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Labour and Employment Laws of India

The law relating to Labour and employment in India is primarily known under the broad category of "Industrial Law". Industrial law in this country is of recent vintage and has developed in respect to the vastly increased awakening of the workers of their rights, particularly after the advent of Independence. Industrial relations embrace a complex of relationships between the workers, employers and government, basically concerned with the determination of the terms of employment and conditions of Labour of the workers. Escalating expectations of the workers, the hopes extended by Welfare State, uncertainties caused by tremendous structural developments in industry, the decline of authority, the waning attraction of the work ethics and political activism in the industrial field, all seem to have played some role.

Historical Background
The history of Labour legislation in India is naturally interwoven with the history of British colonialism. The industrial Labour legislations enacted by the British were primarily intended to protect the interests of the British employers. Considerations of British political economy were naturally paramount in shaping some of these early laws. The earliest Indian statute to regulate the relationship between employer and his workmen was the Trade Dispute Act, 1929 (Act 7 of 1929). Provisions were made in this Act for restraining the rights of strike and lock out but no machinery was provided to take care of disputes. The original colonial legislation underwent substantial modifications in the post-colonial era because independent India called for a clear partnership between Labour and Capital. The content of this partnership was unanimously approved in a tripartite conference in December 1947 in which it was agreed that Labour would be given a fair wage and fair working conditions and in return capital would receive the fullest co-operation of Labour for uninterrupted production and higher productivity as part of the strategy for national economic development and that all concerned would observe a truce period of three years free from strikes and lockouts. Ultimately the Industrial Disputes Act (the Act) brought into force on 01.04.1947 repealing the Trade Disputes Act 1929 has since remained on statute book.
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Industry:The term 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.1 Industry as defined in Sec. 2(j) of Industrial Dispute Act, 1947 and explained in Bannerjis case2 has a wide import. Industry means any: Systematic Activity carried on or organized by co-operation between Employer & Employee for the production and/or distribution of goods & services calculated to satisfy human wants and wishes In Management of Safdarjung Hospital v. Kuldeep Singh Sethi3, it was held that an industry is to be found when the employees are carrying on any business, trade or undertaking, manufacture or calling of employers. If they are not, there is no industry as such. It was held that employees in a Government Health Department are not workmen engaged in an industry. The following are industries:1. Manufacturing establishment, Agricultural farms & commercial houses 2. A Municipality: in the term industry the word undertaking is used and a municipality is an undertaking which supplies light or water for payment. D. N. Banerjee v. P. R. Mukherjee4 3. A non-profit organization: The Western India Automobile Association which renders service to its members on a non-profit basis has been held to be an industry within the meaning of the Act. Province of Bombay v. Western India Automobile Association5. Profit Motive is not necessary Characteristics of industry.

The definition has been held to be within the legislative competence of the Central Legislature, Nirmala Textile Finishing Mills v. Second Punjab Tribunal, AIR 1957 SC 329 2 1955 SCR 302 3 1971 (1) SCR 177 4 (1953) SC A. 303 5 (1949) F.C.R 321

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4. A chartered accountant (large scale): If a chartered accountant doing audit work with a large staff it can be called an industry. Rabindra Nath Sen v. The First Industrial Tribunal, W.B & Others.6 5. A college with pharmacy: A college pharmacy manufacturing ayurvedic medicines for sale is an industry. Lalit Hari Ayurvedic College Pharmacy v. Workers Union7. 6. The activities of the Indian standards Institution fall within category of Industry. Workmen of Indian standards Institution v. Management of Indian Standards Institution8. 7. Activities of Government in Industry: The State has to undertake many activities which would otherwise be called industries. Nagpur corporation v. Its Employees.9 The Following are not Industries:1. The University: A University cannot be called an industry. University of Delhi & others v. Ram Nath etc10 2. A Dock Labour Board: A Dock Labour Board, which supplies workmen to the stevedores for loading or unloading of ships, is not an industry. Vizagapatnam Dock Labour v. Stevedores Association, Vishakhapatnam and Ors.11 3. A Chartered accountant: It was held that a chartered accountants office is not an industry. R. Vaidyanathan v. Fifth Industrial Tribunal, W.B & Othrs12 4. A Solicitor: The calling of a solicitor is not a industry, so long as he carries on the normal avocations of a solicitor. Brijmohan Bagaria v. N. C Chatterjee13 5. Educational Institutions: A society whose main object is advancement of learning is not an industry, even though it publishes and sells books. Asiatic Society v. State of W.B14 6. A Religious Institution: A temple, church is not regarded as an industry.

