Industrial Disputes Act 1947

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Industrial Disputes Act, 1947

History of the Industrial Disputes Acts in India:

Employers’ and Workmen’s Disputes Act of 1860:

- First law dealing with industrial disputes in India
- Favoured employers over workers
- Replaced by the Trade Disputes Act of 1929

Trade Disputes Act of 1929:-

- aimed to provide a conciliation mechanism to settle
disputes peacefully.
- limited the right to strikes and lock-out in public
utility services
- lacked provision to make industrial dispute
settlement legally binding on parties involved.

The Industrial Disputes Act, 1947:-

- objective: investigation and settlement of industrial disputes
by conciliation, arbitration and adjudication

Introduction of the Industrial Disputes Act, 1947

• The two institutions for the prevention and settlement of industrial disputes:
o Works Committees and
o Industrial Tribunals
• Conciliation became mandatory for public utility service disputes and optional
for other industries, with time limits for conciliation proceedings.
• Strikes and lockouts were prohibited during conciliation and adjudication
proceedings, and awards of Industrial Tribunals were declared binding.
• The government could declare an industry a public service during public
interest or emergency.
• The Industrial Disputes Act, 1947, was passed with amendments from the
Select Committee and came into force from April 1, 1947.
• Since enactment, the Industrial Disputes act, 1947 has been amended
several times.

Objectives of the act:

(i) Securing and preserving amity and good relations between the employer and
workmen.

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(ii) Investigation and settlement of industrial disputes between:

- employers and employers
- employers and workmen
- workmen and workmen with a right of representation
- by registered trade union or federation of trade unions or an association of
employers or a federation of associations of employers.
(iii) Prevention of illegal strikes and lock-outs.
(iv) Relief to workmen in the matter of lay-off and retrenchment.
(v) Promotion of collective bargaining

Application of the act:

- Extends to whole of India
- applies to an existing and not to a dead industry
- applies to all industries irrespective of religion or caste of parties.
- applies to the private and public (central as well as state govt.) industries

Administration of the act:

Definitions
• Appropriate Government (Section 2 (a)): The term "appropriate
Government" refers to the government that has jurisdiction over an industrial
dispute.

Central Govt. as
appropriate Govt.
If an industrial dispute is related to any industry under the Central
Government, a railway company, certain specified industries, or certain
government-owned corporations

State Govt. as
appropriate Govt.

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any other industrial dispute, including those involving state-owned

corporations, subsidiary companies, or autonomous bodies owned or
controlled by the state government, the appropriate government will be
the state government.

However, if there is a dispute between a contractor and contract labour in an

industrial establishment, the appropriate government will be the one that has control
over that establishment, which may be either the Central or State Government.

• Arbitrator (Section 2(aa)): Arbitrator includes an umpire (any person who is

appointed to determine differences and disputes between two parties).
o The arbitrator is appointed by mutual agreement between the parties or
by the government, and the decision of the arbitrator is binding on both
parties.

• Average Pay (Section 2(a)): the average of the wages payable to a

workman--
o in the case of monthly paid workman, in the 3 complete calendar
months,
o in the case of weekly paid workman, in the 4 complete weeks,
o in the case of daily paid workman, in the 12 full working days,
In cases where the workman has not worked for the full period specified
above, the average pay is calculated based on the wages payable for the
period he actually worked.

• Award (Section 2 (b):

o Refers to a final or interim decision made by a Labour Court, Industrial
Tribunal, or National Industrial Tribunal regarding any industrial dispute
or related questions.
o It also includes an arbitration award made under section 10A of the
Act. (will explain later in the chapter).

Case study
Cox & Kings (Agents) Ltd. v. Their Workmen
- It was explained that for an award to be made, there must be an existing
or anticipated industrial dispute, and the Labour Court or Tribunal must
adjudicate the dispute based on relevant evidence and their own judgment.
- The definition of "award" also includes interim awards, but these
should not be confused with interim relief granted by the Tribunal under
Section 10(4).
- If an industrial dispute is withdrawn by order of the adjudication
authority, there is no award because there has been no determination of the
dispute on merit.
- However, if the parties settle the dispute through a private agreement
and ask the Tribunal to make an award based on the agreement, that award
will be binding on the parties as long as there was no fraud or coercion
involved.

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- If a party fails to appear before the Tribunal, the Tribunal may proceed ex-
parte, but it cannot make an award unless it has considered the evidence
and exercised its judgment.

• Banking Company (Section 2(bb):

o Refers to a company that provides banking services and has
branches or establishments in multiple states.
o It includes various specific banks like the Export-Import Bank of India,
the Industrial Development Bank of India, and the State Bank of India,
along with their subsidiary banks.
o This definition is outlined in section 5 of the Banking Companies Act,
1949.

• Board (section 2(c): Means a Board of Conciliation constituted under this Act

Conciliation
- Conciliation means the process of resolving an industrial dispute by
mediation between the parties involved, with the assistance of a third
party known as a conciliator appointed by the appropriate government.
- The aim of conciliation is to reach a settlement that is acceptable to both
parties and avoid a strike or lockout.
- If the conciliation process fails, the dispute may be referred to a labour
court or an industrial tribunal for adjudication.

• Closure (Section 2(cc): Refers to the permanent shutdown of a workplace or

a part of it.
• Conciliation officer (Section 2(d): Means a conciliation officer appointed
under this Act
• Conciliation proceeding (Section 2(e)): Any proceeding held by a
conciliation officer or Board under this Act.
• Controlled Industry (Section 2(ee): Any industry that is deemed necessary
for the public interest and is under the control of the Union, as declared by
any Central Act.
• Court (Section 2(f): a Court of Inquiry constituted under this Act.
• Employer (Section 2(g):
o In central or state govt. industry: Authority prescribed by the govt. or
the head of the department in case no authority is prescribed.
o In non-govt. industry: Chief executive officer of that authority is the
employer.
• Executive (section 2(gg): The group responsible for managing a trade union
is called the executive body.
• Independent (Section 2(i):
o A person is considered "independent" when appointed as the chairman
or member of a Board, Court or Tribunal for an industrial dispute if they
have no connection with the dispute or any affected industry.
o However, if the person is a shareholder of a company connected
to the dispute, they are still considered independent, but they

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must disclose the nature and extent of their shares to the

appropriate Government.

