The Industrial Disputes Act, 1947

Learning Objectives : Understand

The objects of the Industrial Disputes Act,
1947
The definitions of the Act and authorities
associated with it
The procedures, powers, and duties of
appropriate authorities under the Act
The concept and meaning of settlements
and awards, strikes and lock outs, lay off,
retrenchment and closure.
The penalties associated with failure to
follow Act
 The Industrial Disputes Act, 1947

Structure :
20.1 Introduction
20.2 Objectives of the Act
20.3 Definitions
20.4 Authorities under the Act
20.5 Notice of Change
20.6 Reference of disputes
20.7 Voluntary reference of disputes to
arbitration
20.8 Procedure, Powers & Duties of Authorities
 The Industrial Disputes Act, 1947

Structure :
20.9 Powers of labour Courts &
Industrial Tribunals
20.10 Section 11A
20.11 Settlement & Awards
20.12 Strikes & Lockouts
20.13 Lay off , Retrenchment and
Closure [ Chapter V A }
20.14 Lay off , Retrenchment and
Closure [ Chapter V B }
20.15 Penalties
20.16 Summary
 The Industrial Disputes Act, 1947

Introduction
After the First World War, there were new
incidents of industrial unrest in India. It led to
passing of the first Industrial Disputes Act in India
in 1929. It empowered the Government to intervene
into industrial disputes when it deemed necessary.
It contained provisions regarding strikes in
public utilities and general strikes affecting the
community.
Industrial Disputes Act of 1947 as amended
from time to time is a sheet anchor of industrial
adjudication in India. It has undergone 34 major
amendments.
 The Industrial Disputes Act, 1947

Objectives of the Act

To ensure social justice to both employers &
employees and advance progress of industry by
bringing about harmony & cordial relationship.
To settle disputes arising between the capital
and labour by peaceful methods and through
machinery of conciliation, arbitration and if
necessary, by approaching the tribunals constituted
under the Act .
To promote measures for securing and
preserving amity and good relations between the
employer & workmen.
 The Industrial Disputes Act, 1947

Objectives of the Act

To prevent illegal strikes and lockouts

To provide compensation to workmen in case of
lay off, retrenchment and closure.
To protect workmen against victimization by
the employer & to ensure termination of industrial
disputes in a peaceful manner.
To promote collective bargaining.
 The Industrial Disputes Act, 1947

Definitions
Appropriate Government
Central Government for disputes in industry
carried by central government authorities, railways,
ESIC, Air India & Indian Airlines, Banking and
Insurance companies, etc
State Government - for industrial disputes in
establishments not covered above.
Employer
in relation to industry carried under authority
of central or state government, authority prescribed or
head of the Department
 The Industrial Disputes Act, 1947

Definitions
Public Utility Service
railways, Passenger or freight by air, postal,
telegraph and telephones; power, light and water
supply and several such industries specified in the
first schedule to the Act.
Industry
means any business, trade, undertaking,
manufacture, or calling of employers & includes
service , employment, handicraft or industrial
occupation or avocation of workers.
 The Industrial Disputes Act, 1947

Definitions
The supreme court laid down a triple test to
decide applicability of the Act to industry. i]
systematic activity; ii] cooperation between employer
& employees and iii] production of goods or services.
Industrial Dispute
means any dispute between employers and
employers, employers and workmen and between
workmen and workmen; which is connected with
employment or non employment or the terms of
employment.
 The Industrial Disputes Act, 1947

Definitions

Workman
means any person, employed in any industry
to do any skilled or unskilled manual , supervisory,
operational, technical, or clerical work for hire or
reward and , in relation with industrial dispute,
includes any person who is discharged, dismissed or
retrenched in connection with such dispute
 The Industrial Disputes Act, 1947