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(1963)67 C.W.N 232 (1960) I.L.L.J 250 8 AIR (1976) SC 145 9 AIR (1960) SC 675 10 AIR (1963) SC 1873 11 (1971) 1. SCA 625 12 (1976) 71 C.W.N 755 13 (1958) 62 C.W.N 473 14 (1967) 71 C.W.N 119

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7. Hospital: Dhanrajgiriji Hospital, Sholapur is not carrying on any economic activity is in the nature of trade of business. Thus,this hospital is not an industry. Management of Safdar Jung Hospital, New Delhi v. Kuldip Singh Seth15 8. Sovereign Functions: Several English and Indian cases held that the activities of a lawful government must undertake the administration of justice, maintenance of law and order, prevention of crime etc and such activities do not come within the term industry. State of Bombay v. Hospital Mazdoor Sabha16 9. Club: Activity of Cricket Club of India is not Industry. Cricket Club of India v. Bombay Labour Union & another.17 10. Other Organizations like Lawyers Office, Humanitarian Institution are not industries.

Grievance Settlement: Evolution & Ambit

The Industrial Disputes Act was enacted with the objective of ensuring a swift and effective settlement procedure for industrial disputes. As had been Stated by Justice Krishna Iyer, the notion of a welfare state could be considered to mean an end to the exploitation of workers and the inception of peace and harmony in the industrial growth of the state. The primary function of the Industrial Disputes Act as contained in a number of cases at its early stages was to facilitate the idea of collective bargaining. Collective bargaining can be defined to be the act by way of which employees organize collectively and bargain with employers regarding certain rights and liabilities within the employer employee relationship. It is thus the coming together of workers to negotiate their employment and other related matter existed under the Industrial Disputes Act, 1947. The first instance however of a legal mechanism of grievance settlement can be traced back to the Industrial Employment (Standing Orders) Act of 1946 that envisaged for the settlement of individual grievances that any employee may have in the industry. With this Act, the right and privilege of the employees of knowing their conditions of work and effectively and individually demanding for them had become the accepted law of the land. However, according to SB Sinha J., the Act did not receive enough attention and a lax in its enforcement rendered it ineffective.

15 16

AIR (1970) SC 1407 AIR (1960) SC 610 17 AIR (1969) SC 276

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Introduction:- Industrial Dispute Act, 1947

The Industrial Disputes Act, 1947 extends to whole of India. It came into operation on the first day of April, 1947. This Act replaced the Trade Disputes Act of 1929. The Trade Disputes Act imposed certain restraints on the right of strike and lockout in Public Utility Services. But no provision existed for the settlement of Industrial Disputes, either by reference to a Board of Conciliation or to a Court of Inquiry. In order to remove this deficiency, the Industrial Disputes Act, 1947 was passed. It is an important social legislation enacted to provide for investigation and settlement of Industrial Disputes and for maintaining industrial harmony. It is an Act enacted to ensure specific justice to both employers and workmen and to advance the progress of the industry by bringing about Harmony and cordial relationship between the parties. The Act also enumerates the contingencies as to when a strike or lock-out can be lawfully resorted to, when they can be declared illegal conditions for laying-off retrenching, discharging or dismissing a workman; circumstances under which an Industrial Establishment can be closed down and several other matters related to industrial employees and the employers. 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. In India, the Industrial Disputes Act, 1947 is the main legislation for investigation and settlement of all industrial disputes. The Act enumerates 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.

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The 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. The CIRM, which is an attached office of the Ministry of Labour, is also known as the Chief Labour Commissioner (Central) [CLC(C)] Organization. The CIRM is headed by the Chief Labour Commissioner (Central). It has been entrusted with the task of maintaining industrial relations, enforcement of labour laws and verification of trade union membership in central sphere.

Industrial Dispute Defined:According to Section 2(k) of the Industrial Dispute Act, the term 'industrial dispute' 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". 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 involved and hence lead to industrial disputes or conflicts. These disputes may take various forms such as protests, strikes, demonstrations, lock-outs, retrenchment, dismissal of workers, etc. Some of the important causes of an industrial dispute are:

Demand for higher wages and allowances. Demand for payment of bonus and determination of its rate thereof. Demand for higher social security benefits.

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Demand for good and safer working conditions, including length of a working day, the interval and frequency of leisure and physical work environment.

Demand for improved Labour welfare and other benefits. For example, adequate canteen, rest, recreation and accommodation facility, arrangements for travel to and from distant places, etc.

Besides, poor personnel management; conflicting legislative measure or government policies; and psychological factors such as denial of opportunity to the worker for satisfying his/ her basic urge for self-expression, personal achievement and betterment may also result in Labour problems.

Main Features of the Act:

Some of the important features of the Act may be summarized as below: 1. Any industrial dispute may be referred to an industrial tribinal by mutual consent of paries to dispute or by the State Government, if it deems expedient to do so. 2. An award shall be binding on both the parties to the dispute for the operated period, not exceeding one year; 3. Strike and lockouts are prohibited during: (a) The pendency of conciliation and adjudication proceedings; (b) the pendency of settlements reached in the course of conciliation proceedings, and . (c) the pendency of awards of Industrial Tribunal declared binding by the appropriate Government. 4. In public interest or emergency, the appropriate Government has power to declare the transport (other than railways), coal, cotton textiles, food stuffs and iron and steel industries to be public utility services for the purpose of the Act, for a maximum period of six months. 5. In case of lay-off or retrenchment of workmen, the employer is requested to pay compensation to them. This provision stands in the case of transfer or closure of an undertaking.
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6. A number of authorities (Works Committees, Conciliation Officers, Board of conciliation, Courts of Inquiry, Labour Courts, Tribunal and National Tribunal) are provided for settlement of Industrial disputes. Although the nature of powers, functions and duties of these authorities differ from each other, everyone plays important role in ensuring industrial peace.

