Methods of Settling Industrial

Disputes

Settlement Without State

Intervention
There are two ways in which the basic
parties to an industrial dispute- the
employer and the employees- can settle
their disputes.
Collective bargaining
Voluntary arbitration

Settlement Under the

Influence of the State
Compulsory establishment of bipartite
committees;
Establishment of compulsory collective
bargaining;
Conciliation and mediation (voluntary and
compulsory);
Compulsory investigation; and
Compulsory arbitration or adjudication.

Collective Bargaining
Collective bargaining implies the following
main steps:
a. Presentation in a collective manner, to the
employer, their demands and grievances by the
employees;
b. Discussions and negotiations on the basis of
mutual give and take for settling the grievances
and fulfilling the demands;

c. Signing of a formal agreement or an informal

understanding when negotiations result in
mutual satisfaction; and
d. In the event of failure of negotiations, a likely
resort to strike or lock-out to force the
recalcitrant party to come to terms.
When collective negotiations reach a deadlock,
the parties themselves may call in third persons
to help them settle their disputes.
The role of this third person is to break the
deadlock, to interpret the view point of one to
the other, and thereby to help the parties arrive
at an agreement.

 The solution, if any comes out of the parties

themselves; the presence of the outsider neither
supersedes the process of collective bargaining
nor the freedom of the parties to agree or to
disagree.
Bargaining with the help of the third party is
generally called conciliation or mediation.
Strikes and lock-outs are an integral part of the
process of collective bargaining.
If the threat of a strike were not there, mutual
negotiations would rarely succeed.
The solutions arrived at in the process of
collective bargaining are ultimately evolved by
the parties themselves and are of lasting value.

Voluntary Arbitration
In many cases an argument simply cannot be
settled as both parties disagree on their own
grounds. They therefore enter into Voluntary
Arbitration, which involves appointing an
independent party to assess the situation and
then make a decision based on the facts
presented to them.
It is commonly viewed as less expensive and
faster than resolving a dispute in court.
An arbitrator may be a single person or a panel.

 At the time of submitting a dispute to

arbitration, the parties may agree in advance,
to abide by the award of the arbitrator and
thus industrial peace is maintained and the
dispute is resolved.
Sometimes, however, the parties may agree
to submit the dispute to an arbitrator but at
the same time, reserve their right to accept or
reject the award when it comes.

 Factors hampering the adoption of

Voluntary arbitration in India:
i. Easy availability of adjudication in case of
failure of negotiations;
ii. Dearth of suitable arbitrators who command the
confidence of both parties;
iii.Absence of recognised union which could bind
the workers to common agreements;
iv.Legal obstacles;
v. The fact that in law no appeal was competent
against an arbitrators award;
vi.Absence of a simplified procedure to be
followed in voluntary arbitration.

Compulsory Establishment of
Bipartite Committees
The state has passed enactments requiring the
establishment of bipartite committees
consisting of the representatives of workers
and their employer at the plant or industrial
level.
These bipartite committees are given the
power to settle differences between the
workers and the employers as soon as they
appear, and thereby they prevent them from
growing into big conflagrations.

 In India the Industrial Disputes Act, 1947

provides for the compulsory formation of works
committees in industrial establishments
employing 100 or more employees.
A works committee is entrusted with the
responsibility to promote measures for
securing and preserving amity and good
relations between the employer and the
workmen and, to that end, to comment upon
matters of their common interest or concern
and endeavor to compose any material
difference of opinion in respect of such matters.

 The relevant rules framed by the Central

Govt. under this Act lay down the details
concerning the size of Works Committees, the
selection of workers representatives, terms of
office, facilities of meeting and so on.
State Govt. has formed similar rules requiring
the formation of works committees in different
industrial establishments.
Some of these Works Committees are
functioning successfully while some have
proved to be a failure.
The main factors accounting for their
failure have been:

i.
ii.
iii.

a.

b.