• Industry (Section 2(j):

o "Industry" means any systematic activity carried on by cooperation
between an employer and their workers for the production, supply, or
distribution of goods or services to satisfy human wants or needs.

Activities
included
- activities carried out with or without investment of capital
- activities with a motive to make a profit
- activities related to sales and promotion

Activities
excluded
- Agricultural operations (unless carried out in combination with another
industry)
- Hospitals or dispensaries, educational or research institutions, charitable
organizations, khadi or village industries
- Government activities related to defence research, atomic energy, or space.
- Domestic services and co-operative societies/clubs with less than 10
employees.

The triple test

The triple test outlined in the Supreme Court case Bangalore Water Supply and
Sewerage Board, etc. vs. R. Rajappa Others is used to determine whether an
activity is considered an "industry" under the Industrial Disputes Act, 1947.
This test consists of three factors:
1) the activity must be systematic,
2) there must be an employer-employee relationship, and
3) the activity must provide services to society at large.

Example:
In the case of Gujarat Forest Producers, Gatherers and Fore Workers Union vs.
State of Gujarat, it was determined that the Forest and Environment Department of
the State Government is not an industry under the Act. Whether any unit,
establishment, or undertaking of the Department is considered an industry or not
depends on the nature of the work being done.

Industrial Dispute:
Under section 2 (k) (as it is)

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“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.”

Simplified definition
"Industrial dispute" refers to a conflict related to employment or labour conditions
between employers and employees or among employees themselves. It can include
disagreements over employment/non-employment status, terms of employment, or
labour conditions.

The above definition can be analysed and discussed under the following heads:
(a) Existence of a dispute or difference
(b) Parties to the dispute
(c) Subject matter of dispute
(d) Dispute in an “Industry”

(a) Existence of a dispute or difference:

- The dispute must have a clear and substantial issue, rather than just a
personal quarrel or agitation.
- The demands made by employees should be reasonable and within the
employer's capacity to fulfill.
- The dispute must also have the potential to endanger industrial peace if
not resolved.
- An industrial dispute only exists when employees raise the issue with their
employer, and the demand is not met.
- If a case is referred for adjudication, it is assumed that an industrial dispute
exists.
- Just participating in conciliation proceedings is not sufficient to consider
it an industrial dispute.

(b) Parties to the dispute

- Most industrial disputes occur between employers and employees, but other
groups may also raise disputes to widen the scope of the issue.
- Workmen or their unions can raise the dispute, based on their right of
collective bargaining.
- The dispute can also be raised by a minority union/sectional union or a
substantial number of its members. (not mandatory to be a registered Trade
Union)
- However, individuals who are not employees of the same employer
cannot convert an individual dispute into an industrial one.
- But industrial dispute can be raised in respect of non-workmen.
- Even legal heirs can initiate and continue an industrial dispute after the death
of a workman.

Individual dispute whether industrial dispute

- An individual dispute (relating to ‘any person’) was not considered an
industrial dispute but it can develop into an industrial dispute if it directly and

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substantially interested in the employment, non-employment, or conditions of

work of the concerned workmen.

Workmen of Dimakuchi Tea Estate vs. The Management of Dimakuchi Tea

Estate (1958) AIR 353)
- In this case, the appellants, who were the workmen of Dimakuchi Tea
Estate, supported the cause of one Assistant Medical Officer, who had been
dismissed without a hearing but received payment and left the estate.
- In this case, the Supreme Court of India had to decide whether a dispute
raised by workmen concerning a person who was not a workman could be
an industrial dispute.
- The Supreme Court held that such a dispute could be an industrial dispute if
the workmen had a direct and substantial interest.

(c) Subject matter of dispute

- The term "industrial dispute" refers to a dispute relating to employment, non-
employment, terms of employment, or conditions of labour of any person.
- The dispute may arise between:
o an employer and a workman or a group of workmen
o workmen themselves
o two or more unions.
- Employment or non-employment:
o If an employer refuses to employ a workman dismissed by him, the
dispute relates to non-employment of workman.
o But the union insists that a particular person should not be employed
by the employer, the dispute relates to employment of workman
- Terms of employment: all terms and conditions stated in the contract of
employment, as well as those understood and applied by parties in practice or
by common consent.
- Condition of labour:
o Amenities provided to workmen
o Matters related to safety, health, and welfare of workers are also
included.
o Disputes relating to payment of pension

(d) Dispute in an “Industry”:

- To be considered an "industrial dispute", the disagreement must be related to
an industry.
- This means that the existence of an industry is necessary for there to be an
industrial dispute.
- An industrial dispute can only arise in an existing industry and not in a closed
one.

Case study

Pipraich Sugar Mills Ltd. v. P.S.M. Mazdoor Union, A.I.R. 1957

Pipraich Sugar Mills Ltd. v. P.S.M. Mazdoor Union case involved a dispute
between the sugar mill and its workers' union regarding the retrenchment of

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workers due to the closure of the mill. The court found that since the
industry was closed, no industrial dispute could exist. This decision
affirmed that the existence of an industry is a condition precedent to an
industrial dispute, and without it, no such dispute can arise.

• Industrial establishment or undertaking (Section 2(ka):

o Refers to a place where any industry is being conducted.
o If there are multiple activities being carried out in the establishment and
only one or some of those activities are industries, then the following
conditions apply-

Separable Supportive Only Predominant activities unit will be

activities unit from
predominant activities considered a separate industrial
unit establishment or undertaking.

Non- Separable Entire establishment or undertaking is

Supportive activities unit
from predominant considered an industrial
activities unit establishment

• Insurance company (Section 2(kk):

o Refers to a company that offers insurance services, and is defined
under section 2 of the Insurance Act, 1938.
o It includes companies that have branches or other establishments in
more than one state.

• Lay-off (Section 2(k):

o A situation when an employer can't provide work to a worker due to
various reasons as:
- shortage of coal, power or raw materials, or
- accumulation of stocks, or
- break-down of machinery, or
- natural calamity, or
- for any other connected reason.
o The worker being considered laid-off if he is present on the
establishment's muster rolls and not retrenched.
o It is a temporary stoppage and within a reasonable period of time.

If the worker presents himself for work during normal working hours on any day and
is not given employment within two hours of his presentation, he is considered laid-
off for that day.
If the worker is asked to present himself during the second half of the shift and is
given employment, he is considered laid-off only for one-half of that day.

