LFGHR

UNIT-4
The Industrial Dispute Act-1947
The objective of the Industrial Disputes Act 1947 is to secure industrial peace and harmony by
providing machinery and procedure for the investigation and settlement of industrial disputes by
negotiations. This act deals with the retrenchment process of the employees, procedure for layoff,
procedure and rules for strikes and lockouts of the company.
What is an industrial dispute?
According to Section 2A: Where any employer discharges, dismisses, retrenches  or otherwise
terminates the services of an individual workman, any dispute or difference between that workman
and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or
termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor
any union of workmen is a party to the dispute.

Industrial Disputes have adverse effects on industrial production, efficiency, costs, quality, human
satisfaction, discipline, technological and economic progress and finally on the welfare of the
society. A discontent labour force, nursing in its heart mute grievances and resentments, cannot be
efficient and will not possess a high degree of industrial morale. Hence, the Industrial Dispute Act of
1947, was passed as a preventive and curative measure.

SCOPE AND OBJECT :

The Industrial Dispute Act of 1947, came into force on the first day of April, 1947. Its aim is to
protect the workmen against victimization by the employers and to ensure social justice to both
employers and employees. The unique object of the Act is to promote collective bargaining and to
maintain a peaceful atmosphere in industries by avoiding illegal strikes and lock outs. The Act also
provides for regulation of lay off and retrenchment. The objective of the Industrial Disputes Act is to
secure industrial peace and harmony by providing machinery and procedure for the investigation and
settlement of industrial disputes by negotiations.
DEFINITIONS :
Appropriate Government [Sec. 2(a)]: Appropriate Government means the Central Government in
relation to any industrial dispute concerning any industry carried on by or under the authority of the
Central Government, any industry carried on by a Railway Company, any controlled industry
specified by the Central Government, The Unit Trust of India. Corporations under the Central
Statutes, Banking company, Insurance company. Mines. Oil field, Cantonment board, Major ports,
etc. In relation to any other industrial dispute, the appropriate Government is the State Government.

Award [Sec 2 (b)] means an interim or a final determination of any industrial dispute or of any
question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and
includes an arbitration award made under section 10A;

Industry [Sec. 2(j)]: Industry means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, service, employment, handicraft or industrial occupation or
avocation of workmen.

Industrial Dispute [Sec. 2(k)]: 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.
Settlement [Sec. 2(p)]: Settlement means a settlement arrived at in the course of conciliation
proceeding and includes a written agreement between an employer and a workman arrived at
otherwise than in the course of conciliation proceeding where such agreement has been signed by the
parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer
authorised by the Appropriate Government and the Conciliation Officer.
Wages [Sec. 2(rr)]: Wages mean all remuneration capable of being expressed in terms of money,
which would, if the terms of employment, express or implied were fulfilled, be payable to a
workman in respect of his employment or of the work done in such an employment and includes:
(i) such allowances (including dearness allowance) as the workman is for the time being entitled to;

(ii) the value of any house accommodation, or of supply of light, water, medical attendance or other
amenity or of any service or of any concessional supply of food grains or other articles;

(iii) Any traveling concession. But the following are excluded:

(a) Any bonus.
(b) Any contribution paid or payable to any pension fund or provident fund, or for the benefit of the
workman under any law for the time being in force.
(c) Any gratuity payable on the termination of his service.

2(n) "Public utility service" means -

(i) any railway service or any transport service for the carriage of passengers or goods by air;
(ia) any service in, or in connection with the working of, any major port or dock;
(ii) any section of an industrial establishment, on the working of which the safety of the
establishment or the workmen employed therein depends;
(iii) any postal, telegraph or telephone service;
(iv) any industry which supplies power, light or water to the public;
(v) any system of public conservancy or sanitation;
(vi) any industry specified in the First Schedule which the appropriate Government may, if satisfied
that public emergency or public interest so requires, by notification in the Official Gazette, declare to
be a public utility service for the purposes of this Act, for such period as may be specified in the
notification

DISPUTE SETTLEMENT AUTHORITIES UNDER THE ACT :

The I.D. Act provides elaborate and effective machinery for the investigation and amicable
settlement of industrial disputes by setting up the various authorities. These are:

1. Works Committee;
2. Conciliation Officer;
3. Conciliation Board;
4. Court of Enquiry;
5. Labour Court;
6. Industrial Tribunal;
7. National Tribunal;
8. Arbitrators;
9. Grievances Settlement Authority.

