Methods for Settlement of Industrial Disputes

Methods for Settlement of Industrial Disputes

The three methods for settlement of industrial disputes are as follows: 1. Conciliation 2. Arbitration 3. Adjudication.
Failure of the employees and the employers to sort out their differences bilaterally leads to the emergence of industrial disputes. The Industrial Disputes Act, 1947 provides legalistic machinery for settlement of such disputes by involving the interference of a third party.
The settlement machinery as provided by the Act consists of the three methods:

1. Conciliation
2. Arbitration
3. Adjudication

These are discussed one by one.

1. Conciliation:

In simple sense, conciliation means reconciliation of differences between persons. Conciliation refers to the process by which representatives of workers and employers are brought together before a third party with a view to persuading them to arrive at an agreement by mutual discussion between them. The alternative name which is used for conciliation is mediation. The third party may be one individual or a group of people.

In view of its objective to settle disputes as quickly as possible, conciliation is characterised by the following features: 

(i) The conciliator or mediator tries to remove the difference between the parties.
(ii) He/she persuades the parties to think over the matter with a problem-solving approach, i.e., with a give and take approach.
(iii) He/she only persuades the disputants to reach a solution and never imposes his/her own viewpoint.
(iv) The conciliator may change his approach from case to case as he/she finds fit depending on other factors.
According to the Industrial Disputes Act 1947, the conciliation machinery in India consists of the following: 

1. Conciliation Officer
2. Board of Conciliation

3. Court of Enquiry
A brief description of each of these follows:

Conciliation Officer:

The Industrial Disputes Act, 1947, under its Section 4, provides for the appropriate government to appoint such number of persons as it thinks fit to be conciliation officers. Here, the appropriate government means one in whose jurisdiction the disputes fall.
While the Com­missioner /additional commissioner/deputy commissioner is appointed as conciliation officer for undertakings employing 20 or more persons, at the State level, officers from central Labour Commis­sion office are appointed as conciliation officers, in the case of Central government. The conciliation officer enjoys the powers of a civil court. He is expected to give judgment within 14 days of the commencement of the conciliation proceedings. The judgement given by him is binding on the parties to the dispute.

Board of Conciliation:

In case the conciliation officer fails to resolve the dispute between the disputants, under Section 5 of the Industrial Disputes Act, 1947, the appropriate government can appoint a Board of Conciliation. Thus, the Board of Conciliation is not a permanent institution like conciliation officer. It is an adhoc body consisting of a chairman and two or four other members nominated in equal numbers by the parties to the dispute.
The Board enjoys the powers of civil court. The Board admits disputes only referred to it by the government. It follows the same conciliation proceedings as is followed by the conciliation officer. The Board is expected to give its judgment within two months of the date on which the dispute was referred to it.
In India, appointment of the Board of Conciliation is rare for the settlement of disputes. In practice, settling disputes through a conciliation officer is more common and flexible.

2. Arbitration:

Arbitration is a process in which the conflicting parties agree to refer their dispute to a neutral third party known as ‘Arbitrator’. Arbitration differs from conciliation in the sense that in arbitration the arbitrator gives his judgment on a dispute while in conciliation, the conciliator disputing parties to reach at a decision.
The arbitrator does not enjoy any judicial powers. The arbitrator listens to the view points of the conflicting parties and then gives his decision which is binding on all the parties. The judgment on the dispute is sent to the government. The government publishes the judgment within 30 days of its submission and the same becomes enforceable after 30 days of its publication. In India, there are two types of arbitration: Voluntary and Compulsory.

Voluntary Arbitration:

In voluntary arbitration both the conflicting parties appoint a neutral third party as arbitrator. The arbitrator acts only when the dispute is referred to him/her. With a view to promote voluntary arbitration, the Government of India has constituted a tripartite National Arbitration Promotion Board in July 1987, consisting of representatives of employees (trade employers and the Government. However, the voluntary arbitration could not be successful because the judgments given by it are not binding on the disputants. Yes, moral binding is exception to it.

Compulsory Arbitration:

In compulsory arbitration, the government can force the disputing parties to go for compulsory arbitration. In other form, both the disputing parties can request the government to refer their dispute for arbitration. The judgment given by the arbitrator is binding on the parties of dispute.

