Settlement of Industrial Disputes: The

Industrial Disputes Act, 1947

Introduction
The Industrial Disputes Act, 1947 is a significant piece of legislation in India that was enacted to
provide a framework for the investigation and settlement of industrial disputes. It aims to
promote harmony and cooperation between employers and employees, ensuring that disputes
are resolved amicably and efficiently. This act is crucial for maintaining industrial peace and
protecting the rights of workers while also safeguarding the interests of employers.

Legislative History
The origins of the Industrial Disputes Act can be traced back to the socio-economic conditions
prevailing in India during the early 20th century. The rapid industrialization post-independence
led to an increase in labor unrest, strikes, and conflicts between workers and management.
Recognizing the need for a structured approach to resolve these disputes, the Indian
government initiated various measures.

Before the enactment of this act, several laws were already in place concerning labor relations,
such as the Trade Unions Act of 1926 and the Payment of Wages Act of 1936. However, these
laws were insufficient to address the complexities arising from industrial disputes
comprehensively. Consequently, a committee was formed under the chairmanship of Justice
R.M. Sahai in 1946 to examine labor issues and recommend solutions.

The recommendations made by this committee laid down the foundation for what would
eventually become the Industrial Disputes Act. After thorough discussions and revisions,
Parliament passed this legislation on March 11, 1947, marking a pivotal moment in India's
labor law landscape.

Objectives
The primary objectives of the Industrial Disputes Act, 1947 are as follows:

1.​ To Provide Mechanisms for Settlement: The act establishes various mechanisms for
resolving disputes between employers and employees through conciliation, arbitration,
and adjudication processes. This ensures that conflicts can be addressed without
resorting to strikes or lockouts.
2.​ To Promote Industrial Peace: By providing clear guidelines for dispute resolution, the
act aims to foster an environment conducive to industrial peace and stability. It
encourages dialogue between parties involved in disputes.
3.​ To Protect Workers' Rights: One of the key goals is to safeguard workers' rights by
ensuring fair treatment in matters related to employment conditions, wages, layoffs,
retrenchments, and dismissals.
4.​ To Regulate Layoffs and Retrenchments: The act provides specific provisions
regarding layoffs and retrenchments that require employers to follow due process before
terminating employees’ services.
 5.​ To Establish Labor Courts: The act facilitates the establishment of labor courts and
tribunals which serve as adjudicating bodies for resolving disputes effectively.
6.​ To Encourage Collective Bargaining: By recognizing trade unions' role in representing
workers' interests, it promotes collective bargaining as a means for negotiating terms
between employees and employers.

In summary, the Industrial Disputes Act of 1947 was enacted to provide a structured
framework for resolving industrial disputes through conciliation and adjudication
mechanisms while promoting industrial peace and protecting workers' rights.

Definition of Industry under Section 2(j)

Section 2(j) of the Industrial Disputes Act defines "industry" as follows:

"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.

This definition is broad and inclusive, aiming to cover a wide range of activities beyond
traditional manufacturing or commercial enterprises. The key terms in this
definition—such as "business," "trade," "undertaking," and "calling"—have been
interpreted by courts to encompass various sectors and types of work.

Key Judicial Interpretations

1.​ Bangalore Water Supply & Sewerage Board v. A. Rajappa (1978):: In this
landmark case, the Supreme Court provided a broad interpretation of what
constitutes an industry. The court held that even non-profit organizations and
public services could fall under the definition if they involved systematic activities
aimed at providing goods or services. This decision significantly expanded the
scope of the term "industry" to include entities like hospitals and educational
institutions1.

2 .Indian Oil Corporation Ltd v. Ashok Sinha (2006): This case reaffirmed that any
dispute arising out of employment conditions falls under the purview of industrial
disputes as defined by Section 2(j).

Section 2(k) - Definition of Industrial Dispute

One of the critical components of the Industrial Disputes Act is Section 2(k), which
defines what constitutes an "industrial dispute." According to this section, an
industrial dispute is defined as:

"any dispute or difference between employers and employees 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 labor, of any person."
Key Elements of Section 2(k)

1.​ Parties Involved: The definition explicitly mentions three parties:

○​ Employers
○​ Employees (or workmen)
○​ Other workmen (in cases where disputes arise among workers
themselves)
2.​ Nature of Dispute: The disputes can relate to various aspects:
○​ Employment status (employment or non-employment)
○​ Terms of employment (wages, working hours, etc.)
○​ Conditions of labor (working environment, safety measures)
3.​ Connection Requirement: For a dispute to be classified under this section,
it must have a direct connection to employment-related issues.

Definition of "Workman" 2(S)

According to Section 2(s) of the Industrial Disputes Act, 1947, a "workman" is
defined as:

“any person (including an apprentice) who is employed in any industry to

do any manual, unskilled, skilled, technical, operational or supervisory
work for hire or reward, whether the terms of employment are express or
implied.”

