Industrial Disputes Act

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 INTRODUCTION
 Industrial Disputes Act, 1947 is an important piece of socio-economic
legislation.
 The objectives of the Act are to
• Regulate and promote measures for securing and preserving amity and good
relations between employers and workman, past, present and future.
• Encourage and promote collective bargaining.
• Maintain industrial peace by preventing illegal strikes and lockouts.
• Provide for relief to workmen in the matter of lay-off and retrenchment.
• Investigate and settle industrial disputes.
• Ameliorate the condition of workmen.
 BROAD FEATURES OF THE ACT
 It is applicable to industries and certain categories of industrial workers.
 The Act provides for setting up of
• Works committees as a machinery for mutual consultation between employers
and employees so as to promote cordial relations.
• Labour courts, industrial tribunals, and national tribunals by central and state
governments or by administrations of union territories for dealing with matters
that cover central and state domains.
 It depends on the central government to refer a matter to a labour court or
an industrial tribunal constituted by the state government.
 It is intended to encourage arbitration over the dispute between employers
and employees.
 It lays down time limits for various stages of conciliation and arbitration so
as to eliminate delays.
 INDUSTRY, INDUSTRIAL ESTABLISHMENT
 Sec 2 (j): Industry means
• any business, trade, undertaking, manufacture or calling of employers and
includes any calling, service, employment, handicraft, or industrial occupation or
avocation of workmen
 Sec 2 (ka): Industrial establishment or undertaking means
• an establishment or undertaking in which any industry is carried on: Provided
that where several activities are carried on in an establishment or undertaking
and only one or some of such activities is or are an industry or industries, then,-
(a) (deals with)…. a unit severable from others is a deemed industrial establishment or
undertaking….;
(b) (deals with)…. if a predominant activity is industry and other activities are not
severable, then the entire establishment or undertaking shall be deemed to be an
industrial establishment or undertaking;
 TEST OF INDUSTRY: A LANDMARK CASE
 Bangalore Water Supply and Sewerage Board vs. A. Rajappa AIR 1978
SC 548.
 This case is a landmark judgement under Industrial Disputes Act, 1947,
which provides clarity on what “industry” encompasses.
 The judgement established the triple test and the dominant nature test for
the scope of the definition of “industry”.
 Triple Test established by SC: Industry is one where there is
(a) systematic activity organised by
(b) co-operation between employer and employee for
(c) production and distribution of goods and services calculated to
satisfy human wants and wishes.
 TESTS FOR AN “INDUSTRY”
 Systematic activity
• That is regularly done or intended to be regularly done
• Employer-employee relationship
• Production and or distribution of goods or services
• Which satisfy human wants and wishes
 Absence of profit motive or gainful objective is irrelevant, whether the
venture is in the public sector, joint or private sector.
 If an organization is a trade or business ,it does not cease to be one because
of philanthropy clouding the undertaking.
 THE CASE
 The ruling also established a dominant nature test:
 Where a complex of activities are performed, and
• some of which qualify for exemption; others do not,
• involves employees on the total undertaking,
• some of whom are not ‘workmen’ or
• some departments are not productive of goods and services if isolated,
• even then,
• the predominant nature of the services and the integrated nature of the
departments will be the true test.
• The whole undertaking will be ‘industry’.
• Even in sovereign functions, if there are units which are industries and they are
severable, can be considered to come within the scope of Industry.
 INDUSTRY
 Consequence of applying triple test is: professions, clubs, educational institutions,
cooperatives, research institutes, charitable projects cannot be exempted if they
fulfil the triple test.
 What do not come under definition of “industry”?
• Any agriculture operation; Khadi or village industries;
• Hospitals or dispensaries; Domestic service;
• Educational, scientific, research or training institutions;
• Charitable, social services institutions;
• Defence, Research, Atomic energy and Space departments of government;
• Profession practiced by an individual or body of individuals;
• Activity carried on by a co-operative society.
 Universities: Excluded! Predominant activity is teaching which is not a
commercial motive; teaching staff was not held to be “workmen”; non-teaching
staff are so that they are able to take benefits under the Act.
 INDUSTRIAL DISPUTE

