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 ASSIGNMENT

Question

Dispute resolution in the realm of industrial relations plays a pivotal role

in maintaining industrial peace between employers and employees. This
is vital for the economic stability of a country as the production process
would need to run smoothly to maximize the profits and for the full
utilization of the limited resources. Keeping these considerations in mind,
the Industrial Dispute Act No. 43 of 1950 has introduced several dispute
settlement mechanisms to keep industrial peace and to delt swiftly with
such disputes with an aim of providing amicable solutions.

Critically discuss the above statement and prepare a report to highlighting

the relevant advantages and disadvantages of the available mechanisms.

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 CONTENT

CHAPTER 1

INTRODUCTION OF INDUSTRIAL DISPUTE …………………………… 1 -2

CHAPTER 2

LEGAL PROVISIONS AND DISPUTE SETTLEMENT

MECHANISMS OF THE INDUSTRIAL DISPUTES ACT ………………… 3 -7
NO. 43 OF 1950

1. Collective Agreement ……………………………………………… 3-4

2. Conciliation ………………………………………………………... 4
3. Arbitration ……………………………………………………….... 5-6
i. Voluntary Arbitration ……………………………... 5
ii. Compulsory Arbitration ………………………….... 5
4. Industrial Court …………………………………………………... 6
5. Labor Tribunals …………………………………………………... 7

CHAPTER 3

ADVANTAGES AND DISADVANTAGES OF THE ……………………….. 7 - 11

DISPUTE MECHANISMS

REFERENCE ………………………………………………………………... 12

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 CHAPTER 1

INTRODUCTION OF INDUSTRIAL DISPUTE

A conflict or disagreement over working conditions, employment terms, or other work-related

issues between employers and employees, or between employers and trade unions, is referred
to as an "industrial dispute." Industrial disputes can manifest in various forms, including
strikes, lockouts, protests, work stoppages, slowdowns, or collective bargaining deadlocks.

Industrial disputes can have various consequences that impact different stakeholders involved,
as well as the overall functioning of the industrial sector. These disputes can disrupt normal
business operations, affect productivity. Further, following as some common consequences of
industrial disputes:

1. Financial loss:
It can lead to financial losses for both the employer and the employee.

2. Economic impact:
It can disrupt normal business operations, resulting in loss of productivity and
production. This can have a negative impact on the economy, affecting growth,
investment and job opportunities.

3. Impact on workers' well-being:

It can have a significant impact on workers' welfare. Strikes or shutdowns can lead
to lost wages, financial instability, and stress.

4. Damage to the employer-employee relationship:

It can strain the relationship between the employer and the employee. Trust,
cooperation, and mutual respect can be eroded, making it difficult to rebuild positive
working relationships in the future.

5. Legal and regulatory consequences:

It can lead to legal actions and regulatory interventions. The government or labor
administration can also intervene to enforce labor laws, leading to increased
supervision and regulation of the industrial sector.

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6. Reputation and brand image:
It can tarnish the reputation and image of both employers and employees. Negative
publicity and public perception of conflict can damage the trust of customers,
investors, and other stakeholders.
7. Social unrest and disruption:
It can lead to broader social unrest and disruption. Large-scale strikes or
demonstrations can affect public services, transportation and essential industries,
affecting the public and society as a whole. Such unrest can have political
ramifications and weaken social cohesion.

Industrial disputes can vary depending on the nature and duration of the dispute, as well as the
effectiveness of the dispute resolution mechanisms in place. Prompt and effective dispute
resolution is crucial to mitigating these consequences and restoring stability and harmony in
the industrial sector.

Industrial Dispute Resolution is an important process for resolving conflicts and

disagreements between employers and workers in the industrial sector. This involves finding
mutually acceptable solutions to issues related to wages, working conditions, terms of
employment, and other factors affecting the employment relationship.

The settlement of Industrial disputes is very important for maintaining social peace, protecting
rights and interests, promoting social justice, maintaining labor productivity, strengthening
relations between employers and employees, prevent litigation and ensure a sustainable
environment. By resolving disputes in a fair, timely, and constructive manner, the resolution
process contributes to the overall prosperity and stability of the industry.

