Overview of Industrial Dispute Act:

In Indian laws, The Industrial Disputes Act, enacted in 1947, has been amended over the years, including notable amendments in 2010, 2015, and 2020. The most significant recent changes were part of the larger reform package in Indian labour laws under the new labour codes introduced in 2020.

These codes consolidate and update several existing labour law bare Acts, including provisions from the industrial disputes act

Industrial Dispute Act

It is an important labour law in India that aims to address and resolve industrial disputes between employers and employees in the industrial sector. The main objective of the industrial dispute Act of 1947 is to ensure peace and harmony in the world of work by providing a legal framework for the investigation and resolution of labour disputes in labour and industrial laws. This comprehensive guide explains the scope of industrial dispute act, their importance, and their impact on industrial relations in India.

Definition of Industrial Dispute act 1947:

Important Provisions of the Industrial Disputes Act 1947

Before the enactment of the Industrial Act, industrial relations in India were largely unregulated, resulting in frequent lockouts and strikes in the industrial disputes act . The Commercial Code of 1929 was the first attempt to regulate industrial disputes, but it did not go far enough to provide a comprehensive framework for dispute resolution.

 Post-Independence, the need for a strong mechanism for resolving industrial disputes became paramount. To bridge this gap, the Industrial Disputes Act, 1947 was introduced. Over the years, the law has been amended several times to adapt to the changing industrial landscape. Substantial changes occurred in 2010, 2015 and 2020.

Objectives of the Industrial Dispute Act

The primary objectives of the Industrial Dispute Act / bare act are:

Setting out guidelines for legal strikes and lockouts to prevent any disruptions in the smooth functioning of industries.

Implementing mechanisms to address issues related to job cuts, layoffs, and closures, ensuring job security for workers.

Upholding the principles of fairness in the treatment of workers and preventing any form of unjust labour practices under labour laws.

The Act seeks to establish a structured process for resolving disputes in order to reduce conflicts in the industrial sector.

Fostering a culture of dialogue and cooperation between employers and employees to resolve conflicts peacefully.

Important Provisions of the Industrial Disputes Act 1947

The Industrial Disputes Act of 1947 plays a crucial role in India by addressing and resolving industrial disputes to ensure peace and harmony in the industrial sector.

Key provisions of the Act given below:

  • Industry: Encompasses any business, trade, undertaking, manufacture, or calling of employers, including services, employment, handicrafts, or industrial occupations of workmen.
  • Workman: Refers to any individual engaged in manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward within an industry.
  • Industrial Dispute: Refers to any disagreement between employers and employers, employers and workmen, or workmen and workmen related to employment, non-employment, terms of employment, or labour conditions.
  • Works Committee: This committee consists of representatives from both employers and workers, with the aim of promoting measures to maintain harmony and good relations.
  • Conciliation Officers: These officers are appointed by the government to mediate and facilitate the settlement of disputes.
  • Boards of Conciliation: These temporary boards are formed to specifically address and resolve disputes that are referred to them.
  • Courts of Inquiry: These courts are set up to investigate any matter related to or relevant to an industrial dispute.
  • Labour Courts: These courts specialize in handling disputes concerning the implementation and interpretation of standing orders, as well as matters listed in the second schedule of the Act.
  • Industrial Tribunals: These tribunals deal with matters specified in the second and third schedules of the Act, which include issues such as wages, working hours, and employment conditions.
  • National Tribunals: These tribunals are established to adjudicate disputes of national importance or those involving multiple states.

Employers must provide prior notification to employees before implementing any modifications to the terms and conditions of their employment, as stated in the Fourth Schedule.

The legislation allows for the resolution of industrial disputes through the involvement of conciliation boards, inquiry courts, and labour courts/tribunals, as determined by the relevant government authority.

The Act encourages parties involved in an industrial dispute to voluntarily submit the matter to arbitration by mutual agreement.

Prohibition of Strikes and Lockouts: The Act prohibits strikes and lockouts in public utility services during the conciliation proceedings, adjudication process, and the duration of any settlement or award.

Notice of Strikes and Lockouts: Prior notice is mandatory for strikes and lockouts in public utility services, with a specified waiting period before their commencement.