Scope and Objective of this Act: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. This act deals with the retrenchment process of the employees, procedure for layoff, procedure and rules for strikes and lockouts of the company. 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 and other analogous State statutes provide the machinery for regulating the rights of the employers and employees for investigation and settlement of industrial disputes in peaceful and harmonious atmosphere by providing scope for collective bargaining by negotiations and mediation and, failing that, by voluntary arbitration or compulsory adjudication by the authorities created under these statutes with the active participation of the trade unions. With the aid of this machinery, industrial law covers a comprehensive canvas of state intervention of social control through law to protect directly the claims of workers to wages, bonus, retrial benefits such as gratuity, provident fund and pension, claims, social security measures such as workmens compensation, insurance, maternity benefits, safety welfare and protection of minimum of economic well-being. Job security has been particularly protected by providing industrial adjudication of unfair discharges and dismissals and ensuring reinstatement of illegally discharged or dismissed workmen. Protection has gone still further by laying down conditions of service in specified industries and establishments and limiting the hours of work. By and large, all these subjects are "connected with employment or non-employment or terms of employment or with the conditions of labour" of industrial employees. In other words, these matters are the subject matter of industrial disputes, which can be investigated and settled with the aid of the machinery provided under the Act or analogous State statutes.
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The prosperity of any industry very much depends upon its growing production. Production is possible when the industry functions smoothly without any disturbances. This means industrial peace through harmonious relationship between labour and management. Therefore every industrial relations legislation necessarily aims at providing conditions congeniel to the industrial peace. Economic justice is another objective of industrial legislation. Almost all industrial interuptions in production are due to industrial disputes. Dissatisfaction with the existing economic conditions is the root cause of industrial disputes. The Labour demands for fair return is expressed in varied forms; e.g. increase in wages, resistance to decrease in wages and grant of allowance and benefits etc. If a Labourer wants to achieve these gains individually, he fails because of his weaker bargaining power against the sound economic footing of the management. Therefore, the economic struggle of Labour with capital can be fought collectivity by organised Labours. It is with this object to provide economic justice by ensuring fair return to the Labour, the State, being the custodian of public interest, intervenes by 'State legislation' Economic justice has also been ensured to the people of India by our Constitution. Thus the main object of all Labour legislation is to ensure fair wages and to prevent disputes so that the production might not be adversely affected. The principal objects of Industrial Disputes Act as analyzed and interpreted by the Supreme Court are as follows:

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. To avoid unfair Labour practices.

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Adjudicating Authorities under Industries Dispute Act:-

Adjudication is a Judicial (Decision Making) process for settlement of industrial dispute. The adjudication of industrial disputes has been kept out of the jurisdiction of Municipal Courts at the first instance so that effort may be made for settlement of such disputes through some other agencies. The principal techniques of dispute settlement provided in the I.D. Act are collective bargaining, mediation and conciliation, investigation, arbitration, adjudication and other purposes. The various modes of settlement of industrial disputes provided by the Act may be classified under three heads: (1) Negotiation (2) Conciliation (3) Arbitration












Machinery for Settlement of Industrial Dispute are:1. Negotiation It is a dialogue between two or more people or parties, intended to reach an understanding, resolve point of difference, or gain advantage in outcome of dialogue, to produce an agreement upon courses of action, to bargain for individual or collective advantage, to craft outcomes to satisfy various interests of two people/parties involved in negotiation process. Negotiation is a process where each party involved in negotiating tries to gain an advantage for themselves by the end of the process. Negotiation is intended to aim at compromise. Features of Negotiation Process: To confer or discuss with another with a view toward reaching agreement where some interests may be shared and some may be opposed And interactive communication process that may be used whenever one person wants something from another and seeks their cooperation in obtaining it A skill Haggling or bargaining over limited resources A useful way to resolve a problem or conflict
Phases of a Negotiation Preparation

Introductions & Entry: Setting the Stage

Information Gathering & Exploration

Option Generation of Possible Resolutions

Option Analysis and Bargaining

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Negotiation includes Works Committees which is explained below.

