This article is written by Sandeep Garg, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.com.

What is industrial dispute?

In general term, Dispute is a conflict arising out of mismatch in opinion, perception, mindset and demand between two or more parties. Similarly, Industrial Dispute is difference in opinion or demand or any other mismatch between workers or employer while working in industries is termed as Industrial Dispute. In normal business scenario, disputes between employer and employee are very common nowadays. It may come up by any reasons, but most frequently dispute arises due to difference in wages, policy of employer, environment or working conditions. 

However as per Section 2(K) Industrial Dispute Act, 1947 defines ” industrial dispute” means any dispute or difference between employers and employers 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 labour, of any person.

As per the definition of Industrial Dispute, disputes of following Parties also come under Industrial Dispute.

• employer and employer
• employer and workmen
• workmen and workmen 

Now, we know about Industrial Dispute, statue governing industrial dispute and parties between whom dispute arises. Let’s understand the root cause of Industrial Disputes.

Causes of industrial disputes

Psychological Issues:

While working together there could be various psychological issues come up between employer and employee, which could include :

1. Difficulty in adjusting with each other
2. Behavioral clashes.
3. Excessive Work Pressure
4. Abusive Language and lack of self-respect by Manager
5. Strict reporting timelines 

Institutional Causes:

In Government Institutional Companies, policies are made up to discourage the constitution of union within the premises to avoid unnecessary hassles and delays in work. Various institutional cases are:

1. Formulation of Policies to press workers not to become members of any union.
2. Non-recognition of labour Union by government
3. Unfair working practices.

Inadequate Working Environment and Policies:

The other major reasons for dispute between Parties are working conditions, wages and inhumane treatment. Various other reasons could be:

1. Environment Conditions such as too cold, too hot, life threatening working conditions or too crowded workspace.
2. Frequent policy change, retrenchment, suspension, dismissal.
3. Inadequate wages, no bonus policy on late shift or festivals.

Denial of Legal Welfare Benefits:

In India, few Companies intentionally not grants benefits as defined under various labour laws like Employee State Insurance Act,1948, The Employees Provident Fund Miscellaneous Provisions Act, 1952, Bonus Act, 1965 and various other employee welfare act to save money and compliance cost which acts as major reason for eruption of dispute between employer and employee. 

Other Causes

The various other causes of industrial disputes are stated below:

• Weak and multiple trade unions resulting in weak redressal of dispute;
• Political intervention in Trade union often delays and disturb the whole process;
• The adverse effect of the relationship with the central and state governments, unstable political conditions and everyday responsibilities results in industrial disputes;
• In some organizations, collective bargaining is not allowed since the workmen are not even permitted to make trade unions;
• Other reasons can be corruption, apparent consumption, role conflicts, etc.

We have discussed causes of industrial dispute so can an issue, complaint or problem of one single individual may come under Industrial Dispute. We would discuss the principle of nature of Industrial Dispute to understand it better.

Principles of nature of industrial dispute

1. The dispute must affect a large number of workmen who have a community of interest and the rights of these workmen must be affected as a class.
2. The dispute must be raised by the Trade union or majority of workmen are facing the same issue.
3. Proper nexus between Union and dispute.
4. As per Section 2A of Industrial Dispute Act, 1947, a single workman has the right to raise an industrial dispute with regard to termination, discharge, dismissal or retrenchment of his or her service, even though no work union or trade union raises it or party to the dispute. 

Outcome of industrial disputes

The outcome of industrial disputes could be detrimental to the interest of employers, the economy, and society workers. 

Employers shall have to suffer business loss, production loss due to the eruption of Industrial Dispute and society will have to bear the brunt in the form of shortage of product supply and increased price. Workers have to bear the loss in the form of salary. 

Still, Industrial Dispute acts as effective tools to raise your voice and put up their voice in front of the management, employer or government. Recently we have seen various strikes by the Bank employees to increase their salary and meet their demand. In one way it empowers the employees to protect their rights of speech.