 Sec 2(k): Industrial dispute means any dispute or difference

between:
• Employers and employers;
• Employers and workmen;
• Workmen and workmen
• Which is connected with:
 Employment
 Non- employment;
 Terms of employment;
 Condition of labour.
 WORKMAN
 Sec 2(s): Important points….
• Any person (includes an apprentice)
• Must be employed in any industry
• To do any manual, unskilled, skilled, technical, operational, clerical or supervisory
work for hire or reward
• On express or implied employment terms
 In regard to an industrial dispute, workman includes
• Any such person who has been dismissed, discharged or retrenched as a result of a
dispute, or his dismissal etc. led to the dispute
• But does not include Defence & Police personnel;
• Employed mainly in a managerial or administrative capacity;
• Being employed in a supervisory capacity, draws wages exceeding Rs. 10,000 p.m.; or
• Exercises powers or functions mainly of a managerial nature.
 LAY OFF
 Sec 2(kkk): Lay off means
• The failure, refusal or inability of an employer
• on account of shortage of
• coal, power or raw materials
• or the accumulation of stocks
• or the breakdown of machinery
• or natural calamity
• or for any other connected reason
 Employer was unable to give employment to a workman for above reasons.
 Workman’s name is borne on the muster rolls of his industrial establishment
– employer is duty bound to maintain muster rolls.
 Workman has not been retrenched.
 LAY OFF COMPENSATION
 U/s 25C, workman has a right to compensation for lay off.
 Eligibility:
• Continuously served for 1 year or more (other periods too!)
• Continuous service is uninterrupted service; excludes sickness, authorised leave, accident,
non-illegal strike, lock-out not due to workman’s fault
 Not eligible:
• If refuses to accept any alternative employment in the same establishment or any
other owned by same employer within 5 miles
• Does not present himself for work at the establishment at the appointed time
• Lay off is due to strike/ slowdown on part of workmen
 Quantum of relief:
• For all days for which laid off, excluding weekly holidays. If an agreement exists for such
lay off, then limited to first 45 days
• 50% of total basic wages & DA that would have been payable had s/he not been laid off.
• Wages u/s 2(rr) mean all remuneration capable of being expressed in terms of money….
 RETRENCHMENT
 Sec 2(oo): Retrenchment means
• The termination by the employer
• Of the service
• Of a workman
• For any reason whatsoever,
• Otherwise than as a punishment inflicted by way of disciplinary action
 Retrenchment does not include
• Voluntary retirement of the workman; or
• Retirement as per contract of employment.
• Termination as a result of non-renewal of contract.
• Termination as a result of continued ill-health.
• punishment
 RETRENCHMENT, CLOSURE RELATED…
 Conditions precedent to retrenchment (Sec 25F): No workman who has been in
continuous service for not less than 1 year shall be retrenched until -
• Given 1 month’s written notice with reasons and that period has expired or payment
in lieu thereof
• Has been paid 15 days average pay for every completed year of continuous service
or any part thereof in excess of 6 months
• Notice in the prescribed manner is served on the appropriate Govt.
 Closure (a permanent closing of an undertaking)
• 60 days prior notice required to be given to appropriate Govt.
• Not applicable if < 50 workmen (or <50 average in 12 months)
• All workmen in continuous service for not less than 1 year immediately before
closure are eligible for compensation as is applicable for retrenchment
• Compensation is limited to 3 months average pay if closure is beyond the control of
employer.
 STRIKE ETC.
 Sec 2(q): Strike means
• A cessation of work by a body of persons employed in any industry.
• They may be acting in combination, a concerted refusal or in common
understanding
 Sec 2(l): Lock-out means
• The temporary closing of a place of employment
• Or the suspension of work
• Or the refusal by an employer to continue to employ any number of persons
employed by him
 STRIKES, LOCKOUTS: PUBLIC UTILITY

Sec 22: Strikes or Lock-outs in public utility service:

 Employee (for Strike) and Employer (for Lock-out)…
• Six weeks notice before going on strike; or
• Cannot strike within fourteen days of giving such notice; or
• Before the expiry of the date of strike specified in such notice; or
• During the pendency of any conciliation proceedings before a conciliation officer;
and
• Seven days after the conclusion of such proceedings.
 Other provisions relate to lock out notices…when and manner.
 Public utility services: Railway service; Transport service for the carriage of
passengers or goods by air; Service at major port or dock; Maintenance
sections; Postal, telegraph or telephone service; Industry which supplies power,
light or water to the public; System of public conservancy or sanitation.
 STRIKE AND LOCKOUT

Sec 23: General prohibition of strikes and lock-outs:

 Employee (for Strike) and Employer (for Lock-out)…
• During the pendency of conciliation proceedings before a Board and seven days
after the conclusion of such proceedings;
• During the pendency of proceedings before a Labour Court, Tribunal or National
Tribunal and two months after the conclusion of such proceedings;
• During the pendency of arbitration proceedings before an arbitrator and two
months after the conclusion of such proceedings; or
• 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 STRIKE
 Illegal strike and lockout: Secs 24 & 25:
(1) A strike or a lock-out shall be illegal if
(i) it is commenced or declared in contravention of Section 22 or Section 23; or
(ii) it is continued in contravention of an order made by a Board, Court, or
Tribunal or an Arbitration award
(2) If a strike or lock-out in pursuance of an industrial dispute has already
commenced, the continuance of such strike or lock-out shall not be
deemed illegal, provided when it was started, it was not in contravention
of the provisions of the Act
(3) Lock-out in consequence of an illegal strike….not illegal
(4) Strike declared in consequence of an illegal lock-out….not illegal
 WAGES DURING STRIKE PERIOD
 ID Act is silent upon the wages during the period of strike.
 The issue of denial of wages during the period of strike has been under constant
judicial scrutiny in various courts or tribunals across the country.
 Hon'ble Supreme Court in Crompton Greaves vs. the Workmen (1978) 3 SCC 155,
• "It is well settled that in order to entitle the workmen to wages for the period of strike, the
strike should be legal as well as justified.
• "It is also well settled that the use of force or violence or acts of sabotage resorted to by the
workmen during a strike disentitles them to wages for the strike period.“
 However, in case of Bank of India vs. T.S. Kelawala (1990) II LLJ 39, the Hon'ble
Supreme Court endorsed a different view
• “Where the contract, Standing Orders or the service rules/regulations are silent on the
subject, the management has the power to deduct wages for absence from duty when the
absence is a concerted action on the part of the employees and the absence is not disputed.”
• The Hon'ble Court further held that "...whether the strike is legal or illegal, the workers are
liable to lose wages for the period of strike.
 WAGES DURING STRIKE PERIOD
 The Hon'ble SC in the aforesaid judgment
• Reserving the right of the workman to go on strike
• Workers are not entitled to wages during the strike period irrespective of the fact
that the strike is legal or illegal.
 In Syndicate Bank v. K. Umesh Nayak, AIR 1995 SC 319, the question
which came up for consideration before the Constitution Bench of the
Hon'ble Supreme Court was whether the workman who proceeded on
strike, whether legal or illegal, are entitled to wages for the period of strike.
 The necessity to refer this issue to a constitution bench arose due to the
apparent conflict in the views expressed by the Supreme Court in
• Management of Chitrakulam Tea Estates (P) Ltd. vs. Its Workman; and
• Crompton Greaves vs. The Workmen; and
• Bank of India v. TS. Kelawala.
 WAGES DURING STRIKE PERIOD
 In Churakulam Tea Estate and Crompton Greaves cases, the view taken up
by Court was
• The strike must be both legal and justified to entitle the workmen to wages for
the period of strike
 In TS. Kelawala, the Court had taken the view that the employees are not
entitled to wages for the period of strike irrespective of whether it is legal or
illegal
 The essence of the first two decisions is
 If the strike is legal but unjustified or it is illegal but justified, the
employees would not be entitled for wages for the period of strike
irrespective of the fact that whether the strike is legal or illegal.
 WAGES DURING STRIKE PERIOD
 The Supreme Court in Syndicate Bank case held that to be entitled to wages for
the strike period,
• The strike has to be both legal and justified
• Whether the strike is legal or justified are questions of fact to be decided on evidence
by the industrial adjudicator.
• Question of justifiability of strike has to be examined by taking into consideration
factors such as service conditions, nature of demands, the cause which led to the
strike, urgency of the cause or the demands of the workmen, reason for not resorting
to the dispute resolving machinery under the Act, etc.
 Therefore, a conjoint reading of the aforesaid observations, it is clear that
• Where a strike is not in contravention of any statutory provision, and
• Consequently it is neither illegal nor is unjustified
• There is no reason to deprive the workmen of their wages during strike period
• However, if it is either illegal or unjustified, no wages.
 DISPUTE RESOLUTION MECHANISM
 Grievance redressal committee: Compulsory to set up at least one, if
employing 20 or more workmen with 50:50 representation.
• Decision within 30 days which can be appealed by the aggrieved workman to the
employer
 Works committee: Employer may be required to constitute if number of
workmen are 100 or more; consists of representatives of employer and
workmen. Purpose of the committee:
• To promote measures for securing and preserving amity and good relations
between the employer and workmen
 Conciliation officers: Appointed by the Govt. for a specified are or for
specified industries.
 AUTHORITIES
 Courts of Inquiry:
• Constituted for inquiring into any matter appearing to be connected with or
relevant to an industrial dispute.
 Sec 7: Labour court:
• Constituted for adjudication of industrial disputes relating to matters specified in
Schedule II.
• Some examples of matters in Schedule II …
 Illegality or otherwise of a strike or lock-out;
 Withdrawal of any customary concession or privilege;
 The propriety or legality of an order passed by an employer;
 Discharge or dismissal of workmen including re-instatement of, grant of relief,
wrongful dismissal;
 AUTHORITIES
 Sec 7A: Industrial Tribunal:
• Constituted for adjudication of industrial disputes relating to matters specified in
Schedule II or III.
• Some examples of matters in Schedule III …
 Wages, period & mode of payment;
 Compensatory & other allowances;
 Hours of work, rest intervals, leave with wages, holidays;
 Bonus, profit sharing, PF;
 Shift working

 Sec 7B: National Tribunal: For adjudication of industrial disputes relating

to matters of national importance.
 REFERENCE TO BOARDS ETC.

The appropriate Govt. if it is of the opinion that an industrial dispute exists or

is apprehended to exist, may at any time
1. Refer it to a Board of conciliation for promoting a settlement.
2. Refer any matter appearing to be connected with or relevant to the dispute
to a Court of inquiry.
3. Refer the dispute or any matter connected therewith if it relates to any
matter specified in Schedule II, to a Labour Court for adjudication.
4. Refer the dispute or any matter connected therewith if it relates to any
matter specified in the Schedules II or III, to a Tribunal for adjudication.
5. Refer to a National Tribunal if the dispute involves a any question of
national importance or industrial establishment across states are likely to
be interested.