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Industrial Disputes Act, 1947

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2014

Industrial Disputes
Act, 1947
An Ambivalent Institution
Industrial Disputes Act, 1947, is an institution, enacted to make provisions for the
investigation and settlement of industrial disputes. The paper tries to identify some
of the determinants of industrial disputes, such as strikes and lock-outs, and
illustrates the vital significance of resolving or minimizing such disputes. The study
examines the institutional change in the Industrial Disputes Act, 1947, focusing on
why amendments were necessary to the Act, and aiming to achieve an
understanding of the economic performance of the society after the
implementation of the Act over time.

Compiled by-
Shafin Shabir
Shashank Gupta
Vaishnavi Nair
Varushi Jain
Vishaka Agarwal
 Contents

S.NO Particulars Page No.

1. Introduction 3

2. History and formation 4

3. Industrial Disputes Act, 1947- An Overview 6

4. Economic Rationale 8

5. Causes 11

6. Amendments- Overview and Reason 14

7. Impacts 16

8. Settlement 18

9. Prevention 22

10. Conclusion 24

11. References 25

2|Page
INTRODUCTION
History is a continuous dialogue between past and present1, and our main aim of studying history

is to inform the present. “Economic history can be thought of as a search for understanding of the

nature of economic activity in the past. Such study is intrinsically rewarding but also can be

useful in shedding light on questions of relevance to economic policy makers.” (N.F.R Crafts)

But, the society cannot just function on economic theory; we need an amalgam of economic,

political and social theory which shapes the way a society functions. In other words, we need

effective institutions.

Institutions are made up of formal rules and informal norms of behaviour, and their enforcement

characteristics (Douglass North), which structure human interactions and provide incentives and

disincentives for people to behave in a particular manner. Hence, an effective institution provides

that incentive and structure for economic, political and social activity. Laws, constitutions,

regulations, which are specified and defined precisely, constitute the formal part. While, informal

part includes norms, and the understandings of these norms that govern the behaviour of the

people. The evolution of a society over time is dependent on the institutional change and hence is

helpful in understanding the historical change.

When an institution evolves it has the ability to enhance the performance of the economy. Now,

there may be times when these institutions do not prove to be as efficient as expected. It is well

known that the structures that evolve overtime have both positive and negative effects. The bad

performance of an institution is due to poor enforcement of the law, regulations, or the norms

which mainly arise due to poor understanding of that particular institution. On the other hand, an

1
Carr EH. 1967. What is History?

3|Page
institution performs well due to lower costs of information and better awareness and increased

knowledge of the polities.

As economic historians, in this study we will examine an institutional change in the Industrial

Disputes Act, 1947. How this change in the Act impacted the past and further influences the

present and the future. In the later sections, there is also a discussion on how the Act was

amended in order to illustrate the effects of the same. The main objective of the study is to

achieve an understanding of the economic performance after the implementation of the Act over

time.

This study also takes into consideration the importance of labour and the regulations essential for

a peaceful and healthy work environment. In an industry, the work environment cannot always

be peaceful. There is always conflict of interests, and these conflicts result in disputes. Since this

dispute is connected with the condition of the labour and is between the employer and the

employee, it can be referred to as an industrial dispute. The question to be asked now is, how to

prevent such disputes from taking place. The forth coming sections of the paper will focus on

this issue.

The next section of the paper ponders over the details of the Act, defines it and explains how the

Act came into existence. The origin, the rationale behind the formation of the Act, its

determinants, outcomes, and the amendments made and the reasons for these amendments follow

next.

History and formation

The origin of Industrial Disputes Act 1947 can be traced back to the existence of the monopolist

traders in India, that is, The East India Company. Due to cheap labour and raw material, India
4|Page
became the hub for the production of a variety of products which was later sold to international

markets at high prices. This helped East India Company to make huge profits.

Indians at that time produced and exported some of the most desirable fabrics which posed a

threat to the British Crown. Hence, the British decided to cut off this competition by imposing

duties and tariffs on Indian cloth. This was a huge set back to the Indian economy. Not only did

the British impose excise duties but they also flooded the Indian markets with cheaper fabric

produced at the new steam mills in Britain. Since then the legislations enforced on Indians were

more severe than the ones followed in Britain. This led Indian weavers to face complete isolation

from international markets. Hence, instead of exporters of finished products, India became

importer of British goods.

