Chapter-9 Statutory, Voluntary and

Third Party Settlement

Settlement of
Industrial
Disputes
Machinery for Prevention and Settlement of Industrial
Disputes
Machinery for prevention and settlement of industrial disputes comprises of :

Statutory measures and Voluntary measures

A) Statutory measures

In India, the major statutory measure undertaken by the Government to

prevent and settle industrial disputes is the Industrial Disputes Act 1947.

On the basis of the judgments given from time to time by the Supreme
Court, the principal objectives of the Act may be summarised as follows :
 1. To prevent illegal strikes and lockouts.
2. To provide relief to workmen in matters of layoff, retrenchment, wrongful
dismissal and victimization.
3. To promote measures for securing and preserving amity and good relations
between the employer and the employees.
4. To provide a suitable machinery for investigation and settlement of
industrial disputes.
5. To give the workmen the right of collective bargaining and promote
conciliation.
Different authorities created under the Industrial Disputes Act, 1947 for
the prevention of and settlement of industrial disputes are as follows :

6. Works Committee
The Works Committee is purely consultative body. It is essentially
advisory in nature and their decisions are in the form of
recommendations. These committees are bi-partite composing of equal
number of representatives of workmen and management.
The Committee shall meet at least once in every three months and half yearly
progress reports of the functioning of the Committee.

2 Conciliation Officer
Conciliation officer is appointed by Government by notification in the
official gazette and may be appointed for a specific area or for specific
industry in a specific area either permanently or for a limited period of
time.The duty of conciliation officer is to mediate in and promote settlement
of disputes and he has to send report of settlement or otherwise to the
appropriate government within 14 days of commencement of conciliation
proceedings.
3 Board of conciliation
Its constituted as an adhoc body by the appropriate Government by
notification in the official gazette,it consist of a Chairman and two or four
members.The main purpose is to mediate and to induce the parties to come to a
fair settlement. The board must submit the report within 2 months of the date
or within shorter time.
 4. Court of Inquiry.

A Court of Inquiry is constituted as an adhoc body, as the occasion may arise, by appropriate
Government. The Court of inquiry is constituted by the Government to inquire into any matter
connected with an industrial dispute.
The Court of inquiry may consist of one independent person or such number of independent
persons as the appropriate Government thinks fit.

5.Adjudication
The Industrial Dispute Act provides for three tier system of adjudication of industrial
disputes. The cases may be referred to such courts either after the receipt of failure
report from Conciliation officer or directly by any party.Adjudication is carried out by:
1. Labour Court
2.Industrial Tribunal
3.National Tribunal
Labour Court deal with matters as under:
● Legality of an order passed by an employer under the standing orders
● Application and interpretation of standing orders
● Discharge and dismissal of workmen
● Illegality of a strike or lockout
Industrial Tribunal deals with following methods:
● All matters within the jurisdiction of labour court
● Wages
● Compensatory and other allowances
● Hours of work and rest intervals

National Tribunal deals with:

● Industrial disputes involving questions of national interest
● Those industrial disputes where more than one state is involved

6 Voluntary Arbitration
Arbitration is a means of securing an award on a conflict issue by reference to a 3td
party,its a process in which dispute is submitted to an impartial outsider who amke a decision
who is binding on both the parties.Voluntary arbitration refers to a voluntary method of
resolving industrial disputes.

7 Grievance Settlement Authority

Such authority is to be setup by enterprises where 50 or more employed.The main purpose is to
settle individval grievances of employees.
 8 Welfare Officers
Welfare Officers are appointed by organisations under the Factories Act 1948 wherein 500 or
more workers are employed.The state government prescribes the duties,qualifications ans conditions
of service of officers employed.

9.Standing Orders
Standing orders refers to the rules and regulations which govern the conditions of employment of
workers.They specify the duties and responsibilities of both employer and employee.

10 Miscellaneous
It includes Chief Labour Commissioner and regional Labour Commissioner together with Labour
enforcement officers.Their functions are
1 Prevention,investigation and settlement of industrial disputes
2 Verification of union membership
3 Fixation of minimum wages
B)Voluntary Machinery
Voluntary machinery for settlement of industrial disputes is based on Code of Discipline
announced in 1958.