Works Committee
The Works Committee was introduced into India, for the first time, by the Industrial Dispute Act, 1947 to promote amity and good industrial relations and to reconcile differences between the workers and management. Section 3 authorises the appropriate government to require any employer having one hundred or more workers to set up such a Works Committee. The number of representatives of workmen in the works committee must not be less than the number of representatives of the employer. It is a committee consisting of representatives of employers and workmen. The representatives of workmen are to be selected from the men engaged in the establishment in consultation with their Trade Union, if there is any registered union. The main purpose is to develop a sense of a partnership between the employer and his workmen. It is a body which aims to promote good-will and measures of common interest. It is a forum for explaining the difficulties of all parties. The manner of constituting the Works Committee has to be provided by the appropriate government. The following are the duties of the Works Committee:(a) To promote measures for securing and preserving amity and good relations between the employer and the workmen. (b) It has to comment upon matters of their common interest or concern and endeavor to compose any material difference of opinion in respect of such matters. (c) Concerned with the day-to-day working of the concerns and to settle the grievances of the employees.18 It was held in Kempand Co. v. Its Workmen, that the decision of the Works Committee are not conclusive, they do have a great weight. Object of Works Committee: (a) Voluntary Negotiation (b) Mediation or Conciliation (c) Arbitration or Adjudication

Kemp and Co. Ltd v. Their Workmen (1955) 1 LLJ 48

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2. Conciliation( Section 4 & 5 )

Conciliation is an alternative dispute resolution (ADR) process whereby the parties to a dispute use a conciliator, who meets with the parties separately in an attempt to resolve their differences. They do this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bringing about a negotiated settlement. Conciliation is an alternative out-of-court dispute resolution instrument. Like mediation, conciliation is a voluntary, flexible, confidential, and interest based process. The parties seek to reach an amicable dispute settlement with the assistance of the conciliator, who acts as a neutral third party. Conciliation is a voluntary proceeding, where the parties involved are free to agree and attempt to resolve their dispute by conciliation. The process is flexible, allowing parties to define the time, structure and content of the conciliation proceedings. These proceedings are rarely public. They are interest-based, as the conciliator will when proposing a settlement, not only take into account the parties' legal positions, but also their; commercial, financial and / or personal interests.

Features of Conciliation Process

Conciliation ensures party autonomy-The parties can choose the timing, language, place, structure and content of the conciliation proceedings.

Conciliation ensures the expertise of the decision maker-The parties are free to select their conciliator. A conciliator does not have to have a specific professional background. The parties may base their selection on criteria such as; experience, professional and / or personal expertise, availability, language and cultural skills. A conciliator should be impartial and independent.

Conciliation is time and cost efficient-Due to the informal and flexible nature of conciliation proceedings, they can be conducted in a time and cost-efficient manner.

Conciliation ensures confidentiality-The parties usually agree on confidentiality. Thus, disputes can be settled discretely and business secrets will remain confidential.

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The process of adjusting or settling disputes in a friendly manner through extra judicial means. Conciliation means bringing two opposing sides together to reach a compromise in an attempt to avoid taking a case to trial. Under the Act, effective conciliation machinery has been provided which can take cognizance of the existing as well as apprehended dispute, either on its own or on being approached by either of the parties to the dispute. The Act further makes conciliation compulsory in majority of disputes. The Conciliation Process has following stages. It is intended to be flexible and informal. The conciliator may:

.give advice on the case management processes offer opinions as to the issues of factual or legal dispute between the parties; give advice about the costs implications and other non legal consequences; and ask parties to explain any decision making constraints

In the words of Alfred Stenger, conciliation implies a compromise-a basically voluntary process the success of which depends upon the citizens willingness to relinquish certain individual liberties as part of his duty to and respect for his fellow men and to accept the other party as equal partner in conciliation proceedings. Conciliation through statutory government machinery quite clearly signifies the abondment of the doctrine of Lassiez Faire in the industrial relations field in favour of government control in the interests of the welfare of all citizens.19

In India, though the accent is on compulsory adjudication, the Industrial Dispute Act also provides for other modes of settlement. These include conciliation usually by a conciliation officer but possibly by a board of conciliation. Conciliators either bring the contending parties to a conference table or try at least to bridge the barriers to communication between them. They try to remove the sources of tension and friction and help the parties to find common areas of agreement. Conciliators must be fair and impartial while finding solutions.


It is the duty of the parties to see that during the pendency of the conciliation proceeding the conditions of service in regard to any matter connected with the dispute should not be altered to the prejudice of workmen, Gujarat Petroleum Employees Union v. Oil & Natural Gas Commission Ltd. (1998) 3 Lab LJ (supp) 145 (Guj).

