Methods of Settling Industrial Disputes

-by Prof. Priyanka Desai Grims

Settlement Without State Intervention

There are two ways in which the basic parties to an industrial dispute- the employer and the employees- can settle their disputes. Collective bargaining Voluntary arbitration

Settlement Under the Influence of the State

Compulsory establishment of bipartite committees;

Establishment of compulsory collective bargaining;

Conciliation and mediation (voluntary and compulsory);

Compulsory investigation; and

Compulsory arbitration or adjudication.

Collective Bargaining
Collective bargaining implies the following main steps:
a.

Presentation in a collective manner, to the employer, their demands and grievances by the employees;

b. Discussions and negotiations on the basis of mutual give and take for settling the grievances and fulfilling the demands;

Signing of a formal agreement or an informal understanding when negotiations result in mutual satisfaction; and
in the event of failure of negotiations, a likely resort to strike or lock-out to force the recalcitrant party to come to terms. When collective negotiations reach deadlock, the parties themselves may call in third persons to help them settle their disputes. The role of this third person is to break the deadlock, to interpret the view point and thereby to help the parties arrive at an agreement.

The solution, if any comes out of the parties themselves; the presence of the outsider neither supersedes the process of collective bargaining nor the freedom of the parties to agree or to disagree.
Bargaining with the help of the third party is generally called conciliation or mediation. Strikes and lock-outs are an integral part of the process of collective bargaining. If the threat of a strike were not there, mutual negotiations would rarely succeed. The solutions arrived at in the process of collective bargaining are ultimately evolved by the parties themselves and are of lasting value.

Voluntary Arbitration
In many cases an argument simply cannot be settled as both parties disagree on their own grounds. They therefore enter into Voluntary Arbitration, which involves appointing an independent party to assess the situation and then make a decision based on the facts presented to them.

It is commonly viewed as less expensive and faster than resolving a dispute in court. An arbitrator may be a single person or a panel

At the time of submitting a dispute to arbitration, the parties may agree in advance, to abide by the award of the arbitrator and thus industrial peace is maintained and the dispute is resolved. Sometimes, however, the parties may agree to submit the dispute to an arbitrator but at the same time, reserve their right to accept or reject the award when it comes

Factors hampering the adoption of Voluntary arbitration in India:

I. ideas availability of adjudication in case of failure of negotiations; ii. Dearth of suitable arbitrators who command the confidence of both parties; iii. Absence of recognized union which could bind the workers to common agreements; iv. Legal obstacles; v. The fact that in law no appeal was competent against an arbitrators award; vi. Absence of a simplified procedure to be followed involuntary arbitration.

Settlement Under the Influence of the State

Compulsory Establishment of Bipartite Committees
The state has passed enactments requiring the establishment of bipartite committees consisting of the representatives of workers and their employer at the plant or industrial level. These bipartite committees are given the power to settle differences between the workers and the employers as soon as they appear, and thereby they prevent them from growing into big conflagrations.

In India the Industrial Disputes Act, 1947 provides for the compulsory formation of works committees in industrial establishments employing 100 or more employees.
A works committee is entrusted with the responsibility to promote measures for securing and preserving amity and good relations between the employer and the workmen and, to that end, to comment upon matters of their common interest or concern and endeavor to compose any material difference of opinion in respect of such matters.

The relevant rules framed by the Central Govt. under this Act lay down the details concerning the size of Works Committees, the selection of workers representatives, terms of office, facilities of meeting and so on. State Govt. has formed similar rules requiring the formation of works committees in different industrial establishments.
Some of these Works Committees are functioning successfully while some have proved to be a failure. The main factors accounting for their failure have been:

i. The reluctance and hostility of the employer or the trade union concerned, ii. Illiteracy and ignorance of the workers, and iii. Absence of leadership from the rank-and-file.
The basic idea behind the establishment of such bipartite committees are:

a. Giving encouragement to the parties concerned to settle and compose their differences by themselves, to avoid the intervention of third party, and b. Facilitating the composition of the differences at their embryonic stages without causing work stoppages.

Establishment of Compulsory Collective Bargaining

State may encourage, and if necessary, force workers and employers to enter into formal collective bargaining through their representatives. In India, refusal to bargain collectively in good faith by the employer and the recognized union, has been included in the list of unfair labor practices by an amendment of the Industrial Disputes Act in 1982.

However, in absence of making recognition of representative union by the employer statutorily compulsory, this provision of the Industrial Disputes Act, 1947 does not have much significance.