Before delving in more detailed history, we must know the meaning of Industrial Relations (IR).

It was defined by Clegg in 1979 as “the study of rules governing the employment, together with

the ways in which the rules are made and changed, interpreted and administered. Put more

briefly, it is the study of job regulation.” (Clegg, 1979: 1). From this definition it is clear that

employment relationship is central to industrial relations. As IR gained importance at the time of

stable employment and unionized labour force in the manufacturing plants, it emphasized more

on public policies relating to the problem of labour control inside the workplace.

The main objective of the industrial relation legislations in India was to provide the economy

with a protected and bonded labour market. These series of these legislations include the

following acts; Merchant Shipping Act (1859), Workmen’s Breach of Contract Act (1860),

Workmen’s Dispute Act (1860), Indian Factories Act (1881), Trade Unions Act (1926), Trade

Disputes Act (1929), Trade Disputes (Extending) Act (1934), and Trade Disputes Amendment

Act (1938). Failure of the above mentioned acts drew a lot of attention as there was an urgent

5|Page
need to maintain peace and harmony within the industry in order to avoid further harm to the

Indian economy. Hence, the formation of Industrial Disputes Act, 1947 came up in the priority

list of the Government.

Industrial disputes act, 1947- An Overview

Industrial Disputes Act formulated in 1947 was enacted “to make provision for the investigation

and settlement of industrial disputes, and for certain other purposes.” 2 It provides a systematic

institutional design for the prevention and settlement of disputes that arise in an industry. But

how does this Act define an industry? What is an industrial dispute?

To answer this question we turn towards the definitions of these terms under the Act.

1. Industry-Section 2(j) of the Industrial Disputes Act of 1947 defined industry as “any

business, trade, undertaking, manufacture, calling of employers, and includes any calling,

service, employment, handicraft, industrial occupation or avocation of workmen.” This

definition is very broad. It fails to capture all organisations that may or may not come

under an industry. For these types of organisations the definition of an industry has been

constantly modified by the judgements3 given by various High Courts and Supreme

Court. We also have an amended definition of an industry as per Industrial Disputes

(Amendment) Act, 1982 .It defines industry as any systematic activity carried on by

cooperation between an employer and his workmen (whether such workmen are

2
Preamble, THE INDUSTRIAL DISPUTES ACT, 1947 ACT NO. 14 OF 1947 1* [11th March, 1947.]
3
Some Judgements in this regard are- State of U.P VS Jai Bir Singh, (2005) 5; Executive Engineer (State of
Karnataka) VS K. Somasetty, (1997); Tourism Department VS Industrial Tribunal, Kollam (2005); Bangalore
Water Supply & Sewage Board VS A. Rajappa, (1978); Corpn. Of City of Nagpur VS Employees, AIR 1960 SC
675: (1960) 1 LLJ 523; Baroda Borough Muncipality VS Workmen, AIR 1957 SC 110; (D.N. Bannerjee) Budge-
Budge Muncipality VS P.R.Mukherjee, AIR 1953 SC 58.

6|Page
 employed by such employer directly or by or through any agency, including a contractor)

for the production, supply or distribution of goods or services with a view to satisfy

human wants or wishes (not being wants or wishes which are merely spiritual or religious

in nature.”4

This definition also has its loopholes and has been subject to modification through

judgements. Discussing them is beyond the scope of this paper.

2. Industrial Dispute- Section 2(k) of the Industrial Disputes Act defines industrial dispute

as “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;..”5 Normally workmen raise a claim which their employer refuses

to honour. This claim is termed as an industrial dispute. A claim can also be raised by

workers who have been fired or for some reasons have left the industry6.A good reader

might notice that so far we have only talked about collective disputes of workers against

employers. But there also cases where individual disputes are treated as industrial

disputes as in Western Co. VS Worker’s Union7. According to this judgement, an

individual dispute can be treated as an industrial dispute if and only if it is taken up by a

large number of workers or a registered body of workers like Trade Unions.