Following are the important ways in which industrial disputed takes place in any organization through its employee and sometime by employer as well:

1. Strikes
2. Lockouts

So first let’s see what are the types of strikes and then will come to Lockout.

Types of Strike

1. Primary Strike: The strikes that are directly projected against the employer are known as Primary Strikes. Below are types of Primary strikes which workers adapt to push the employer to get them on terms agreed to workers.

• Gherao is adopted by the factory workers to push the management to agree to their demand by restricting access to office or factory premises where nobody could move in or out.
• Picketing is the process of highlighting their issues on playcard or banners to show their demand to the public at large and media. In this union members are being talked to resolve the issue peacefully.
• Boycott is a process where no worker is allowed to carry out any work and union members push other workers not to do work and participate in their strike.
• Pen down strike where workmen come to work on a regular basis but do not do any work and sit idle for whole office hours.
• Go Slow Strike is also a very harmful way of strike where workmen intentionally work very slow to slow down operation. This harms the employer where order has strict timelines to deliver.
• Hunger Strike is the most common and oldest method used by workmen where they go for indefinite fasting and sit around factory or employer residence to project their demand.

1. Secondary Strikes: The other name for the secondary strike is the sympathy strike. In this, the force is applied against the third person having sound trade relations with the organization to indirectly incur a loss to the employer and the business. The third person does not have any other role to play in such a strike.
2. Nowadays third kind of strikes have also become popular which are adopted by the General Public to show their anger or objections against Government Policies for roll back of government policies. Recently we have seen outrage over Farmer’s bill where Bharat Bandh, No Purchase at Government Mandis kind of actions has been adopted at various states. 

Lockouts

This is the only method adopted by the Employers against employees to make employees agree to their new rules and procedures. In lockouts, the employer temporarily closes the workplace or stops the work or takes action like suspending the workers to force them to follow the new terms and conditions. 

Now let’s see how Industrial Disputes are resolved and what are the settlement machinery mentioned in the Industrial Dispute Act, 1947 to resolve the dispute.

Industrial dispute settlement machinery

Industrial Dispute Act has specified machinery for settlement of disputes between parties. It provides a legalistic way of settlement of disputes. Following are the machineries prescribed under the act for the quick resolution of Industrial Dispute.

• Conciliation
• Court of Inquiry
• Voluntary Arbitration
• Adjudication

Conciliation: Conciliation officer is appointed by the Government. In the process of conciliation both parties represent their dispute to the Conciliation Officer appointed by the Government. The Conciliation Officer plays an important role in reducing the extent of difference between the parties and tries to resolve their dispute by pushing both the parties to reach consensus. There are strict timelines within which disputes need to be resolved by 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.

Court of Enquiry: In case conciliation proceeding fails then the next resort to resolve the dispute is through the Court of Enquiry appointed by the government. The Court of Enquiry encourages them to resolve the dispute within 6 months. Within 6 months like conciliation Party rights remain unaffected and workers may remain on strike until a final decision of the Court of Enquiry comes. The Court of Enquiry is prima facie fact finding machinery.

Voluntary Arbitration: Voluntary Arbitration is a proceeding where both the Parties jointly appoint arbitrators to appoint time consuming, costly and length proceeding. Arbitrator derives his/her powers to settle the dispute from the agreement that parties have entered between themselves and arbitrator shall be appointed as mentioned in agreement. 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.

Adjudication: In case all the machinery fails to reach to any conclusion then the last resort to resolve dispute is through 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.

We have understood the dispute resolution machinery available in ID Act, 1947 to resolve disputes along with its process, timelines and effects.

 After evaluating all the machineries, it is advisable to resolve Industrial dispute through Conciliation. It is a fast, easy and pocket friendly concept. Let’s try to understand the Memorandum of Settlement of Industrial Disputes, its effects, its advantages and execution.