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However, if the worker is not given any employment even after presenting himself,
he is not considered laid-off for the second half of the shift for the day and is entitled
to full basic wages and dearness allowance for that part of the day.

• Lock-out (Section 2(L):

o The temporary closure of a workplace, suspension of work, or
refusal by an employer to continue employing any number of workers
employed by them.
o In lock out, the employer refuses to continue to employ the
workman employed by him even though there is no intention to close
down. Closure is not a lock out.

Lock out is an inverse to strike. Just as “strike” is a weapon available to the

employees for enforcing their industrial demands, a “lock out” is a weapon
available to the employer to persuade by a coercive process the employees to see
his point of view and to accept his demands.

Difference between Lay off- and Lock out

Lay off Lock-out

Employer doesn't provide employment Employer deliberately closes the
due to specific reasons business for reasons unrelated to the
business

During lay-off, the business continues In lock-out, the place of business is

closed

Wages may be paid Wages or compensation are not paid

unless it is held to be unjustified
It is due to trade reasons It is a collective bargaining tool

Lay- off is not subject to certain Lock-out is subject to certain restrictions

restrictions and penalties and penalties

Both lay-off and lock-out are temporary and result in the contract of employment
being suspended but not terminated.

• Office bearer (Section 2(LLL): in relation to a trade union includes any

member of its executive (excluded an auditor)

• Public utility services (Section 2 (n): refers to services or industries that are
essential for the public, including:
o railway and air transport services,
o major ports or docks,
o sections of industrial establishments related to safety, postal,
telegraph or telephone services, power, light, and water supply
industries, public sanitation systems, and

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o any industry specified in the First Schedule of the Act that the
government declares as a public utility service for a specified period.

• Retrenchment (Section 2 (oo):

o The termination of a worker's service by the employer for any
reason other than disciplinary action.
o Industry should be a working or a continuing or an existing industry, not
one which is altogether a closed one.

- voluntary retirement, or
Does not include - retirement at the age of superannuation, or
- termination due to the non-renewal of a contract, or
- termination due to continued ill-health

o Deemed retrenchment: The termination of service of a workman on

transfer or closure of an undertaking was treated as ‘deemed
retrenchment’.

Introduction of Deemed retrenchment

The interpretation of the term "retrenchment" in earlier cases suggested that it only
applied when there was a surplus of workers in an existing industry. This view
was challenged by the introduction of new sections 25FF and 25FFF which
provided compensation for workmen in case of transfer or closure of an
undertaking. This expanded the scope of the term "retrenchment" under the Act
to include termination of service due to transfer or closure of an undertaking.

• Settlement
o This section envisages two categories of settlements
(i) a settlement arrived at in the course of conciliation proceedings,
and (ii) a written agreement between employer arrived at otherwise in
the course of conciliation proceedings.
- Conciliation proceedings are a form of dispute resolution
between two parties with the participation of an impartial third
party.
o For the second category, it must be signed by the parties in the
prescribed manner and must be sent to an officer authorized by the
appropriate government and conciliation officer in a prescribed manner.
o Settlements must be in writing and cannot be changed by oral
agreement.
o If the settlement is accepted by the majority of workers, it is presumed
to be fair and just.
o However, a memorandum of settlement signed by union officials
without proper authorization does not count as a settlement.

• Strike

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o A "strike" is when a group of people who work together in any industry

collectively stop working, either by refusing to work or agreeing
not to work.
o This can be an organized decision or an understanding among
individuals working together.

Strike is a weapon of collective bargaining in the armour of workers. The

following points may be noted regarding the definition of strike:
o The workmen's refusal should be in respect of normal lawful work which the
workmen are under an obligation to do.
o If the employer has no right to ask for performance of a certain work, refusal
to do such work does not constitute a strike.
o To be considered a strike, the striking workman must be employed in an
"industry" which has not been closed down.
o The striking workmen still retain their status as employees, even if they are
not currently working.
o If the strike is deemed illegal, the employer can take disciplinary action
against the striking workers, including dismissal.

Types of strike and their legality

(1) Stay-in, sit-down, pen-down or tool-down strike:
• In such cases, workmen enter the premises of their employment and refuse
to take their tools in hand and start their usual work.
• These types of strikes are also called primary strikes.

(2) Go- slow:

• Intentionally slowing down the work, thereby reducing output, while still
claiming full wages.
• It is a serious misconduct and a breach of the contract of employment.

(3) Sympathetic strike:

• A sympathetic strike is when workers stop working in support of the demands
of workers from another employer.
• This is unjustifiable and the employer who is not involved in the dispute has
the right to take disciplinary action against absent workers.

(4) Hunger strike:

• Workers may sometimes engage in a "hunger strike" by fasting near the
workplace or employer's residence.
• If this does not cause a stoppage of work and is peaceful, it will not be
considered a strike.
• However, if it prevents other workers from doing their job, it will be treated as
a strike.

(5) Work-to-rule:
• It involves employees doing only what is strictly required by the rules and
procedures of their job.
• It is not considered a strike because work is not stopped.

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Legality of strike
• The legality of a strike is determined by the legal provisions of the Industrial
Disputes Act, and the reason for the strike is not relevant in determining its
legality.
• The Act has sections that deal with strikes and impose restrictions on their
commencement and prohibit their continuance.

Wages during strike

• If a strike is legal and justified, the workers are entitled to full wages for the
strike period, but if it is illegal or unjustified, they are not entitled to wages
unless special circumstances exist.
• If both the management and the workers are equally to blame for a situation
involving a strike or a lockout, the workers are usually given half of their
wages for the period involved.
• However, in some cases, even if the strike is legal, the workers may not be
entitled to wages for the strike period.

• Village Industries (section 2 (rb)): As assigned under the Khadi and Village
Industries Commission Act, 1956, which is:
o "village industries" refers to any industry in a rural area that produces
goods or services with or without the use of power, and the fixed
capital investment per artisan or worker does not exceed one lakh
rupees (or a different amount specified by the Central Government).
o It includes non-manufacturing units established to promote, maintain,
assist, service, or manage any village industry.
o The investment limit is higher (one lakh and fifty thousand rupees) for
industries located in hilly areas.

