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A DISSERTATION

ON
VOLUNTARY SETTLEMENT OF INDUSTRIAL
DISPUTE

SUBMITTED TO M.S. LAW COLLEGE


(UTKAL UNIVERSITY)
FOR PARTIAL FULFILMENT OF REQUIREMENTS OF 9TH SEMESTER, 5
YEAR INTEGRATED B.A.LL.B (HONS.) CBCS EXAMINATION-2018

SUBMITTED BY
MS. SONALI SINGH
UNIVERSITY ROLL NO.
UNIVERSITY REGD. NO.

MADHUSUDAN LAW COLLEGE


(UTKAL UNIVERSITY)
CUTTACK, ODISHA
ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been
possible without the kind support and help of many individuals. I would
like to extend my sincere thanks to all of them.
I am highly indebted to Dr. Sukant Kumar Nanda Sir and Dr. Soumitra
Kumar Chatterjee Sir for their guidance and constant supervision as
well as for providing necessary information regarding the project & also
for their support in completing the project.
I would like to express my gratitude towards my parents for their kind
co-operation and encouragement which help me in completion of this
project.
My thanks and appreciations also go to my friends in developing the
project and people who have willingly helped me out with their
abilities.

SONALI SINGH
BA.LLB. (HONS) 9TH SEMESTER
CONTENTS

1. Introduction
2. Definition of Industrial Disputes
3. Causes of Industrial Disputes
a. Wage Demands
b. Union Rivalry
c. Political Interference
d. Unfair Labour practices
4. Dispute Settlement Methods and Machinery
a. Conciliation
b. Court of enquiry
c. Voluntary arbitration
d. Adjudication (Compulsory arbitration).
i. Conciliation
ii. Court of Enquiry
iii. Voluntary Arbitration
iv. Adjudication (Compulsory Arbitration
5. Conclusion
INTRODUCTION:

An Industrial Dispute means any dispute or difference between


employers and employers or employers and workmen or between
workmen and workmen which is connected with employment or non-
employment or terms of employment or conditions of labour, of any
person.

Every human being (say a worker) has certain needs, e.g., economic
needs, social needs and needs for security. When these needs do not
get satisfied, there arises a conflict between labour and capital.

A conflict means a struggle or clash between the interests of the


employer and the workers. For example, in order to compete in the
market, the employer would like to reduce the price of his product and
for doing so he will tend to reduce the wages of the workers; the
workers would not agree to it and the result will be an industrial
conflict between the employer and the workers.

When an industrial conflict (which otherwise is general in nature)


acquires a concrete and specific display or revelation, it becomes an
Industrial Dispute. A conflict takes the shape of Industrial Dispute as
soon as the issues of controversy are submitted to the employer for
negotiations.

An industrial dispute may be looked upon as a controversy or


disagreement between employer (or management) and the workmen
on issues such as:

i. Wages and other benefits,

ii. Work hours and working conditions, etc.

Industrial disputes cause losses to, workers, management and nation as


a whole.

(i) Workers lose their wages.

(ii) Management loses its profit,

(iii) Public suffers due to shortage of goods in the market.

(iv) Nation suffers due to loss of production.


DEFINITION OF INDUSTRIAL DISPUTES:

In capitalist and mixed economy, industrial disputes are very


much common. Industrial disputes are the result of conflicts between
employers and workers. While the employers are always trying to resist
increase in wages and also try to increase the hours of work but the
workers or employees are organising themselves through trade union
for raising their wages along with betterment of other conditions of
work.

In order to achieve their goal, workers are following the path of


protests by resorting to gherao, go-slow, demonstrations, strikes etc.
and the employers in order to enforce discipline and to safeguard their
interest may go for retrenchment and dismissal of employees and in
the extreme case may declare a lock-out.

Thus both the strikes and lock-outs are the two extreme measures
followed by employees and employers respectively in extreme cases.
Thus these sorts of conflicts between the employer and employees are
known as industrial disputes. The industrial disputes result in huge loss
of mandays as well as production.
The industrial relations are disturbed by industrial disputes and growing
industrial disputes may pollute the entire industrial climate of the
country leading to a total chaos in the economy.
CAUSES OF INDUSTRIAL DISPUTES

The causes of industrial disputes are many and varied. The major
ones related to wages, union rivalry, political interference, unfair labour
practices, multiplicity of labour laws, economic slowdown and others.