The reluctance and hostility of the employer

or the trade union concerned,
Illiteracy and ignorance of the workers, and
Absence of leadership from the rank-and-file.
The basic idea behind the establishment
of such bipartite committees are:
Giving encouragement to the parties
concerned to settle and compose their
differences by themselves, to avoid the
intervention of third party, and
Facilitating the composition of the differences
at their embryonic stages without causing
work stoppages.

Establishment of Compulsory
Collective Bargaining
State may encourage, and if necessary, force
workers and employers to enter into formal
collective bargaining through their
representatives.
In India, refusal to bargain collectively in good
faith by the employer and the recognised
union, has been included in the list of unfair
labour practices by an amendment of the
Industrial Disputes Act in 1982.

 However, in absence of making recognition of

representative union by the employer
statutorily compulsory, this provision of the
Industrial Disputes Act, 1947 does not have
much significance.

Conciliation and Mediation

a) Voluntary conciliation and mediation
b) Compulsory conciliation and mediation
The only difference between conciliator and
mediator is that conciliator is more active and
more intervening than the mediator who is said
to perform a go messenger service.

 Voluntary conciliation and mediation:

The state sets up a conciliation and mediation
machinery, consisting of personnel trained in the
art of conciliating disputes.
The services of this machinery are always
available to the disputants.
The aim of the conciliator is to break the
deadlock, if any, explain the stand and the viewpoints of one party to the other, convey
messages and generally keep the negotiation
going.
Suggestions may come from the conciliator or
the mediator, but the parties are free to accept or
reject them.

 Compulsory conciliation and mediation:

In many countries state goes a step further
after creation of conciliation service, it imposes
an obligation on the parties to submit their
dispute to the conciliation service and makes it
a duty of the of the latter to seek to conciliate
the dispute.
Meanwhile, the state requires the parties to
refrain from causing any work-stoppage for the
purpose of resolving the dispute, so long as the
conciliation proceeding is going on.
Generally there is a time limit for the
conciliators and mediators to conclude their
efforts at conciliation.

There are three main considerations for

prohibiting the parties from causing workstoppage and imposing time limit. They are:
1. Conciliation provides a cooling off period
during which emotional tensions may subside
and a settlement can be arrived at.
2. Freedom of the parties to settle their disputes
even by causing work stoppage, should not
be taken away from them for long period.
3. If conciliation does not achieve an early
break-through, it is not very likely to succeed
later.

 If, at the end of the conciliation proceeding,

the parties fail to settle their dispute, they are
free to go on a strike or declare a lock-out,
but the state may further persuade the parties
and use other methods for bringing about a
peaceful settlement of the dispute.

Compulsory Investigation
Many governments have assumed power under
laws relating to industrial relations, to set up a
machinery to investigate into any dispute.
A Court of Inquiry is appointed which finds out
the relevant facts and issues involved and give
them wide publicity so that the pressure of public
opinion may force the recalcitrant party to give
up its obstinate attitude.

a.
b.
c.
d.

Further, it provides a cooling off period to

the parties concerned so that they could
reconsider their respective stands, realise
the implications of their steps and, if
possible, settle their disputes peacefully.
In India, the Court of Inquiry has the same
powers as are vested in a civil court under
the Code of Civil Procedure in respect of:
Enforcing the attendance of any person and
examining him on oath;
Compelling the production of documents
and material objects;
Issuing commissions for the examination of
witnesses;
In respect of matters prescribed under
relevant rules.

Compulsory Arbitration or
Adjudication

The government under some conditions may

decide to refer the dispute to adjudication and
force the parties to abide by the award of the
adjudicator and at the same time, prohibit the
parties from causing work-stoppages.
There are two principal forms of compulsory
arbitration based upon the nature of reference
and nature of the award:
a) Compulsory reference but voluntary
acceptance of the award

b) Compulsory reference and compulsory

acceptance of the award.
The parties are required to refrain from
going on a strike or declaring a lock-out
during the pendency of the adjudication
proceedings and during the period when the
award is in operation.
An Arbitration Court may consist of one
person only or a few persons with one
member acting as the chairman.
Usually the adjudicators are drawn from the
judiciary.

