The Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947 talks about disputes that occurs in an industry. Dispute may arise between 2 or more industries. It also makes provision for the investigation and settlement of disputes that may hamper the peace of the industry. It ensures harmony and cordial relationship between the employers and employees.

Objectives of the Industrial dispute act, 1947

The objective of the Industrial Disputes Act 1947 is to secure industrial peace and harmony by providing machinery and procedure for the investigation and settlement of industrial disputes by negotiations. This act deals with the retrenchment process of the employees, procedure for layoff, procedure and rules for strikes and lockouts of the company.

Types of industrial dispute

There are four types of industrial dispute:

Interest dispute: Interest disputes arise out of deadlocks in negotiation for collective bargaining.
Grievance dispute: Grievance dispute pertains to discipline, wages, working time, promotion, rights of supervisors, etc. It is also called as interpretation disputes.
Unfair labor practices: Unfair labor practices are those arising out of the right to organize, acts of violence, failure to implement an award, etc
Recognition disputes: Recognition disputes are disputes over the rights of a Trade Union to represent a class or category of workers.

Dispute Settlement Authorities

The authorities are for Investigation and Settlement of industrial disputes:

WORKS COMMITTEE (Section 3): The works committee is a committee consisting of representatives of employers and workmen (section3). The main objective of the works committee is to solve the problems arising in the day-to-day working of concern and to secure industrial harmony.
CONCILIATION OFFICER (Section 4): For promoting and settlement of industrial disputes, the appropriate Government may by notification in the Official Gazette, appoint such a number of conciliation officers as it thinks fit. The main objective of appointing a conciliation officer is to create a congenial atmosphere within the industry and reconcile the disputes of the workers and the employers.
BOARDS OF CONCILIATION (Section 5): The appropriate Government may by notification in the Official Gazette, constitute a Board of Conciliation for the settlement of industrial disputes. The Board shall consist of a chairman and 2 or 4 other members in equal numbers representing the parties to the disputes as the appropriate Government thinks fit.
COURT OF INQUIRY (Section 6): The appropriate Government may by notification in the Official Gazette, constitute a court of inquiry into any matter appearing to be connected with or relevant to the settlement of industrial disputes having an independent person or of such independent persons as the appropriate Government may think fit.
LABOUR COURT (Section 7): The appropriate Government may by notification in the Official Gazette, constitute one or more labour court for adjudication of industrial disputes relating to any matters specified in the Second Schedule. The main function of the labour court is to hold its proceedings expeditiously and submit its award as the proceeding concludes.
LABOUR TRIBUNALS (Section 7- A): The appropriate Government may by notification in the Official Gazette, constitute one or more Industrial Tribunals for adjudication of industrial disputes. A Tribunal shall consist of one person to be appointed by the appropriate Government. The Appropriate Government may appoint two persons as assessors to advise the Tribunal.
NATIONAL TRIBUNALS (Section 7 B) The Central Government may, by notification in the Official Gazette, constitute one or more National Industrial Tribunals for the adjudication of industrial disputes. National Industrial Tribunals are involve only in case of the questions of national importance or if they are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such industrial disputes.

Definition of strike and lockout

Strike [Sec. 2 (q)]: Strike means “a cessation of work by a body of persons employed in any industry acting in combination or a concerted 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”.

Lockout [Sec. 2(1)]: Lockout 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”. Lockout is the antithesis of strike.

Procedure of strike

According to Sec. 22(1) No person employed in a public utility service shall go on strike in breach of contract-

(a) without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking; or

(b) within fourteen days of giving such notice; or

(d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.

Procedure of lockouts

According to Sec. 22(2), No employer carrying on any public utility service shall lock-out any of his workman

(a) without giving them notice of lock-out as hereinafter provided, within six weeks before locking-out; or

(b) within fourteen days of giving such notice; or

(d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.

Legal Strikes and Lockouts

A strike or a lockout shall be illegal, if employers or worker who ever disobeys or fails to follow [Sec 22, 23, 10(3), 10-A (4-A)] for commencing strikes or lockout, those strikes and lockout are said to illegal.
Section 22 provides Prohibition of strikes and Lockouts (Notice is mandatory in public utility services) and Section 23 provides General prohibition of strikes and Lockouts.
Section 24 (3) says that a lock-out declared in consequence of an illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be illegal.

Penalties for illegal strikes and lockouts

(1) Any workman who commences, continues or otherwise acts in furtherance of, a strike which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to fifty rupees, or with both.

(2) Any employer who commences, continues, or otherwise acts in furtherance of a lock-out which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees, or with both.