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Conciliation consists of three authorities:-

A. Conciliation Officer
The Section 4 enacts that the Appropriate Government is empowered to appoint such Conciliation Officers, as many persons, as it thinks fit to mediate in and promote settlement of industrial disputes. The appointment is to be made by notification in the Official Gazette. Such an officer can be appointed for a specified area or for a particular industry as the case may be. The word conciliation means the intervention of a mediator with a view to bring the parties to an agreement. Conciliation Officers are to make all such things and suggestions as appear to them proper and fit to bring the parties to an agreement or to induce them for the settlement of the dispute by amicable agreement. The importance of this Officer or the machinery is that iit is another step toward the prevention of the industrial disputes and settling them between the parties. The position of Conciliation Officer under the Industrial Dispute Act, is an independent agency created with a view to promote industrial peace by making available governmental facilities in the process of collective bargaining. It was held in Jaswant Sugar Mills v. Laxmi Chand20 that the Conciliation Officers duties are administrative and not judicial thus, he is not required to observe the formalities of a judicial trial. In D.C.M. Chemicals Employees Lokhit Congress v. Delhi Administration21, the Delhi High Court held that there is no legal duty cast on the Conciliation Officer to intervene in the matter till some action is taken against the workman and the workman has a grievance to that effect. It has been held in The General Manager, Security Paper Mill v. R. S. Sharma 22 that Section 12(1) requires a conciliation officer to hold conciliation proceedings in the prescribed manner where an industrial dispute exists or apprehended.

20 21

(1963) 1 LLJ. 524 S.C. (1983) 1 LLJ 309 22 1986 Lab. I.C 667

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Duties of Conciliation Officer

Section 12 lays down the following duties of Conciliation Officer:(1) Where any industrial dispute exists or is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under Section 22 has been given, shall, hold conciliation proceedings in the prescribed manner. (2) The Conciliation Officer shall, for the purpose of bringing about a settlement of the dispute, without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute. (3) If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings the conciliation officer shall send a report thereof to the appropriate Government [or an officer authorized in this behalf by the appropriate Government] together with a memorandum of the settlement signed by the parties to the dispute. (4) If no such settlement is arrived at, the conciliation officer shall, as soon as practicable after the close of the investigation, send to the appropriate Government a full report setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and for bringing about settlement thereof, together with a full statement of such facts and circumstances, and the reasons on account of which, in his opinion, a settlement could not be arrived at. (5) If, on a consideration of the report referred to in sub-section (4), the appropriate Government is satisfied that there is a case for reference to a Board, [Labour Court, Tribunal or National Tribunal], it may make such reference. Where the appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor.

(6) A report under this section shall be submitted within fourteen days of the commencement of the conciliation proceedings or within such shorter period as may be fixed by the appropriate Government.

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The duty of a Conciliation Officer is not judicial but administrative. He has to investigate the dispute and do all such things as he thinks fit for the purpose of inducing the parties to arrive at a fair and amicable settlement of the dispute Royal Calcutta Golf Club Mazdoor Union v. State.23

B. Board of Conciliation
Section 5 provides that the Appropriate Government may constitute a Board of Conciliation for promoting the settlement of an industrial dispute. The Board shall consist of a chairman and two or four members as the Government thinks fit. The chairman shall be an independent person. The quorum for conducting the proceedings is two where the strength is three and three where the strength is five. The other members shall be appointed in equal numbers to represent the two parties. Each party is to recommend the names of their representatives, but if this is not done, the government shall select the members.

Duties of BoardSection 13 provides the duties of the Board of Conciliation which are as follows:(1) Where a dispute has been referred to a Board under this Act, it shall be the duty of the Board to endeavor to bring about a settlement of the same and for this purpose the Board shall, in such manner as it thinks fit and without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all such things as it thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute. (2) If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings, the Board shall send a report thereof to the appropriate Government together with a memorandum of the settlement signed by the parties to the dispute. (3) If no such settlement is arrived at, the Board shall, as soon as practicable after the close of the investigation, send to the appropriate Government a full report setting forth the proceedings and steps taken by the Board for ascertaining the facts and circumstances relating to the dispute and

AIR (1956) Cal. 550

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for bringing about a settlement thereof, together with a full statement of such facts and circumstances, its finding thereon, the reasons on account of which, in its opinion, a settlement could not be arrived at and its recommendations for the determination of the dispute. (4) If, on the receipt of a report under sub-section (3) in respect of a dispute relating to public utility service, the appropriate Government does not make a reference to a [Labour Court, Tribunal or National Tribunal] under Section 10, it shall record and communicate to the parties concerned its reasons therefor. (5) The Board shall submit its report under this section within two months of the date [on which the dispute was referred to it] or within such shorter period as may be fixed by the appropriate Government: Provided that the appropriate Government may from time to time extend the time for the submission of the report by such further periods not exceeding two months in the aggregate: Provided further that the time for the submission of the report may be extended by such period as may be agreed on in writing by all the parties to the dispute.

C. Court of Inquiry( Section 6)

Under Section 6 of the Act, the Appropriate Government may constitute a Court of Inquiry for inquiring into any matter appearing to be connected with or relevant to an industrial dispute by notification in the Official Gazette. The Act gives a special definition of the word Court which means a court of inquiry constituted under this Act. The provision for the constitution of such a court is based on a similar provision in the English Industrial Courts Act, 1919. The provision was enacted in the original Act of 1947. The inquiry under this Section is to be limited to the reference made to the Court of Inquiry by the Appropriate Government. The inquiry is however, not limited with regard to an industrial dispute as defined in the Act.