 The qualifications and tenure of office,

powers and functions of the adjudicators are,
in general, prescribed under the law itself.
Sometimes, representatives of employers
and employees are also associated with the
deliberations of the Court.

Adjudication in India

The Industrial Disputes Act,1947, provides for

three types of adjudication authorities for the
adjudication of industrial disputes:
a. Labour Court
b. Tribunal
c. National Tribunal

 Labour Courts and the Tribunal can be

established both by the central and state
governments, but the National Tribunal is set
up only by the central government.
National Tribunal is set up to adjudicate such
disputes which involve any question of
national importance or are of such a nature
that industrial establishments situated in more
than one state are likely to be interested in or
affected by them.

 The Labour Court adjudicates disputes relating

to the propriety or legality of an order passed
by the employer under ths standing orders,
discharge or dismissal of workmen, legality or
otherwise of a strike or lock-out.
The Tribunal and National Tribunal generally
deal with such subject matters as wages,
bonus, profit-sharing, rationalisation,
allowances, hours of work, provident fund,
gratuity etc.
Strikes and lock-outs are prohibited during the
pendency of the proceedings before any of the
adjudication authorities, and two months after
the conclusion of such proceedings and during
any period in which the award is in operation, in
respect of any matter covered by the award.

Adjudication vs. Collective

Bargaining
Adjudication
Introduces an
element of law and
justice
Standards of
adjudication of
industrial disputes
may be imperfect, yet
they are far better
than the principle of
might is right that
underlies CB

Collective Bargaining
It gives democratic
freedom to parties to
resolve their disputes by
mutual discussions and
negotiations.
Use of coercive
economic power of one
party against the other.

 Compulsory
arbitration is based
upon the coercive
power of the state.
The authority of the
state is used to
prevent strong groups
and organizations,
whether they belong
to the employers or to
the workers, from
holding the
community to ransom.

Even if parties fight

for the time being ,
they will ultimately
succeed in working
out a lasting solution
of their problems as
they have to live
together on a
permanent basis.
In CB it is not just
cause but the
relative strength of
the parties , that
ultimately wins.

 Adjudication in India
A strong union may
does not suppress CB,
take up a weak case
rather supplements it.
and still win and vice
There are heavy
versa.
expenses and delays in The institution of
adjudication but it can
collective bargaining is
be improved and is
rooted in the coercive
gradually improving.
power of the parties
Helps workers in poorly
themselves.
organised sector in
securing significant
gains.

 There are no
standards which can
be used by
adjudicators, to
resolve divergent
interests and to
judge the fairness or
otherwise of
conflicting claims.

The adoption of
collective bargaining
comes with a
freedom to resort to
strikes and lock-outs
which can hamper
industrial growth.


i.

ii.

Machinery for the Prevention and

Settlement of Industrial Disputes in
India
Prevention and settlement of Industrial
Disputes requires:
Leaving the parties free to settle their
difference sin a way they like best, but without
causing work-stoppages, that is, CB without
the right to strike and declare a lock-out;
Assisting the parties by the provision of
conciliation services, to arrive at a peaceful
settlement.

iii. In case the parties still fail to settle their disputes

in a peaceful manner, imposing on them
adjudication, if state deems it fit;
iv. Imposing certain restrictions on the right to strike
and declare a lock-out, in case of some
industries of public importance and under certain
conditions in all industries;
v. Establishing a number of non-statutory bodies for
the purpose of working out the guiding principles
of the relations between the employers and the
employees, and recommending actions so as to
prevent industrial disputes from arising.