COURT OF ENQUIRY [Sec. 6]: as occasion arises, Government can initiate a Court of Inquiry.
This Court of Inquiry was to find out matters connected with or relevant to an industrial dispute.
Where a Court consists of two or more members, one of them shall be appointed as the chairman.

A Court of Inquiry looks into only matters which are referred to it by Government and submits its
report to the Government ordinarily within certain period from the date of reference.

ADJUDICATION
Labour Court [Sec. 7]: The appropriate Government is empowered to constitute one or more
Labour Courts. Its function is the adjudication of industrial disputes relating to any matter specified
in the Second Schedule.
A Labour Court consists of one person only. A person is qualified to be appointed as presiding
officer of a Labour Court, if:

(a) he is, or has been a judge of a High Court, or

(b) he has been a District judge or an Additional District judge for at least three years, or

(c) he has held the office of the chairman or any other member of the Labour Appellate Tribunal or
of any Tribunal for at least two years, or

(d) he has held any judicial office in India for not less than seven years, or

(e) he has been the presiding officer of a Labour Court constituted under any Provincial Act or State
Act for at least five years.

(f) he is or has been a Deputy Chief Labour Commissioner (Central) or Joint Commissioner of the
State Labour Department , having a degree in law and at least 7 years’ experience in the labour
department after having acquired degree in law including three years of experience as Conciliation
Officer:

(g) as the case may be, before being appointed as the presiding officer; or (g) he is an officer of
Indian Legal Service in Grade III with three years’ experience in the grade.”

ARBITRATION

Voluntary reference of disputes to arbitration. [sec. 10 (a)]: an arbitrator is appointed by the

Government. Whether the dispute is before Labour Court, or Industrial Tribunal or National
Tribunal, the parties can go to arbitration by written agreement. The arbitrators conduct the
investigation in to the dispute matters and give arbitration award (final decision or settlement or
decree) as for making reference of an industrial dispute. If an industrial dispute exists or is
apprehended and the employer and the workman agree to refer the dispute to an arbitration, they may
refer the dispute to an arbitration. But such reference shall be made before the dispute has been
referred under Sec. 19 to a Labour Court or Tribunal or National Tribunal by a written agreement.
The arbitrator may be appointed singly or more than one in number. The arbitrator or arbitrators shall
investigate the dispute and submit to the appropriate Government the arbitration award signed by the
arbitrator or all the arbitrators, as the case may be.

Grievance procedure :

Grievance Settlement Machinery [Sec. 9 (c)]: This Section is incorporated as a new chapter II B of

the Act. As per this Section, the employer in relation to every industrial establishment in which fifty
or more workmen are employed or have been employed on any day in the preceding twelve months,
shall provide for, in accordance with the rules made in that behalf under this Act, a Grievances
Settlement Authority.

1. every industrial establishment employing 20 or more workmen shall have one or more
Grievance Redressal Committee for the resolution of disputes arising out of individual
grievances.
2. The Grievance Redressal Committee shall consist of equal number of members from the
employer and the workmen.
3. The chairperson of the Grievance Redressal Committee shall be selected from the employer
and from among the workmen alternatively on rotation basis every year.
4. The total number of members of the Grievance Redressal Committee shall not exceed more
than 6:
o Provided that there shall be, as far as practicable, one woman member if the
Grievance Redressal Committee has two members and in case the number of
 members is more than two, the number of women members may be increased
proportionately.
5. The Grievance Redressal Committee may complete its proceedings within forty-five days on
receipt of a written application by or on behalf of the aggrieved party.
6. The workman who is aggrieved of the decision of the Grievance Redressal Committee may
prefer an appeal to the employer against the decision of Grievance Redressal Committee and
the employer shall, within one month from the date of receipt of such appeal, dispose off the
same and send a copy of his decision to the workman concerned.
7. Nothing contained in this section shall apply to the workmen for whom there is an established
Grievance Redressal Mechanism in the establishment concerned.e

AWARDS (decree) [Secs 16, 17, 17A]

 The award of a Labour Court or Tribunal or National Tribunal shall be in writing and shall be
signed by its presiding officer. [Sec 16(2)].