• Wages (Section 2(rr): Any payment in money or kind, that an employee is

entitled to receive for the work done. It:

Includes Excludes

Allowances
Facilities (medical, home, etc.)
Food concessions
Travelling concessions
Commissions on sales or business
Bonuses
Contributions to pension or provident funds
Gratuity payable on termination of service

• Workman (Section 2(s): The term "Workman" refers to any person (including
an apprentice), employed in any industry to do any kind of manual, unskilled,
skilled, technical, operational, clerical, or supervisory work for compensation,
regardless of whether the terms of employment are expressly stated or
implied.

It includes:

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o Any dismissed, discharged, or retrenched employee who seeks compensation

or reinstatement,
o Any employee who was terminated due to a disciplinary action but disputes
the dismissal, and
o Any employee whose agreement with the employer is terminated or whose
terms of employment are altered.
o Part-time employees

It excludes:
o Subject to the Army Act, 1950, or the Air Force Act, 1950 or the Navy Act,
1957
o Employed in the police service or as an officer or other employee of a prison
o Employed mainly in a managerial or administrative capacity
o Employed in a supervisory capacity drawing more than Rs. 10,000 per month
as wages

Some work profiles ‘In or Out’ of the category of ‘workmen’

• Teachers: On the basis of definition of workman, the teachers employed
by the educational institution cannot be considered as workmen.
as imparting of education which is the main function of the teachers
cannot be considered as skilled or unskilled manual work or supervisory
work or technical work or clerical work.
• Medical representative whose main work is promoting sales is not a
workman, while a salesman who performs manual and clerical work can be
considered a workman
• A temple priest is not a workman

Some of the expressions used in the definition of “workman” have been the subject
of judicial interpretation and hence they have been discussed below:

(1) Employed in “any industry”:

To be a workman, a person must have been employed in an activity which is an
“industry” as per Section 2(j).
Even those employed in operation incidental to such industry are also covered under
the definition of workman.

(2) Person employed:

o To be considered a workman, a person must be employed by an employer in
an industry, usually under a contract of employment.
o The employer has control and supervision over the employee's work, and the
contract can specify how the work is to be done.
o Payment on a piece-rate basis does not necessarily disprove the master-
servant relationship, and even part-time and casual workers can be
considered workmen. The key factor is whether there is a jural relationship of
master and servant between the employer and employee.

Difference between ‘contract of employment’ and ‘contract for employment’

o Contract for employment: Employer can require what is to be done.
In the case of contract for employment, the person will not be held as a
‘workman’ but only an ‘independent contractor’.

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o Contract of employment: The employer has control and supervision over

the employee's work, and the contract can specify how the work is to be
done.

(3) Employed to do skilled or unskilled etc.

- Only those persons who are engaged in the following types of work are
covered by the definition of “workman”:
o Skilled or unskilled manual work;
o Supervisory work;
o Technical work;
o Clerical work.
- Where a person is doing more than one work, he must be held to be
employed to do the work which is the main work he is required to do.
- For example: If their main work is supervisory and they do clerical work only
occasionally, they are considered a supervisor.

Chapter II: Authorities under the act and their duties

Works

Committee

National Conciliation

Tribunal Officers

AUTHORITIES
Labour Boards of

Tribunals Conciliation

Industrial Court of

Tribunals Inquiry

Formation body of the authorities:

The appropriate govt. can create the following authorities (except National Tribunals)
under this act by announcing it in the official gazette.
Responsibilities of the committee:
to promote good relations between the employer and workers.

Works Committee
Formation of Works Committee for Industrial Establishments:

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• When required?
o If an industrial establishment employs 100 or more workers, or have
been employed on any day in the preceding 12 months, the
appropriate government can require the employer to form a Works
Committee.
• Number of representatives:
o with an equal number of representatives from the employer and
workers, as per Section 3.
o Worker representatives are chosen from among the workers and their
trade union, if any registered under the Indian Trade Unions Act, 1926.

• Responsibilities of the committee:

o to promote good relations between the employer and workers.
o They discuss matters of common interest and try to resolve any
disagreements on such matters.

Conciliation Officers:
• Number of Conciliation officer: The government can appoint Conciliation
Officers, as many as it deems necessary, to mediate and settle industrial
disputes.
• Appointment area and duration of appointment: Conciliation Officer can
be appointed for a particular area or specific industries in that area, either
permanently or for a limited period of time.
• Primary goal: to create a peaceful environment within the establishment
where workers and employers can resolve their disputes through the
mediation of the officers.

Boards of Conciliation
• A Board of Conciliation shall have a chairman and 2 or 4 other members.
• The chairman of the board of conciliation shall be independent, while the
other members shall be appointed in equal numbers to represent the parties
involved in the dispute.
o Each party will recommend their representative, but if a party fails to do
so within the prescribed time, the appropriate government will appoint
someone to represent them.
• A Board can still function even if the chairman or some members are absent
or there are vacancies.
o But if the appropriate Government informs the Board that the chairman
or a member is no longer available, the Board cannot act until a new
chairman or member is appointed.

Courts of Inquiry
• The appropriate Government can constitute a Court of Inquiry into any matter
connected with an industrial dispute.
• The Court may have one or more independent persons (as required), with one
appointed as Chairman (where court consists of more than one member).

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• A Board can still function even if the chairman or some members are absent
or there are vacancies.
o But if the appropriate Government informs the Board that the chairman
or a member is no longer available, the Board cannot act until a new
chairman or member is appointed.

Labour Courts
• Number of courts: The appropriate Government can establish one or more
Labour Courts for the adjudication of industrial disputes related to matters
specified in the Second Schedule.
• Member: only one
• Qualification of officer: The presiding officer of a Labour Court must fulfill
certain qualifications, including:
a) he is, or has been, a Judge of a High Court; or
b) he has been a District Judge or an Additional D Judge for a period of not less
than 3 years; or
c) he has held any judicial office in India for not less than 7 years; or
d) he has been the presiding officer of a Labour Court constituted under any
Provincial Act or State Act for not less than 5 years.
e) Has been a Deputy Chief Labour Commissioner (Central) or Joint
Commissioner of the State Labour Department including-
- have a degree in law
- Should have at least 7 years of experience in the labour department (
including 3 years of experience as a Conciliation Officer)
- Should resign from the service of the Central or State Government, as
applicable, before being appointed as the presiding officer.
f) he is an officer of Indian Legal Service in Grade III with 3 years' experience in
the grade

Tribunals
• Number of courts: The appropriate Government can establish one or more
Industrial Tribunals for the adjudication of industrial disputes related to
matters specified in the Second or third Schedule of the act.