Conciliation and Mediation

a)Voluntary conciliation and mediation b)Compulsory conciliation and mediation

The only difference between conciliator and mediator is that conciliator is more active and more intervening than the mediator who is said to perform a go messenger service.

Voluntary conciliation and mediation

The state sets up a conciliation and mediation machinery, consisting of personnel trained in the art of conciliating disputes. The services of this machinery are always available to the disputants.

The aim of the conciliator is to break the deadlock, if any, explain the stand and the view-points of one party to the other, convey messages and generally keep the negotiation going. Suggestions may come from the conciliator or the mediator, but the parties are free to accept or reject them.

Compulsory conciliation and mediation

In many countries state goes a step further after creation of conciliation service, it imposes an obligation on the parties to submit their dispute to the conciliation service and makes it duty of the of the latter to seek to conciliate the dispute. Meanwhile, the state requires the parties to refrain from causing any work-stoppage for the purpose of resolving the dispute, so long as the conciliation proceeding is going on. Generally there is a time limit for the conciliators and mediators to conclude their efforts at conciliation.

There are three main considerations for prohibiting the parties from causing work-stoppage and imposing time limit. They are:
1.Conciliation provides a cooling off period during which emotional tensions may subside and a settlement can be arrived at. 2.Freedom of the parties to settle their disputes even by causing work stoppage, should not be taken away from them for long period. 3.If conciliation does not achieve an early break-through, it is not very likely to succeed later.

If, at the end of the conciliation proceeding, the parties fail to settle their dispute, they are free to go on a strike or declare a lock-out, but the state may further persuade the parties and use other methods for bringing about peaceful settlement of the dispute.

Compulsory Investigation Many governments have assumed power under laws relating to industrial relations, to set up machinery to investigate into any dispute. A Court of Inquiry is appointed which finds out the relevant facts and issues involved and give them wide publicity so that the pressure of public opinion may force the recalcitrant party to give-up its obstinate attitude.

Further, it provides a cooling off period to the parties concerned so that they could reconsider their respective stands, realize the implications of their steps and, if possible, settle their disputes peacefully. In India, the Court of Inquiry has the same powers as are vested in a civil court under the Code of Civil Procedure in respect of: a. Enforcing the attendance of any person and examining him on oath; b. Compelling the production of documents and material objects; c. Issuing commissions for the examination of witnesses;d.In respect of matters prescribed under relevant rules.

Compulsory Arbitration or Adjudication The government under some conditions may decide to refer the dispute to adjudication and force the parties to abide by the award of the adjudicator and at the same time, prohibit the parties from causing workstoppages. There are two principal forms of compulsory arbitration based upon the nature of reference and nature of the award: a) Compulsory reference but voluntary acceptance of the award

Compulsory reference and compulsory acceptance of the award.

The parties are required to refrain from going on a strike or declaring a lock-out during the pendency of the adjudication proceedings and during the period when the award is in operation. An Arbitration Court may consist of one person only or a few persons with one member acting as the chairman. Usually the adjudicators are drawn from the judiciary.

The qualifications and tenure of office, powers and functions of the adjudicators are, in general, prescribed under the law itself. Sometimes, representatives of employers and employees are also associated with the deliberations of the Court.

Adjudication in India
The Industrial Disputes Act,1947, provides for three types of adjudication authorities for the adjudication of industrial disputes: a. Labour Court b. Tribunal c. National Tribunal

Labour Courts and the Tribunal can be established both by the central and state governments, but the National Tribunal is setup only by the central government.
National Tribunal is set up to adjudicate such disputes which involve any question of national importance or are of such a nature that industrial establishments situated in more than one state are likely to be interested in or affected by them.

The Labour Court adjudicates disputes relating to the propriety or legality of an order passed by the employer under this standing orders, discharge or dismissal of workmen, legality or otherwise of a strike or lock-out. The Tribunal and National Tribunal generally deal with such subject matters as wages, bonus, profit-sharing, rationalization, allowances, hours of work, provident fund, gratuity etc Strikes and lock-outs are prohibited during the pendency of the proceedings before any of the adjudication authorities, and two months after the conclusion of such proceedings and during any period in which the award is in operation, in respect of any matter covered by the award

Adjudication vs. Collective Bargaining

Adjudication Introduces an element of law and justice Standards of adjudication of industrial disputes maybe imperfect, yet they are far better than the principle of might is right that underlies CB

Collective Bargaining
It gives democratic freedom to parties to resolve their disputes by mutual discussions and negotiations.

Use of coercive economic power of one party against the other.

Compulsory arbitration is based upon the coercive power of the state.