A Court having the prescribed quorum may act in the absence of the Chairman or any members or any vacancy in its number but where the Appropriate Government notifies the court that services of the Chairman have ceased to be available, the Court shall not act until the chairman has been appointed. Section 11 of the Act provides for the procedure and powers.

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Duties of Court of Inquiry-

Section 14 provides that a court is under duty to enquire into matters referred to it and report thereon to the Appropriate Government ordinarily within a period of six months from the commencement of its enquiry. The report of a Court to be in writing and duly signed by all the members of the court. Any member of the court can record any minute of dissent from a report or form any recommendation made within. It has no powers to impose any settlement upon parties. Members of Court of Inquiry shall deemed to be public servants within the meaning of Sec. 21 of IPC. The Court of Inquiry, if it so thinks fit, appoints one or more persons having special knowledge of the matter under consideration as assessor or assessors to advise it In the proceeding before it. On a perusal of the relevant Sections 22, 23 and 33 of the Act relating to the Court during the pendency of a proceeding before a Court of Inquiry, the following right remain unaffected, such as: (i) The right of a workman to go on strike (ii) The right of an employer to lookout his business. and (iii) The right of the employer to dismiss or otherwise to punish the workman in certain cases under Sec.33

3. Arbitration
Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. It is a resolution technique in which a third party reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable.

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Other forms of ADR include mediation (a form of settlement negotiation facilitated by a neutral third party) and non-binding resolution by experts. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial

transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts.

Arbitration is the most traditional form of private dispute resolution. Arbitration is a binding procedure. It is often "administered" by a private organization that maintains lists of available arbitrators and provides rules under which the arbitration will be conducted. Such organizations can also manage the arbitration in whole or in part. Arbitration is adjudicatory, as opposed to advisory, because of the fact that the arbitrator (usually a retired judge or attorney) renders a decision at the end of an arbitration hearing, and that decision is final and binding, subject only to a very limited court review. Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that is voluntarily entered into, where the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. By one definition arbitration is binding and so non-binding arbitration is technically not arbitration. Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed, or legislation has decreed, will be final and binding. There are limited rights of review and appeal of arbitration awards It is a Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the arbitrator's decision. The procedures
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differ from those used in the courts, especially regarding burden of proof and presentation of evidence. Arbitration avoids costly litigation and offers a relatively speedy resolution as well as privacy for the disputants. The main disadvantage is that setting guidelines is difficult; therefore the outcome is often less predictable than a court decision. The Supreme Court also has validated the enforceability of arbitration awards relating to Collective Bargaining agreements.

In addition, arbitration is subject to the legal doctrines of Res Judicata and Collateral Estoppel, which together strictly curtail the option of bringing suits based on issues that were or could have been raised initially.

Res judicata means that a final judgment on the merits is conclusive as to the rights of the parties and their privies, and, as to them, operates as an absolute bar to a subsequent action involving the same claim, demand, or Cause of Action. Collateral estoppel means that when an issue of ultimate fact has been determined by a valid judgment, that issue cannot be relitigated between the same parties in future litigation.

It includes following authorities:-

A. Labour Courts (Section 7)

Section 7 makes the provisions for the constitution of one or more Labour Courts. It is appointed by the Appropriate Government. It shall consist of one person. A person shall not be qualified for appointment as the presiding officer of a Labour Court, unless he is, or has been, a Judge of a High Court; or he has, for a period of not less than three years, been a District Judge or an Additional District Judge; or he has held any judicial office in India for not less than seven years

he has been the presiding officer of a Labour Court constituted under any Provincial Act
or State Act for not less than five years

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Powers of the Labour Court (Sec. 11) Powers of the Labour Court to give appropriate relief in case of discharge or dismissal of workman are as under. Subject to any rule that may be made in this behalf, the labour Court may follow such procedure that it may think fit. The Presiding Officer of the Court may, for the purpose of inquiry into any existing or apprehended dispute, enter into the premises occupied by any establishment to which the dispute relates. The Labour Court shall have all the powers as are vested to a Civil Court. If it thinks fit, appoint one or more persons, having special knowledge of the matter under consideration, as an assessor to advise it in the proceedings before it. Duties of Labour Court (Sec. 15) Where an industrial dispute has been referred to Labour-Court, for adjudication, it shall hold its adjudication expeditiously and shall, submit its award to the appropriate Government. The award shall be in writing and be signed by its Presiding Officer (Sec.16) Every award of Labour Court shall within a period of 30 days from the date of its receipt by the appropriate Government, be published by if in the official Gazette. The award published by the. appropriate Government shall be final and binding on the parties to dispute. Sec.17 -A provides that an award (including arbitration award) shall become enforceable on the expiry of 30 days from the date of its publication under Sec. 17. The award shall not become enforceable on the expiry of 30 days: if the appropriate Government is of opinion, in any case where the award has been given by a Labour Court or Tribunal in relation to an industrial dispute to which it is a party that it will be in expedient to give effect to the whole or any part of the award on public grounds effecting: (i) national economy, (ii) social justice. . if the Central Government, in any case where the award has been given by a National Tribunal, on similar grounds in of the opinion that it would be in expedient to give effect
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to the whole or part of the award. For the purpose of stopping the enforcement of any award, a notification in the Official Gazette is necessary.