Industrial disputes in the Third Schedule

• Wages, including the period and mode of payment;
• Compensatory and other allowances;
• Hours of work and rest intervals;
• Leave with wages and holidays;
• Bonus, profit sharing, provident fund and gratuity;
• Shift working otherwise than in accordance with standing orders;
• Classification by grades;
• Rules of discipline;
• Rationalisation;
• Retrenchment of workmen and closure of establishment; and
• Any other matter that may be prescribed.

• Member: Only one

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o The Presiding Officer must be an independent person and below 65

years of age.
• Qualification of officer: The presiding officer of a Labour Court must fulfill
certain qualifications, including:
(a) he is, or has been, a Judge of a High Court; or
(b) he has been a District Judge or an Additional D Judge for a period of not less
than 3 years; or
(c) Has been a Deputy Chief Labour Commissioner (Central) or Joint
Commissioner of the State Labour Department including-
- have a degree in law
- Should have at least 7 years of experience in the labour department (
including 3 years of experience as a Conciliation Officer
- Should resign from the service of the Central or State Government, as
applicable, before being appointed as the presiding officer

(d) he is an officer of Indian Legal Service in Grade III with 3 years' experience in
the grade
(e) The government can also appoint two assessors to advise the Tribunal.

• Duties and responsibility: The Industrial Tribunal's duties are similar to

those of the Labour Court, which involves resolving industrial disputes
referred to it and submitting awards to the appropriate government quickly.
• The Industrial Tribunal receives its authority when the appropriate government
refers an industrial dispute to it under Section 10 of the Act.
• Duration: The Tribunal may be created for a specific case, limited period, or
area.
o If the Tribunal is appointed for a limited period, it will stop functioning
after its term even if some matters are pending.
o After the Tribunal concludes its work and presents its award to the
government, it doesn't lose its authority, and the government can still
seek its opinion on any matter related to the previous award.

National Tribunals
• Formation: Section 7-B of the Act authorizes the Central Government to
establish one or more National Tribunals for resolving industrial disputes that
involve national importance or affect industrial establishments in multiple
states.
• Member:
o Only one person (presiding officer) with the qualities:
- must have been a Judge of a High Court
- must be an independent person
- should not be above the age of 65 years.
• The Central Government may also appoint two assessors to provide guidance
to the National Tribunal during its proceedings.

Disqualifications for the Presiding Officers of Labour Courts, Tribunals and

National Tribunals

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• No person can be appointed or remain as the Presiding Officer of a Labour

Court, Tribunal, or National Tribunal if
o they are not an independent person or
o have crossed the age of 65 years.

Notice of Change
Employers cannot change the conditions of service for workers in certain matters:
• without giving them notice of the proposed change in the prescribed manner,
and waiting for 21 days after giving such notice.
• However, no notice is required if the change is made due to settlement or
award or if the workers are covered under certain rules or regulations notified
by the appropriate Government.

Setting up of Grievance Redressal Machinery

• Industrial establishments with 20 or more workers must have a Grievance
Redressal Committee for resolving individual disputes.
• The Committee should have an equal number of members from the employer
and the workers, with a rotating chairperson (yearly) chosen from the
employer and workers.
• The Committee should have a maximum of 6 members,
o with at least one female member if there are two members.
o Female members may be increased proportionately in case of more
than 2 members.
• The Committee should complete its proceedings within 30 days of receiving a
written application from the aggrieved party.
• The worker can appeal the Committee's decision to the employer, who must
respond within one month.

Reference of Disputes to Boards, Courts or Tribunals

• If the government believes that there is an industrial dispute, it can take action
by referring the matter to a Board, Court, or Tribunal for settlement or
adjudication.
• If the dispute is expected to impact less than 100 workers, the appropriate
Government can refer the matter to a Labour Court
• If there is a dispute related to a public utility service: If the dispute relates
to a public utility service, the government must refer the matter for resolution,
even if other proceedings under this act have already started.
• If the Central Government is involved: it can refer the dispute to a Labour
Court or an Industrial Tribunal constituted by the State Government.

Process of referring the dispute to National Tribunals:

National Tribunal can resolve industrial disputes of national importance, involving
multiple states

Time limit for submission of award:

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• In case of the dispute related to an individual workman: The period

cannot exceed 3 months.
• If the parties (jointly or separately) apply for an extension: The presiding
officer can extend it if necessary. Reason of extension is recorded in writing.
• If Civil court proceedings stayed the Labor Court, Tribunal, or National
Tribunal, that time does not count towards the specified period.
• Expiration of the specified period does not cause proceedings to lapse before
a Labour Court, Tribunal, or National Tribunal.

Continuation of Industrial Dispute Proceedings Despite Death of Workman:

No pending proceeding shall lapse due to the death of any of the parties to the
dispute

Voluntary Reference of Disputes to Arbitration

Arbitration
Arbitration is a procedure in which a dispute is submitted, by agreement of the
parties, to one or more arbitrators who make a binding decision on the dispute.

(1) When an industrial dispute is not referred to Conciliation Board, Labour Court,
and Court of Inquiry, Industrial Tribunal or National Tribunal for adjudication, the
employer and the workmen through a written agreement forward the matter for
arbitration specifying the names of the arbitrator.
o If an arbitration agreement specifies an even number of arbitrators
(equally divided in opinion), an umpire will be appointed to resolve a
deadlock. The umpire's decision will prevail and be considered the
arbitration award.
(2) The arbitration agreement should be made in prescribed form and should be
signed by the parties.
(3) Within one month from the receipt of the arbitration agreement which should be
forwarded to Appropriate Government and the Conciliation officer, a copy of the
same has to be published in the official Gazette.

Procedure, Powers and Duties of authorities

Procedure and Powers of Conciliation Officers, Boards, Courts and Tribunals
• Arbitrators and authorities like Boards, Courts, and Tribunals can follow any
procedure they see fit, as long as there are no specific rules governing the
matter. (Subsection 1)
• Labour court, Tribunal and National Tribunal can enter the premises of an
establishment related to the dispute after giving notice for the purpose of
inquiry. (Subsection 2)
• These authorities have powers similar to a Civil Court under the Code of Civil
Procedure, 1908, such as: (Subsection 3)
o enforcing the attendance of any person and examining him on oath,
o compelling the production of documents and material objects,
o issuing commissions for the examination of witnesses,
• These authorities can appoint assessors with special knowledge to advise
them during proceedings.