4
Industrial Disputes Act,1947 in P.L.Malik's Industrial Law, Volume 2, Page 1986-1987, 24th Edition,2013, Eastern
Book Company
6
Industrial Disputes Act,1947 in P.L.Malik's Industrial Law, Volume 2, Page 1986-1987, 24th Edition,2013, Eastern
Book Company
6
Traingular Motors Ltd. VS Bombay Automobile Employees' Union, 2 FJR 179 (LAT)
7
SCC 1 255 (1970); AIR 1970 SC 1205; (1970) 2 LLJ 256.

7|Page
Economic rationale
The economic rationale behind the formulation of Industrial Disputes Act is simple. Without a

proper mechanism in place for the resolution of industrial disputes, they can harm the harm the

economic growth rates of a country. Strikes and lockouts cause massive losses to the country as

they decrease the level of production in the economy and therefore decrease the GDP. Given

below is a closer analysis of the economic rationale behind the working of the act.

1. Collective bargaining- It is a process whereby trade unions, representing workers, and

employers through their representatives, treat and negotiate with a view to the conclusion

of a collective agreement or renewal thereof or the resolution of disputes.8 The labourers

come together and form a union, and the representatives of these unions negotiate with

the employer on issues concerning wage raise, work environment, sanitation facilities,

health and safety, working hours, etc. More essentially, trade unions use collective

bargaining as a set of rules which keep the labour in the workplace regulated, disciplined

and remunerated. Occasionally, in the process of bargaining, employers deliberately pull

out from the ongoing negotiations due to strategic reasons, these deliberate acts cause

tension and friction between both the parties. This havoc then takes the form of strikes,

lockouts, work stoppages and various other forms of agitations. Industrial dispute is the

outcome of all such conflicts between the employers and employees.

2. Strikes and lock-outs - The protests of the labourers in the form of strikes and lockouts

cause a massive economic loss, in terms of production, profits generated, GDP, to the

economy. These strikes and lockouts are harmful both to the employers and the

8
Section: Module 2 - The Collective Bargaining Process. http://www.ilocarib.org.tt/Promalco_tool/productivity-
tools/manual10/m10_3.htm.

8|Page
 employees. Disputes tend to reduce organisational profits. Often, both the parties have

different information and understanding of gains from bargaining which results in

disputes that are unavoidable. Nonetheless, it is important to reduce the duration of the

disputes with the introduction of additional policies. A common notion that thrives

amongst us is, stronger trade unions tend to increase the chances of strikes and disputes

taking place, but this may not be true. On the one end, a strong trade union poses a

colossal threat of going on a strike; whether this threat is carried out or not, depends on

how strong and cooperating the opponent is. The negotiations tend to go well if the

employers are all ears and intent on solving the issue. If the situation is the opposite the

threat of a strike taking place increases. The implementation of the threat is dependent on

what the expectation of the workers is, from the outcome of the strike. A vital point to

note is, higher the threat of a strike, higher is the probability of making the employers

willing to negotiate. This in turn reduces the possibility of a strike. On the other end, for

the employer, imposing lock-outs becomes difficult due to confrontations from the strong

trade unions. Hence, it is in the hands of the trade unions to turn a negotiation into a

dispute.

What is essential to understand is that without trade unions, all the surplus earned would

be bagged by the employers and this is highly unjust even though it is dispute free. Trade

unions formation, therefore, has its own advantages and disadvantages in the industrial

world. Collective bargaining between the employers and employees has the same effects.

If the employer has a higher bargaining power, then the odds of lock-outs taking place

increase. On the contrary, a strong union with greater bargaining power can lead to a

9|Page
 negotiation between the two. But if the negotiations go bad, the consequences are well

felt.

3. Man-days- Another issue that we need to focus on is the man-days lost due to strikes and

lock-outs. Man-days are the days regarded in terms of the amount of work a worker can

perform in this period, which essentially means the number of days lost per worker per

day. Table 1 gives the number of disputes, which includes the number of strikes and

lockouts, in India ranging from 1947- 1961. The table also includes the number of man-

days lost and the number of workers involved at the time of the strikes and lockouts. The

year of 1947 was the peak of industrial unrest with the total number of disputes of 1,181

which resulted in the loss of 1.62 million man-days.