This broad definition includes various categories of workers engaged in different

types of work across industries. The inclusion of apprentices indicates that even
those undergoing training are recognized under this definition.

This definition encompasses a wide range of individuals working across

various capacities within an industrial setting. However, there are specific
exclusions from this definition:

Individuals who are primarily engaged in managerial or administrative roles.

Employees whose remuneration exceeds a certain threshold (currently set at

INR 10,000 per month).

Persons employed in positions that fall under military or police

[Link] Judicial Interpretation

In M/s Bharti Airtel Limited vs. A.S Raghavendra, the court ruled that a
holistic view should be taken when determining whether an individual qualifies as
a workman. Factors considered include:
 ●​ Job responsibilities
●​ Employment history
●​ Overall role within the organization

This ruling highlights that even if an employee lacks direct authority over hiring or
firing decisions but performs managerial duties or supervises other employees,
they may still be classified differently than traditional non-workmen roles would
suggest.

Settlement of Industrial Disputes: The

Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947 is a key piece of legislation in India that
governs the resolution of conflicts between employers and employees. It aims to
promote industrial peace and harmony by providing mechanisms for the
investigation and settlement of disputes. Understanding the types of industrial
disputes as defined under this Act is crucial for both employers and employees to
navigate their rights and responsibilities effectively.

FORMS of Industrial Disputes

Industrial disputes can be categorized into several types based on their nature
and the parties involved. Here are the main types along with examples:

1. Interest Disputes

Interest disputes, also known as economic disputes, arise when there are
disagreements over the terms of employment or working conditions. These
typically involve negotiations about wages, bonuses, job security, or other
economic benefits.

Example: A trade union may demand a wage increase for its members due
to rising living costs. If management refuses to negotiate or agree to these
demands, an interest dispute arises.

2. Grievance or Rights Disputes

Grievance disputes occur when employees believe their rights have been
violated or that company policies have been unfairly applied. These disputes
often relate to issues such as wrongful termination, disciplinary actions
perceived as unjust, or violations of existing agreements.
Example: An employee might file a grievance if they are dismissed without
proper notice or if their promotion is unjustly denied despite meeting all
criteria.

3. Unfair Labour Practices Disputes

These disputes arise from practices deemed unfair by either employers or

trade unions. The Industrial Disputes Act outlines specific unfair labour
practices that can lead to conflict.

Example: If an employer retaliates against workers for participating in union

activities—such as firing them or threatening them—this constitutes an unfair
labour practice dispute.

4. Recognition Disputes

Recognition disputes occur when there is disagreement over which trade

union should represent the employees in negotiations with management.
This can happen if multiple unions claim representation rights or if
management refuses to recognize a particular union.

Example: If a newly formed trade union claims to represent workers but

management only recognizes an older union, this leads to a recognition
dispute.

5. Individual vs. Collective Disputes

While many disputes start as individual grievances (e.g., issues involving

one worker), they can escalate into collective disputes when groups mobilize
around common concerns.

Example: An individual worker's complaint about unsafe working conditions

may lead others in the workplace to join in solidarity, resulting in a collective
action such as a strike demanding better safety measures.

Types of Industrial Disputes

Definition of Strike under Section 2(q)

According to Section 2(q) of the Industrial Disputes Act, 1947, a

strike is defined as:"A cessation of work by a body of persons
employed in any industry acting in combination, or a concerted
refusal, or a refusal, under a common understanding of any number
of persons who are or have been so employed to continue to work
or to accept employment."

This definition highlights several critical aspects:

1.​Cessation of Work: A strike involves stopping work. This

cessation must be voluntary and can occur even if workers
remain physically present at their workplace but refuse to
perform their duties.
2.​Collective Action: The definition emphasizes that strikes are
collective actions taken by groups of workers rather than
individuals acting alone. This collective nature is crucial as it
signifies solidarity among workers.
3.​Common Understanding: The strikers must act with a
common understanding or agreement regarding their decision
to cease work. This implies that there should be some level of
organization or coordination among the workers involved.
4.​Employment Context: The definition specifies that those
participating in the strike must be individuals who are currently
employed or have been employed in the industry concerned.

To illustrate how this definition applies in practice, consider the

following examples:

1.​Economic Strikes: Workers at a manufacturing plant may

decide to go on strike demanding higher wages due to rising
living costs. In this case, they collectively stop working until
their demands are met.
2.​Sympathy Strikes: If workers from one factory go on strike
not because they have grievances against their employer but
to support another group of workers striking for better
conditions elsewhere, this would also qualify as a strike under
Section 2(q).
3.​General Strikes: A nationwide general strike organized by
multiple unions across various sectors protesting against
government policies can also fall under this definition as it
 involves collective action and cessation from work across
different industries.

4.​Sit-Down Strikes: Employees might occupy their workplace

without leaving but refuse to perform any work until certain
demands are addressed by management. This form also
meets the criteria set out in Section 2(q).