Wage Demands

By far, the most important cause for disputes is related to wages. The
demand for wages has never been fully met because of inflation and
high cost of living. High inflation results in increased cost of living
resulting in never-ending demands from unions.

Management and Unions have wage agreement generally valid


for three years. Each new agreement is preceded by a prolonged battle
between managements and unions, often resulting in strikes and
lockouts. Agreement reached in one company will inspire unions in
other plants in the locality, and make them pitch tents demanding
similar rise in wages.
Closely related to wages are bonus, incentives, and other allowances.
Of all these, wages have been a major issue of contention that leads to
disputes.

Union Rivalry
Multiplicity of unions leads to inter-union rivalries. If one union agrees
to a wage settlement, another union will oppose it. The consequence is
never-ending disputes, as has been happening at the Singareni
Collieries. The company had 445 strikes in 1990-91 resulting in a loss of
production of 3.12 million tonnes and 34.19 lakh man-days. The reason
is mainly union rivalry. One union or the other is always on strike and
often the demands of rival unions on an issue are conflicting.

Multiplicity of unions poses peculiar problems to managers. One such


problem relates to authenticity of memberships. Unions put up
respective numbers of members in such a way that when added
together the figure exceeds the total number of workers in the
organisation. Another problem relates to the selection of a bargaining
agent in the process of collective bargaining. Union rivalry leads to
large-scale violence.

Political Interference

Major trade unions are affiliated to political parties. Political affiliation


is not peculiar to our country alone. Even a cursory assessment of
labour movements around the world would show that trade unions are,
by their very nature, political, and that politicisation of labour is the
rule rather than the exception.
What happens when unions get politicised? In the first place, distant
ideological issues divide and fragment unions on party lines. When
unions multiply, inter-union rivalry erupts and the consequences are
too obvious. Second, inspired by their political ideologies, certain
unions refuse to sign an agreement even if it is favourable to all the
workers and thus these perpetual dissenters manage to keep the issue
alive.

Third, every political party somehow engineers strikes to demonstrate


its political strength. Invariably, the political party which is in power
favours a union which is affiliated to it, and the result is end less
disputes.

Unfair Labour Practices

Majority of disputes are management inspired. The following points 2


justify the assertion:

1. The management is generally not willing to talk over any disputes


with the employees or the representatives, or refer it to ‘arbitration’
even when trade unions want it so, and this enrages the workers.

2. A management’s unwillingness to recognise a particular trade union


and the dilatory tactics to which it resorts while verifying the
representative character of any trade union have been a source of
industrial strife.

Multiplicity of Labour Laws

Labour laws in our country, as in several other countries, have been


enacted to create conditions for the protection of labour from unfair
employment practices and to provide a legal framework within which
Industrial Relations is to be regulated.

Labour legislation is regarded as the most dynamic institution. From a


simple restraint on child labour in 1881, labour legislation in our
country has become an important agency of the State for the regulation
of working and living conditions of workers, as indicated by the rising
number and variety of labour acts. This rapid development of labour
legislation is an integral part of the modern social organisation.

There are more than 155 Acts, both Central and State, earning our
country the dubious distinction of being one of the few highly labour
legislated countries in the world. What has been the outcome of all
these? Surely, the result has been endless confusion, industrial strife,
loss of production and exploitation of labour by the management and
of the management by the labour.
What is strange is that in developed countries of the Western world,
labour legislation followed the emergence of industrialisation and in
response to a demand for economic and social betterment of the
workers. We neither experienced an industrial revolution. in the true
sense of the tenn, leading to the gradual emergence of a welfare state.
nor a socialist revolution which binds the public sector with a sense of
performance.
DISPUTE SETTLEMENT METHODS AND
MACHINERIES

This machinery has been provided under the Industrial Disputes Act,
1947. It, in fact, provides a legalistic way of setting the disputes. As said
above, the goal of preventive machinery is to create an environment
where the disputes do not arise at all.

Even then if any differences arise, the judicial machinery has been
provided to settle them lest they should result into work stoppages. In
this sense, the nature of this machinery is curative for it aims at curing
the aliments.