 Every arbitration award and every award of a Labour Court, Tribunal or National Tribunal
shall, within a period of 30 days from the date of its receipt by the appropriate Government,
be published in such manner as the appropriate Government thinks fit. [Sec 17(1)].

 The award published shall be final and shall not be called in question by any Court in any
manner whatsoever. [Sec 17 (2)].

 An award (including an arbitration award) shall become enforceable on the expiry of thirty
days from the date of its publication [Sec 17A (1)].

 where the award has been given by a National Tribunal, that it will be inexpedient (not
advisable or not practicable) on public grounds affecting national economy or social justice to
give effect to the whole or any part of the award, the appropriate Government, or as the case
may be, the Central Government may, by notification in the Official Gazette, declare that the
award shall not become enforceable on the expiry of the said period of thirty days. [Sec 17A
(1) (b)].

 The appropriate Government or the Central Government may, within 90 days from the date
of publication of the award under section 17, make an order rejecting or modifying the award,
to legislature of sate or parliament [Sec 17A (2) ]. And if no pursuance has made, the order
become enforceable after the expiry of 90 days. [Sec 17A (3)].

 Any award as rejected or modified laid before legislature of state or parliament, shall become
enforceable on the expiry of 15 days from the date on which is so laid. [Sec 17A (3)].

 Award declared becomes enforceable on the specified date if mentioned, if no date mentioned
award becomes enforceable according to above rules.

Section 17B Payment of full wages to workman pending proceedings in higher courts.-

Where in any case, a Labour Court, Tribunal or National Tribunal by its award directs reinstatement
of any workman and the employer prefers any proceedings against such award in a High Court or the
Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of
such proceedings in the High Court or the Supreme Court, full wages last drawn by him, inclusive of
any maintenance allowance admissible to him under any rule if the workman had not been employed
in any establishment during such period and an affidavit by such workman had been filed to that
effect in such Court:

Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that such
workman had been employed and had been receiving adequate remuneration during any such period
or part thereof, the Court shall order that no wages shall be payable under this section for such period
or part, as the case may be.]

PERIOD OF OPERATION OF SETTLEMENTS AND AWARDS. [Sec 19]

 A settlement shall come into operation on such date as is agreed upon by the parties to the
dispute, and if no date is agreed upon, on the date on which the memorandum of the
settlement is signed by the parties to the dispute.

 An award shall remain in operation for a period of one year from the date on which the award
becomes enforceable under section 17A: Provided that the appropriate Government may
reduce the said period and fix such period as it thinks fit :

 the appropriate Government may, before the expiry of the said period, extend the period of
operation by any period not exceeding one year at a time as it thinks fit, so however, that the
total period of operation of any award does not exceed three years from the date on which it
came into operation.

Eg: if the court orders the employer to reinstate the workman in case of unreasonable removal or
discharge , the employer is bind over for one year or in some cases, the period specified by the
courts.

Trade Union Act – 1926

Introduction : Before the emergence of industrialization on a massive scale, there were personal
contracts between the workers and employers. Therefore, no requirement for the evolution of any
machinery governing the relationship between workers and employers arose until then. But after the
establishment of modern factory system this relationship lost its significance due to large scale
industrialization which enticed employers to reduce the cost of production in order to withstand the
cut-throat competition in the market and maximize their profit by using technologically more
sophisticated means of production which in turn resulted in the rise of a new class of workers who
were completely dependant on the wages for their survival which changed the existing employer and
employee relationship in which the employees were exploited by their employers. The conflict of
interest between workers and employers and the distress of workers resulted in the growth of various
trade unions.
A trade union is an organized group of workers who strive to help the workers in the issues relating
to the fairness of pay, good working environment, hours of work and other benefits that they should
be entitled to instead of their labour. They act as a link between the management and workers. In
spite of being newly originated institutions, they have turned into a powerful force because of their
direct influence on the social and economic lives of the workers. To control and manage the working
of these trade unions different legislations regulating the same required. In India Trade Unions Act of
1926 is a principal Act for controlling and managing the working of trade unions. The present article
aims at explaining and bringing forth various aspects of the Act.

