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Types of industrial disputes

February 27, 2023

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This article is written by Pragya Agrahari of Amity Law School, Lucknow. This article provides a detailed analysis of types of industrial disputes, the machinery provided to settle disputes and the methods that can be employed to resolve such disputes.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Around three centuries ago, the concept of ‘industrialisation’ came into existence, which has, in one way or the other, transformed the lifestyle of the people and contributed to the overall economic growth and development of society. It has simplified various works of the people, which earlier requires laborious efforts. But in addition to these benefits, it also paves the way for industrial disputes. Generally, where there is an industry, there has always been a conflict of interest between the management and the workers. The management or administration focuses on profit maximisation, whereas the workers expect healthy wages, reasonable facilities and good conditions of work. Therefore, industrial disputes are inevitable.

For the progress and development of the country, industrial peace and harmony must be restored. Therefore, every country tries to maintain good relations between the employer and the employee. In India, these objectives were accomplished through the provisions of the Industrial Disputes Act, 1947. This Act provides for the investigation and settlement of industrial disputes.

Industrial dispute under the Industrial Disputes Act, 1947

Industrial disputes refer to disagreements or conflicts of interest between the management and the worker or among members of management and the workers themselves. The subject matter of the dispute can be related to any conditions of employment such as wages, bonuses, promotions, working hours, holidays, etc. Usually, industrial disputes occurred between the employer and employee, who were represented through their trade unions respectively. This dispute can be connected to them in any manner, either individually or collectively.

According to the Section 2(k) of the Industrial Disputes Act, 1947, industrial disputes refer to “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.”

In the case of Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate (1958), this definition of the industrial dispute has been divided into the following three parts by the Supreme Court:

Factum of the dispute,
Parties to the dispute,
The subject matter of the dispute.

Factum of the dispute

“Industrial dispute” means the real and substantial difference between the parties having an element of persistence and which can endanger the industrial peace of the community if not resolved timely. It means the dispute must be definite and related to the terms and conditions of employment or non-employment of the person. The concerned parties should be directly interested in such a dispute.

Parties to the dispute

Section 2(k) of the Act enumerates three pairs that could be parties to any industrial dispute:

employers and employers,
employers and workmen, or
workmen and workmen.

Usually, an industrial dispute occurs between an employee and an employer. But in order to widen the scope of the definition of industrial dispute, disputes between two employees and two workmen have also been included. However, disputes between workmen and workmen are rare.

The subject matter of the dispute

According to Section 2(k) of the Act, industrial disputes may be connected to the following issues:

the employment or non-employment,
the terms of employment, or
the conditions of labour of any person.

If the dispute does not relate to these three categories, it will not fall within the ambit of an industrial dispute.

Employment or non-employment

This includes issues related to the appointment, suspension, discharge, termination, or reinstatement of the workmen.

Terms of the employment

It includes all the matters covered by the contract of employment, which a workman agrees to before appointing into any service. It may include wages, all types of allowances, working hours, bonuses, holiday leaves, sickness benefits, superannuation, promotion criteria, dismissal, or retrenchment procedures.

Conditions of labour

It will include all the conditions of the employment, like the type of work, environmental conditions, facilities, etc.

Major categories of industrial disputes

Industrial disputes can be categorised into four major types, which are as follows:

Interest disputes,
Grievance or rights disputes,
Unfair labour practices disputes, and
Recognition disputes.

Interest disputes

Interest disputes are also known as economic disputes or conflicts of interest. These disputes arise due to differences in opinion regarding changes in terms of employment, etc. Generally, these types of disputes arise when employees represented through their trade unions, bargain with their employers regarding changes in terms of employment, including increases in wages, job security, fringe benefits, etc. A dispute occurs when trade unions fail to negotiate with the employers or negotiations fail to reach an agreement. These disputes are often settled through conciliation proceedings.

Grievance or rights disputes

Grievance disputes are also known as legal disputes or conflicts of rights. These disputes arise due to non-fulfilment or infringement of the rights of the worker or workers by an employer. Usually, workers protest against the action of the management, which has violated their legitimate rights. Such rights can be related to issues like timely payment of wages, promotion, dismissal or transfer of workers, and certain other benefits, including retirement benefits, seniority benefits, etc. It includes disputes involving the interpretation and application of existing agreements or regulations. If such grievances are left unsettled, it often results in bitter management-labour relations, which severely affects industrial peace. The government often encourages voluntary arbitration for the settlement of such disputes.

Unfair labour practices disputes

Unfair labour practices disputes are the most common industrial disputes. These disputes occur due to unfair labour practices exercised by employers against their employees. ‘Unfair labour practices’ are enumerated in Schedule V of the Industrial Disputes Act, 1947. This Act strictly prohibits any of such practices employed by either management or the labours under Section 25T and provides punishment for any such practices employed under Section 25U.

Unfair labour practices refer to discriminatory or unethical treatment towards employees which can include the following:

restricting them from being members of any trade union or
restricting them from participating in any of the activities of the union,
forcing them to agree on unfair agreements through violent or non-violent means,
refusing to bargain,
employing new employees during strikes,
framing wrong charges against them,
discharging or dismissing them unfairly without any reason,
making wrongful efforts to put an end to legal strikes like signing good conduct bond as a precondition to allowing them to work,
showing favouritism in appointment or promotion,
failure to implement award or settlement, etc.

The Industrial Disputes Act provides various methods to resolve such types of disputes such as conciliation or arbitration.

Recognition disputes

Recognition disputes occur when the management refuses to recognise a trade union for the purposes of negotiating conflicts through collective bargaining with the employees. There can be a variety of causes why the management refuses to recognise a particular trade union, such as a lack of a sufficient number of representatives in a trade union or the presence of multiple trade unions, each demanding recognition and struggling for the same issue. These disputes also occur when the management personally dislikes a particular trade union. Then the management refuses to recognise and negotiate with such a trade union which leads to the victimisation of employees connected with such trade unions. Recognition disputes are settled based on the guidelines made by the government for the recognition of trade unions.

Individual disputes

Before the Industrial Dispute (Amendment) Act, 1965, a dispute concerning only an individual workman is not considered an industrial dispute. The courts also excluded them from the definition of industrial dispute. There were three different opinions prevalent at that time in regard to the individual dispute:

The individual dispute (i.e., the dispute between an employer and a single workman) cannot be an industrial dispute,
The individual dispute can be an industrial dispute,
Individual disputes cannot be per se called industrial disputes but may become one if it is represented by a trade union or group of workmen.

In the case of The Newspapers Ltd v. the State Industrial Tribunal, U.P. (1957), this controversy was set to rest by the Supreme Court as it held that the dispute between an employer and a single workman does not fall under the definition of industrial dispute. But if that single workman shares the common cause with the body of workmen or a considerable section of them, the individual dispute can also be considered an industrial dispute.

This position of the court has been overturned in the case of Workmen of M/S Dharampal Premchand (1966), where it was held that an individual dispute could not be regarded as an industrial dispute unless espoused by his own trade union or a substantial number of workmen. It means the workmen who were not supported by any trade union will not get any remedy for the dispute. This case caused hardships for various workmen who failed to get represented by trade unions.

To end this controversy and mitigate this issue, Section 2A was added through the Industrial Dispute (Amendment) Act, 1965. According to this Section, individual disputes related to ‘dismissal, discharge, retrenchment or termination’ of the workman will now be called industrial disputes. It is no more necessary for an individual dispute to be taken up by any trade union or a considerable number of workmen. The objective behind this amendment is that the workman should not be left at the mercy of trade unions to get justice on certain matters.

Causes of industrial disputes

Economic causes

Demand for higher wages and allowances

The ultimate aim of why workers work in various industries is to earn their living and meet their economic requirements. When these workers realise that current rates of wages do not fulfil their needs, they demand an increase in wage rates and other allowances from the management. On the other hand, the main aim of the management is to increase its profits and therefore, they reject the workmen’s demand for higher wages. This conflict of interest between the management and the workmen creates tussles between them, leading to an industrial dispute. In India, it is one of the most common causes of industrial disputes.