Statutory Machinery
Statutory Machinery consists of:
a. Works Committee,
b. Permanent conciliation services for particular
geographical areas or industries both at the
central and state levels,
c. Ad hoc Board of Conciliation at the central and
state levels,
d. Ad hoc Courts of Inquiry at the central and
state level,

e. Adjudication authorities consisting of Tribunals

and Labour Courts at the central and state levels,
f. National Tribunals at the central level.
Both the central and state Govt. are empowered
to require the employers of industrial
undertakings employing 100 or more workmen, to
constitute a Work Committee consisting of
representatives of the employers and the
workmen.
In pursuance of the provisions of the Industrial
Disputes Act, 1947, permanent conciliation
services have been established by both the
central and state governments for particular
geographical areas or industries.

 The Conciliation Officers are required to hold

conciliation proceedings in the case of public
utility services where a notice of strike or lockout has been given, but in other cases, it is
up to them to do so.
A settlement arrived at in the course of
conciliation proceedings is binding on the
parties.
The govt. is empowered to refer at any time,
an industrial dispute pending before a
Conciliation Officer to an adjudication
authority for decision.

 Courts of Inquiry may be set up by the central

or state governments when considered
necessary for the purpose of inquiry into any
matter appearing to be connected with or
relevant to an industrial dispute.
The adjudication authorities set up under the
Industrial Disputes Act, 1947 consist of
Labour Courts and Tribunals at both the
central and state levels and National
Tribunals at the central level.

 The parties to an industrial dispute are not to

resort to work-stoppage if the dispute is
pending before a Board of Conciliation or any
adjudication authority.
Additional restrictions on the right to strike
and lock-out have been imposed, in case of
public utility and essential services.

Non-statutory Bodies
Non statutory bodies exist at different levels
such as the Indian Labour Conference and
Standing Labour Committee at the national level,
Wage Boards and Industrial Committees at the
industry level, and State Labour Advisory Boards
at the state level.
The primary purpose of these organisations is to
work out the guiding principles of the relations
between employers and employees in order to
prevent industrial disputes from arising.

Indian Labour Conference and

Standing Labour Committee
The ILC and SLC are tripartite in character
consisting of representatives of the central and
state governments, employers and workers.
Both of them were set up in 1942, with initial
membership of 44 in the ILC and 20 in the SLC.
Both bodies are expected to ensure equal
representation of the employers and workers,
and the representatives of the government being
equal to those of the employers and workers
taken together just like International Labour
Conference and the Governing Body of ILO.

 Decisions in these bodies are arrived at on

the basis of a consensus arising out of the
discussions rather than on formal voting,
although a provision exist in the rules of both
the ILC and the SLC, for taking decisions by a
two-third majority.
The main objectives underlying their
establishment were: promoting uniformity in
labour legislation; laying down of a procedure
for the settlement of industrial disputes; and
discussing all matters of national importance
as between employers and employees.

 The scope of the deliberations of both bodies is

confined mainly to labour matters in the country.
The deliberations of these bodies have helped
reaching a consensus regarding minimum wage
fixation, introduction of health insurance and
provident fund schemes, enactment of new
labour laws and modification of the existing
ones.
The procedure of settling industrial disputes as
envisaged in the Industrial Disputes Act, 1947 is
a direct outcome of the deliberations of these
bodies.

 The Code of Discipline and the Code of

Conduct evolved at the ILC have also
played an important role in influencing
the pattern of industrial relations.

Code of Discipline in Industry

The Code of Discipline, as drafted by a tripartite
sub-committee appointed by the Indian Labour
Conference in 1957 and modified by the
Standing Labour Committee was unanimously
adopted by the ILC at its 16th session held in
May 1958. the Code came into force from June
1958. the text of the Code is mentioned in your
book on page no. 203

Working
The Code of Discipline has come to be accepted
not only by the central organisations of
employers and workers represented by the
Indian Labour Conference, but also by those
who are not he members of these organisations.
The Code is also applicable to public sector
undertakings run as companies and
corporations except those under the Ministry of
Defence, Railways , and Ports.

i.