Memorandum of Settlement (MOS)

When both the Parties represent themselves before the Conciliation Officer then after reaching a conclusion persuaded by the conciliation officer, both parties enter into a Memorandum of Settlement which shall be binding on both the parties for the period. The settlement as mentioned in Section 2 (P) includes a written agreement signed by both the parties and executed copy be sent to the appropriate government. As per Rule 59 of The Industrial Dispute (Central) Rules,1957, MOS must be executed in Form H.(4). The settlement shall come into force on the date of signing of MOS between the Parties and shall come to end as mentioned in the MOS or after expiry of 2 months’ notice, where no date is mentioned in MOS. 

Now we understand that Memorandum of Settlement remains binding on Parties and when it ceases to have effects. Let’s understand it in more detail through various case laws and the judiciary’s stand on it.

Case Laws

In Jeypore Sugar Company, Ltd. vs Labour Appellate Tribunal on 25 July 1957

In this case, settlement between employer and workmen was finalized through signing of MOS that there shall be no strike till next crushing season. But workers carried on strike during the validity of MOS without paying heed to binding terms of MOS. The Company approached the Labour Tribunal to settle the strike and the Court decided that as per terms of MOS the workers cannot conduct strike as binding terms of strike is still valid. Due to the decision of the Labour Court, workers had to call off their strike.

In another judgement titled Cochin State Power And Light vs State Of Kerala on 25 February, 1965, employer and employee reached settlement through Memorandum of Settlement which was need to be in force till 30^th September, 1959.Employees presented charter of demands on 14^th October, 1959 by which they resolved to terminate the settlement and asked the company to raise their wages along with other demands. But the company contended that they have not given sufficient notice to terminate the Memorandum of Settlement. Both the parties reached the Supreme court. The Apex Court held that the charter is sufficient notice to terminate the Memorandum of Settlement and validity of settlement was till 30^th September 1959.

Now after seeing the importance of Memorandum of Settlement, Let’s look at how the draft looks like and who are the Parties and whom it should be sent to make it binding. 

Draft Memorandum of Settlement

Form for Memorandum of Settlement of Industrial Dispute between Employer and Employees

Parties Name

Representing employer(s):

Representing workmen:

The memorandum should include

1.      Short Recital of the Case
2.      Terms of settlement
3.      With the signature names and designations in the Organisation, of all the parties.

Signature of the parties

…………………………

………………………………

Witness:

(1)

(2)

Conciliation Officer

Signature of ……………….

Copy to:

1.      Assistant Labour Commissioner (Central)……………………………. [enter the office address of the Assistant Labour Commissioner (Central) in the local area concerned].
2.      Regional Labour Commissioner (Central)……………………………..
3.      Chief Labour Commissioner (Central), New Delhi.
4.      The Secretary to the Government of India, Ministry of Labour, New Delhi.

Conciliation Officer

In case of settlements affected by ………………..

Board of Conciliation

In case where settlements are arrived at between the employer and his workmen

Otherwise than in the course of conciliation proceeding.

Conclusion

In case of Industrial disputes between Parties there are various redressal machineries specified in the Industrial Dispute Act, 1947. But, after evaluating all the benefits like cost, timelines, effectiveness, resolution of Dispute and Judiciary stand it is better approach to resolve any industrial Dispute through Conciliation. This is the most effective and fast tool and outcome is a win-win situation for all the involved parties.

References

1. https://www.businessmanagementideas.com/industries/industrial-disputes/industrial-disputes-and-its-settlement/10107
2. Chart taken from https://theinvestorsbook.com/industrial-disputes.html
3. https://www.yourarticlelibrary.com/industries/4-industrial-dispute-settlement-machineries-for-settling-industrial-disputes-in-india/27993
4. https://www.advocatekhoj.com/library/legalforms/rules/index.php?Pno=industrialdisputes.php
5. https://indiankanoon.org/doc/1823400/
6. https://indiankanoon.org/doc/459217/
7. https://www.advocatekhoj.com/library/agreements/labourlaw/4.php

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