Source: Labour Year Book and Indian Labour Journal

10 | P a g e
In order to reduce such negative effects on the economy, we need an intervention. In cases as

these, the intervention is from the Government. Industrial Disputes Act, 1947 was formed and

implemented for all such reasons. The vital significance of the Act will be explained in the

upcoming sections.

Causes
Industrial disputes can arise between employer-employer; employer-employee; and employee-

employee. A manner to categorise causes of an industrial disputes can be economic and non-

economic. Economic causes include issues relating to rightful compensation such as, wages and

allowances, the conditions of work, bonus, leave or holidays without pay, working hours, unjust

layoffs or retrenchments and so on. Undisciplined behaviour of the workers, victimization,

political factors are some of the items that come under non-economic causes of an industrial

dispute.

We here focus more on the other categorization of the causes of an industrial dispute- industrial

factors and management factors. These are stated below-

1. Industrial factors- These mainly include different forms of protests. Strikes, gheraos,

etc. are the protest from the workers side where strikes, are a form of protest where

employees with same interests come together and stop working in order to get their

demands fulfilled by the employee and gheraos is a form of industrial action wherein

employees imprison or surround their employers in a premise until their demands are met

or until they get satisfactory answers. Retrenchments, lockouts, dismissals, etc are also a

11 | P a g e
 form of protest but from

the employers’ side.

Retrenchment means

removing or firing some

employees from a

department in order to cut

the expenses. Lockouts are

an act performed by the

Figure 1- Source:
employers during a dispute wherein
http://www.populstat.info/Asia/indiac.htm
they do not allow any employees to work or even enter the work premises, either by

changing the locks or by keeping heavy security around the premises. Basically lockouts

mean that industry stops functioning. Dismissals are the act of terminating or removing

an employee from an industry without his/her will.

One of the main reasons as to why an employers’ union or an employees’ union have to

take such adverse steps can be accounted from many reasons. One of the reasons could be

low wage rate. The wage rate that an employee gets does not rise in proportion to the rise

in prices of goods. As we can see from Figure 1, the population decreased till 1920 which

was in proportion to the wage rate. But after 1920 the population kept on increasing

which failed to keep pace with the stagnant wage rate levels, thus leaving the employees

and their families in a situation where they had to struggle for their survival. For example,

a family which earlier had five members now had ten. They found it difficult to meet

their ends with same income. So, an increase in the wages became a necessity for the

employees and their families to survive. Employees were now desperate to earn more

12 | P a g e
 money and were ready to work extra to earn bonuses. Employers acted greedily and did

not fulfil the demands of workers, which created disputes between workers and

employers. Apart from low wages, working hours, employee privileges, bonuses, security

in jobs, safety measures in factories, canteen, leave and holidays with pay, etc. were some

other measures that led to ugly disputes between the employers and the workers.

2. Management’s attitude- Due to lack of proper communication between management

and workers even a small dispute would take longer time to arrive at a settlement.

Employees, thus, felt alienated from the industry and led to increased number of disputes.

Managements were unwilling to recognize any groups or associations formed by the

employees like the trade unions due to which such unions tend to take major steps in

order to get noticed and so that their grievances are heard by the higher authorities, which

harmed the management ,the employees and in turn the nation adversely. These

sometimes also lead to conflict between the unions as well. The management was quite

adamant about the recruitment, promotions, etc. and insisted on the fact that these

decisions are to be made by the management only without the consultation or assistance

from any of the employees, not even the leaders appointed in the unions.

Once again these unions were left unheard. Management debarred the employees from

services and benefits which they deserve, like bonuses for good work, extra wage for

overtime, promotions for constantly performing well, because of which the employees

were less motivated to work. Their only motive left to work was to gain enough money to

keep their ends meet as they knew that whatever amount of efforts they will put in, their

work will never be appreciated for. This used to affect the quality and quantity of

production.

13 | P a g e
Amendments- Overview and Reasons

The Industrial Disputes Act, 1947 provides the machinery and procedure for the investigation

and settlement of Industrial Disputes. The provisions of this act have been amended from time to

time based on the experiences gained from various past judgements. The National commission of

Labour in 1969 made an in-depth study on the various Industrial Relations and procedures

leading to disputes between the employers and employees and decided to make changes in the

act so that the resolutions of various Industrial Disputes could be made in a much speedier way.

Hence, the commission proposed various amendments in the bill to amend the act in 1982.