B. Industrial Tribunal
Industrial Tribunals were created for first time by the Industrial Dispute Act.1947. Commenting upon the starts of these tribunal, the Supreme Court has observed that tribunals under the Act are invested with many trappings of a Court; but do not have the same status as courts'. The Tribunal is the judicial body or at any rate, a quasi-judicial body. The appropriate Government may by notification in the Official Gazette, constitute one or more industrial tribunals for the adjudication of industrial dispute s relating to any matters specified above as in the case of Labour Court, or the following:(1) Wages including the period and mode of payment (2) Compensatory and other allowances; (3) Hours of work and rest intervals; (4) Leave with wages and holidays; (5) Bonus, profit sharing, provident fund and gratuity; (6) Shift working otherwise than in accordance with standing orders; (7) Classification by grades; (8) Rules of discipline; (9) Rationalization; (10) Retrenchment of workmen and closure of establishment; and

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A Tribunal shall consist of one person only to be appointed by the appropriate Government. A person to be appointed as a Presiding Officer of a Tribunal must .be, or must have been, a judge of a high Court; or if he has for a period of not less than three years, be a District Judge or on Additional District-Judge. Only experienced persons of high integrity can be appointed as Providing Officer of the Tribunal. It is provided by Sec.7-A (4) that the Appropriate Government, if thinks fit, may appoint two persons as assessors to advise the Tribunal in the proceedings before it. Industrial Tribunals shall have the same power vested in a Civil Court when trying a suit, such as: (a) enforcing the attendance of any person and examining him on oath, (b) Compelling the production of document and material object, (c) Issuing commissions for the examination of witness and any such matters as may be prescribed. Section 7 (A) empowers the Appropriate Government to constitute one or more Industrial Tribunals for adjudication of disputes relating to any matter specified in the Schedules. The Second Schedule enumerated the matters which fall within the jurisdiction of the Labour Court. The Third Schedule enumerates the matter which falls within the jurisdiction of the Industrial Tribunal, Jagadish Narain Sharma v. Rajasthan Patrika Ltd24.

C. National Tribunal (Section 78)

The Central Government may, by notification in the Official Gazette, constitute one or more National Industrial Tribunals for the adjudication of industrial disputes 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.


1994 LIR 265 (Raj.)

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A National Tribunal shall consist of one person only to be appointed by the Central Government. In order to be qualified as a Presiding Officer of a National Tribunal, a person must be or must: have been a Judge of a High Court, or must have held the office of the Chairman or any other member of the Labour Appellate Tribunal for at least 2 years. The Central Government may appoint two assessors to advise the National Tribunal, in proceeding before it. The presiding officer of a National Tribunal must be an independent person and must not have attained the age of 65 years (Section 7C). It has same duties as Labour Courts and Industrial Tribunals. (Section 15) EMERGING TRENDS IN GRIEVANCE SETTLEMENT In 2002, the Second National Labour Commission25 submitted its report to the Indian Government. As regards grievance settlement, the report is crucial in the sense that after a gap of 20 years, the issue again came to the forefront when the Commission strongly suggested the setting up of a Grievance settlement authority and also prescribed an elaborate procedure for the same. According to the report of the Commission26, every establishment to which the general law of employment relations applies i.e. those with 20 or more workers, shall establish a Grievance Redressal Committee consisting of equal number of workers and employers representatives, which shall not be larger than ten members or smaller than two members depending on the employment size of the establishment, as may be prescribed. One member of the committee may be designated as Chairman and another as Vice Chairman and a system may be established to see that one of the two is from the management, and the other from among employees representatives. The Grievance Redressal Committee shall be the body to which all grievances of a worker in respect of his employment, including his non employment will be referred for decision within a given timeframe. Where the worker is not satisfied with the decision of the committee, he shall be free to seek arbitration of the dispute by an arbitrator, to be selected from

For instance, See Central Silk Board, GRIEVANCE REDRESSAL MECHANISM, available at