Conditions for Lay-off and Retrenchment: The Act outlines the conditions under which workers can be temporarily laid off or permanently retrenched, along with the compensation they are entitled to in such cases.
Compensation for Lay-off: Workers who are temporarily laid off are entitled to receive compensation equivalent to 50% of their basic wages and dearness allowance.
Retrenchment Compensation: Workers who are permanently retrenched are entitled to receive compensation equivalent to 15 days’ average pay for each completed year of continuous service.

The Act defines unfair labour practices committed by employers, workers, or unions and imposes penalties for engaging in such practices.

A specific number of employees within an establishment are designated as “protected workmen” to safeguard them against victimization and ensure their active participation in union activities without fear of retaliation.

The Act stipulates penalties for various offenses, including illegal strikes and lockouts, violation of settlements or awards, and unfair labour practices.

Procedures for Dispute Resolution :

  • Voluntary Arbitration: Recommended as the initial approach for resolving disputes. It is possible for the parties to mutually decide to arbitrate the dispute.
  • Conciliation: If a resolution cannot be reached through arbitration, the disputes are directed to a conciliation officer or board.
  • Adjudication: In the event that conciliation proves unsuccessful, the dispute can be referred to a labour court, tribunal, or national tribunal.
  • Authority to Reach Settlements: Settlements reached during conciliation proceedings hold legal weight and are enforceable for all parties involved.
Procedures for Dispute Resolution of Maternity benefit act

The Act regulates the conditions under which strikes and lockouts can be legally conducted:

  • Act Requirement for Notice of Strike: Workers must provide notice of a walkout at least six weeks in advance of the walkout and within fourteen days of doing so.
  • Prohibition of Strikes and Lockouts: Strikes and lockouts are prohibited during the pendency of conciliation proceedings and adjudication proceedings, and for a specified period after the conclusion of such proceedings.
  • Illegal Strikes and Lockouts: Strikes and lockouts declared in contravention of the provisions of the Act are deemed illegal.

The Act provides guidelines for lay-offs, retrenchment, and closure in industrial dispute act.

  • Lay-Off: Temporary inability of an employer to provide employment to workers due to reasons beyond control. Compensation is prescribed under the Act.
  • Retrenchment as defined by the Act: A worker’s termination from employment for causes other than disciplinary action. The Act specifies conditions and compensation for retrenchment in industrial dispute act.
  • Closure: The definitive shutdown of a workplace. The Act outlines procedures and compensation for affected workers.

Unfair Labour Practices:

The legislation outlines a range of practices deemed unfair for both employers and employees. 

These consist of:

For EmployersFor Employees
Discriminatory actions, failure to engage in collective bargaining, and taking advantage of employees.Participating in or endorsing illegal strikes, pressuring other employees, and impeding the lawful operations of the employer.
Table of Unfair Labour Practices

The industrial disputes act compliance in India:

The Industrial Disputes Act, 1947, is a crucial legislation in India that governs the resolution of industrial disputes. Here is an outline of the compliance requirements under the Act:

The Act broadly defines industrial dispute to include any disagreement between employers and employees, or between employers and workmen, or between workmen and workmen, related to employment, non-employment, terms of employment, or labour laws conditions.

Employers must inform employees about any changes in their terms of employment, such as wages and working hours, in accordance with the Act.

Employers are required to recognize and negotiate with trade unions representing a significant number of employees, as outlined in the Act.

The Act specifies the conditions under which employees can be laid off or retrenched, and mandates certain procedures for employers to follow in such situations.

The Act regulates strikes and lockouts, requiring prior notice from the involved parties. It also prohibits certain workers from striking while providing safeguards for legal strikes.

Under the Act, employers are obligated to keep a range of records and registers, including those pertaining to accidents, wages, and employment terms.

Failure to comply with the regulations outlined in the Act may result in penalties, which can include monetary fines and imprisonment for employers.

Employers may need to compensate employees in cases of layoffs, retrenchments, or establishment closures, as per the Act.

The Act offers various mechanisms for dispute resolution, including negotiation, conciliation, and adjudication through labour courts and industrial tribunals.