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• All conciliation officers, members, and presiding officers are considered public
servants.
• The relevant body has the power to determine the costs of proceedings,
including who pays and how much. Any costs owed can be recovered by the
government as if they were an arrear of land revenue.

Powers of Labour Courts, Tribunals and National Tribunals to give appropriate

Relief in case of discharge or dismissal of workmen:
• If a worker is fired or dismissed and the issue is taken to a Labour Court,
Tribunal, or National Tribunal for resolution, and during the proceedings, it is
found that the dismissal was unjustified, the Court or Tribunal can order the
employer to reinstate the worker with certain conditions, or provide other
appropriate relief (award of any lesser punishment) to the worker.

Duties of conciliation Officers

Section 12 of the Industrial Disputes Act outlines the duties of conciliation officers in
resolving industrial disputes.

• The conciliation officer must submit a report within 14 days of the

commencement of conciliation proceedings, which may be extended by
agreement of all parties involved.

Duties of Board
• The Board must submit its report within 2 months of the date on which the
dispute was referred to it.
• However, the appropriate Government may extend the time by up to 2
months, and the parties may agree to further extensions in writing.

Duties of courts
A court shall inquire into the matter referred to it and report thereon to the
appropriate Government within a period of 6 months from the commencement of its
inquiry.

Distinction between Award and Settlement

Award Settlement

Award means an interim or a final Settlement means a settlement arrived

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
It is the decision given by the arbitrator,
Labour Court or Industrial Tribunal.
at in the course of conciliation
proceeding and includes a written
agreement between the employer and
workmen.
It is arrived at as a result of conciliation
between the parties to the settlement.

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It resembles the judgment of a Court. It resembles a gentleman agreement. It

It is to be signed by the Presiding is signed by the parties to the dispute.
Officer. and a copy thereof has been sent to an
officer authorized in this behalfs

Publication of Reports and Awards

• After receiving a report or award, the government must publish it within 30
days from the date of its receipt.
Commencement of the Award
An award (including arbitration award) becomes enforceable after 30 days of its
publication

Subsection:
• If an award is rejected or modified by the appropriate government or the
Central Government, and the modified award is presented to the legislative
body, the award becomes enforceable after 15 days from the date of its
presentation.
• If no order is made by the government to reject or modify the award, then the
award becomes enforceable after a period of 90 days from its publication.

Payment of full wages to workmen pending proceed in higher courts

If a Labour Court, Tribunal, or National Tribunal orders an employer to reinstate a
worker, but the employer challenges a reinstatement order for a worker in a higher
court, they must pay the worker their full wages during the pending proceedings.
• This only applies if the worker was not employed elsewhere and files an
affidavit to that effect.

Period of Operation of Settlements and Awards

Subsection (2):
A settlement is binding for the agreed period or 6 months (if no such period is agreed
upon), from the date of signing. It continues to be binding for 2 months after written
notice to terminate is given.

Subsection (3):
An award remains valid for 1 year from the date it becomes enforceable, but the
government can reduce or extend the period up to a maximum of 3 years.

Subsection (4):
The government may refer an award to a labour court or tribunal to decide if a
change in circumstances warrants a shorter period of operation. The decision of the
court or tribunal is final.

Subsection (6):
The award will still be valid even after its initial period has ended. However, if any
party wants to terminate the award, they must give notice to the other parties. The
award will then no longer be valid after 2 months from the date of the notice.

pg. 21
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Commencement and Conclusion of Proceedings

Subsection (1):
If a notice of strike or lock-out under Section 22 is received by the conciliation officer,
or if the dispute is referred to a Board by an order, then the conciliation proceeding is
considered to have started on that date.

Subsection (2):
A conciliation process ends in three possible ways:
(a) if a settlement is reached and signed by the parties involved,
(b) if no settlement is reached and a report is submitted to the appropriate authority
or published, or
(c) if the dispute is referred to a court or tribunal while the conciliation process is
ongoing.

Subsection (3):
Proceedings before an arbitrator, Labour Court, Tribunal or National Tribunal are
considered to have started on the date of the dispute reference, and they end when
the award becomes enforceable

STRIKES AND LOCK-OUTS

Prohibition of Strikes and Lock-Outs

Subsection (1):
Employees working in public utility services cannot go on strike without fulfilling the
following conditions:
• Giving notice of strike to the employer within 6 weeks before striking.
• Not going on strike within 14 days of giving the notice.
• Not going on strike before the specified strike date mentioned in the notice.
• Not going on strike during conciliation proceedings and 7 days after the
conclusion of such proceedings.

Subsection (2):
Employers of public utility services cannot lock out their employees without fulfilling
the following conditions:
• Giving notice of lock-out to the employees within 6 weeks before locking them
out.
• Not locking out employees within 14 days of giving the notice.
• Not locking out employees before the specified lock-out date mentioned in the
notice.
• Not locking out employees during conciliation proceedings and 7 days after
the conclusion of such proceedings.

Subsection (3):
• If there is already a strike or lock-out in a public utility service, the notice of a
new strike or lock-out is not necessary.

pg. 22
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• However, the employer must inform the appropriate government authority

about the new strike or lock-out on the day it is declared.

Subsection (6):
• If an employer receives notices from employees or gives notices to them as
referred to in sub-sections (1) or (2), he must report it to the appropriate
government within 5 days.
• The government may also require the employer to report the number of such
notices received or given.

General Prohibition of Strikes and Lock-outs

No workman in an industrial establishment shall strike in breach of contract and no
employer shall declare a lock-out during:
(a) Conciliation proceedings before a Board and 7 days after the conclusion of
such proceedings.
(b) Proceedings before a Labour Court, Tribunal, or National Tribunal and 2
months after the conclusion of such proceedings or
- arbitration proceedings before an arbitrator and 2 months after the
conclusion of such proceedings
(c) during any period in which a settlement or award is in operation, in respect
of any of the matters covered by the settlement or award.

Illegal Strikes and Lock-outs

Sub section (3):

A lock-out declared in response to an illegal strike or a strike declared in response to
an illegal lock-out is not deemed to be illegal.

LAY OFF AND RETRENCHMENT

• These sections don't apply to:
o to those with less than 50 workers in the preceding month, or
o to seasonal/intermittent work establishments.
• The government's decision on whether an establishment is seasonal or
intermittent is final.

