Industrial Disputes Act,1947

Introduction
 Introduction

• Earliest legislation-Bengal Regulation VII of 1819-

Breach of law a criminal offence.
• Merchant Shipping Act,1859, Workmen’s Breach of
Contract Act, 1859 etc. followed.
• Trade Unions Act, 1926- immunisation of civil and
criminal liability.
• Prohibited strikes and lockouts,
• Establishment of conciliation boards,
• Establishment of courts of enquiry.
 Introduction
• Since 1937 substantial progress was made to build up
permanent machinery for speedy and amicable
settlement of industrial disputes.
• The II world war brought about rapid changes in the
whole economic structure and the field of industrial
relations.
 Introduction
• The necessity to keep production at the highest
level without interruption and the clamour of the
workers to have their share in the abnormal war
profits, led the government to introduce the
Defense of India Rules in 1942.
• Compulsory adjudication in India,
• Specified terms and conditions of employment,
• Enforcing decisions of adjudicators mandatory.
 Introduction
• In 1942 Essential Services Maintenance
Ordinance was promulgated- prohibiting strikes
and lockouts without 14 days’ previous notice.
• Industrial Disputes Act,1947-
– Defense of India Rules which empowered the
government to refer disputes for conciliation or
adjudication was kept in operation by the ordinance of
1946.
– The Bill after certain amendments was made the law
on 1st April 1947.
 Definitions of important terms:
• ‘award’- an interim or a final determination of
any industrial dispute; [sec.2(b)]
• ‘closure’- the permanent closing down of a place
of employment; [sec.6-A]
• ‘employer’-
– (i) in relation to an industry carried on by or under the
authority of any department of Central or State
Government, the prescribed authority or the head of
the department.
– (ii) in relation to a local authority, the CEO of that
authority. [sec.2(g)]
 Definitions of important terms:
• ‘industry’- any business, trade, undertaking,
manufacture or calling of employers and includes
any calling, service, employment, handicraft or
industrial occupation or avocation of workmen.
[sec.2(j)]

• ‘strike’- cessation of work by a body of persons

employed in any industry acting in combination,
or a concerted refusal, or a refusal under a
common understanding, of any number of persons
who are or have been so employed to continue to
work or to accept employment.
 Definitions…
• ‘unfair labour practice’- any of the practices
specified in the Fifth Schedule.[sec.2(r)]
– Category I contains 16 practices on the part of
employers or their trade unions.
• For ex. to interfere with,
• restrain from, or coerce workmen
• in the exercise of their right to organise, form, join,
assist a trade union or
• to engage in concerted activities, etc.
 Definitions…
• ‘unfair labour practice’-
• Category II contains 8 practices on the part of
workmen or their trade unions such as,
– to advice or actually support or
– to instigate any strike deemed to be under the Act,
– to stage demonstrations at the residence of the
employers or the managerial staff members,
– to incite or indulge in willful damage to
employers property connected with the industry,
etc.
 Definitions
• ‘wages’-means all remuneration capable of being
expressed in terms of money, which would, if the terms
of employment, expressed or implied were fulfilled, be
payable to a workman in respect of his employment or
of work done in such employment. It also includes:
– allowances that the workman is entitled to;
– value of any house accommodation, supply of light, water,
medical or other amenity or other articles;
– any travelling concessions;
– any commission payable on the promotion of sales or
business or both;
• But these are not wages: any bonus or pension or gratuity or PF
or any fund for the termination of workmen
 Definitions
• ‘workman’- means any person employed in any
industry to do any manual, unskilled, skilled,
technical, operational, clerical or supervisory work
for hire or reward, whether the terms of
employment are express or implied,
• and for the purposes of the proceedings under this
Act, in relation to an industrial dispute, includes
any such person who has been dismissed,
discharged, or retrenched in connection with, or as
a consequence of, or whose dismissal, discharge, or
retrenchment has led to that dispute.
 Definitions
• Does not include any person-
– subject to Army Act 1950, Air Force Act 1950, Navy Act
1957; or
– employee of police service or prison; or
– employed in managerial or administrative capacity; or
– being employed in supervisory capacity, draws wages
exceeding Rs.1600 per month.
Industry?- Triple test- Bangalore water supply Vs A.
Rajappa

• Test-
– (i) where there is 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, it is an industry.
 Triple test-

• Emphasis on-
– (1) industry does not include spiritual or religious services or
services geared to celestial bliss;
– (2) absence of profit motive or gainful objective is irrelevant;
– (3) special emphasis is on employer-employee relations;
– (4) if the organisation is a business or trade it does not cease
to be one because of philanthropy animating the undertaking.
 Is Municipal Corporation an Industry?