The Code has also come to be applied to the

Department of Defence Production, LIC, SBI
and RBI.
The Code soon became an instrument to
which credit/ discredit was given for industrial
peace/ conflict and was perhaps
conveniently used by employers and workers
to point out the shortcoming of other side.
Some of the factors accounting for the
ineffectiveness of the Code have included:
Absence f a genuine desire for, and limited
support to, self-imposed voluntary restraints
on the part of employers and workers
organisations

The worsening economic situation which

eroded the real wage of workers
iii. The inability of some employers to
implement their obligations,
iv. The disarray among labour representatives
due to rivalries
v. Conflict between the Code and the law, and
above all
vi. The state of discipline in the body politic.
Some of the points of Code of Discipline
should be embodied in law as suggested by
the first National Commission on Labour.
These include:
ii.

i.
ii.
iii.
iv.
v.

Recognition of unions as bargaining

agents,
Setting up of an grievance machinery
in an undertaking,
Prohibition of strike/lock-outs without
notice,
Penalties for unfair labour practices
and
Provision for voluntary arbitration.

Industrial Committees
The establishment of Industrial Committees for
specific industries was the outcome of the 1944
session of the Indian Labour Conference.
There are no rigid constitution in respect or these
committees, but the policy of their remaining
tripartite in character and equal representation of
employers and workers is accepted.
Within the framework of this broad policy, the
actual composition is decided afresh each time a
meeting is convened.

 The first Industrial Committee was set up in

1947 for plantations.
Later, such committees came to be set up for
many other industries like, coal mining, cotton
textiles, cement, tanneries and leather goods
manufactories, mines other than coal, jute,
building and construction, chemical
industries, iron and steel, road transport,
engineering industries, metal trades,
electricity, gas and power, and banking.
Meeting of Industrial Committees are ,
however, not held regularly; these are
convened as and when required.

Wage Boards
Second Five Year Plan had observed:
Statistics of industrial disputes show that
wages and allied matters are the major
source of friction between employer and
workers.
An authority like a tripartite wage board,
consisting of equal representatives of
employers and workers and an independent
chairman will probably ensure more
acceptable decisions.
Such wage boards should be instituted for
individual industries in different areas.

 The Third Five Year Plan also

encouraged Wage Board.
The first non-statutory Wage Board was
set up for the cotton textile industry in
1957. subsequently, Wage Boards were
set up for other industries too.
A Wage Board generally consists of an
impartial Chairman, two other
independent members, and two or three
representatives of employers and
workers each.

 The Boards were purely recommendatory

bodies and dissolved after they had
submitted their recommendations.
The most important function performed by a
Wage Board had been to determine the wage
structure for the industry concerned and to
specify the categories of employees to be
brought under the purview of the wage
fixation.
In some cases, they were also asked to deal
with such questions as gratuity, hours of work
and bonus.
Now, the Wage Board system has fallen in
disuse.

Board of Arbitration for Central

Government Employees
In 1966, the Government of India introduced
a scheme for the Joint Consultative
Machinery and Compulsory Arbitration for
resolving differences between the
government as an employer and the general
body of its employees.
The scheme provides for compulsory
arbitration of pay and allowances, weekly
hours of work and leave of a class or grade of
employees.

 The Board of Arbitration functions under the

administrative control of the Ministry of
Labour.
Its awards are binding on both sides and can
be modified or rejected only by the
Parliament.

Other Tripartite Bodies at the

Central Level
Notable tripartite bodies which have been
functioning at the central level are:
Central Implementation and Evaluation
Committee
Central Board of Workers Education
National Productivity Council

State Labour Advisory Boards

State Labour Advisory Boards on the pattern of
the Indian Labour Conference have also been
set up in almost all the states in the country.
These Boards provide a forum of the
representatives of government, employers and
employees to discuss problems so as to
maintain and promote harmonious industrial
relations and to increase production.
They advise the state governments on all
matters relating to labour.

Other Tripartite Bodies at the State

Level
Amongst the important tripartite
committees functioning in the states are:
Implementation and Evaluation
Committees
Committees for particular industries
Labour Welfare Boards or Committees
Some of these are permanent, while
others are constituted as and when
required.