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a panel of arbitrators to be maintained in the manner prescribed, or seek adjudication of the dispute by the labour court. The decision of the labour court or arbitrator shall be final. The Commission also recommended that all matters pertaining to individual workers, be it termination of employment or transfer or any other mater be determined by recourse to the grievance redressal committee and then only to other dispute settlement mechanisms like arbitration, conciliation and judicial recourses. This may also lead one to conclude that such mechanism seeks to remove the workload of labour courts and other mechanisms and in turn provides for a speedy settlement of disputes to the aggrieved worker. Now let us assume a situation that a trade union represents a particular claim to the employers and achieves a settlement in the issue. However, after such a settlement, there are certain individuals having a grievance against the order. The question then arises as to whether there is any remedy for these individuals under the existing legal mechanism. This question was answered by the Court in AR Brahme v. Gujarat Urja Vikas Nigam Ltd27. where is was contended that the established principle of law in respect of collective bargaining dictates that the settlement arrived at between the parties is binding upon all the workers irrespective of their individual grievance. The fundamental principle in the regard is that the unions would take care of the majority workers and it will work for their betterment.28 In Chairman, State Bank of India v. All Orissa State Bank Officers Association 29, the Supreme Court held that there is no common law right of a trade union to represent its members, whether for purposes of collective bargaining or individual grievances of members. On general principles of equity, justice and fair play it was held that minority groups and individuals should also be afforded an opportunity of ventilating their grievances in a given situation and merely because the majority union is representing a claim the rights of other minority and individuals cannot be left out.

27 28

(2008) 1 GLR 736 Herbertsons Ltd v. The Workmen of Herbertsons Ltd, 1977 SCC (L&S) 48 : Tata Engineering and Locomotive Company Limited v. Their Workmen, 1982 SCC (L&S) 1. 29 Chairman, State Bank of India v. All Orissa State Bank Officers Association, (2003) III LLJ 751 (SC).

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Some Important Definition: Collective bargaining

Collective bargaining is a technique by which disputes of employment are resolved amicably, peacefully and voluntarily by settlement between labour unions and managements. The method of collective bargaining in resolving the Industrial dispute, while maintaining industrial peace has been recognized as the bed rock of the Act. Under the provision of the Act, the settlement arrived at by process of collective bargaining with the employer has been given a statutory recognition under Section 18 of the Act. Under the Act two types of settlement have been recognized: 1. Settlement arrived in the course of conciliation proceeding before the authority. Such settlements not only bind the member of the signatory union but also non-members as well as all the present and future employees of the management. 2. Settlement not arrived in the course of conciliation proceedings but signed independently by the parties to the settlement binds only such members who are signatory or party to the settlement. Section 19 of the Act prescribes the period of operation inter alia of such a settlement and envisages the continuation of the validity of such a settlement unless the same is not replaced by another set of settlement, while Section 29 prescribes the penalty for the breach of such a settlement.

Section 6 of the Act empowers the government to constitute a court of inquiry, for inquiring into any matter pertaining to an Industrial Dispute. The procedure of the court of inquiry has also been prescribed by Section 11. While the report of the court is not binding on the parties, many time it paves the way for an agreement.

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Appropriate Government
According to 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.

According to Sec 2 (b) Award 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

According to 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 authorized by the Appropriate Government and the Conciliation Officer.

A grievance can be defined as the sense of resentment or antipathy typically arising out of a feeling of being wronged and as an expression of discontent made to an organization in relation to the services rendered by it and related to its products, where a certain standard is explicitly or implicitly expected. A grievance is thus any sort of dissatisfaction, which needs to be redressed.. It can be real or imaginary, legitimate or ridiculous, rated or unvoiced, written or oral, it must however, find expression in some form of the other.

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The Industrial Disputes Act, 194730 reflects this very concern of the State and thus justifying a strong need for the intervention of the State in modern industrial disputes. State intervention in industrial relations is essentially a modern development. The Third Five Year Plan formulated a Code of Discipline for industries which was voluntary accepted by the management and the labour. Through it the industrial disputes could be mutually settled and litigation could be avoided as far as possible. The establishment of Works Committees, the encouragement of workers organizations and the settlement of the problem of bonus by constituting a Bonus Commission were the other features of this plan document31. The first few traces of the evolution of alternative dispute mechanisms to solve labour disputes can be traced from this document. Needless to say, one of these mechanisms is the proposed establishment of Grievance Settlement Authorities to solve disputes between individual workers and the management. Recently the courts are recognizing the role of the individual in labour disputes. This is a shift from the traditional form of collective bargaining and seeks to take further the notions of social justice and social equity enshrined in the Constitution of India and labour statutes32.

The Central and State Governments as well as various organizations under them have set up grievance redressal mechanisms to look into the complaints of citizens. Besides, there are other institutional mechanisms like the CVC, and the Lokayuktas which have the mandate to look into the complaints of corruption and abuse of office by public servants. Many organizations, for example, the Reserve Bank of India, have set up Ombudsman to look into grievances. Thus, the grievance redressal mechanism is an integral part of any governance system. Today, with increased awareness levels, the aspirations of individuals have increased as have their demand for prompt and effective resolution of their grievances. Grievances however are human problems with lot of emotions and sentiments attached with them and thus require informal, proactive procedure of resolution in order to be effective.

30 31

Industrial Dispute Act, 1947(Act 14 of 1947) See BS Sinha, LAW AND SOCIAL CHANGE IN INDIA, 1st ed. 1987, p. 318 32 See Gajendragadkar J., State of Mysore v. Workers of Gold Mines, AIR 1958 SC 923

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