Right of laid- off workmen for compensation

• This law applies to non-badli and non-casual workers who have worked
continuously for at least one year in an industrial establishment.
o Badli workman- workman who is employed in an industrial
establishment in the place of another workman. However, if the Badli
workman has worked continuously for one year in the establishment,
he/she will no longer be considered as a Badli workman under this
section.
o Casual Worker- workman employed on a day-to-day basis

pg. 23
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• If the worker is laid-off (whether continuously or intermittently), they must be

paid by their employer for all the days during which they are laid-off, except
for weekly holidays.
• The compensation paid must be equal to 50% of the total basic wages and
dearness allowance that would have been paid to the worker if they had not
been laid-off.
• If a worker is laid-off for more than 45 days in a 12-month period, the
employer is not required to pay compensation for any period after the first 45
days, if there is an agreement to that effect between the worker and the
employer.
• After the first 45 days of a lay-off, the employer may choose to retrench the
worker according to section 25F. If this happens, any compensation paid to
the worker for the previous 12 months of lay-off can be set off against the
compensation payable for retrenchment.

Difference Between Lay Off and Retrenchment

Criteria Lay Off Retrenchment
Duration Temporary cessation of Permanent reduction in
employment workforce

Reason Usually occurs due to a lack Usually occurs due to

of work or a downturn in restructuring or cost-cutting
business measures

Rehiring Employees may be rehired Employees are typically not

Compensation Employees may be eligible
for unemployment benefits
during the period of layoff.
Notice Employees are entitled to
notice before being laid off
as per the labour laws.
rehired
Employees may be eligible
for severance pay or other
compensation upon
retrenchment.
Employees are entitled to
notice before being
retrenched as per the labour
laws.

Workmen not entitled to compensation in certain cases

If a workman has been laid-off, he is not entitled to compensation in the following
cases:
• If the workman refuses to accept any alternative employment in the same
establishment or any other establishment of the same employer within a
radius of five miles, if the employer deems such alternative employment
suitable for the workman and offers wages equivalent to what he was
receiving before.
• If a workman is laid off and the employer provides him with an opportunity to
work during normal working hours, the workman must present himself for
work at least once a day to be eligible for compensation. Failure to do so may
result in the workman forfeiting his right to compensation for the layoff period.

pg. 24
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• If the laying-off is due to a strike or slowing-down of production by other

workmen in another part of the establishment

Conditions precedent to retrenchment of workmen

A workman employed for at least one year cannot be retrenched without meeting
following conditions:
• The employer must give one month's notice in writing to the workman
indicating the reasons for retrenchment, or pay the workman wages in lieu of
such notice, wages for the period of the notice.
• The workman must be paid compensation at the time of retrenchment
equivalent to 15 days' average pay for every completed year of continuous
service or any part thereof in excess of 6 months.

Compensation to workmen in case of transfer of undertakings

When an ownership or management of an undertaking is transferred from one
employer to another, either by agreement or by operation of law, every workman
who has been working in that undertaking for at least one year continuously before
such transfer is entitled to notice and compensation as if the workman had been
retrenched.

Sixty days' notice to be given of intention to close down any undertaking

• Employers intending to close an undertaking must serve a notice to the
appropriate Government at least 60 days before the intended closure date.
• The notice must state the reasons for the intended closure of the undertaking.
• Not applicable: This provision does not apply to two specific types of
undertakings:
o An undertaking that employs less than 50 workers or had less than 50
workers on an average per working day in the preceding 12 months.
o An undertaking set up for construction work or projects.

Compensation to workmen in case of closing down of undertakings

• If the closure is due to unavoidable circumstances beyond the control of the
employer, the compensation paid to the workman cannot exceed their
average pay for three months.
• Not included under unavoidable circumstances:
o Financial difficulties (including financial losses),
o accumulation of undisposed stocks,
o expiry of lease/license, or
o exhaustion of minerals in mining

If an undertaking engaged in mining operations

• If an undertaking engaged in mining operations is closed down due to the
exhaustion of minerals in the area, workmen are not entitled to notice or
compensation under Section 25F, if:
(a) The employer provides alternative employment to the workman with the same
remuneration and terms as before;

pg. 25
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(b) The workman's service is not interrupted by the alternative employment;

(c) The employer is legally liable to pay compensation to the workman if they are
retrenched based on their continuous service.

If an undertaking engaged in construction operations

• Closed down within two years (after completion of work): no workman
employed therein shall be entitled to compensation.
• Closed down within two years (before completion of work): the workman
shall be entitled to notice and compensation for every completed year of
continuous service or any part thereof in excess of six months.

Procedure for retrenchment

• If an Indian workman in an industrial establishment needs to be retrenched
and belongs to a specific category, the employer should usually retrench the
last hired person in that category, unless there's a valid reason to choose
another worker.
o This applies if there's no agreement between the employer and the
worker regarding the retrenchment.

Re-employment of retrenched workmen

• If an employer retrenches workmen and intends to hire new employees, they
must give an opportunity to the retrenched workmen who are Indian citizens
to offer themselves for re-employment in a manner prescribed.
• The retrenched workmen who offer themselves for re-employment will have a
preference over other persons.

Prohibition of lay-off/ retrenchment/ closing down an undertaking

(common provisions)

Employer needs permission from appropriate authority before retrenchment, by

submitting application with reasons for intended action.

If the appropriate government or specified authority does not communicate the

order within 60 days, permission is deemed to have been granted.

The order of the appropriate government will be final and binding on all parties and
will remain in force for 1 year.
The appropriate government or specified authority may review the order or refer
the matter to a tribunal for adjudication.
• the Tribunal must pass an award within 30 days from the date of such
reference.

If no application for permission is made within the specified period or permission is

refused, the lay-off/ retrenchment/ closing down an undertaking

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is deemed illegal, and the workmen are entitled to all benefits under any law as if
they had not been laid-off/ retrenched/ closing down an undertaking

The appropriate government may exempt an establishment from the provisions in

exceptional circumstances. (as accident in the establishment or death of the
employer or the like).

Penalty for lay-off and retrenchment without previous permission

• If an employer lays off or retrenches workers without obtaining previous
permission, they can be punished with imprisonment for up to 1 month or a
fine of up to Rs.1000 or both.