Lay-off and retrenchment

The term ‘lay-off’ has been defined under section 2 (kkk) of the Industrial Disputes Act, 1947, thus lay-off means the failure, refusal or inability of an employer on account of the shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery, etc. Thus, the following are the essentials of lay-off:

(i) There must be failure, refusal or inability on the part of the employer to give employment to a workman.

(ii) The failure, refusal or inability should be on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery, or natural calamity, or any other connected reason.

(iii) The workman’s name should be on the muster rolls of the industrial establishment.

(iv) The workman should not have been retrenched.

Retrenchment is something akin to downsizing. When a company or government goes through retrenchment, it reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent. Section 2 (oo) of the Industrial Disputes Act, 1947 defines Retrenchment as ” 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, but does not include –

(a) voluntary retirement of the workman,

(b) retirement of the workman on reaching the age of superannuating if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf

(b) termination of the service of the workman as a result of the non-removal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein

Continuous service in regard to lay-off compensation

The right to compensation under the Act accrues to a workman only if he has put in at least ‘one year of continuous service.’ Section 25 B defines what amounts to continuous service.

Even if a workman has not been in continuous service for a period of one year, he shall be deemed to be in continuous service for the period of one year if he satisfies the following two conditions:

(i) He was in employment for twelve calendar months preceding the date with reference to which calculation is to be made, and

(ii) During such twelve months, he actually worked for not less than (a) one hundred and ninety days in the case of employment in a mine, and (b) two hundred and forty days in any other case.

Provisions for Compensation for Lay-Off (Rights of Workmen)

According to Section 25 C of the Industrial Disputes Act, a workman who is laid-off is entitled to compensation equivalent to 50 per cent of the total basic wages and dearness allowance for the period of lay-off.

A badli workman means a workman who is employed in place of another workman whose name is borne on the muster rolls of the establishment.
A workman is entitled to lay-off compensation at the rate equal to fifty percent of the total of the basic wage and dearness allowance for the period of his lay off except for weekly holidays which may intervene.
Even if lay-off exceeds forty-five days during any period of twelve months no compensation is required to be paid for the excess period if there is an agreement to that effect between the workman and the employer.
Where the lay-off is justified and it satisfies the requirements of the definition under Section 2(kkk), the only relief to which workmen laid off are entitled is the statutory relief prescribed by Section 25-C.
If the lay-off is malafide in the sense that it has been declared in order to victimize the workmen, it would not be lay-off justified under Section 2(kkk), and the relief provided to the laid-off workmen under section 25-C would not be the only relief to which they are entitled.

When a Workman is not entitled to Lay-Off Compensation

The provisions of Section 25-E provide certain exceptions to the general rule for the payment of lay-off compensation. In other words even if the workman is laid off, he will be disentitled to claim compensation if his case falls within any of the three clauses of this section. In the following cases, a worker who is laid-off will not be entitled to claim compensation.

Refusal to Accept Alternative Employment:

If a laid off workman refuses to accept alternative employment provided that such alternative employment is:

(a) In the same establishment from which he has been laid-off or

(b) In any other establishment belonging to the same employer situated in the town or village within a radius of five miles from the establishment to which he belongs,

Absence from the Establishment:

If the workman does not present himself at the appointed time during normal working hours at least once a day.

Strike or Go Slow:

If such laying-off is due to a strike or slowing down of production on the part of workmen in another part of the establishment.

Special Provisions Relating to Prohibition of Lay-Off

Section 25 M lays down that no workman, other than a badli or a casual workman, whose name is borne on the muster rolls of an industrial establishment to which this chapter applies shall be laid off by his employer unless such lay-off is due to shortage of power or natural calamity, and in the case of a mine such lay-off is due also to fire, Hood, excess of inflammable gas or explosion. He can lay-off the workman only with the prior permission of the appropriate government or such authority as may be specified by that government on an application made in this behalf (as amended by the Industrial Disputes Amendment Act, 1984).

Procedure for calculation of retrenchment compensation

While effecting retrenchment of the workmen, it is obligatory on the part of the employer to pay retrenchment compensation at the rate of 15 days wages to be calculated at the last drawn salary of an employee. The calculation of compensation is to be based on the date of appointment and in case an employee has completed 240 days, he will be entitled to 15 days retrenchment compensation besides one month’s notice or salary in lieu thereof as if he has worked for one year. 240 days include Sundays or off days as well as a festival or national holidays.

Condition precedent to retrenchment

Section 25F provides the conditions precedent to retrenchment. According to this section, the employer must satisfy the following conditions before retrenching an employee employed for a period of a continuous period of not less than one year –

(a) the workman has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired,

(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay or any part thereof in excess of six months

Procedure of retrenchment

Section 25G lays down the procedure of retrenchment. Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman on this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman.