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UNIT 7 Prevention and Settlement of Disputes in India

UNIT STURCTURE: 7.0 Objectives of Study 7.1 Introduction 7.2 Industrial Relations machinery 7.3 Preventive Machinery 7.4 Settlement Machinery 7.5 Industrial Dispute Act 7.6 Summary 7.7 Self assessment test 7.8 Reference books 7.0 Objectives of Study: After reading this unit you will be able to : o Discuss Mechanism of prevention of disputes o Define the ways to handle deputes o Evaluate Indian mechanism of disputes settlement

7.1 INTRODUCTION: Today we are going to study the means and ways to resolve industrial conflicts or disputes. We should understand that whenever there is some problem in our professional or personal life, we should not get anxious by the problem .We should look for solutions. The term industrial conflict indicate the clash of interests, and resulting disputes of varying intensity, between individuals, groups and organizations in the industrial relations system. The relationship between the owners/managers and the workers/employees is frequently one of conflict. Conflicts may exist latently or evident themselves overtly at every level of industrial relations. The overt forms of conflict are various and include absenteeism, sabotage, go-slows, work-to-rule, and restriction of output, non-cooperation and industrial action. The term industrial action refers to a position where the employers' or the employees' side takes joint action to exert pressure on the other collective bargaining party in order to achieve its goals. The term is

often used synonymously with labour dispute. Forms of industrial actions include strikes by employees, lock-outs by employers, and boycotts. Industrial action can be measured in three dimensions:
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The number of strikes and lock-outs (frequency of industrial action); The number of affected workers (extent of industrial action); and The number of working days lost (volume of industrial action).

Some argue that strikes are just accidents in defective negotiations or exist to show that the trade unions' weapons are not becoming rusty. Others argue that the right to bargain collectively presupposes that the social partners can establish and maintain a balance of bargaining power by resorting to industrial action. Still others argue that strikes serve as filtering and an information mechanism whereby the union receives information on the profits of the employer and the employer receives information on union militancy. As a consequence, more gainful employers will settle more quickly, implying higher wage rises for the unions, whereas low levels of profit

7.2 INDUSTRIAL RELATIONS MACHINERY: Pleasant industrial relations and eternal industrial peace require that the causes of industrial disputes should be eliminated Hence both labour and management must appreciate the importance of openness, trust and collaboration their day-to-day dealings.

The consequences of an Industrial dispute will be harmful to the owners of industries, workers, economy and the nation as a whole, which results in loss of productivity, profits, market share and even closure of the plant. Hence, Industrial disputes need to be averted by all means. Prevention of Industrial disputes is a pro-active approach in which an organization undertakes various actions through which the occurrence of Industrial disputes is prevented. Like the old saying goes, “prevention is better then cure”. We can settle the conflict in an industry through following methods: 7 Preventive Machinery 8 Settlement Machinery

Preventive steps should be taken so that industrial disputes do not occur. But if preventive machinery fails then the Government should activate the industrial Settlement machinery because non-settlement of disputes proves to be harmful not only for the workers, but also the management and the society as a whole.

7.3 PREVENTIVE MACHINERY: (VOLUNTARY METHODS) The consequences of an Industrial dispute will be harmful to the owners of industries, workers, economy and the nation as a whole, which results in loss of productivity, profits, market share and even closure of the plant. Hence, Industrial disputes need to be averted by all means. Prevention of Industrial disputes is a pro-active approach in which an organisation undertakes various actions through which the occurrence of Industrial disputes is prevented. Like the old saying goes, “prevention is better then cure”. It comprises the following measures:

1) Collective Bargaining:  Collective bargaining is a type of negotiation used by employees to work with their employers. During a collective bargaining period, workers' representatives approach the employer and attempt to negotiate a contract which both sides can agree with.  It is typical issues covered in a labor contract are hours, wages, benefits, working conditions, and the rules of the workplace.  Once both sides have reached a contract that they find agreeable, it is signed and kept in place for a set period of time, most commonly three years.  The final contract is called a collective bargaining agreement, to reflect the fact that it is the result of a collective bargaining effort.  The parties often refer to the result of negotiation as a Collective Bargaining Agreement (CBA) / as a Collective Employment Agreement (CEA).

2) Trade Unions:  Trade union is a voluntary organization of workers formed to promote and protect their interests and welfare by collective action.  Trade union is the most appropriate institution for harmonizing and improving the relations between the employer and the employees. Trade union aim to:  Protect the interest of labour.  Ensure Fair wages for workers and improve their opportunities for promotion and training.  To look after security of work.  Improve working and living conditions of workers.  To strengthen the weak labour class.

3) Works committees:  Every industrial undertaking employing 100 or more workers is under an obligation to set up a works committee consisting equal number of representatives of employer and employees. The main purpose of such committees is to promote industrial relations. According to Indian Labour Conference work committees are concerned with:o Administration of welfare & fine funds. o Educational and recreational activities. o Safety and accident prevention o Occupational diseases and protective equipment. o Conditions of work such as ventilation, lightening, temperature & sanitation including latrines and urinals. o Amenities such as drinking water canteen, dining rooms, medical & health services. 4) Joint Management Councils:  The JMC normally consists of equal number of representatives of workers and employers looking after three things: information sharing, consultative and administrative matters relating to welfare, safety, training etc and the formulation of standing orders 5) Standing orders:  These are the rules and regulations which govern the conditions of employment of workers.  The Industrial Employment (standing orders) Act of 1946 provides for the framing of standing orders in all industrial undertakings employing 100 or more workers.  The purpose of having Standing Orders at the plant level is to regulate industrial relations. They

define with sufficient precision the conditions of employment under the employers and hold them liable to make the said conditions known to workmen employed by them. These orders regulate the following: o o o o o Conditions of employment Discharge Grievances Misconduct Disciplinary action etc.

These apply to all the workmen employed in industrial undertakings. 6) Grievance procedure:  A model grievance procedure as suggested by the Indian Labour Conference, 1958 has more or less been widely accepted in India now. 7) Code of discipline:  To maintain harmonious relations and promote industrial peace, a Code of Discipline has been laid down which applies to both public and private sector enterprises.  It specifies various obligations for the management and the workers with the objective of promoting cooperation between their representatives.  It consists of a set of self-imposed obligations voluntarily formulated by the central organization of workers and employers.  Industrial Relations And Industrial Disputes Machinery For The Settlement of Industrial Disputes In India

7.4 SETTLEMENT MACHINERY: (STATUTORY MEASURES) Preventive measures seek to generate an environment where industrial disputes do not arise. This is the machinery for the settlement of industrial disputes has been provided under the Industrial Disputes Act, 1947.It consists of :

1) Works committees: As per the Industrial Disputes Act, 1947, works committees have to be set up all those industrial units which employ 100 or more persons. It is basically a consultative body  Giving greater participation to workers  Ensuring close interaction between labour and management  Generating cooperative atmosphere for negotiation between parties

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Opening the doors to unions to have a clear view of what is going on within the unit Strengthening the spirit of voluntary settlement of disputes

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2) Conciliation: Conciliation or mediation signifies third party intervention in promoting the voluntary settlement of disputes. It is an attempt to reconcile the views of the disputants and bring them to an agreement. Conciliation is generally understood as the friendly intervention of a neutral person in a dispute to help the parties to settle their differences peacefully. Conciliation includes: .1. Conciliation Officers: The Act provides for the appointment of conciliation officers, permanently or for a limited period, for specific area or for a specific industry, to whom the industrial disputes shall be referred for conciliation. The conciliation officer enjoys the powers of a civil court; he can call and witness parties on oath. The conciliation officer examines all facts relevant to the disputed matter and then gives his judgment. .2. Board of Conciliation: The Act also empowers the Government to appoint a Board of Conciliation for promoting the settlement of disputes where the Conciliation Officer fails to do so within 14 days. The Conciliation Board is a tripartite adhoc body consisting of a chairman and two to four other members nominated by the parties to the dispute. The mode and procedure of the functioning of the Board are similar to those of the Conciliation Officer.

.3. Court of Inquiry: In case the conciliation proceedings fail to settle an industrial dispute, the Government has yet another option of referring the disputed to the Court of Inquiry.

3) Voluntary arbitration:  Arbitration is a means of securing an award on a conflict 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.  The parties submit their disputes/issues and are bound by the award of an arbitrator in relation to the matter which is in dispute between them.  This is followed after failure of conciliation proceedings.  The provision for voluntary arbitration was made because of the lengthy legal proceedings and formalities and resulting delays involved in adjudication.  It may, however, be noted that arbitrator is not vested with any judicial powers. He derives his powers to decide the dispute from the agreement that parties have made between themselves

regarding the referring of dispute to the arbitrator. The arbitrator submits his award to the government. The government then publishes it within 30 days of its submission.

Advantages of Arbitration:  It is established by the parties themselves and therefore both parties have good faith in the arbitration process.  The process in informal and flexible in nature.  It is based on mutual consent of the parties and therefore helps in building healthy Industrial Relations. Disadvantages:    Delay often occurs in settlement of disputes. Arbitration is an expensive procedure and the expenses are to be shared by the labour and the management. Judgment can become arbitrary when the arbitrator is incompetent or biased.

4) Adjudication:  It is the process of settling disputes compulsorily through the intervention of a third party appointed by the Government.  There are no court fees to be paid in labour courts, which is a huge relief for all labour matters.  It is decided within a short time frame third the deputy commissioner does it at the earliest and in very few cases the affected party had to visit court.  The Industrial Disputes Act provides a three-tier adjudication machinery consisting of: a. Labour Court: The appropriate government may, by notification in the official gazette constitute one or more labour courts for adjudication of Industrial disputes relating to any matters specified in the second schedule of Industrial Disputes Act. They are: o Dismissal or discharge or grant of relief to workmen wrongfully dismissed. o Illegality or otherwise of a strike or lockout. o Withdrawal of any customary concession or privileges. b) Industrial Tribunal: The appropriate government may, by notification in the official gazette, constitute one or more Industrial Tribunals for the adjudication of Industrial disputes relating to the following matters: o Wages o Compensatory and other allowances o Hours of work and rest intervals o Leave with wages and holidays o Bonus, profit-sharing, PF etc.

o Rules of discipline o Retrenchment of workmen o Working shifts other than in accordance with standing orders c) National Tribunal: The central government may, by notification in the official gazette, constitute one or more National Tribunals for the adjudication of Industrial Disputes in o Matters of National importance o Matters which are of a nature such that industries in more than one state are likely to be interested in, or are affected by the outcome of the dispute.

7.5 INDUSTRIAL DISPUT ACT 1947: The Industrial Disputes Act, 1947 extends to the whole of India. It came into force April 1, 1947. In India, the Industrial Disputes Act, 1947 is the main legislation for investigation and settlement of all industrial disputes. The Act specify the contingencies when a strike or lock-out can be lawfully resorted to, when they can be declared illegal or unlawful, conditions for laying off, retrenching, discharging or dismissing a workman, circumstances under which an industrial unit can be closed down and several other matters related to industrial employees and employers. Main objective of act is to provide machinery for peaceful resolution of disputes and to promote harmonious relation between employers and workers. This act is administered by the Ministry of Labour through its Industrial Relations Division. The Division is concerned with improving the institutional framework for dispute settlement and amending labour laws relating to industrial relations. It works in close co-ordination with the Central Industrial Relations Machinery (CIRM) in an effort to ensure that the country gets a stable, dignified and efficient workforce, free from exploitation and capable of generating higher levels of output. It has been entrusted with the task of maintaining industrial relations, enforcement of labour laws and verification of trade union membership in central sphere. It ensures harmonious industrial relations through:    Monitoring of industrial relations in Central Sphere; Intervention, mediation and conciliation in industrial disputes in order to bring about settlement of disputes; Intervention in situations of threatened strikes and lockouts with a view to avert the strikes and lockouts; Implementation of settlements and awards.

The basic objectives of the Act are:

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To provide a suitable machinery for the just, equitable and peaceful settlement of industrial disputes. To promote measures for securing and preserving amity and good relations between employers and employees. To prevent illegal strikes and lockouts. To provide relief to workers against layoffs, retrenchment, wrongful dismissal and victimization. To promote collective bargaining. To ameliorate the conditions of workers.

Under the Act, statutory machinery has been constituted for conciliation and adjudication of industrial disputes. It includes:  The Act provides for appointment of 'Conciliation Officers', by appropriate Government, charged with the duty of mediating in and promoting the settlement of industrial disputes. The appropriate Government may, as occasion arises, constitute a 'Board of Conciliation', which shall consist of a chairman and two or four other members, as the appropriate Government thinks fit. The appropriate Government may, as occasion arises, also constitute a 'Court of Inquiry' to inquire into any matter appearing to be connected with or relevant to an industrial dispute The appropriate Government may constitute one or more 'Labour Courts' to adjudicate industrial disputes relating to any matter specified in the second schedule like issues related to standing orders, discharge or dismissal of workers, illegality or otherwise of strikes and lockouts, withdrawal of any customary benefit, etc. and to perform such other functions as may be assigned to them under the Act. The appropriate Government may constitute one or more 'Industrial Tribunals' to adjudicate industrial disputes relating to any matter, whether specified in the second schedule or third schedule, and to perform such other functions as may be assigned to them under the Act. The Central Government may, by notification in the Official Gazette, constitute one or more 'National Industrial Tribunals' to adjudicate an industrial dispute which, in the opinion of the Central Government, involve questions 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, such disputes. The Act also makes it obligatory for an employer to set up a 'Grievance Settlement Authority (GSA)' in an industrial establishment in which fifty or more workers have been employed in the preceding twelve months. No reference can be made under the Act to Conciliation Boards, Labour Courts or Industrial Tribunals, unless the dispute has first been the subject of a decision of a Grievance Settlement Authority.

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7.6 SUMMARY: Disputes arise because of perceived differences in interests. That is, if there is an interaction between two or more people or companies, and one person believes that his or her interests are not identical to those of the others, there will be a dispute. In this chapter we have studied about the mechanism for prevention an settlement of disputes. Industrial dispute act 1947 is related to investigation and settlement of all industrial disputes. This act provides the methods to get rid of disputes. Industrial disputes are the disputes which arise due to any disagreement in an industrial relation. The term 'industrial relation' involves various aspects of interactions between the employer and the employees; among the employees as well as between the employers. In such relations whenever there is a clash of interest, it may result in dissatisfaction for either of the parties.

7.7 SELF ASSESSMENT TEST: 1) 2) 3) 4) Write a note on Conciliation in 100 words. Try to find out the differences in collective bargaining and conciliation. Explain Industrial Dispute Act 1947. In your point of view, do we require any amendment in our settlement mechanism of disputes?

7.8 Reference Books:  Industrial Relations and Labour Laws by Monappa,Nambudiri,Selvaraj, Tata Mcgraw Hill Education Private Limited (2012)  Human Resource Management by C.B. Gupta, Sultan Chand & Sons  Industrial Relations and Labour Laws by S C Srivastava, Vikas Publishing HouseReleased:2006