This machinery comprises following organs:

1. Conciliation
2. Court of Enquiry
3. Voluntary Arbitration
4. Adjudication (Compulsory Arbitration).

1. Conciliation:

Conciliation, is a form of mediation. Mediation is the act of making active


effort to bring two conflicting parties to compromise. Mediation,
however, differs from conciliation in that whereas conciliator plays only
a passive and indirect role, and the scope of his functions is provided
under the law, the mediator takes active part and the scope of his
activities are not subject to any statutory provisions.

Conciliation is the “practice by which the services of a neutral party are


used in a dispute as a means of helping the disputing parties to reduce
the extent of their differences and to arrive at an amicable settlement of
agreed solution.”

The Industrial Disputes Act, 1947 provides for conciliation, and can be
utilised either by appointing conciliation officers (permanently or for a
limited period) or by constituting a board of conciliation. This conciliation
machinery can take a note of a dispute or apprehend dispute either on
its own or when approached by either party.

With a view to expediting conciliation proceeding, time-limits have been


prescribed—14 days in the case of conciliation officers and two months
in the case of a board of conciliation, settlement arrived at in the course
of conciliation is binding for such period as may be agreed upon between
the parties or for a period of 6 months and with continue to be binding
until revoked by either party. The Act prohibits strike and lock-out during
the pendency of conciliation proceedings before a Board and for seven
days after the conclusion of such proceedings.
Conciliation Officer:

The law provides for the appointment of Conciliation Officer by the


Government to conciliate between the parties to the industrial dispute.
The Conciliation Officer is given the powers of a civil court, whereby he
is authorised to call the witness the parties on oath. It should be
remembered, however, whereas civil court cannot go beyond
interpreting the laws, the conciliation officer can go behind the facts and
make judgment which will be binding upon the parties.

On receiving information about a dispute, the conciliation officer should


give formal intimation in writing to the parties concerned of his intention
to commence conciliation proceedings from a specified date. He should
then start doing all such things as he thinks fit for the purpose of
persuading the parties to come to fair and amicable settlement of the
dispute.

Conciliation is an art where the skill, tact, imagination and even personal
influence of the conciliation officer affect his success. The Industrial
Disputes Act, therefore, does not prescribe any procedure to the
followed by him.

The conciliation officer is required to submit his report to the


appropriate government along with the copy of the settlement arrived
at in relation to the dispute or in case conciliation has failed, he has to
send a detailed report giving out the reasons for failure of conciliation.

The report in either case must be submitted within 14 days of the


commencement of conciliation proceedings or earlier. But the time for
submission of the report may be extended by an agreement in writing of
all the parties to the dispute subject to the approval of the conciliation
officer.

If an agreement is reached (called the memorandum of settlement), it


remains binding for such period as is agreed upon by the parties, and if
no such period is agreed upon, for a period of six months from the date
on which the memorandum of settlement is signed by the parties to the
dispute, and continues to be binding on the parties after the expiry of
the period aforesaid, until the expiry of two months from the date on
which a notice in writing of an intention to terminate the settlement is
given by one of the party or parties to the settlement.

Board of Conciliation:

In case Conciliation Officer fails to resolve the differences between the


parties, the government has the discretion to appoint a Board of
Conciliation. The Board is tripartite and ad hoc body. It consists of a
chairman and two or four other members.
The chairman is to be an independent person and other members are
nominated in equal number by the parties to the dispute. Conciliation
proceedings before a Board are similar to those that take place before
the Conciliation Officer. The Government has yet another option of
referring the dispute to the Court of Inquiry instead of the Board of
Conciliation.

The machinery of the Board is set in motion when a dispute is referred


to it. In other words, the Board does not hold the conciliation
proceedings of its own accord. On the dispute being referred to the
Board, it is the duty of the Board to do all things as it thinks fit for the
purpose of inducing the parties to come to a fair and amicable
settlement. The Board must submit its report to the government within
two months of the date on which the dispute was referred to it. This
period can be further extended by the government by two months.

2. Court of Inquiry:

In case of the failure of the conciliation proceedings to settle a dispute,


the government can appoint a Court of Inquiry to enquire into any
matter connected with or relevant to industrial dispute. The court is
expected to submit its report within six months. The court of enquiry
may consist of one or more persons to be decided by the appropriate
government.

The court of enquiry is required to submit its report within a period of six
months from the commencement of enquiry. This report is subsequently
published by the government within 30 days of its receipt. Unlike during
the period of conciliation, workers’ right to strike, employers’ right to
lockout, and employers’ right to dismiss workmen, etc. remain
unaffected during the proceedings in a court to enquiry.