The authority of testate is used to prevent strong groups and organizations, whether they belong to the employers or tithe workers, from holding the community to ransom. Even if parties fight for the time being , they will ultimately succeeding working out a lasting solution of their problems as they have to live together on permanent basis. In CB it is not just cause but the relative strength of the parties ,that ultimately wins.

Adjudication in India does not suppress CB,rather supplements it.

There are heavy expenses and delays in adjudication but it cane improved and is gradually improving.

Helps workers in poorly organised sector in securing significant gains.

A strong union may take up a weak case and still win and vice versa. The institution of collective bargaining is rooted in the coercive power of the parties themselves.

There are no standards which can be used by adjudicators, to resolve divergent interests and to judge the fairness or otherwise of conflicting claims. The adoption of collective bargaining comes with a freedom to resort to strikes and lock-outs which can hamper industrial growth.

Machinery for the Prevention and Settlement of Industrial Disputes in India

Prevention and settlement of Industrial Disputes requires: i. Leaving the parties free to settle their difference sin a way they like best, but without causing workstoppages, that is, CB without the right to strike and declare a lock-out;

ii.Assisting the parties by the provision of conciliation

iii. In case the parties still fail to settle their disputes in a peaceful manner, imposing on them adjudication, if state deems it fit; iv. Imposing certain restrictions on the right to strike and declare a lock-out, in case of some industries of public importance and under certain conditions in all industries;
v.Establishing a number of non-statutory bodies for the purpose of working out the guiding principles of the relations between the employers and the employees, and recommending actions so

Statutory Machinery
Statutory Machinery consists of: a.Works Committee, b.Permanent conciliation services for particular geographical areas or industries both at the central and state levels, c.Ad hoc Board of Conciliation at the central and state levels, d.Ad hoc Courts of Inquiry at the central and state level,

Adjudication authorities consisting of Tribunals and Labour Courts at the central and state levels,
National Tribunals at the central level.

Both the central and state Govt. are empowered to require the employers of industrial undertakings employing 100 or more workmen, to constitute a Work Committee consisting of representatives of the employers and the workmen.
In pursuance of the provisions of the Industrial Disputes Act, 1947, permanent conciliation services have been established by both the central and state governments for particular geographical areas or industries.

The Conciliation Officers are required to hold conciliation proceedings in the case of public utility services where a notice of strike or lock-out has been given, but in other cases, it is up to them to do so.
A settlement arrived at in the course of conciliation proceedings is binding on the parties. The govt. is empowered to refer at any time,an industrial dispute pending before a Conciliation Officer to an adjudication authority for decision.

Courts of Inquiry may be set up by the central or state governments when considered necessary for the purpose of inquiry into any matter appearing to be connected with or relevant to an industrial dispute.
The adjudication authorities set up under the Industrial Disputes Act, 1947 consist of Labor Courts and Tribunals at both the central and state levels and National Tribunals at the central level.

The parties to an industrial dispute are not to resort to work-stoppage if the dispute spending before a Board of Conciliation or any adjudication authority.
Additional restrictions on the right to strike and lock-out have been imposed, in case of public utility and essential services.

Non-statutory Bodies
Non statutory bodies exist at different levels such as the Indian Labour Conference and Standing Labour Committee at the national level,Wage Boards and Industrial Committees at the industry level, and State Labour Advisory Boards at the state level. The primary purpose of these organisations is to work out the guiding principles of the relations between employers and employees in order to prevent industrial disputes from arising

Indian Labor Conference and Standing Labor Committee The ILC and SLC are tripartite in character consisting of representatives of the central and state governments, employers and workers. Both of them were set up in 1942, with initial membership of 44 in the ILC and 20 in the SLC. Both bodies are expected to ensure equal representation of the employers and workers,and the representatives of the government being equal to those of the employers and workers taken together just like International Labor Conference and the Governing Body of ILO

Decisions in these bodies are arrived at on the basis of a consensus arising out of the discussions rather than on formal voting,although a provision exist in the rules of both the ILC and the SLC, for taking decisions by a two-third majority.
The main objectives underlying their establishment were: promoting uniformity legislation; laying down of a procedure for the settlement of industrial disputes; and discussing all matters of national importance's between employers and employees.

The scope of the deliberations of both bodies is confined mainly to labor matters in the country.
The deliberations of these bodies have helped reaching a consensus regarding minimum wage fixation, introduction of health insurance and provident fund schemes, enactment of belabor laws and modification of the existing ones.