Negotiation is the first step in the dispute settlement process. It involves direct discussions
between the employer and the worker (in the case of an individual dispute) or their
representatives (in the case of a collective dispute). Negotiation allows the parties to express
their concerns, present their positions, and seek a mutually agreeable resolution without
external intervention.

Accordingly, I will consider in the next chapter the LEGAL PROVISIONS AND DISPUTE
SETTLEMENT MECHANISMS OF THE INDUSTRIAL DISPUTES ACT NO. 43 OF 1950
established in Sri Lanka for the settlement of such industrial disputes.

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 CHAPTER 2

LEGAL PROVISIONS AND DISPUTE SETTLEMENT MECHANISMS

OF THE INDUSTRIAL DISPUTES ACT NO. 43 OF 1950

The Industrial Disputes Act No. 43 of 1950 is an important law in Sri Lanka that provides a
framework for resolving disputes between employers and workers in the industrial sector. This
law establishes a dispute resolution mechanism to promote harmony, social justice and equality
in the workplace. Also, the Act defines the rights and responsibilities of employers, employees
and their representatives in relation to labor disputes.

The primary objective of the Industrial Dispute Act is to maintain industrial peace and stability
by providing a structured and formal process for resolving conflicts. By setting out clear
procedures and guidelines, the act seeks to ensure that disputes are handled in a fair and
transparent manner, benefiting both the employers and the workers.

It is important to note that while negotiation is encouraged, it is not mandatory under the
Industrial Dispute Act. If the parties are unable to reach a resolution through negotiation or if
either party chooses not to engage in negotiation, other dispute settlement mechanisms such as
conciliation, arbitration, or the intervention of a labor tribunal can be pursued.

Following as the Dispute Settlement Mechanisms which enforced under the Industrial Disputes
Act No. 43 of 1950:

1. Collective Agreement

Collective agreement refers to an agreement reached between an employer (or an employers'

organization) and a trade union (or a group of trade unions) representing the workers. This
agreement sets out the terms and conditions of employment, including wages, working hours,
leave entitlements, and other relevant matters for a group of employees.

The existing law on collective agreements is governed by Section 05 to 10 of Part 3 of the

Industrial Disputes Act.

Important provisions pertain to the Collective Agreement

➢ Section 05 of the Industrial Disputes Act defines a collective agreement.
➢ Clause (1) B of the Section 05 describes the contents of such an agreement
➢ Section 06 of the Act specifies how a collective agreement should be prepared.

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 ➢ Section 07 and 08 of the Act deal with the enforceability of a collective agreement.
➢ Section 09 provides provisions for the termination of a collective agreement.

A special point to be mentioned here are:

that a collective agreement should be in writing, signed by both parties and transmitted to the
Commissioner of Labor and published in the Government Gazette.
until a collective agreement is published in the Gazette, none of the parties involved in
the said agreement is entitled to enjoy any right or privilege mentioned in the
agreement.

2. Conciliation:

Conciliation is a voluntary process facilitated by a conciliation officer appointed by the

Commissioner of Labour. The officer acts as a neutral third party who assists the parties in
reaching a settlement through mediation. The conciliation officer facilitates discussions,
clarifies issues, and helps the parties explore possible solutions. The aim is to foster a spirit of
cooperation and arrive at a mutually acceptable agreement.

Important provisions pertain to the Conciliation

➢ Section 11 of the Industrial Disputes Act defines the duties and powers, purpose of
conciliation and time limit for conclusion of investigation related to the conciliation
mechanism.
➢ Section 12 of the Act describes the reporting structure
➢ Sections 13 and 14 of the Act deal with the enforceability of a Conciliation.
➢ Clause (1) to (2) of the Section 15 provides provisions for the termination of a
settlement related to the Conciliation.

In addition to that Section 03 describes Mediation and Conciliation as following ways.

➢ Clause (1) (b) – The Commissioner of Labor may endeavor to settle the industrial dispute by
conciliation
➢ Clause (1) (c) – The Commissioner of Labor may refer the industrial dispute to an authorized
officer for settlement by conciliation,

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3. Arbitration:

Arbitration is an alternative method for resolving disputes when negotiation or conciliation

fails to produce a settlement. The act provides for the appointment of an arbitrator, who is
entrusted with the task of making a binding decision based on the merits of the case. The
arbitrator's decision is legally enforceable and serves as a final resolution to the dispute. The
parties may agree on the arbitrator or seek the assistance of the Commissioner of Labour in
appointing one.