Definition of Lockout

According to Section 2(l) of the Industrial Disputes Act, 1947, a

lockout is defined as:

"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."

1.​Temporary Closure: A lockout involves a temporary cessation

of operations at the workplace. This does not imply a
permanent closure but rather a strategic decision made by the
employer in response to specific circumstances.
2.​Suspension of Work: The act may involve halting all work
activities within an establishment. This suspension can be
used as leverage during negotiations with employees.
3.​Refusal to Employ: Employers may refuse to allow workers to
return to their jobs during the period of dispute. This refusal is
often aimed at compelling workers to accept certain terms or
conditions proposed by management.
Examples Illustrating Lockouts

Example 1: A manufacturing company faces ongoing strikes due to

employee demands for higher wages and improved working conditions.
In response, the management declares a lockout, temporarily shutting
down operations until an agreement can be reached with the union
representing the workers. During this period, no employees are allowed
on site.
Definition of Layoff : 2(kkk)

According to Section 2(kkk) of the Industrial Disputes Act,

1947, a "layoff" occurs when an employer fails, refuses, or is
unable to provide employment to a workman whose name is
on the muster roll due to reasons beyond the employer's
control. These reasons may include:

●​ Shortage of coal
●​ Power or raw materials
●​ Accumulation of stocks
●​ Breakdown of machinery
●​ Natural calamity
●​ Any other connected reason

It is important to note that a layoff does not equate to retrenchment;

it is a temporary cessation of work rather than a permanent
termination of employment.
Example Scenario

To illustrate this definition, consider a manufacturing company that

relies heavily on coal for its operations. If there is an unexpected
strike by coal miners leading to a shortage of coal supply, the
company may be unable to operate at full capacity. As a result, it
might decide to lay off some employees temporarily until the coal
supply resumes. In this case:

1.​The employees affected are still considered part of the

workforce since they remain on the muster roll.
2.​They have not been retrenched; instead, their employment
status is temporarily suspended due to circumstances beyond
their control.

Conditions for Valid Layoffs

For layoffs under Section 2(kkk) to be legally valid, certain

conditions must be met:
 1.​Inability or Failure: The employer must genuinely be unable
or unwilling to provide work due to specified reasons.
2.​Muster Roll Inclusion: The affected workman must be
listed on the muster roll.
3.​No Retrenchment: The employee should not have been
retrenched; they should still hold their position within the
organization.
Legal Precedents

4.​In Priya Laxmi Mills Ltd v. Mazdoor Mahajan Mandal

(1976), it was established that layoffs are temporary
discharges from work and do not terminate the contractual
relationship between employer and employee.​

Compensation During Layoffs

Under Section 25C of the Industrial Disputes Act, laid-off workers

are entitled to compensation amounting to 50% of their total basic
wages and dearness allowance during the period they are laid off.
However, specific conditions apply:

1.​The worker must not be categorized as casual or badli

(temporary replacement).
2.​They must have completed at least one year with the
establishment.
3.​Their name must remain on the muster roll throughout this
period.
Example Scenario for Compensation

If an employee earning INR 20,000 per month is laid off due to

machinery breakdown for two months, they would receive INR
10,000 per month as compensation during this period (50% of their
salary). This provision ensures that workers have some financial
support while they await [Link] of Industrial
Disputes: Retrenchment under the Industrial Disputes Act, 1947
Definition of Retrenchment

According to Section 2(oo) of the Industrial Disputes Act,

retirement refers to the termination of an employee's service by an
employer for any reason other than as a punishment inflicted by
way of disciplinary action. This means that retrenchment occurs not
due to misconduct or performance issues but rather for economic
reasons or operational necessities.

Key Points about Retrenchment:

Economic Reasons: Retrenchment is often initiated when a company faces
financial difficulties, surplus labor, or needs to restructure its operations.

Not Punitive: It is essential to note that retrenchment does not involve

disciplinary actions against employees; instead, it reflects broader business
challenges.

Legal Framework: The process must adhere to specific legal requirements

outlined in the Act to ensure fairness and protect employee rights.

Requirements for Valid Retrenchment

For retrenchment to be considered valid under the Industrial Disputes Act,
certain conditions must be met:

Notice Requirement: The employer must provide written notice at least one
month before the retrenchment takes effect. This notice should specify the
reasons for retrenchment1.

Compensation: If notice is not provided, the employer must pay

compensation equivalent to fifteen days' average wages for each completed
year of continuous service2.

Government Approval: In many cases, especially when large numbers of

employees are affected, prior approval from the appropriate government
authority may be required before proceeding with retrenchment3.
Adherence to Fair Practices: Employers are expected to follow fair practices
during retrenchment processes, such as adhering to principles like "last
come, first go," ensuring that those who joined last are typically the first to be
retrenched.