Demand for bonus

Demand for bonuses by workers accounts for many industrial disputes in India. Workmen wanted to have a greater share in the profits earned by the industry, but the management did not accept their demand which caused industrial disputes.

Issues related to working hours

Many times industrial disputes occur due to conflict in fixing reasonable working hours for the workmen. When workers do not agree to the management’s standards of working hours, a dispute arises between them.

Issues related to working conditions and safety

Workmen do expect not only fair wages or reasonable working hours but also safe working conditions with required equipment installed or safety measures taken to provide enabling conditions for the workmen. It also includes providing various other facilities like a canteen, clean toilets, clean drinking water, proper lighting, etc.

Modernisation of machinery

Industrial disputes also occur due to modernisation and the introduction of automated machinery in industries, which leads to the replacement of manual labour in the industry. Workers often go on strikes or go slow in order to show their resistance to the management, which ultimately results in industrial disputes.

Leaves and paid leaves

Sometimes, workmen were forced to take leaves due to certain unavoidable circumstances or accidents that occurred in their families or surroundings. In this case, the management cut their wages for the days they were absent from work. This causes disputes between the management and the workmen.

Gratuity, pension, and other benefits

Some industrial disputes occur as a result of the demand of employees for payment of pension, gratuity and other benefits.

Managerial causes

Non-recognition of trade unions

Many times, employers refused to recognise the trade unions which were representing the workmen in several disputes. The management of the industry is usually suspicious about the workers’ involvement with their trade unions. Therefore, they always try to prevent them from joining any trade union or uniting to form a new trade union. Employers do not recognise their trade unions for representing them or deliberately recognise the rival union so that their demands cannot be accomplished.

Non-enforcement of the agreements

Before joining work in the industry, the workers and the employers enter into various agreements to decide on various issues related to work. But the employers, on various occasions, violate these agreements or do not enforce agreements as per such contracts. This leads to violation of the rights given to the workers and workers often start opposing the decisions taken by employers, which ultimately results in industrial disputes.

Ill-treatment of the workers

Various authorities in the industry, such as managers or supervisors, show their superiority to the workers by dominating or treating them badly. The workers represented by their trade unions oppose ill-treatment by the employers, which leads to conflict between the two parties.

Corrupt recruitment procedures

The management, in order to accomplish their selfish goals, employs corrupt practices in recruiting workers in the industry. Sometimes, workers are recruited through bribed middlemen or sometimes, workers are recruited based on favouritism or biases. Even after recruitment, such corrupt practices are also employed in the transfer, promotion, or training of the workers.

Victimisation or wrongful termination of workers

Many employers follow the policy of ‘Hire and fire’, which means there is no security of a job for the workers. They are employed for some purpose, and after fulfillment of that purpose, they are fired without any reason. Workers are terminated or retrenched due to the downfall in the industry. Workers who actively participate in the affairs of trade unions also face dismissal or termination before in preference.

Political causes

Political influence

Political parties or leaders often use various industrial issues as their election propaganda. They instigate the management against workers or trade unions against the management to fulfill their selfish political motives. This leads to industrial disharmony and several industrial disputes.

Government’s support for management

The ruling government often supports the management of the industry for their own political agendas. Due to this, negotiations between the workers and the management fails, which gives rise to industrial disputes.

Trade union movements

The workers of the industry, on many occasions, are involved in various trade union movements meant to improve working conditions or provide various facilities to the workers in the industry. Due to these movements, several conflicts between the management and the workers arise, leading to industrial disputes.

Internal conflicts between trade unions

Many times, conflicts emerge between the members of the trade union on several issues, which leads to disruption in industrial peace.

Outcomes of industrial disputes

Strike

Usually, when workers’ demands are not accepted by the management of the industry, they go on strike. It is a way through which workers put pressure on the management by stopping their work or protesting against their employers until their demands get fulfilled.

According to Section 2(q) of the Industrial Disputes Act, 1947, a strike means “a cessation of work by a body of persons employed in any industry acting in combination or a concerned 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.”

Strikes can be of various types:

General strike: These are strikes which are conducted on a mass level to raise certain demands before the employer.
Go slow strike: In this strike, workers do not stop themselves from working in the industry but they do the work very slowly so that employers will earn less profit.
Hunger strike: This strike involves workers going on fast till their demands get fulfilled. It is one of the most common forms of strike.
Economic strike: This strike involves opposition of the employers by the workers on certain economic issues such as low wages, demand for bonuses, paid leaves, etc.
Work-to-rule strike: This strike also does not involve stoppage of work by the workers but working strictly according to the rules written in the rulebook. No extra work or overtime work is done by the workers.
Stay-in strike: In this type of strike, workers do not absent themselves from the working premises but do not work in the industry. They just stay in the premises without doing any work.
Sympathetic strike: This strike does not involve any issue of the workers themselves who are protesting. This strike starts to show sympathy towards the workers of other departments or industries and to put pressure on their employers.

Lockout

When there is a dispute between the employer and the workers, employers often close the place of employment for a temporary period in order to put pressure on their workers to stop protests. This is called a lockout. It is the reverse of a strike, which is done by workers against employers.

According to Section 2(l) of the Industrial Disputes Act, 1947, lockout means “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.”

Machinery for settlement of industrial disputes

Industrial peace is the backbone of the country’s economic system, which is disrupted by various types of industrial disputes that occur between employers and workmen. The main aim of the Industrial Dispute Act is to provide machinery for the settlement of these disputes.

There are seven major types of machinery provided under the Act to settle and investigate several industrial disputes based on their intensity or severity, which are as follows:

Works Committee (Section 3)
Conciliation Officer (Section 4)
Board of Conciliation (Section 5)
Courts of Enquiry (Section 6)
Labour Courts (Section 7)
Tribunal (Section 7A)
National Tribunal (Section 7B)

Works committees

Section 3 of the Act provides for the constitution of a works committee by the employer in the industrial establishment consisting of 100 or more workmen. This committee will consist of representatives of the employer and workmen, provided that the number of representatives of workmen should not be less than the number of representatives of the employer. The main duty of the committee is to promote good employer-employee relations and to discuss matters of common interest.

Conciliation officers

Section 4 provides for the appointment of conciliation officers by the appropriate Government either for a specified area or industry. The main duty of the Conciliation Officer is to mediate between the two parties and promote the settlement of the industrial dispute by conciliation or other techniques. The conciliation officer has the power to investigate disputes and is required to submit the report to the appropriate government in a manner or time prescribed.

Board of conciliation

Section 5 of the Act provides for the constitution of the Board of Conciliation by the appropriate Government for promoting the settlement of industrial disputes. This Board will consist of an independent person as Chairman and 2 or 4 other members as representatives of employer and workmen. The representatives of employers and workmen should be in equal numbers. Board also has the power to investigate the dispute and is required to submit the report to the appropriate Government.

Court of enquiry

Section 6 of the Act provides for the constitution of a court of enquiry by the appropriate Government to enquire into matters connected with industrial disputes. This Court should consist of independent persons as its members and in case of more than one member, one independent person is to be appointed as Chairman.

Labour Courts

Section 7 of the Act provides for the constitution of Labour Courts by the appropriate Government. These Labour Courts will adjudicate on the matters specified under Schedule 2 of the Industrial Disputes Act, which are also known as ‘rights disputes’. Labour Courts shall constitute one person as presiding officer to be appointed by the appropriate Government. The main duty of the Court is to provide expeditious and amicable settlement of industrial disputes.

Tribunals

Section 7A of the Act provides for the constitution of Labour Tribunals by the appropriate Government, to adjudicate on the matters specified under either Schedule 2 or Schedule 3 of the Industrial Disputes Act. The matters provided under Schedule 3 are also known as ‘interest disputes’. shall constitute one person as presiding officer to be appointed by the appropriate Government. The tribunal shall constitute one person as presiding officer to be appointed by the appropriate Government. It has much broader functions than labour courts and the same duties as those of labour courts.

National tribunals

Section 7B of the Act provides for the constitution of National Tribunals by the Central Government. The national tribunal shall adjudicate upon industrial matters of national importance or disputes involving industries situated in two or more states. It also consists of one person as presiding officer to be appointed by Central Government.