Development of Trade Union Law in India :

Labour legislation in India has a key impact on the development of industrial relations. The
establishment of social justice has been the principle of all the labour legislation in India. The
establishment of the International Labour Organization to uplift the condition of labour all over the
world gave further impetus to the need for well-framed labour legislation in the country. Several
other internal factors like the Swaraj movement of 1921-24, the royal commission on labour also
paved the way for various labour laws and also encouraged the framers of the constitution to
incorporate such laws in the constitution which will benefit the labourers. Under the constitution,
labour is the subject of the concurrent list and both centre and state can make laws related to the
subject. The different legislation on labour in the country are as follows:

 Apprentices Act, 1961: The object of the Act was the promotion of new manpower at
skills and improvement and refinement of old skills through practical and theoretical
training.
 Contract Labour (Regulation and Abolition) Act, 1970: The object of the Act was the
regulation of employment of contract labour along with its abolition in certain
circumstances.
 Employees’ provident funds and misc. Provision Act, 1952: The Act regulated the
payment of wages to the employees and also guaranteed them social security.
 Factories Act, 1948: The Act aimed at ensuring the health of the workers who were
engaged in certain specified employments.
 Minimum wages Act, 1948: The Act aimed at fixing minimum rates of wages in certain
employments.
 Trade Union Act, 1926: The Act provided for registration of trade unions and defined the
laws relating to registered trade unions.

Indian Trade Union (Amendment) Act, 1947 :

The labours, especially the ones who work in the unorganized sectors lack the capacity to bargain
and this becomes a major reason for their exploitation. The Right of collective bargaining is provided
only to those trade unions which are registered but in India, there are legislations regarding the
recognition of trade unions but there is no single legislation on registration of trade unions. Realizing
the need of having central legislation for registration of trade unions, the parliament passed the
Indian Trade Union (Amendment) Act in the year 1947. The said Act sought to introduce Chapter
III-A into the Trade Union Act, 1926, which enumerated the conditions required for mandatory
recognition of any trade union. however, this Act was never brought to force Therefore, the
mandatory recognition of trade unions is not present under any law in force in India.

Collective Bargaining and Trade Disputes :

When an organized body negotiates with the employer and fixes the terms of employment by means
of bargaining is known as Collective Bargaining. The essential element of Collective Bargaining is
that it is between interested parties and not from outside parties.
International labour organization in its manual in the year 1960 defined the meaning of collective
bargaining as:
“Negotiations about working conditions and terms of employment between an employer, a group of
employees or one or more employers organization on the other, with a view to reaching an
agreement.” the terms of agreement are used to ascertain the rights and obligations by which each
party is bound towards one another during the course of employment.
Section 8 of the Industrial Relations Act 1990 define trade dispute, according to the Act, industrial
dispute refers to any dispute which arises between the employers and the workers and it is usually in
connection with any one of the following:
 employment or non-employment, 
 the terms or conditions of the employment,
 Something which affects the employment of any person.

Essential conditions for collective bargaining :