Employers must adhere to decisions, awards, and settlements made through the dispute resolution mechanisms provided by the Act.

Adherence to the Industrial Disputes Act is crucial for employers conducting business in India, as it promotes harmonious industrial relations and helps prevent legal consequences. It is recommended that businesses stay informed about any modifications or revisions to the Act in order to maintain continuous labour laws compliance.

Amendments and Reforms of Industrial Dispute Act:

Industrial disputes act 1947 with latest amendments

2010 Amendment: The 2010 amendment introduced changes to enhance the dispute resolution mechanism and ensure quicker justice. It aimed at making the conciliation process more effective and streamlined the functioning of labour courts and tribunals.
2015 Amendment: The 2015 amendment focused on simplifying the processes and reducing the procedural delays in adjudication. It also introduced provisions to promote better industrial relations and collective bargaining .
2020 Amendment: The 2020 amendment was a significant overhaul aimed at improving the ease of doing business while ensuring the protection of workers’ rights.

Key changes included with latest amendments

  • The threshold limit for lay-offs, retrenchment, and closure provisions has been raised by the amendment.
  • Employers can now offer fixed-term employment, granting flexibility in hiring while guaranteeing equal benefits for workers.
  • Specific timelines have been implemented for dispute resolution to expedite the adjudication process.

Impact on Industrial Relations:

Promoting Industrial Peace

The Act has been contributory in promoting industrial peace and harmony by providing a structured mechanism for the resolution of disputes. The establishment of various authorities and the clear procedures laid out in the Act have helped in addressing conflicts effectively.

Encourage Collective Bargaining

The Act has encouraged collective bargaining by promoting the formation of works committees and recognizing the importance of conciliation and arbitration. This has led to better employer-employee relationships and has contributed to the overall improvement in industrial relations

Protecting Workers’ Rights

By defining unfair labour practices and providing mechanisms for grievance redressal, the Act has played a crucial role in protecting the rights of workers. It has also ensured job security through provisions related to lay-offs, retrenchment, and closure.

Industrial Disputes Act Machinery

Challenges and Criticisms in Industrial Dispute Act

Complicated Processes

The intricate nature of procedures and the bureaucratic obstacles have frequently impeded the prompt resolution of conflicts.

Inflexible Clauses

Certain clauses have been deemed excessively rigid, constraining the adaptability required in a constantly evolving industrial setting.

Challenges in Implementing

Ensuring the Act’s provisions are effectively enforced continues to pose difficulties, with numerous instances of non-compliance.

Important Sections of The Industrial Dispute Act 1947

The Industrial Disputes Act, 1947, is a significant legislation in India that governs labour industrial law and deals with industrial disputes. Although the significance of different sections may vary depending on the situation, there are certain sections that are universally recognized as essential for comprehending and implementing the Act.

Section 2 of The Industrial Disputes Act, 1947:

This portion of the legislation outlines important terminology utilized in the Act, including terms like “industrial dispute,” “workman,” “employer,” and “industry.” Comprehending these definitions is crucial for correctly interpreting and implementing the remaining provisions of the Act. Additional subsections of the Industrial Disputes Act, such as 2a, 2s, 2j, 2k, and 2q, further elaborate on specific aspects of the law.

Section 2 j o

As per Section 2(j) of the Industrial Disputes Act, 1947, the term “industry” encompasses various aspects:

  1. Business, Trade, Undertaking, Manufacture, or Calling of Employers: Refers to any organized activity conducted by employers aimed at producing, supplying, or distributing goods or services, with the participation of workers. This category includes common commercial and industrial operations like factories, plantations, and service establishments.
  2. Service, Employment, Handicraft, or Industrial Occupation or Avocation of Workmen: Encompasses all types of work where individuals are hired for compensation, covering manual, clerical, supervisory, technical, or professional roles.

Section 4 of the Act, deals with the selection and responsibilities of Conciliation Officers. The Industrial Disputes Act is a crucial law in India that outlines the process of investigating and resolving industrial conflicts.

Section 10 of The Industrial Disputes Act:

This provision allows the authorities to send labour disputes to Conciliation Panels, Inquiry Courts, or Workplace Tribunals for settlement. It plays a crucial role in the official resolution of conflicts.