Methods utilised to resolve industrial disputes

Industrial disputes can be resolved through any of the methods of amicable settlement such as negotiation, conciliation, mediation or arbitration. Mostly, industrial disputes are civil in nature, which can be compromised between the parties to restore peace and harmony in the industrial premises. So the parties should try to negotiate problems between them in non-violent ways or through a system of collective bargaining. The most important thing is that these disputes must be resolved as early as possible to prevent further disruption in industrial peace.

Collective bargaining

Negotiation is one of the best methods to resolve industrial disputes. It is done between employers and workers through a process called collective bargaining. Collective bargaining is a process of negotiation between the representatives of employers and workers on the terms of employment or other conditions of labour. The major focus of these negotiations is to reach to an agreement on certain conflicting interests of both parties. It is a collective effort to achieve a common goal through peaceful means.

Conciliation

Conciliation is a method of resolving disputes between the management and the workmen through an independent and neutral third party known as a conciliator. A conciliator brings both parties together to discuss and negotiate their issues peacefully. The main aim of this process is to alleviate further differences or conflicts between them. A conciliator helps them in negotiation and guides them in solutions to their problems. The Industrial Dispute Act provides for the Conciliator officers and Board of Conciliators for amicable settlement of industrial disputes.

Mediation

Mediation is one of the most popular methods of resolving disputes in India. It involves negotiations between two parties who are unable to find solutions to their issues or unable to come to equal terms. It also involves a neutral third party known as a mediator who plays an important role in collecting information, assessing a situation or suggesting solutions to resolve the dispute. Both mediation and conciliation are advisory in nature and not binding on the parties.

Arbitration

Arbitration is a method which parties resort to when other methods of dispute resolution fail. Just like conciliation and mediation, arbitration also involves the help of an impartial third party, called an arbitrator, in resolving industrial disputes. But unlike conciliation and mediation, arbitration is judicial in nature and not only advisory. An arbitration award is binding in nature. Industrial Disputes Act also provides for compulsory and voluntary arbitration for the settlement of industrial disputes. Parties can refer their disputes to arbitration by an agreement between the employer and employees.

Conclusion

Good management-employee relation is necessary to keep industrial peace and harmony alive, which is necessary for any country’s economic growth and development. Good industrial relation depends upon mutual understanding between the management and the workers. When this understanding between them disrupts, it leads to several types of industrial disputes, such as disputes on rights, disputes on interests, disputes related to unfair labour practices or recognition disputes. Each dispute has solutions to it. There are many dispute resolution machinery functioning in the country that provides expedient and amicable settlement of disputes. But it must be understood that disputes will always lead to conflicts and disruption in industrial peace, so it is important to resolve these disputes as early as possible by employing any of the methods provided by the amicable settlement of disputes.

Frequently asked questions

What are the salient features of the Industrial Disputes Act, 1947?

The important features of the Industrial Disputes Act, 1947 are as follows:

The main objective of the Act is to provide machinery for the settlement and investigation of industrial disputes,
Industrial dispute includes conflict between employer and employee about the terms and conditions of the employment,
The Act provides for several authorities to be constituted or established for the settlement of disputes and for maintaining good relations between employer and employee,
It provides provisions for the reference of industrial disputes to the concerned authorities, including individual disputes,
It provides the procedure for the settlement of disputes through conciliation, arbitration or other techniques,
The Act provides a procedure for imposing legal strikes or lockouts and for having valid layoffs and retrenchments,
It prohibits any type of unfair labour practices and provides penalties for its contravention.

What is the penalty for indulging in unfair labour practices?

According to Section 25U of the Industrial Disputes Act, 1947, any person who commits unfair labour practices shall be liable for imprisonment of upto six months or a fine up to one thousand rupees or both.

What is Schedule 2 of the Industrial Disputes Act, 1947?

Schedule 2 of the Industrial Disputes Act, 1947 consists of the following issues:

The legality of the order passed by the employer under the standing order of the industry,
Interpretation and application of standing orders,
Discharge and dismissal of workmen and relief,
Withdrawal of customary privileges,
The legality of the strike or lockout,
Other matters not specified in Schedule 3.

References

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