 Favourable political and social climate: all the collective bargaining which took place in
the past bears the testimony to the fact that favourable political and social climate is the
prerequisite of collective bargaining. The reason for the same is quite obvious as almost
all the trade unions in India subscribe to one or the other political view and therefore,
trade unions usually favour the employees not on the basis of the merit of the issues they
raise but on the basis of their political considerations.
 Trade union: in any democratic country like India which recognizes the right to speech as
a fundamental right, the right to form a trade union is a direct consequence of it and so all
the employers should recognize the trade unions and its representative.
 Problem-solving attitude: it means that both the parties while negotiating a bringing up
their relative concerns should adopt a problem-solving attitude and should aim at
amicably solving the problem without trying to put the opposite party into a loss.
 Continuous dialogue: the dialogue between the employer and the workers may
sometimes end up without any fruitful negotiation or there may arise a bargaining
impasse, in such a case the free flow of dialogue between the employer and employee
should not be stopped and sometimes keeping aside the bone of contention helps bring up
a better solution.
Purposes of collective bargaining :
 To provide an opportunity for the workers to voice their complaints and grievances
regarding the working conditions.
 To pave the way for the employer and workers to reach an amicable solution peacefully
without having any ill will towards one another.
 To sort out all the disputes and conflicts between the employer and worker.
 To prevent any dispute which is likely to take place in the future by mutually agreeing on
the contract.
  To foster a peaceful and stable relationship between the workers and the organization.
Position in India :
In India, collective bargaining remained limited in its application and has been restricted by different
labour legislations in India. Different labour laws made different provisions with respect to the
working conditions of the workers. Some of the labour legislation in India are as follows:

 The Factories Act, 1948 made provisions for the betterment of the workers in respect of
their health, safety, welfare and other aspects while the workers are employed in factory
work. However, all the provisions of the Act were not applicable in all the factories, for
example, the provision for restroom will be applicable only if there are 150 or more
workers. 
 Employees Provident and Miscellaneous Provisions Act, Maternity Benefit Act and
Payment of Gratuity Act.
 Industrial Disputes Act, 1947, lays down the procedures by which the settlement of
industrial disputes has to be done. Its procedural aspects are applicable to all enterprises
for the settlement of industrial disputes.

On a closer view of the labour laws in India indicate that mostly the workers who are employed in
the organized sectors of the economy are protected under the various labour legislations. According
to the Fifth Economic Census of 1999, it was revealed that more than 97 per cent of the enterprises
employ less than ten workers, and most of these employ less than five workers. This clearly shows
that labour laws apply to less than 3 per cent of enterprises.
Further, the acceleration of in formalization of the workforce with the onset of liberalization has
changed the formal sector also in terms of shifting the jobs from formal to the informal sector and
along with it in formalization of jobs. Today, in the formal sector, a number of formal workers are
about 33.7 million and informal workers about 28.9 million (2004-05). Increase in the employment
(in whatever amount) in the formal sector has largely been informal in nature. Which in turn has
been reflected on the trade bargaining?

Agreements for collective bargaining :

In India, Following types of agreements are prevalent for collective bargaining:

 Bipartite agreement: These agreements usually result into voluntary negotiations between
the employer and employees and are usually binding per se.
 Settlements: Settlements usually arise out of the conciliation process and they are usually
tripartite in nature as they involve three parties which are employer, employee and
conciliation officer.
 Consent awards: When the parties reach an agreement while the dispute between them is
pending before the adjudicatory body. Such agreements are incorporated in authority’s
award and are binding on the parties under the dispute.
Conclusion :
Trade Union Act of 1926 is welfare legislation that has been enacted to protect the workers in the
organized and unorganized sector from inhuman treatment and protection of their human rights. As
such the legislation contains the provisions for registration, regulation, benefits, and protection for
trade unions, thereby, benefitting the workers. 
Trade unions are important organs for the democratic development of any country as it puts up the
needs and demands of the workers by collective bargaining. Collective bargaining is an important
aspect of the employer-employee relationship. However, collective bargaining is not provided to all
the trade unions but is only provided to those trade unions which are recognized. Today, the growth
of media has resulted in the empowerment of trade unions and they have turned into influential
pressure groups not only in industrial sectors but also in agricultural and other allied sectors.

Industrial Employment ( Standing Orders ) Act - 1946

Introduction :

The concept of ‘Standing Orders’ is one of the recent growth in relation to Indian labour-
management. Prior to 1946, there existed chaotic conditions of employment, wherein the workmen
were engaged on an individual basis with uncertain and vague terms of employment. The Act was
enacted as a simple measure to remedy this situation – by bringing about uniformity in the terms of
employment in industrial establishments so as to minimize industrial conflicts.
The Preamble of the Act imposes a compulsion upon the employers, “to define with sufficient
precision the conditions of employment” and make the same known to the workmen.