A court of enquiry is different from a Board of Conciliation. The former


aims at inquiring into and revealing the causes of an industrial dispute.
On the other hand, the latter’s basic objective is to promote the
settlement of an industrial dispute. Thus, a court of enquiry is primarily
fact-finding machinery.

3. Voluntary Arbitration:

On failure of conciliation proceedings, the conciliation officer many


persuade the parties to refer the dispute to a voluntary arbitrator.
Voluntary arbitration refers to getting the disputes settled through an
independent person chosen by the parties involved mutually and
voluntarily.
In other words, arbitration offers an opportunity for a solution of the
dispute through an arbitrator jointly appointed by the parties to the
dispute. The process of arbitration saves time and money of both the
parties which is usually wasted in case of adjudication.

Voluntary arbitration became popular as a method a settling differences


between workers and management with the advocacy of Mahatma
Gandhi, who had applied it very successfully in the Textile industry of
Ahmedabad. However, voluntary arbitration was lent legal identity only
in 1956 when Industrial Disputes Act, 1947 was amended to include a
provision relating to it.

The provision for voluntary arbitration was made because of the lengthy
legal proceedings and formalities and resulting delays involved in
adjudication. It may, however, be noted that arbitrator is not vested with
any judicial powers.

He derives his powers to settle the dispute from the agreement that
parties have made between themselves regarding the reference of
dispute to the arbitrator. The arbitrator should submit his award to the
government. The government will then publish it within 30 days of such
submission. The award would become enforceable on the expiry of 30
days of its publication.
Voluntary arbitration is one of the democratic ways for setting industrial
disputes. It is the best method for resolving industrial conflicts and is a
close’ supplement to collective bargaining. It not only provides a
voluntary method of settling industrial disputes, but is also a quicker way
of settling them.

It is based on the notion of self-government in industrial relations.


Furthermore, it helps to curtail the protracted proceedings attendant on
adjudication, connotes a healthy attitude and a developed outlook;
assists in strengthening the trade union movement and contributes for
building up sound and cordial industrial relations.

4. Adjudication:

The ultimate remedy for the settlement of an industrial dispute is its


reference to adjudication by labour court or tribunals when conciliation
machinery fails to bring about a settlement. Adjudication consists of
settling disputes through intervention by the third party appointed by
the government. The law provides the adjudication to be conducted by
the Labour Court, Industrial Tribunal of National Tribunal.

A dispute can be referred to adjudication if hot the employer and the


recognised union agree to do so. A dispute can also be referred to
adjudication by the Government even if there is no consent of the parties
in which case it is called ‘compulsory adjudication’. As mentioned above,
the dispute can be referred to three types of tribunals depending on the
nature and facts of dispute in questions.

These include:

The Industrial Disputes Act, 1947 provides three-tier machinery for the
adjudication of industrial disputes:

a. Labour Court
b. Industrial Tribunal
c. National Tribunal
A brief description on these follows:

A. Labour Court:

Under Section 7 of the Industrial Disputes Act, 1947, the appropriate


Government by notifying in the official Gazette, may constitute Labour
Court for adjudication of the industrial disputes The labour court consists
of one independent person who is the presiding officer or has been a
judge of a High Court, or has been a district judge or additional district
judge for not less than 3 years, or has been a presiding officer of a labour
court for not less than 5 years. The labour court deals with the matters
specified in the second schedule of the Industrial Disputes Act, 1947.
These relate to:

1. The property or legality of an employer to pass an order under the


standing orders.
2. The application and interpretation of standing orders.
3. Discharge or dismissal of workers including reinstatement or grant of
relief to workmen wrongfully dismissed.
4. Withdrawal of any statutory concession or privilege.
5. Illegality or otherwise of a strike or lockout.
6. All matters other than those reserved for industrial tribunals.

B. Industrial Tribunal:

Under Section 7A of the Act, the appropriate Government may


constitute one or more Industrial tribunals for the adjudication of
industrial disputes. Compared to labour court, industrial tribunals have
a wider jurisdiction. An industrial tribunal is also constituted for a limited
period for a particular dispute on an adhoc basis.

