economic pressure comes from its
ability to withhold the services of its members—a strike. The employer’s
bargaining pressure comes from its potential to lock out the employees . The
Labor Act and the courts, through their interpretation and administration of the
Act, have limited the kinds of pressure either side may exert and how such
pressure may be applied. This chapter examines the collective bargaining
process and the legal limits placed on that process.

The Duty to Bargain

An employer is required to recognize a union as the exclusive bargaining

representative of its employees when a majority of those employees support the
union. The union may demonstrate its majority support either through signed
authorization or by winning a representation election. Once aware of the
union’s majority support, the employer must recognize and bargain with the
union according to the process spelled out in the existing law.

Although the Labor Act imposes an obligation to bargain collectively upon

both employer and union, it does not control the results of the bargaining
process. The Act thus reflects an ambivalence regarding the duty to bargain in
good faith. The parties, to promote industrial relations harmony, are required to
come together and negotiate, but in deference to the principle of right of
collective bargain, they are not required to reach an agreement. This tension
between the goal of promoting industrial peace and the principle of freedom of
collective bargain underlies the duty to bargain. The accommodation of these
conflicting ideas makes the area a difficult and interesting aspect of labor
relations law.

If the parties are required to negotiate, yet are not required to reach an
agreement or even to make a concession, how can one determine whether
either side is bargaining in good faith? Labor requires that the parties meet at
reasonable times to discuss wages, hours, and terms and conditions of
employment. It also requires that any agreement reached must be put in writing
if either party so requests. Is either side free to insist upon its proposal as a
“take-it-or-leave-it” proposition? Can either side refuse to make any proposal?
These questions must be addressed in determining what constitutes bargaining
in good faith.

Bargaining in Good Faith

Section 116 and 117 of Labor Act requires that the employer bargain with a
union that is the representative of its employees.
Labor Act says that a union that has the support of a majority of employees in a
bargaining unit becomes the exclusive bargaining representative of all
employees in the unit. That law also states that the employer may address the
grievances of individual employees as long as it is done in a manner consistent
with the collective agreement and the union has been given an opportunity to
be present at such adjustment. That provision raises the question of how far the
employer can go in dealing with individuals rather than the union. When the
union, which won a representation election, requested bargaining over working
conditions, the company refused. In some case in the US, the employer argued
that the individual contracts covered those issues and no bargaining could take
place until those individual contracts had expired. The Supreme Court held that
the individual contracts must give way to allow the negotiation of a collective
agreement. Once the union is certified as the exclusive bargaining
representative of the employees, the employer cannot deal with the individual
employees in a manner inconsistent with the union’s status as exclusive
representative. To allow individual contracts of employment to prevent
collective bargaining would undercut the union’s position.

Dispute Settlement Mechanism Under Labor Act of Nepal

New Labor Act encourage the settlement of dispute between the Employer and
Employee. While working and managing the industry, the employer and
employee has to work together as well as side by side.
While making deicision by management or setting policies, the differencs
between labor an employer may arise. Some time labor want to increase their
salary, benefit and facilities which will have impact on expenditure of the
enterprises. Such issue also bring difference between these two party.

The labor law focuses more on how to resolved the issue raise and dispute arises
between these two parties?

The Labor Act 2074 has divided the labor issue in two categories
a. Individual Disputes
b. Collective Disputes

Individual claims relates with the issue of one work's right and entitlement
whereas collective disputes relates with the issue and entitlement of more than
one labor or worker.
Thus if a labor has his individual concern or claim, he must resort resolving them
by following the procedure as laid down in Chapter 18 of the Act whereas the
collective issue or dispute must be resolved by following the procedure as
laiddwon in Chapter 19 of the Act

Provisions Relating to Settlement of Individual Dispute

1. Submission of individual claim

Each worker who has any individual claim must submit his claim in the form
of an application in writing with management or employer pursuant to Section
116 of the Act.

Upon receiving such claim, the employer has to give a written acknowledgment
of the claim received from such individual labor.
After receiving such claim, it shall be the duty of the employer to resolve such
issue amicably with 15 days of receiving such claim. The employer may try to
resolve such claim with individual consultation with the concerned person. Even
though the time of resolving such claim is set for 15 days, such duration my be
extended through mutual consent between the parties.