Section 11 of The Industrial Disputes Act:

This segment outlines the approaches and powers of the government worried in resolving business disputes. It presents the framework for a way disputes must be handled and resolved.

Section 18 of The Industrial Disputes Act:

This section outlines the binding nature of settlements and awards, making it clear which parties are responsible for compliance with decisions made through conciliation or adjudication

Section 19 of The Industrial Disputes Act:

This Section deals with the period of operation of settlements and awards, as well as the procedures for their termination. The section is divided into several sub-sections, each addressing different aspects of the operation and termination of settlements and awards.

  • Section 19(1): Period of Operation of Settlements
  • Section 19(2): Termination of Settlements
  • Section 19(3): Period of Operation of Awards
  • Section 19(4): Termination of Awards
  • Section 19(5): Continuance of Awards and Settlements

Section 25 of The Industrial Disputes Act:

Subsections 25A to 25S provide detailed provisions for redundancy, redundancy and remuneration. This information is important for protecting workers’ rights during downsizing or economic downturns.

Section 33 of The Industrial Disputes Act:

The terms of employment that will continue to evolve in certain circumstances while the litigation is pending, and so on. 

This clause prevents employers from changing the terms of employment to the detriment of employees during the pendency of the dispute, to ensure fairness and equity. Section 33 of the Industrial Disputes Act aims to balance the interests of labor and business while promoting industrial peace and harmony.

Industrial Dispute Act, Section 33C: Recovering money owed to the employer

This section allows employees to collect their wages from their employer, and provides a mechanism for establishing contributions or settlements. All these issues cover the basic aspects of industrial dispute resolution, rights of employees and responsibilities of employers and authorities are important for maintaining industrial harmony and ensuring fair treatment of employees in India. 

The causes of industrial disputes act:

Industrial disputes involve conflicts between employers and employees or groups of employees over employment terms. These disputes can stem from economic, managerial, or political/social factors. 

The primary causes of industrial disputes include:

Wages and Salaries:

  • Low Pay: Employees may feel their wages are inadequate compared to living costs or industry standards.
  • Unequal Pay: Discrepancies in pay for employees performing similar tasks.
  • Bonuses and Incentives:
  • Bonus Disputes: Conflicts regarding bonus amounts, distribution, or non-payment.
  • Incentives and Commissions: Disagreements on performance-based incentives or sales commissions.
  • Poor Working Conditions: Issues such as inadequate facilities, unsafe environments, lack of proper equipment, or unhealthy workplace conditions.
  • Hours of Work: Disputes related to working hours, overtime, and shift schedules.
  • Benefits and Allowances:
  • Fringe Benefits: Conflicts over allowances like housing, transport, medical, and other fringe benefits.
  • Deductions: Unfair or unexplained deductions from salaries and wages.

Job Security:

  • Concerns about job security often lead to disputes, especially when layoffs or retrenchment are looming, and employees feel uncertain about their future.
  • Disagreements can also arise when contract terminations are handled poorly, leaving employees feeling undervalued and uncompensated.

Promotions and Transfers:

  • Disputes may occur when promotions are perceived as unfair or biased, causing tension among employees.
  • Conflicts can also arise from transfers that are seen as punitive or arbitrary, leading to dissatisfaction and discord in the workplace.

Management Policies:

  • Disputes can be triggered by management’s unilateral decisions, especially when employees feel left out of the decision-making process.
  • Issues may also arise from strict disciplinary actions that are perceived as unfair or overly harsh by employees.
  • Workload: Conflicts often arise when employees are faced with an excessive workload without adequate compensation, leading to stress and dissatisfaction in the workplace.

Summery of the industrial disputes act : 

The Industrial Disputes Act is the foundation of Indian labour laws and provides a comprehensive framework for resolving labour disputes. While the system has contributed significantly to industrial peace and protection of workers’ rights, continued reform and effective implementation is required to address evolving challenges in industrial relations. The changes in 2010, 2015 and 2020 reflect ongoing efforts to make the law more relevant and effective in the current industrial environment.