The matters that come within the jurisdiction of an industrial tribunal


include the following:

1. Wages, including the period and mode of payment.


2. Compensatory and other allowances.
3. Hours of work and rest periods.
4. Leave with wages and holidays.
5. Bonus, profit sharing, provident fund, and gratuity.
6. Classification by grades.
7. Rules of discipline.
8. Rationalisation.
9. Retrenchment of employees and closure of an establishment or
undertaking.
10. Any other matter that can be prescribed.

C. National Tribunal:

This is the third one man adjudicatory body appointed by the Central
Government by notification in the Official Gazette for the adjudication of
industrial disputes of national importance. The central Government may,
if it thinks fit, appoint two persons as assessors to advise the National
Tribunal. When a national tribunal has been referred to, no labour court
or industrial tribunal shall have any jurisdiction to adjudicate upon such
matter.

The main highlights revealed from figures in Table 25.7 are gleaned as
follows:

1. That referring of disputes conciliation machinery is a common practice


is well indicated by a large number of disputes taken for conciliation.
2. One average, around one-third of the disputes referred for conciliation
failed. Of these, about 60 to 90 per cent of cases were referred to
adjudication. Only one per cent of the cases were referred for
arbitration. These underline the ineffectiveness of conciliation
machinery in settling industrial disputes. Thus, the existing machinery for
the settlement of industrial disputes, as provided under the Industrial
Disputes Act, 1947, needs to be strengthened.

3. Adjudication has proved the most popular way of settling industrial


disputes in India. This is because adjudication is the last recourse for
disputing parties to settle their disputes.

Here it is noteworthy that the data given in the Table 25.7 is incomplete
in the sense that in no year did all the States and Union Territories send
all the information. For example in some years as many as 12 States and
Union Territories did not furnish information to the Union Ministry of
labour, as can be verified from the latter’s annual reports for the years
decrease in the number of disputes taken for conciliation from 47,788 in
19801 in 981 is explained by the same reason, i.e. non-furnishment of
information on dispute conciliation by all States and Union Territories.

Finally, following are a few suggestions to make the settlement


machinery more effective:
1. The trained and experienced officers who are well acquainted with the
problems of industrial workers should be entrusted with the
responsibility of dealing with conciliation machinery Political and
administrative interference should not be allowed to cloud the
functioning of conciliation machinery.

2. One way to strengthen the adjudication machinery is to substitute it


by setting up Industrial Relations Commissions (IRCs), both at the Central
and the State level, on the lines suggested by the National Commission
on Labour. The IRC should also be empowered to oversee the working of
the conciliation machinery.

3. In order to make arbitration fair, the arbitrator chosen for settling


disputes be mutually acceptable to both the union and the management.
This can be facilitated if the government prepares the panel of
experienced arbitrators at the national and the state levels so that
arbitrators are chosen from the panel, as and when required.

4. The government should refrain from actively intervening in the


matters of industrial disputes unless it is must for her to intervene in the
disputes.
CONCLUSION

In India industrial disputes are growing with the progress of


industrialisation in the country. Increasing price level, rising cost of living,
growing industrial inefficiency, indiscipline and sickness are the most
responsible factors for the growing industrial disputes in the country.

In 1951, total number of work stoppages was about 1,071 which involved
nearly 6.9 lakh workers and resulted in a total loss of 38.2 lakh man-days.
During the planning period, the problem of industrial disputes magnified
considerably. In 1974, total number of work stoppages rose to 2,938 and
number of workers involved significantly increased to 28.55 lakh
resulting in a huge loss of 402.6 lakh man-days.

In recent years also, the industrial disputes remain unabated. Thus the
number of man-days lost due to strikes and lockouts over industrial
disputes was 307.7 lakh in 1989-90 which declined significantly to 236.0
lakh in 1990-91. But in 1991-92, there was a sharp increase in the man-
days lost to the tune of 341.5 lakh. There has however, been a steep
decline in the mandays lost in 1992-93 which stood at 22.97 million
mandays.
There has been an improvement in the industrial relations scenario of
the country in the 1990s as compared to the 1980s as reflected in the
statement of mandays lost on account of strikes and lockouts. The above
table reveals that the number of strikes which was 732 in 1995 has
increased to 793 in 1997 and then it declined to 173 in 2012.

Considering the radical changes that have taken place in the domestic
industrial scenario and the labour market, Second National Commission
on Labour was set up to suggest among others, rationalisation of the
existing laws in the organised sector so as to make them more relevant
and appropriate in the changing context of globalisation and opening up
of the Indian Economy.