Application may be filed in the Office

Upon making application to employer for individual claim, if the employer fails to
take any action on such claim, what recourse a worker has against the employer?
Section 114 of the Act has further provision in this regards.
According to section 114, the concerned worker may file an application to Labor
office.
As provided by this section,
Any concerned party, for the settlement of dispute under section 113 through
mediation, may submit an application to the office in the following situations:
a) if the employer does not give any notice for consultation within 7 days
from the date of submission of the application
b) if an agreement could not be reached with 15 of the submission after the
consultation held After receipt of the application pursuant to sub section (1),
the office shall notify the date and time to the employer and the concerned
worker for consultation.
Upon receiving such request, the Labor office shall have to settle the dispute
relating to the claim within 21 days from the date of the receipt of the application
by holding consultation as required between the employer and the concerned
worker. This provision requires the Labor office to completed process of settling
the claim with 21 days. However, with taking consent from both party, the Labor
Office may extended time that is necessary to resolve such issue.
After consultation and effort by labor office, if an agreement is reached between
the employer and worker ,such dispute relating to the claim shall be deemed to
have been settled.
The agreement reached through mediation, shall be binding to both the parties.

Decision of the Office

Even though Labor Office wish to resolve the issue amicably, but some time such
dispute does not resolve as parties will have different view on such matter. Due
to difference on their approach, the dispute remain unsettle or they do not want
to come to consensus. What will happen then ?
The Act has provision in regards. Section 15 allows the Labor Office to make a
decision in this regards
Section 115 says
Where the dispute does not get settled between , the office shall give decision
within 15 days on the basis of evidences.
The decision of the Office can be appealed in Labor court if any one of the parties
does not agree with the decision of the labor office.

Provisions Relating to Resolution of Collective Dispute

Collective bargain is one of the important right and weapan of the worker
through which they will be able to bargain with effectively and arm-length
position. As we know the employer are resourceful and well contected. Their
influence and power is much superior than an individual worker. In order to
protect their interest and making their demand agreed by employer, each
individual labor needs to be organized and united. This is only possible if they
have right to form trade union and through such union, they could put forward
their demand and negotiate with the employer.
Collective bargaining is the process by which the labor and employee will meet
and discuss about working conditions and negotiate to enhance their economic
and resolve their conflict amicably.

Employees join unions to gain some influence over their working conditions and
wages; that influence is achieved through the process called collective bargaining.
Thus, the Collective Bargaining is a process by which a union and employer meet and
confer with respect to wages, hours, and other terms and conditions of employment.
In collective bargain process, the issue of individual worker will be the subject
matter of bargain, rather in this process, the trade union will put forward the
demand which is relevant and concerned to all employee within an entity.
Thus Labor Act of Nepal has provision in Chapter 19 regarding resolution of
collective disputes.

Submission of collective claims

Section 116 prescribed the process for submitting the claim by the Union. It says
that any enterprise employing 10 or more 10 workers shall have to form a
Collective Bargaining Committee to pursue their claim with the enterprises.

If there is a elected trade union, then it shall form a team of representatives for
negotiation with the employer on behalf of the elected authorized trade union of
the enterprise.
If there is not elected trade union in a enterprises, a team of representatives
nominated through a mutual agreement of all the unions in the enterprise shall
have to be formed.
If a representative of the union could not be formed, , a team of representatives
supported with the signatures of more than 60% of the workers working in the
enterprise shall have to form.
Such collective bargaining committee will represent whole work in collective
bargainin process. Such Collective Bargaining Committee shall have authority to
submit collective claims/demands in writing to the employer on issues relating
to the interest and right of the workers.
One question may arises, will such representive be allowed to submit demand
with employer in any issue or are there any restriction on submitting such
demand
Section 116 has specificed certain area or subject in which submitting of
collective demand is prohibited. Such matter Union can not submit the collective
demand are as followsM

a) which is contrary to the Constitution of Nepal;

b) which may adversely affect the interest of any other person because it is based
on groundless allegation without any proof;
c) any matter which may affect the personal behaviour of any employer or
worker;
d) matter which is not related to the enterprise;
e) where the collective agreement has been entered and the period specified in
the Act for such agreement has not expired yet;
f) relating to contribution rate and benefits specified for the social security
schemes;

Collective Bargaining Committtee:

Labor Act specifically emphasis in forming a representative committee in order

to facilitate the bargaining process. So the law prescribe that , a Collective
Bargaining Committee may have a maximum of three to eleven members. The
Collective Bargaining Committee formed shall have the power to submit
collective claims or demands, enter into agreement, file a case against any
person or defend in such case.

Hold consultation on collective claims

The Labor Act sees consultation as first step of resolving collective disputes. The
consultation help agree on differences between the parties amicably.

On submission of collective claims or demands to enterprises, the concerned

employer must give a notice in writing to the Collective Bargaining Committee
within seven days from the date of submission of such claims or demands stating
the place and time for the consultation.
Once the committed received such notice for meeting from employer, the
members of the Collective Bargaining Committee shall have to be present for
consultation at the place and time stated in the notice. The dispute relating to the
collective claims or demands shall end if any agreement, between the concerned
two parties, is achieved or reached. It means that such committee does not have
permanent existence. The forming of such committee is to put forward the
collective demand in particular time and period.
The agreement signed after negotiation between parties shall be binding for both
the employer and workers.