There are two different types of arbitration processes used in the resolution of industrial
disputes:

I. Voluntary Arbitration:
Voluntary arbitration is a form of arbitration where both parties, i.e., the employer and the
worker or their representatives, voluntarily agree to submit their dispute to arbitration. It is a
consensual process in which the parties mutually decide to have their dispute resolved by an
arbitrator rather than pursuing other dispute resolution methods such as negotiation or
litigation.

In voluntary arbitration, the parties have the freedom to choose the arbitrator and agree on the
rules and procedures to be followed during the arbitration process. The decision reached by the
arbitrator is binding on both parties and carries legal authority. It is considered a more
collaborative and cooperative approach to resolving disputes, as it relies on the willingness of
both parties to participate and accept the outcome of the arbitration.

II. Compulsory Arbitration:

Compulsory arbitration, also known as mandatory or binding arbitration, is a type of arbitration

that is imposed by law or by agreement between the parties. It occurs when the Industrial
Dispute Act or other legislation requires the parties to submit their dispute to arbitration,
regardless of their consent or preference for other methods of dispute resolution.

In compulsory arbitration, the arbitrator's decision is binding and enforceable, similar to

voluntary arbitration. However, unlike voluntary arbitration, the parties are obligated to
participate in the arbitration process even if they would have preferred alternative methods of
dispute resolution.

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 Important provisions pertain to the Arbitration
➢ Clause (1) (d) of the Section 03 describe how Voluntary Arbitration involve to the settlement
process
➢ Clause (2) of the Section 03 deals with the constitution of a body of arbitrators.
➢ Section 04 describe how Compulsory Arbitration involve to the settlement process
➢ Clause A of the Section 15 to Section 21 in Part 03 (C) of the Industrial Disputes Act provides
provisions regarding Settlement by Arbitration.

4. Industrial Court:

In Sri Lanka, there is a separate legal framework that includes the establishment of the Labour
Court under the Industrial Disputes (Amendment) Act No. 56 of 1999. An Industrial Court consist
with four (04) major Jurisdictions;

I. Original Jurisdiction:
According to the Clause (2) of the Section 4 Minister may refer any industrial dispute to an industrial
court for settlement.

II. Limited Appellate Jurisdiction:

According to the Clause (9) of the Section 10 it can be appealed with respect of a decision given by the
Commissioner of Labor according to some conditions of a collective agreement.

III. Limited Revisionary Jurisdiction:

According to the Section 27 and Clause (1) of the Section 28 any party may make an application to the
Minister of Labor for re-consideration an award given by the Industrial Court. Then the Minister may
refer it to the Industrial Court again and the Industrial Court may revise it.

IV. Limited Extraordinary Jurisdiction:

According to the Clause (1) of the Section 34 an Industrial Court has limited extraordinary jurisdiction
for Interpretation of an award by an arbitrator or an industrial court or an order of a labor tribunal.

Important provisions pertain to the Industrial Court

➢ Section 22 to Section 31 in Part IV of the Act provide provisions regarding Industrial
Courts
➢ Clause (1) of the Section 22 describe the governing body of the Industrial Courts.
➢ Clause (2) od the Section 04 describes the reporting structure
➢ Section 24 describe the power and its duties and functions

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5. Labor Tribunals:

Labor tribunals play a crucial role in adjudicating disputes that remain unresolved through
negotiation, conciliation, or arbitration. These tribunals, established under the Industrial
Dispute Act, are comprised of experienced and knowledgeable individuals with legal expertise.
They have the authority to hear evidence, examine witnesses, and make binding decisions on
the issues raised in the dispute. The decisions of labor tribunals are legally binding and
enforceable. The very first Labor Tribunal was established on May 2, 1959.

Important provisions pertain to the Industrial Tribunals

➢ Clause A of the Section 31 – (amended by Sec. 14, No. 62 of 1957) emphasized the
Establishment and conditions of labor tribunals.
➢ Clause B of the Section 31 emphasized the Applications of labor tribunals.
➢ Clause C of the Section 31 emphasized duties and its powers.