There were many reasons illustrated to amend the act. Interpretations of various terms in the

original act were vague and hence needed to be made clear. For example, there were difficulties

arising with the interpretation of the term “Appropriate Government”. Hence, a clear definition

of the term was necessary; leading to the commission defining “Appropriate Government” to be

the Central Government itself and no other Government could be referred to as the “Appropriate

Government”. In the 1978, case of the Bangalore Water Supply & Sewerage Board vs. Rajappa,

there were many misinterpretations of the term “industry”. Hence, there was a proposal made to

redefine the term “industry” as well. As a result, certain institutions were excluded from the

definition of this term like hospitals and dispensaries, educational, scientific, research or training

institutes, institutions engaged in charitable, social and philanthropic services, etc. There was

need to maintain in such institutions an atmosphere different from that in a commercial industry.

Therefore, they were excluded from the industry. There was also a need for model grievances so

that proper procedural grievance counselling could be offered to their employees by the

14 | P a g e
employers. Hence, a proposal was made that the grievance redressal procedure becomes

mandatory for every industry employing a hundred or more workers. It was also proposed to fix

a time limit for the adjudication of individual as well as collective disputes to sort out the delays

involved in the entire process. These were the major amendments that were proposed in 1982

and then implemented in 1984.

The major reason for the implementation of these amendments was to reduce the negative impact

that the Industrial disputes had on the economy. Strikes and lockouts, which are a result of

Industrial disputes cause a loss of output produced in the industry which in turn affects the

economy as a whole. It causes the overall GDP of a country to suffer, based on the number of

man days that have been lost as a consequence of these strikes. So, it is necessary to analyse

whether there has been any impact as a result of these amendments proposed in the Industrial

Disputes Act, 1947.

It must be clear as to why any law or an act in general, is amended in the first place. It is done so

as to make changes in the adjudication process and to provide benefits to both the parties to

ensure a smooth running of the entire process. Hence, one of the major reasons the act was

amended was to speed up the adjudication process, which made sure the disputes were solved at

a much quicker rate. This helped the industries to function once again and reduce any damage

that the dispute may have caused to the economy over this period of dysfunction. Amending the

act also meant that it was supposed to have a major influence in reducing the number of strikes

and lockouts but it was proved that it was not the case. As even though amending the act helped

in better decision making on part of the courts; it didn’t really do much when it came to

improving the relationships between the employers and the employees. Also, had the bill made

any proposals regarding collective bargaining, wherein both the employer and employee have

15 | P a g e
equal say regarding matters of disputes, such as salary and perks, before taking it to the courts,

there would have been a significant decrease in the number of industrial disputes. But, even then

it is fair to say that by improving the adjudication process through these amendments, the

economy of the country has improved in some way. Also, one would expect the number of

disputes to fall as the settlement process speeds up, but a peculiar thing to notice is that the

numbers of disputes rise. A possible way to look at is that if the cost of settling the dispute is

reduced, and this process of settlement takes less time, at the same time, the cost of reporting a

dispute may fall as well. This cut down in the cost of reporting would lead to an increased in the

number of disputes reported.

Impacts

Strikes and lockouts have a major say in a country’s economy as they result in the industry being

shut down for a temporary period. This affects the overall production of a country. Strikes allow

employers to dictate their own terms in the running of the industry, allowing them to locking out

industries to maintain their personal profits.

16 | P a g e
Given above is a data chart that shows as to how much of an effect these strikes and lockouts

have had on the overall production over the years. It can be observed from the set data, that the

average number of strikes and lockouts has always had a general upward trend. It can also be

observed that the number of lockouts have always dominated the number of strikes in reducing

production. But the most notable observation that can be made here is that from the mid-eighties

up to the early nineties there has been as much a decrease in man-days lost due to strikes as there

has been an increase in the same due to lockouts. The reason for this is the major economic crisis

that affected India during this period. So, to sustain the economy, the Government wanted to

encourage emerging private investors. Hence, they decided to discourage strikes by declaring

them illegal, which in turn empowered the employers. As a result of this, the number of lockouts

in the country increased significantly. During this period about 47.6% of the strikes were

unsuccessful as a consequence of the Government’s actions.