Settlement through mediation

If a dispute between employer and employee is not resovle through the
consulation as mentioned above, either the employer or the employee may go
for other option to resolve such issue. That other option is called the mediation.

The Labor Act prescribe that in the following situations, any concerned party
may give an application to the Office for the settlement of collective bargaining
claims or demands through mediation:

a) where the employer fails to give any notice to the Collective Bargaining
Committee for consultation within 7 days of submission of their claim.
b) where an agreement could not be reached in the consultation within 21
days from the date of submission of claims or demands.

On receipt of the application for mediation, the office shall call both the
concerned parties and resolve the dispute through mediation.
The proceeding of mediation have to be completed within 30 days from the date
of application for mediation.
Provided, however that, it shall not be a constraint to extend the time through
consent of the parties in case there is continuity in the negotiation.

The dispute relating to the collective claims or demands shall come into an end if
concerned two parties reached into an agreement and is achieved in the
negotiation held in presence of the office. Such agreementshall be binding both
to employer and employee..

Settlement of dispute through arbitration

Labor Act 2074 is mover focused and determined in settling labor dispute
amicably in order to maintain industrial relation in harmony and trust. The
purpose of maintaining industrial relation can be achieved if resolving of dispute
could be obtain by amicable solution. In order to resolve collective dispute
amicably, the Act has resorted various option one of them is arbitration process.

Where the dispute is not resolved through mediation, such dispute relating to
the collective claims or demands shall be settled through arbitration. In order to
pursue arbitration process to resolved the collective claims or demand, both
parties must agree in advance. The arbitration process can be initiated only upon
mutual consensus between the parties.

The arbitration process shall be initiated in following situation only:

i) In some industries, the initiation of arbitration process to resolve a
collective dispute is a must. The Act says that any industry providing
essential service must resolve their dispute by arbitration.

ii) Similarly, an enterprise located inside the special economic zone also
must resort to resolve their dispute through the arbitration process.

iii) In certain situation where the strike is prohibited due to imposition of

emergency under constitution, the parties must opt arbitration to resolve
their dispute or demand.

iv) Where the Government has a ground to believe that a financial crisis may
take place in the country as a result of ongoing or possible strike or
lockout or believes that the dispute needs to be settled by arbitration, the
Government, irrespective of the state of the collective dispute, may give
an order for the settlement of the dispute through arbitration.

If government so decide to resolve such dispute through arbitration, then it shall

form an arbitration panel ensuring representations from workers, employers
and the Government of Nepal.
Expenses for the formation of arbitration panel will be borne by the Government.

Procedure for arbitration

If a person or entity want to settle the dispute through arbitration, it need to

submit claims in writing to the arbitrator. Upon receiving of such claims, the
arbitrator shall send a copy of such claims to the other party and provide an
opportunity to such party to file a written statement in response to that.

i) When initiating the arbitration proceeding, the arbitrator shall have

choice to consult or take an advice from an expert.
ii) Arbitration hearing need to be conducted by the arbitrator on the
specified date, time and place and the arbitration proceeding is not going
 be stopped simply on the ground that the other party has failed to be
present or has not submitted a written statement.
iii) After initiation of arbitration proceedings, the arbitrator shall have to
deliver the decision within 30 days from the date of ending of the hearing
iv) The arbitrator shall have power as that of any court under the prevailing
laws to take evidence into record, examine witnesses, inspect sites and
other related work in connection with the proceeding.

Formation of labour arbitration tribunal

The Government of Nepal, for the purpose of settling collective dispute through
mediation and arbitration, may form an independent labour arbitration tribunal.
If a labour arbitration tribunal is formed, all proceedings relating to mediation
and arbitration under this Chapter 19 of the Act shall be conducted through the
tribunal as formed under the Act.

Right to strike for settlement of collective dispute

The unique provision of Labor Act provide right to strike in certain situation
under the condition as prescribed in the Act. This is one fo the effective and
strong weapon of worker to forced the employer to agree to certain demand put
forward by the union. The right to strike is highly regulated by the Act as well.
While resorting to strike for settlement of dispute, the collective bargain
committee must comply with the certain provision of the Act/

The Collective Bargaining Committee may, under following circumstance,

organize a strike for the settlement of collective dispute:
a) if no condition exists for compulsory arbitration
b) if an arbitrator does not perform the functions of arbitration;
c) if an arbitration panel could not be formed within 21 days from
the date of application in the Ministry or decision is given
against the need for arbitration;
d) if decision is not given by arbitrators within the prescribed
time;
 e) if the employer refuses to enforce the decision of the arbitrators
or challenges such decision on legal grounds;
f) except where compulsory arbitration is to be adopted, if any
party dissents with the decision given by the arbitrator

In order to organize a strike, a written notice along with claims or demands and
the date from which the strike is to commence must be submitted to the
employer 30 days before organizing such strike and such notice also shall have
to be given to the office of the local administration as well as concerned labour
accordingly.