CHAPTER 3

ADVANTAGES AND DISADVANTAGES OF THE DISPUTE

MECHANISMS

The dispute settlement mechanisms outlined both advantages and disadvantages. While these
mechanisms aim to promote fair resolution of conflicts in the industrial sector, they also face
certain limitations. Let's examine the advantages and disadvantages of the dispute mechanism.

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MECHANISMS ADVANTAGES DISADVANTAGES
Power Imbalance
Direct Communication
Power imbalance causes unfair distribution of benefits or
Direct communication improves understanding, rapport,
disadvantages for weaker parties due to dominant party's
empathy, and cooperative approach in conflicts.
influence.
Flexibility and Customization Limited Legal Enforcement
Negotiation offers flexibility, customization, and Negotiation agreements may have limited legal enforceability,
exploration of options, increasing the likelihood of finding potentially leading to disputes and dissatisfaction if parties fail
Negotiation

mutually agreeable terms. to honor terms.

Preserves Relationships Incomplete Resolution
Open dialogue in negotiation preserves trust, respect, Incomplete resolution in negotiation can lead to partial or
cooperation, and long-term employment relationships, temporary settlements, potentially resurfacing disputes
promoting workplace harmony. requiring further negotiation or alternative mechanisms.
Lack of Expertise
Time and Cost Efficiency
The Industrial Dispute Act No. 43 of 1950 lacks specific
Negotiation offers time and cost efficiency by addressing
training for negotiating parties, potentially limiting
concerns directly, avoiding prolonged legal proceedings,
effectiveness due to a lack of negotiation skills and
and saving time and expenses.
understanding of legal and industry-specific issues.

Collective Bargaining Power Potential for Conflict

Collective bargaining power empowers workers to Employers and trade unions may face conflicts due to
Agreements
Collective

negotiate better wages, working conditions, and benefits disagreements on terms, economic feasibility, and
through unified group negotiations through trade unions. relationships.
Protection of Workers' Rights Imbalance of Power
Framework for protecting workers' rights, ensuring fair Power imbalances between employers and trade unions can
wages, working hours, leave entitlements, health and cause unequal bargaining power, affecting collective
safety, and promoting employee well-being. agreements' fairness and effectiveness.

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 Stability and Predictability
Rigidity and Inflexibility
Stability and predictability in employment relationships are
Establishing an agreement can be rigid and inflexible, making
achieved through clear rules and guidelines, promoting
it difficult to adapt to changing circumstances and demands.
security, confidence, and a harmonious work environment.
Resolution of Disputes
Cost Implications
Dispute resolution mechanisms, such as negotiation,
Employers may face cost implications due to increased wages,
conciliation, arbitration, or referral to labor tribunals,
benefits, and other provisions in the collective agreement,
minimize conflicts, ensure timely resolution, and maintain
requiring resource allocation and budget adjustments.
workplace productivity.
Representation and Participation Limited Individual Negotiation
Collective agreements promote worker representation and Limited individual negotiation due to standardized terms,
participation in decision-making, empowering workers limiting flexibility and agency in personalized employment
through trade unions and influencing employment terms. terms for workers.

Voluntary Resolution Non-binding Nature

Voluntary resolution in industrial disputes encourages Conciliation terms are non-binding unless formalized through
dialogue, negotiation, and mutually agreeable solutions written settlement agreements, preventing enforceable
without adversarial methods like strikes or lockouts. obligations for compliance.
Conciliation

Preservation of Relationship Lack of Power to Compel

Preserving employer-employee relationship through Conciliation lacks power to compel parties to accept a
constructive discussions with conciliation officer, resolution, potentially hindering a satisfactory outcome if
addressing concerns and interests. unwillingness is present.
Speed and Efficiency
Imbalance of Power
Conciliation officer streamlines communication, identifies
Power imbalances can impact conciliation effectiveness,
key issues, and facilitates timely dispute resolution,
potentially leading to unequal outcomes if one party has more
reducing disruptions and restoring normalcy faster than
bargaining power or resources.
formal legal proceedings.

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 Confidentiality Limited Remedies
Confidentiality in legal proceedings promotes open Limited remedies focus on resolving immediate disputes and
communication, exploration of potential solutions, and reaching agreements, but may not address systemic issues or
avoids potential legal consequences. labor law violations.