Penalty for closure

Section 25R of the Industrial Disputes Act, 1947 imposes penalties on employers
who violate the provisions related to closure of an undertaking.
• If an employer closes down an undertaking without complying with the
provisions of Section 25-O(1), they can be punished with imprisonment for up
to 6 months, or a fine of up to Rs. 5000, or both.
• If an employer contravenes an order refusing to grant permission to close
down an undertaking under Section 25-O(2) or a direction given under
Section 25P, they can be punished with imprisonment for up to 1 year, or a
fine of up to Rs. 5000, or both.
• In case the contravention continues, a further fine of up to Rs.2000 can be
imposed for every day during which the contravention continues after the
conviction.

UNFAIR LABOUR PRACTICES

Penalty for committing unfair labour practices
Any person, including an employer, worker, or trade union, who is found to have
committed an unfair labour practice can be punished with imprisonment for a term up
to 6 months or a fine up to Rs. 1000, or both.

PENALTIES
Penalty for illegal strikes and lock-outs
• For supporting an illegal strike: If any workman starts or supports an illegal
strike, they may face imprisonment of up to 1 month or a fine of up to Rs. 50
or both.
• For supporting an illegal lock-out: If any employer starts or supports an
illegal lock-out, they may face imprisonment of up to 1 month, or a fine of up
to Rs.1000, or both.

Penalty for instigation, etc.

• This Act imposes a penalty for instigating or inciting others to take part in or
further an illegal strike or lock-out.

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• Any person who commits this offence may face imprisonment for up to 6
months, or a fine of up to Rs.1000, or both.

Penalty for giving financial aid to illegal strikes and lock-outs

• If someone knowingly spends or uses money to support an illegal strike or
lock-out, they can be punished with up to 6 months in jail, or a fine of up to
Rs.1000, or both.
Penalty for breach of settlement or award
• If someone breaks any term of a settlement or award that they are bound to
follow under this Act, they can be punished with up to 6 months in jail, or a
fine, or both.
• If the breach is ongoing, they can also be fined up to Rs. 200 for each day
that the breach continues after their first conviction.
o The court may also order the offender to pay compensation to anyone
who has been harmed by the breach.
Penalty for disclosing confidential information
• If someone intentionally reveals confidential information mentioned in section
21, against the rules mentioned in that section, they can be punished with up
to 6 months in jail, or a fine of up to Rs.1000, or both.
• The trade union or individual business affected can file a complaint against
the offender.

Penalty for closure without notice

If an employer shuts down their undertaking without following the rules mentioned in
section 25FFA, they can be punished with up to 6 months in jail, or a fine of up to
Rs.5000, or both.

Penalty for other offences

• Penalty on an employer: If an employer violates the rules mentioned in
section 33, they can be punished with up to 6 months in jail, or a fine of up to
Rs.1000, or both.
• Penalty on others (excluding an employer): If someone breaks any rule
mentioned in this Act or any rule made under it, and if no other penalty is
mentioned for that particular violation in this Act, they can be punished with a
fine of up to Rs.100.

TABLE FOR THE SECTION VI: PENALTIES

SECTION Offence done Penalty

(Imprisonment /
Fine / both)
SECTION 26 Support illegal strikes up to1 month / up to Rs. 50/ both

Support illegal lock-outs up to 1 month / up to Rs. 50/ both

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SECTION 27 Instigation (encourage) others up to 6 months, up to Rs.1000, / both

to take part in illegal strike or
lock-out

SECTION 28 giving financial aid to illegal up to 6 months/ up to Rs.1000/ both

strikes and lock-outs

SECTION- breaching settlement or award up to 6 months/ fine/ both

29 If the breach is ongoing, fined up to
Rs. 200 for each day
SECTION 30 disclosing confidential up to 6 months/ up to Rs.1000/ both
information

SECTION closure without notice up to 6 months/ up to Rs.5000/ both

30A

SECTION 31 other offences For employer: up to 6 months/ up to

(not mentioned above) Rs.1000/ both
For others: fine of up to Rs.100

Conditions of service, etc., to remain unchanged under certain circumstances

during pendency of proceedings
Sub-section (1)
• During any conciliation or labour dispute proceedings, no employer can:
o change the working conditions of the workers involved in the dispute,
or
o punish them for misconduct related to the dispute, without the written
permission of the relevant authority.

Sub-section (2)
• During any industrial dispute proceedings, an employer can change the
working conditions of a worker not related to the dispute, or punish them for
misconduct not related to the dispute, if it is in accordance with the standing
orders or contract terms.
o However, the worker cannot be dismissed or discharged without being
paid one month's wages and the approval of the relevant authority.
Sub-section (3)
• During an industrial dispute proceeding, no employer can take any action
against a "protected workman" who is a member of the executive or office
bearer of a registered trade union connected with the establishment.
• The employer cannot alter the conditions of service or punish the protected
workman without the express permission in writing of the authority before
which the proceeding is pending.
• The term "protected workman" means a workman recognized as such in
accordance with rules made for this purpose.

Sub-section (4)

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• Every establishment must recognize one percent of the total number of

workmen as protected workmen, subject to a minimum of five and a maximum
of one hundred.

Recovery of money due from an employer

The term "Labour Court" includes any court constituted under any law relating to
investigation and settlement of industrial disputes in force in any state.

• A workman or their authorized representative or by his heirs/assignee (in case

of death) can apply to the appropriate Government for the recovery of money
due from an employer.
• This can be done alongside other modes of recovery available to the
workman.
• If the Government finds that money is due, it will issue a certificate to the
Collector for recovery.
• The application must be made within a year from when the money became
due, but the Government can still consider it if there was sufficient cause for
the delay.

Sub-section (2)
• In cases where a worker is entitled to receive money or a benefit from their
employer, and there is a dispute over the amount or calculation of such
money or benefit, a Labour Court specified by the appropriate government
may decide the matter.
• The decision should be made within a period not exceeding three months,
o although the presiding officer of the court may extend this period if they
consider it necessary or expedient for reasons recorded in writing.

Protection of persons
• If a person refuses to take part in or continue participating in an illegal strike
or lockout under this Act, they cannot be expelled from their trade union or
society, fined, penalized, or deprived of any right or benefit they are entitled
to.

Representation in conciliation-
In conciliation proceedings or court proceedings under this Act, no party to a dispute
can have a legal practitioner represent them.

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