Application of the Act :

Section 1 of the Act provides that the Act shall apply to the industrial establishments (within India)
with an engagement of more than a hundred workmen at present or as noted on any day in the
preceding year unless provided by the appropriate Government for application to any such industrial
establishment – with less than a hundred employees.

Exclusion of certain industrial establishments :

Certain industrial establishments have been excluded from its application via various statutory
provisions enlisted in this Act:
 Section 1(4) excludes those establishments to which Chapter VII of the BIRA (Bombay
Industrial Relation Act – 1946) applies unless controlled by the Central Government.
 Section 13-B excludes those establishments whose workmen are subject to the
Fundamental & Supplementary Rules; various Civil Services Rules; or any other rules
provided by the ‘appropriate Government’.
 The provisions of Sections 10 and 12-A(1) do not apply to the establishments under the
control of the States of Gujarat/Maharashtra.
Special features of the Act :
The Act envisages three important features, they are:
 Concept of Standing Orders;
 Adjudicatory powers of the Certifying Officer; and
 CSOs (Certified Standing Orders) to have the force of law.

Standing orders :
Section 2(g) of the Act states that “standing orders” are the rules relating to matters set out in the
Schedule, i.e. with reference to:
 The classification of workmen;
 Manner of intimation to workers about work and wage-related details;
 Attendance, and conditions of granting leaves, etc.;
 Rights & liabilities of the employer/ workmen in certain circumstances; 
 Conditions of ‘termination of’/‘suspension from’ employment; and
 Means of redressal for workmen, or any other matter.

Submission of Draft Standing Orders :

A statutory obligation is imposed by the Act upon the employer(s) to submit, individually/ jointly,
five copies of a ‘Draft Standing Order’ within six months of its applicability to the industrial
establishment, which should be inclusive of the matters enlisted in the Schedule and of the MSOs
(short for – Model Standing Orders), if any, and to which shall be annexed such documents
containing particulars of the workmen employed.

Certification Process :
The procedure for certification of Standing Order, as prescribed under Section 5 of the Act, is
threefold:
 The Certifying Officer to send a copy of the Draft Standing Order to the workmen or trade
union, along with a notice calling for objections, that shall be submitted to him within 15
days of receiving such notice.
 Upon receipt of such objections, the employer and workmen to be given an opportunity of
being heard, after which the Certifying Officer shall decide and pass an order for
modification of the Standing Order.
 Finally, the Certifying Officer shall certify such Standing Order, and thereby, within seven
days, send a copy of it annexed with his order for modification passed under Section 5(2).

Reasonableness of Standing Order :

The proviso to Section 4 of the Act, as amended by Act 56 of 1956, necessitates the Certifying
Officer or appellate authority to adjudicate upon the fairness or reasonableness of the contents of
such Draft Standing Order in order to proceed with its certification.
Non Existence of Different set of Standing Orders :
“Once the standing orders are certified, they constitute the conditions of the service binding upon the
management and the employees serving already and in employment or who may be employed after
certification.” This implies that different set of standing orders cannot exist in respect of distinct
sections of workmen or the employer(s), for that would frustrate the intent of the legislature by
rendering the conditions of employment as indefinite & diversified, just as existed prior to the
enactment of the said Act.

Power of Appropriate Govt. to make rules :

The Act empowers the appropriate Government to make rules for the purpose of this Act, in
consultation with representatives of related parties, relating to:
 Additional matters to be included in the Schedule & the procedure for modification;
 Set out MSOs;
 Procedure to be followed by Certifying Officers & appellate authorities;
 The fee to be charged for the copies of registered standing orders, and any other matter so
prescribed.
Provided that the rules made by the Central Government be passed/annulled through each House of
Parliament without prejudice to the validity of anything done under it.

Conclusion :
The Act is a regulatory regime to formally define the employment relations between the
workmen/trade union and the employer. A very prominent initiative of this Act is the concept of
‘standing orders’ which is amorphous in nature being a contract promulgated statutorily, that
represent the will of the parties so regulated. Finally, it may be stated that, though it lays an
exemplary notion, it requires thorough reforms in respect of the present scenario of employment
practised by the principal employer so as to fulfil the Constitutional objective of securing socio-
economic justice substantially.