Flexibility Dependence on Cooperation

Conciliation officer offers flexibility in finding solutions, Conciliation relies on parties' willingness and cooperation, as
brainstorming creative alternatives, and facilitating uncooperative or unwilling dialogue hinders effective dispute
compromises in rigid legal processes. resolution.

Consensual Process Unequal Bargaining Power

Voluntary arbitrations foster ownership, commitment, Voluntary arbitration may face power imbalances, with one
cooperation, and acceptance of decisions through a party influencing outcomes and outcomes unfairly, potentially
consensual process. influencing outcomes.
Voluntary Arbitration

Flexibility and Control

Lack of Compulsion
Parties gain greater control over arbitrator selection and
Arbitration relies on voluntary participation, but challenges
arbitration rules, enabling tailored processes and more
may arise if one party refuses or rejects the outcome.
satisfactory outcomes.
Preserves Relationships
Maintains positive employer-employee relationships
through arbitration, promoting collaborative dispute
resolution, preserving trust, goodwill, and future working
relationships.
Efficiency and Timeliness
Arbitration offers efficiency, time-savviness, and greater
control over dispute resolution, saving time, costs, and
resources compared to court litigation.

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 Resolution of Deadlocked Disputes Limited Autonomy
Deadlocked disputes can be resolved through mechanisms Compulsory arbitration may limit autonomy, causing
Compulsory
Arbitration
that break them, ensuring a decision is made and preventing dissatisfaction and perceived lack of control over outcome,
industrial peace threats. even if parties prefer alternative dispute resolution methods.
Binding and Enforceable Decisions
Potential for Resentment
Compulsory arbitration decisions are binding and
Resentment and strained relationships may arise from
enforceable, ensuring certainty and compliance between
arbitration, hindering cooperation and goodwill.
parties.

Specialized Expertise Limited Remedies

The Labour Tribunal's specialized composition includes The Labour Tribunal's authority is limited to Industrial
judicial experts and assessors representing employers and Dispute Act No. 43 of 1950, offering limited remedies like
workers, ensuring dispute adjudication based on labor laws reinstatement and compensation, potentially restricting
and industrial relations. redress options in complex cases.
Labour Tribunal

Efficient and Timely Resolution Lack of Formality

Labour Tribunal streamlines industrial dispute resolution, Informality in Labour Tribunal benefits speed and
focusing on swift, less formal procedures, saving time and accessibility, but may lead to less rigorous evidence
resources for both parties. examination, impacting decision-making accuracy and depth.
Accessible Forum Potential Bias
The Labour Tribunal offers an accessible forum for Labour Tribunal decision-making may face bias due to
industrial disputes, providing an alternative to the costly assessors representing employers and workers, potentially
formal court system. affecting fairness and impartiality.
Binding and Enforceable Decisions Limited Appellate Process
The Labour Tribunal's decisions are binding and Limited Appellate Process: Labour Tribunal's appeals may be
enforceable, promoting adherence to labor relations rules restricted by grounds and review, limiting parties' ability to
and ensuring certainty and finality in dispute resolution. seek further recourse or challenge decisions.

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REFERENCE

Industrial Dispute Act No. 43 of 1950

Perera, L.K.N. (1972). Industrial Law of Sri Lanka and Labour Relations. Frewin &

Co.Ltd

Sivananthiran, A., & Wijayatilake, D. (2000). Prevention and Settlement of Labour

Disputes in Sri Lanka.

Hatch, N. (1989). Commentary on the Industrial Disputes Act of Sri Lanka.

INDUSTRIAL DISPUTES. (n.d.). LawNet. https://www.lawnet.gov.lk/industrial-disputes-2/

තිලකරත්න, ආනන්ද. (2001). කම්කරු නීති සංග්‍රහය (1st ed.) [සංහල]. විජේසූරිය ග්‍රන්ථ
ජේන්රය.

ජහට්ටිජේ. එන්. (2011). කම්කරු නීතිය (1st ed.). පහන් ප්‍රකාශන.

වීරප්ජපරුම, පී. (2013). කම්කරු උසාවිය (4th ed.) [සංහල]. සී/ස ඇස් ජ ාඩජේ සහ
සජහෝදරජයෝ (පුද්.) සමා ම.

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