• D.N. Banerjee Vs P.R. Mukherjee (AIR1953SC58)

– A public utility service such as telephone, supply of water,
light or power to the public may be carried on by private
companies or business corporations and if these public utility
services are carried on by local bodies like a Municipality
they do not cease to be an industry.
– The definition cannot be confined to activities analogous to
trade or business.
– Monetary consideration for service is not an essential
characteristic of industry.
 Is hospital an Industry?
• State of Bombay Vs Hospital Mazdoor Sabha(1960)
– An activity systematically and habitually undertaken
• for the production or distribution of goods, or
• for the rendering of material services to the community at large or a
part of such community with the help of employees is an
undertaking.
– Such activity generally involves the co-operation of
employer and employee.
– The object is satisfaction of human needs.
– It must not be casual or for pleasure.
– Hospitals run by governments as part of its sovereign
functions, with the sole object of rendering free service to
the patients are not industry.
 Is Educational Institution an Industry?
• Brahmo Samaj Education Society Vs West Bengal
College Employees Association(1960)
– Education is a mission and vocation rather than a profession or
trade or business.
– But many technical institutions are of a different nature-where
a number of individuals join hands to render service with a
profit motive.
– Realists in the cultural field say that schools have become
trade and managers merchants, because of the high fees that is
charged.
– Again institutions do business by manufacturing or selling
things they are certainly an industry.
 Is Club an Industry?
• Clubs or self-service institutions or non-proprietary
member’s clubs will be an industry provided they fulfill
the triple test.
• The real need is to see whether there is a systematically
organised activity involving the co-operation of both the
employer and employee for the distribution of service to
satisfy human needs.
• It is not necessary that the activity should be trade or
business or analogous to trade or business.
 Is Agricultural Operation an Industry?

• The carrying on of agricultural operations by the

company for the purpose of making profits,
employing workmen who contribute to yhe
production of the agricultural commodities bringing
profits to the company, is an industry.
 Is Lawyer’s Office an Industry?
• The work of his staff has no direct nexus or connection
with the advice, which is the duty of the advocate to give
his client.
• However, there is a kind of co-operation between the
solicitor and his employees. A lawyer’s office becomes
successful because of the co-operative operations of
several juniors, competent stenographers and paralegal
supportive services.
• A lawyers office employing persons to help in catering to
the needs of the client is an industry.
 Position of Other bodies

• For any organisation to be an industry its activity must

take the nature of a business or trade, and there must
also be co-operation of the employer and employee
resulting in production of material services.
• Co-operative Milk Society,
• Oil Distribution Company,
• Chamber of Commerce,
• Partnership Firm of Accountants,
 Position of Other bodies

• Pharmacy,
• Railways etc. have been held to be an industry.
• Association of Cloth Merchants,
• Book Shop,
• Hair Cutting Saloon,
• Forest Department,
• Post and Telegraph,
• Any non-sovereign function.
 Strike and Lockout
• In any industrial endeavour co-operation of labour and
capital is very essential for its success, although they
have interests contrary to each other.
• Strike and lockout are two weapons available to the
employee and employer respectively to enforce their
industrial demands.
• Strike is one of the oldest and the most effective
weapons of labour in its struggle for securing economic
justice.
 Strike and Lockout
• Essential requirements for the existence of a strike:
– there must be cessation of work;
– it must be by a body of persons employed in any industry;
– strikers must have been acting in combination;
– strikers must be working in any establishment which can be
called industry under the Act;
– there must be concerted refusal; or
– refusal under common understanding;
– they must stop work for some demands relating to
employment, non- employment, or terms of employment.
 Strike and Lockout
• Essential requirements for lockout:
– temporary closing of place of employment;
– the element of a demand for which the industrial
establishment has been locked out, must be present;
– intention to re0open or take the workers back if they accept
the demands must exist;
– Employer and employee must be engaged in an industrial
process carried on in an institution falling within the meaning
of industry as defined in the Act.
 Strike and Lockout

• Prohibition on strikes and lockout:

– Sec.22 and 23 prohibits these so that there may not be
scarcity of goods or services in the society for satisfaction
of human desires, material wishes and needs of the people.
– No employer carrying on any public utility service shall
lockout any of his workmen, without fulfilling the required
provisions.
– No person employed in the public utility service shall go
on strike without fulfilling the required provisions.
 Strike and Lockout
• No employer carrying on any public utility service shall
lockout any of his workmen-
– Without giving them notice of lockout within 6 weeks before
locking out;
– day of lockout must be within 14 days from date of notice;
– Before the expiry of the day of lockout specified in any such
notice;
– there can be no lockout during the pendency of conciliation
proceedings and 7 days after the conclusion of the same.
 Strike and Lockout
• No person employed in the public utility service shall
go on strike without-
– issue of notice of strike is mandatory;
– date of strike should be specified;
– date of strike must be within 6 weeks of date of issue of
notice;
– day of strike must not be within 14 days from date of
notice;
– there can be no strike during the pendency of conciliation
proceedings and 7 days after the conclusion of the same.
 Strike and Lockout
• In industries which are not public utility services the
strikes and lockouts may be declared by the workmen and
employers respectively without giving any notice:
– during pendency of conciliation proceedings and 7 days after;
– during the pendency of proceedings before a Labour Court,
Tribunal or National tribunal and two months after;
– during the pendency of arbitration proceedings and two months
after the conclusion of the same, where a notification has been
issued.
– during any period in which a settlement or award is in
operation, in respect of any of the matters covered by the
settlement or award.
 Illegal strikes and lockouts
• Sec.24 of the I.D.Act provides that a strike or lockout
shall be illegal if :
– If it is commenced or declared in contravention of Sec.22; or
– If it is commenced or declared in contravention of Sec.23; or
– If it is continued in contravention of an order made under
sec.10(3); or (prohibit the continuity of strike or lockout by app.govt. due to
pendency in court or tribunal)
– If it is continued in contravention of an order made under
sec.10-A(4-A).(arbitration with notification)
 Strike and Lockout
• Strike-fundamental, statutory or moral right?
– There is no fundamental right to go on strike;
– There is no statutory right to go on strike;
– There is no moral or equitable justification to go on strike;
• Penalties:
– for illegal strikes and lockouts-imprisonment which may
extend to 1 month or fine or both;
– for instigation-imprisonment which may extend to 6 months
or fine or both;
– for giving financial aid-same
– for breach of settlement of award-same
 Lay-off and Retrenchment
• Lay-off is defined in Sec.2(kkk)-essentials are:
– there must be (i) failure, (ii) refusal or (iii) inability of the employer to
give employment to a workman,
– names of the workmen laid off must be on the muster rolls of the industrial
establishment on the date on which they have been laid off,
– the failure, refusal or inability of the employer to give employment must
be on account of the following reasons:
• shortage of coal,
• shortage of power,
• shortage of raw materials,
• accumulation of stocks
• breakdown of machinery;
• natural calamity or for any connected reasons.
• The workmen in question must not have been retrenched.
 Lay-off and Retrenchment