3. Adjudication:

The ultimate legal remedy for the settlement of an unresolved dispute is its reference to adjudica­tion by the government. The government can refer the dispute to adjudication with or without the consent of the disputing parties. When the dispute is referred to adjudication with the consent of the disputing parties, it is called ‘voluntary adjudication.’ When the government herself refers the dis­pute to adjudication without consulting the concerned parties, it is known as ‘compulsory adjudication.
The Industrial Disputes Act, 1947 provides three-tier machinery for the adjudication of indus­trial disputes:
1. Labour Court
2. Industrial Tribunal
3. National Tribunal
A brief description on these follows:

Labour Court:

Under Section 7 of the Industrial Disputes Act, 1947, the appropriate Government by notifying in the official Gazette, may constitute Labour Court for adjudication of the industrial disputes The labour court consists of one independent person who is the presiding officer or has been a judge of a High Court, or has been a district judge or additional district judge for not less than 3 years, or has been a presiding officer of a labour court for not less than 5 years. The labour court deals with the matters specified in the second schedule of the Industrial Disputes Act, 1947.
These relate to:
1. The property or legality of an employer to pass an order under the standing orders.
2. The application and interpretation of standing orders.
3. Discharge or dismissal of workers including reinstatement or grant of relief to workmen wrongfully dismissed.
4. Withdrawal of any statutory concession or privilege.
5. Illegality or otherwise of a strike or lockout.
6. All matters other than those reserved for industrial tribunals.

Industrial Tribunal:

Under Section 7A of the Act, the appropriate Government may constitute one or more Industrial tribunals for the adjudication of industrial disputes. Compared to labour court, industrial tribunals have a wider jurisdiction. An industrial tribunal is also constituted for a limited period for a particular dispute on an adhoc basis.
The matters that come within the jurisdiction of an industrial tribunal include the following:
1. Wages, including the period and mode of payment.
2. Compensatory and other allowances.
3. Hours of work and rest periods.
4. Leave with wages and holidays.
5. Bonus, profit sharing, provident fund, and gratuity.
6. Classification by grades.
7. Rules of discipline.
8. Rationalisation.
9. Retrenchment of employees and closure of an establishment or undertaking.
10. Any other matter that can be prescribed.

National Tribunal:

This is the third one man adjudicatory body appointed by the Central Govern­ment by notification in the Official Gazette for the adjudication of industrial disputes of national importance. The central Government may, if it thinks fit, appoint two persons as assessors to advise the National Tribunal. When a national tribunal has been referred to, no labour court or industrial tribunal shall have any jurisdiction to adjudicate upon such matter.

The main highlights revealed from figures in Table 25.7 are gleaned as follows:


1. That referring of disputes conciliation machinery is a common practice is well indicated by a large number of disputes taken for conciliation.
2. One average, around one-third of the disputes referred for conciliation failed. Of these, about 60 to 90 per cent of cases were referred to adjudication. Only one per cent of the cases were referred for arbitration. These underline the ineffectiveness of conciliation machinery in settling industrial disputes. Thus, the existing machinery for the settlement of industrial disputes, as provided under the Industrial Disputes Act, 1947, needs to be strengthened.
3. Adjudication has proved the most popular way of settling industrial disputes in India. This is because adjudication is the last recourse for disputing parties to settle their disputes.
Here it is noteworthy that the data given in the Table 25.7 is incomplete in the sense that in no year did all the States and Union Territories send all the information. For example in some years as many as 12 States and Union Territories did not furnish information to the Union Ministry of labour, as can be verified from the latter’s annual reports for the years decrease in the number of disputes taken for conciliation from 47,788 in 19801 in 981 is explained by the same reason, i.e. non-furnishment of information on dispute conciliation by all States and Union Territories.


Finally, following are a few suggestions to make the settlement machinery more effective: 


1. The trained and experienced officers who are well acquainted with the problems of industrial workers should be entrusted with the responsibility of dealing with conciliation machinery Political and administrative interference should not be allowed to cloud the functioning of conciliation machinery.
2. One way to strengthen the adjudication machinery is to substitute it by setting up Industrial Relations Commissions (IRCs), both at the Central and the State level, on the lines suggested by the National Commission on Labour. The IRC should also be empowered to oversee the working of the conciliation machinery.
3. In order to make arbitration fair, the arbitrator chosen for settling disputes be mutually acceptable to both the union and the management. This can be facilitated if the government prepares the panel of experienced arbitrators at the national and the state levels so that arbitrators are chosen from the panel, as and when required.
4. The government should refrain from actively intervening in the matters of industrial disputes unless it is must for her to intervene in the disputes.