The procedure of settling industrial disputes as envisaged in the Industrial Disputes Act, 1947 is direct outcome of the deliberations of these bodies.

The Code of Discipline and the Code of Conduct evolved at the ILC have also played an important role in influencing the pattern of industrial relations.

Code of Discipline in Industry

The Code of Discipline, as drafted by a tripartite subcommittee appointed by the Indian Labour Conference in 1957 and modified by the Standing Labour Committee was unanimously adopted by the ILC at its 16th session held in May1958. the Code came into force from June 1958.

Working The Code of Discipline has come to be accepted not only by the central organisations of employers and workers represented by the Indian Labour Conference, but also by those who are not he members of these organisations. The Code is also applicable to public sector undertakings run as companies and corporations except those under the Ministry of Defence, Railways , and Ports.

The Code has also come to be applied to the Department of Defense Production, LIC, Band RBI.
The Code soon became an instrument to which credit/ discredit was given for industrial peace/ conflict and was perhaps conveniently used by employers and workers to point out the shortcoming of other side. Some of the factors accounting for the ineffectiveness of the Code have included: i. Absence of a genuine desire for, and limited support to, selfimposed voluntary restraint son the part of employers and workers organisations

ii. The worsening economic situation which eroded the real wage of workers iii.The inability of some employers to implement their obligations, iv.The disarray among labour representatives due to rivalries v. Conflict between the Code and the law, and above all vi.The state of discipline in the body politic.

Some of the points of Code of Discipline should be embodied in law as suggested by the first National Commission on Labour. These include Recognition of unions as bargaining agents, Setting up of an grievance machinery in an undertaking, Prohibition of strike/lock-outs without notice, Penalties for unfair labour practices and Provision for voluntary arbitration.

Industrial Committees
The establishment of Industrial Committees for specific industries was the outcome of the 1944 session of the Indian Labour Conference. There are no rigid constitution in respect or these committees, but the policy of their remaining tripartite in character and equal representation of employers and workers is accepted. Within the framework of this broad policy, the actual composition is decided afresh each time a meeting is convened.

The first Industrial Committee was set up in 1947 for plantations. Later, such committees came to be set up for many other industries like, coal mining, cotton textiles, cement, tanneries and leather goods manufacturers, mines other than coal, jute,building and construction, chemical industries, iron and steel, road transport,engineering industries, metal trades,electricity, gas and power, and banking. Meeting of Industrial Committees are ,however, not held regularly; these are convened as and when required.

Wage Boards Second Five Year Plan had observed: Statistics of industrial disputes show that wages and allied matters are the major source of friction between employer and workers.

An authority like a tripartite wage board,consisting of equal representatives of employers and workers and an independent chairman will probably ensure more acceptable decisions. Such wage boards should be instituted for individual industries in different areas.

The Third Five Year Plan also encouraged Wage Board. The first non-statutory Wage Board was set up for the cotton textile industry in1957. subsequently, Wage Boards were set up for other industries too. A Wage Board generally consists of an impartial Chairman, two other independent members, and two or three representatives of employers and workers each.

The Boards were purely recommendatory bodies and dissolved after they had submitted their recommendations The most important function performed by a Wage Board had been to determine the wage structure for the industry concerned and to specify the categories of employees to be brought under the purview of the wage fixation. In some cases, they were also asked to deal with such questions as gratuity, hours of work and bonus. Now, the Wage Board system has fallen in disuse.

Board of Arbitration for Central Government Employees In 1966, the Government of India introduced a scheme for the Joint Consultative Machinery and Compulsory Arbitration for resolving differences between the government as an employer and the general body of its employees. The scheme provides for compulsory arbitration of pay and allowances, weekly hours of work and leave of a class or grade of employees.

The Board of Arbitration functions under the administrative control of the Ministry of Labour. Its awards are binding on both sides and can be modified or rejected only by the Parliament.

Other Tripartite Bodies at the Central Level Notable tripartite bodies which have been functioning at the central level are:

Central Implementation and Evaluation Committee

Central Board of Workers Education National Productivity Council

State Labour Advisory Boards State Labour Advisory Boards on the pattern of the Indian Labour Conference have also been set up in almost all the states in the country. These Boards provide a forum of the representatives of government, employers and employees to discuss problems so as to maintain and promote harmonious industrial relations and to increase production. They advise the state governments on all matters relating to labor.

Other Tripartite Bodies at the State Level Amongst the important tripartite committees functioning in the states are:
Implementation and Evaluation Committees Committees for particular industries Labor Welfare Boards or Committees Some of these are permanent, while others are constituted as and when required.