• Right of laid off workmen for compensation-

– Sec.25-C provides for payment of compensation to a workman
• who has completed not less than one year of continuous service,
• when laid off whether continuously or intermittently,
• shall be paid for all such days, except for weekly holidays,
• 50% of the basic wages and dearness allowance;
– Provided he shall be paid compensation for layoff for not more
than 45 das.
– Provided he shall be retrenched at the expiry of 45 days of
layoff:
• any compensation paid for layoff during the preceding 12 months will
be setoff against the compensation payable for retrenchment.
 Lay-off and Retrenchment

• Retrenchment is defined in Sec.2(oo)-essentials are:

– there must be termination of services by the employer of the
workmen,
– It must be on the grounds of surplus labour,
– The terminated service must have been capable of being
continued,
– It may be for any reason but not by any motive of
victimisation or any unfair labour practice,
 Lay-off and Retrenchment

– It must be for surplus labour in a continuous industry,

– It must be for reasons such as rationalisation of industry,
installation of new labour saving machinery, economy or any
other trade reason,
– The termination of service must not fall within the exclusion
clause of the definition, such as voluntary retirement,
retirement on reaching the age of superannuation termination
on the ground of continuous ill-health.
 Lay-off and Retrenchment

• Conditions precedent for retrenchment (sec.25-F)-

– Any workman who has been employed in continuous service
for not less than 1 year, shall be retrenched, unless:
• one months notice is given in writing, indicating the period of
retrenchment,
• period of notice has expired or he has been paid in lieu of the notice,
• Workman has been paid 15 day’s average pay for every completed
year of continuous service,
• Notice in the prescribed manner is served on the appropriate
government, by notification in the official gazette.
 Closure
• defined in Sec.2(cc)to mean the permanent closing down
of a place of employment or part thereof.
• distinguishing feature between closure and layoff is the
intention of the owner or the employer to close down the
place of employment.
• where an undertaking is closed down for any reason
whatsoever, every workman who has completed one year
of service shall be served a notice and paid compensation
accordingly.
 Closure
• if the undertaking is closed down on account of unavoidable
circumstances, beyond the control of the employer, the
compensation paid to the workman shall not exceed his average
pay for 3 months.
• sec.25-FFA(1)provides that an employer who intends to close
down an undertaking shall serve a notice, at least 60 days before
the date on which the intended closure is to be effective, on the
appropriate authority.
• however this shall not apply to:
– to an undertaking in which less than 50 workmen are employed or were
employed in the last 12 months.
– Undertaking setup for the construction of canals, dams, bridges etc.
 Authorities under the Act,1947
• Works Committees:
– to promote industrial goodwill and harmony among
employees.
– representatives of employer and employees.
– total number of members shall not exceed 20.
• Conciliation Officers:
– appointed by appropriate government to settle conflicts.
– intervene, investigate and try to settle disputes.
– send report to appropriate government for consideration.
 Authorities under the Act,1947
• Boards of Conciliation:
– consist of a chairman and minimum 2 members.
– members enjoy judicial capacity, hence more powers
than conciliation officers.
• Courts of Enquiry:
– consist of a chairman and minimum 2 members.
– appointed by appropriate government.
– enquire into matters and report it within 6 months.
– Similar to Board of Conciliation.
 Authorities under the Act,1947
• Labour Court, Industrial Tribunal, National Tribunal:
• all three are adjudication machinery.
• Arbitration:
• agreement between employer and employee.
• Arbitrator shall investigate and submit the arbitration award to the
appropriate government.
• Voluntary arbitration appears to be the best method of solving
industrial disputes.
Thank you