17 | P a g e
Settlement

As mentioned earlier, costs associated with industrial disputes are high not only from employer

and employees’ perspective but also from society’s perspective. It often leads to strikes, lock-

outs, etc. all of which lead to a loss in production.

Despite all this, a harsh reality is that disputes

do arise in an industry. Therefore, we need a

Conciliation
mechanism to settle them in a peaceful Collective Bargaining
manner. This is done with the help of

settlements as provided in the Act, are shown

Adjudication
in the diagram. All these processes are briefly discussed below.

1. Conciliation- It is the process of settling disputes internally in an industry which

involves intervention of the Government. The Government has a power to appoint either

conciliation officers or a Board of Conciliation for the purpose of conciliation. The aim of

conciliators is to act as mediators between the workers and employers. They come up

with recommendations for settling the dispute and share it with both the parties, i.e.,

management and workers. If the employees and employers agree on the

recommendations, dispute is settled and Conciliating Officers send an official notification

to the Government stating the terms of agreement. But if conciliators fail to convince

workers and employees, then conciliators send report of failure to the Government and

suggest following the process of adjudication for settling the dispute.

18 | P a g e
 2. Collective Bargaining- Another method of settling the dispute internally is through

collective bargaining. The difference between Collective Bargaining and Conciliation is

the role of Government, while the latter is done after the intervention of Government, the

role of Government in latter is non-existent. The process of collective bargaining

involves following steps:

a. Preparation of negotiations- Workers and management should take proper care in

choosing the bargaining terms as the whole process is dependent on the terms of

bargaining. Also both parties should have complete information regarding the

process. Workers are normally represented by Workers’ Union and management

can be represented by employers association or federation of employers. Before

negotiations, both parties should meet amongst themselves and create a strategy

for the process of bargaining.

b. Negotiations- This process involves a series of meetings between the parties

which ensures an exchange of ideas across board. This also involves giving

threats, bluffing, etc. Bargaining continues as long as both parties come to an

agreement. If they do come to an agreement, it formalised through a majority vote

among the representatives of both parties.

c. Drafting of Agreement- After this the • Preparation of Negotiation

agreement has to be drafted formally. This is a • Negotiations

very complex process. Drafters have to draft it • Drafting of Agreement
in such a manner that reflects the real
• Implementation
intentions of both the parties. Also it has to be

19 | P a g e
 an exhaustive document, stating every point of agreement in detail.

d. Implementation- Laws are useless if not implemented. Same is the true for the end

product of collective bargaining. Management and workers need to follow up to

ensure the implementation of the draft.

3. Adjudication- It refers to settlement of a dispute by a formal authority, in this case a

labour court or a tribunal. Labour Courts and Tribunals have the same function, i.e., to

give verdict on an industrial dispute. However, they differ in matters of jurisdiction.

Labour courts handle only those disputes that come under Second Schedule of Industrial

Disputes Act (1947) while Tribunals handle disputes pertaining to Second as well as

Third Schedule of Industrial Disputes Act (1947). The verdict or judgement given by the

labour courts or tribunals is binding on both parties.

Now let us look at some empirical data that has been put together regarding the method of

settlement and the number of terminated disputes for the years 1958-1960. Figure 1 below

shows that around 50% of the disputes were settled through Government intervention in

1958. But this proportion decreased to 36% in 1959 and increased in 1960 to 42%. Industrial

disputes resolved through Mutual settlement, which mainly comprises of Collective

Bargaining, has remained decreased from 25% in 1958 to 22% in 1960. A more surprising

outcome is the increase in the number of disputes that have been settled using voluntary

resumption9. Voluntary resumptions mean that workers return to work and employers end

9
“Others also include voluntary resumption.”-- Strikes in India by Pradeep Kumar, The
Economic Weekly, October 3, 1964

20 | P a g e
 lockouts10. Dispute settlement through voluntary resolution has increased from 20.5% in

1958 to 35% in 1960. It is also important to note that ‘others’ can also include techniques

other than voluntary resolution.

Figure 2- Source: Indian Labour Journal, November, 1961, p 1050, October 1960, p 1084

Figure 2, illustrates the settlement of industrial disputes from the perspective of the method of

settlement on a larger scale. It shows us a trend of settlement of disputes. One can easily observe

that importance of voluntary resumption has increased in terms of dispute settlement and

Government Intervention has been significant in solving the disputes. Collective bargaining,

however, has remained stable in terms of dispute settlement.