(a) Methods to Promote Industrial Democracy

(i) Profit sharing and co-partnership

The main objectives of the scheme of profit sharing is:
1. To promote industrial harmony and stabilisation of the workforce.
2. To eliminate wastes of all kinds.
3. To instil a sense of partnership among employees and employers and to increase
employee interest in the working of his organisation.
4. To demonstrate some measures of social justice to employees.
 (ii) Collective bargaining
Collective bargaining is a process of negotiations and other related pressure tactics
adopted by the employers and the organised workers represented by their own union in
order to determine the terms and conditions of employment.

(iii) Recognition of a union

For the development and implementation of the concept of collective bargaining, it is a
prerequisite that a strong and responsible union exists and is rightfully recognised by
the employer as a representative union.

b) Ethical Measures

(i) Code of Discipline in Industry

● Government has set up various agencies to implement code of discipline
● At centre it is the Central Relations Machinery
● Provides guidelines to employers,workers &the unions
(ii)Inter-union code of conduct 1958
● Code is adopted by 4 Central unions-INTUC-AITUC-HMS-UTUC
● Purpose is to prevent inter-union rivelry

(iii) Code of efficiency & welfare

● By Union ministry of Labour & employment in 1958
● Formed in ILO conference in 1959
● Provide guidelines to achieve cordial industrial relations and higher
efficiency
Industrial relations machinery &
third party settlement
This section of chapter discuss the dispute settlement machinery involving
3rd party,so far the dispute settlement process was either voluntary or
bilateral.Third party settlement may take any form:

a. Conciliation
b. Adjudication
c. Arbitration
 1 Conciliation
Conciliation in industrial disputes is a
process by which the representatives
of workers and employers are bought
together before a third person with a
view to persuade the parties to come
to an agreement,for the satisfaction of
both and in the larger interest of
industry and community as a whole.
2.Adjudication
Adjudication means a mandatory
settlement of Industrial disputes by
Labour courts or industrial tribunals or
national tribunal under the Industrial
Disputes Act or under any other
corresponding State Statutes
Three-tier system of adjudication:

Industrial Disputes Act authorises

(i) Labour Court
government to appoint
(ii)Industrial Tribunal
Conciliators/Mediator.Board of
conciliation os also formed by (iii)National Tribunal
government for settlement of
3 Arbitration
Arbitration is a means of
securing an award on a conf
lict issue by reference to a
third party.It is a process in
which a dispute is
submitted to an impartial
outsider who makes a
decision which is usually
binding on both the parties
Advantages of arbitration:
(i)Workers & management has full faith
in this settlement machinery
(ii)It is more flexible than other methods
(iii)Less delay in settlement
(iv)Informal in nature,handles by parties
themselves
(v)Base for building a sound base of IR
among both management & workers
 Arbitration can be Voluntary and
Compulsory
a) Voluntary Arbitration:
It implies that the two contending
parties,unable to compose their
differences by themselves or with the
help of mediator or conciliator,
agree to submit the dispute between
them
to be resolved by an impartial
authority whose decision they are ready
to accept.
Main ingredients of voluntary
arbitration are:
● The dispute must exist.
● The agreement must be in
writing.
● The name of the arbitrator
must be specified.
● The reference to arbitration
must be made before a dispute
has been referred to labour
court.
 b)Compulsory Arbitration;

Under compulsory arbitration the parties

It is where the parties are
are forced to arbitration by the state
required to arbitrate without
when
any willingness on their part
When the parties to an
individual dispute feels
aggrieved by an act of the
other
It may apply to the appropriate
government to refer the dispute
to an adjudicating machinery
● The parties failed to arrive at a
settlement
● The court is passing through a grave
economic crisis.
● There is public dissatisfaction with
existing IR.
● When industries of stratigic
importance are involved in the
dispute.
● The parties to disputes are ill-
organised and powerless to present
there case adequately.