Withholding of Strike

Even in situations where the notice on strike is given or the strike is commenced
as per the law, in crtain situation the collective bargain committee shall be under
obligation to withheld strike immediately and take part in the arbitration
process, if the Ministry issues an order to settle the dispute through arbitration

Decision of arbitrators and collective bargaining shall be binding

If any collective dispute is settled by compulsory arbitration, the decision so

given by the arbitrator shall be binding to the concerned parties.

Where any party dissatisfied with the decision given by the arbitrators on the
dispute referred by the Ministry through an order pursuant to section 119(2)
fails to file a note of dissent in writing to the arbitrators within 5 working days
from the date of such decision, it shall be deemed to be binding automatically to
the concerned party after such specified period comes to an end.

Collective agreement or decision of arbitrators need to be registered in the office

for the purpose of record and enforcement.
The validity period of collective agreement shall be two years from the date of
effectiveness if specified in the agreement or it shall be from the date of signing
of the agreement if the date of effectiveness is not mentioned in the agreement or
from the date of decision of arbitrator if such decision has been made and it shall
have the validity of law.

Unless amended or annulled by another collective agreement or decision of the

arbitrators, the provisions in the existing collective agreement or the decision of
the arbitrators shall continue to be effective.

Right to lockouts

Where a strike is organized without giving a notice pursuant to this Act or

continues the strike or collective dispute could not be settled through the
procedure prescribed in the Act, the management may, by giving justifiable
grounds, lockout the enterprise after acquiring an approval from the
Department.

Before carrying out lockout pursuant to sub section (1), the management shall
issue a notice of at least seven days along with a date for lockout to the workers
in case they do not end the strike.

Where there is a possibility of causing loss to the enterprise because of gherao,

physical unrest or any such type of act by the workers during the period of
strike, the management may lockout the enterprise. The notice along with
justifiable reasons regarding such lockout shall be given to the Office or
Department or Office of the Local Administration within 3 days.

On receipt of the notice pursuant to sub section (3), the Office of the Local
Administration shall immediately make necessary security arrangement in the
workplace.
The Department may at any time declare the lock-out of an enterprise illegal in
case it appears unjustifiable or it is likely to disturb the peace and security of the
country or it is likely to cause adverse affect on the economy of the country.

However, the lockout is prohibited in enterprises providing essential services.

Provisions relating to picketing and mass assembly

With the objective of exerting pressure to fulfil the claims or demands when the
strike or lockout is continuing, the workers may picket or assemble at the gate of
the workplace or enterprise peacefully.In situations other than strike or lockout,
workers may picket or assemble before or after the working hours or during the
rest time without disturbing the work in the workplace or enterprise.

During picketing or assembling pursuant to sub section (1), the workers shall
not be permitted to do any act of prohibiting others from entering or leaving the
workplace or enterprise or causing damage to the workplace.

Employment contract will not be violated

Act of organizing strike or lockout or picketing or filing a complaint in

accordance with the law by any worker shall not be considered as violation of his
/her employment contract and during the period, the employment contract shall
continue to be effective

Remuneration for strike and lockout period

Any worker shall not be entitled to receive remuneration for the period of strike
if such strike is organized in contravention to the prevailing laws.

Workers shall be entitled to receive full remuneration for the period of lockout if
such lockout is organized in contravention to the prevailing laws by the
employer.
Except otherwise agreed in relation to the payment of remuneration in the
collective agreement, workers shall receive half remuneration for the period of
strike or lockout organized in compliance with the procedure prescribed in this
Act.

If any dispute in relation to the legality of strike or lockout arises, the

Department, after conducting necessary investigation, shall settle the dispute
within 35 days.

Prohibition on filing of case against loss

Where any financial loss is caused to any employer or worker because of strike
or picketing or lockout organised lawfully pursuant to this Act, filing of a case in
any court against the workers, Collective Bargaining Committee or trade union
or employer involved in such strike or picketing or lockout in relation to the loss
so caused is prohibited.

A legal proceeding under the prevailing law against any person or group
involved in the destruction of the workplace, in the act of arson or destruction of
property in any other way or in the act of causing physical damage may be
initiated and an amount equivalent to the loss so caused may be recovered.

Collective bargaining or agreement must be achieved in good faith

Trade union or Collective Bargaining Committee or employer shall always, when

getting engaging in collective bargaining or entering into collective agreement,
act in good faith.