10
http://labourbureau.nic.in/ID%202k7%20Chap%202%20Tab%202(IX).htm

21 | P a g e
Figure 3: Source- P.Sinha, Indu Sinha, Seema Shekhar, Industrial Relations, Trade Unions and

Labour Legislation, 2009, Pg. 199, Pearson Education.

Having looked at how the legal system handles the instances of disputes, let us now

prospectively view the ultimate aim of the law, i.e. thwarting the future occurrences.

Prevention
One of the objectives of Industrial Disputes Act, 1947 is to prevent industrial disputes. Also the

cost of settlement of industrial disputes through formalised institutions is huge. Therefore, it is

profitable for both the workers as well as employers to settle the disputes internally or prevent

the industrial disputes from arising. One way to do this is through the formation of a Works

22 | P a g e
Committee. It is a body of representatives of employers and employees who ensure the

development of a harmonious relationship between the workers and employers. It also helps in

creating coordination as well as cooperation in the functioning of the industry which in turn leads

to lesser number of disputes. One of the most important characteristics of Works Committee

which gives it a democratic outlook is the equal number of representatives of workers and

employers.

Another way to prevent disputes is to the presence of a strong Trade Union. Employers must

discuss the terms of

employment and other

• Works Committee
Prevention important policy decisions

of • Participitation of Trade
after consulting the Trade
Union for decision
Industial making Union. This would ensure that
Disputes • Collective Bargaining the interests of workers are

given due weightage which in

turn will lead to decreased number of disputes that arise within an industry.

The industrial disputes can be thwarted with the help of collective bargaining as well. We have

already talked about it in the above sections. This takes us to the last section of the study which

talks about the impacts both economic and social.

23 | P a g e
Conclusion
This paper made readers aware of the complexity in the working of the legislation as well as the

high costs that are associated with industrial disputes. This is one of the reasons for the

decreasing trend in the settlement of industrial disputes through Government intervention.

Nevertheless, as is true for every law, we can’t unequivocally say that this particular law has

turned out to be positive or negative for the economy. On the one hand, the Act has increased the

settlement rate from 92% in 1958 to 98% in 196011 and on the other hand number of strikes and

lockouts has also increased. Thus, our analysis shows that the impact of Industrial Disputes Act,

1947 is ambiguous, thus the name ambivalent.

11
A per data in Figure 1.

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REFERENCES
North, Douglass C. The Role of Institutions in Economic Development. UNECE Discussion

Papers Series No. 2003.2, October 2003.

http://www.unece.org/oes/disc_papers/disc_papers.html.

N.F.R. Crafts is C.U.F. Lecturer in Economics at Oxford University.

http://www.historytoday.com/paul-adelman/what-economic-history.

The Industrial Disputes Act, 1947. Act No. 14 of 1947 1*. [11th March, 1947.]

http://pblabour.gov.in/pdf/acts_rules/inustrial_disputes_act_1947.pdf.

Causes of Industrial Disputes. http://www.naukrihub.com/industrialrelations/causes-of-

industrial-disputes.html.

Saha, Bibhas and Pan, Indranil. Industrial Disputes in India: An Empirical Analysis. Economic

and Political Weekly, Vol. 29, No. 18 (Apr. 30, 1994), pp. 1081-1087.

Published by: Economic and Political Weekly. http://www.jstor.org/stable/4401140.

Kumar, Pradeep. Strikes in India: An Analysis. October 3, 1964. The Economic Weekly.

http://www.epw.in/system/files/pdf/1964_16/40/strikes_in_indiaan_analysis.pdf

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 Chand, Smriti. Industrial Disputes in India: its Causes and Measures.

http://www.yourarticlelibrary.com/industries/industrial-disputes-in-india-its-causes-and-

measures/23437/.

Industrial Disputes Act, 1947 in P.L.Malik's Industrial Law, Volume 2, 24th Edition,2013,

Eastern Book Company

http://www.wageindicator.org/documents/Labour_and_Employment_Law-

A_Profile_on_Pakistan.pdf - Iftikhar Ahmad

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