Workman
but does not include any person who [i] is
subject to Army, Navy or Air Force acts, or [ii] is
employed in police service, or [iii] is in a managerial
position or [iv] is in a supervisory position drawing
wages exceeding Rs 1,600/- pm
for a person to qualify as workman, he has to
carry [i] manual skilled or unskilled, [ii]
supervisory, or [iii] clerical or [iv] technical type of
work and should not be covered by four exemptions
above.
 The Industrial Disputes Act, 1947

Authorities under the Act

Works Committee : Any industrial establishment
employing 100 or more workmen is required to
constitute Works Committee with members from
workmen [ in consultation with registered trade
union, if any] equal to or more than those from
management.
The committee
i] to promote measures for securing &
preserving amity and good relations between the
employer and workmen,
 The Industrial Disputes Act, 1947

The committee
ii] to comment upon matters of their common
interest or concern, and
iii] to endeavor to compose any material
difference of opinion in respect of such matters.

Conciliation Officers
The appropriate government may appoint
Conciliation Officers charged with the duty of
mediating in and promoting the settlement of
industrial disputes.
 The Industrial Disputes Act, 1947
Board of Conciliation
In a similar manner it may appoint a Board of
Conciliation with an independent Chairman and
equal number of members from each party to the
dispute.
The Board cannot take up any dispute for
conciliation, it has to be referred to it by the
Government.
Courts of Inquiry
The Government may constitute a court of
inquiry for enquiring into any matter connected
with or relevant to an industrial dispute.
 The Industrial Disputes Act, 1947
Authorities under the Act

Labour Courts
The Government may constitute one or more
Labour Courts for the adjudication of industrial
disputes related to legality of an order passed by
employer, interpretation or application of a standing
order, discharge or dismissal of workmen, withdrawal
of benefits etc.
A labour Court shall consist of one person only
with necessary judicial qualifications.
 The Industrial Disputes Act, 1947

Authorities under the Act

Industrial Tribunals
The Government may constitute by official
notification one or more Industrial Tribunals for the
adjudication of industrial disputes related to any
matter including wages, compensation and other
allowances, hours of work, bonus , profit sharing PF,
gratuity, retrenchment, closure etc.
It can also handle disputes related to
classification of grades, discipline, rationalization
etc.
 The Industrial Disputes Act, 1947

Authorities under the Act

National tribunals
The Government may constitute through
official notification one or more national Industrial
Tribunals for the adjudication of industrial disputes
which in the opinion of the Central Government
involve questions of national importance or of such a
nature that industrial establishments situated in
more than one state are likely to be interested in , or
affected by, such disputes.
It consists of one person .
 The Industrial Disputes Act, 1947

Notice of Change
Before effecting any change in conditions of
service relating to
wages, contribution to PF,
hours of work , rest intervals
leave with wages, holidays
new rules of discipline
withdrawal of any concession etc.
the employer should give 21 days notice to the
workmen likely to be affected by the proposed
changes. Workmen can raise a dispute on proposed
change, even if the notice is served as above.
 The Industrial Disputes Act, 1947

Reference of Disputes
The Government can refer an industrial
dispute to

a] a Board to promote settlement

b] to Court of Inquiry for inquiring into any
matter related to the dispute.
c] a Labour Court or Tribunal for adjudication
d] National labour Tribunal if it involves any
question of national importance.
.
 The Industrial Disputes Act, 1947

Reference of Disputes

If the majority of the parties to the dispute,

apply for reference of the disputes to any of above
authority, Government shall make reference
accordingly.
Once the dispute is so referred , Government
may prohibit any strike or lock out which may be in
existence in connection with the dispute.
If a workman dies during the tendency of the
proceedings, his legal heirs have the right to continue
the proceedings.
 The Industrial Disputes Act, 1947

Voluntary Reference of Disputes to Arbitration

Where any industrial dispute exists or is
apprehended and the employer & workmen agree to
refer it to arbitration , they may , before government
refers it to a court or tribunal, refer it for arbitration
to any person/s as specified in the arbitration
agreement.
Essential features of voluntary arbitration are :
i] existing / apprehended dispute, ii] reference before
dispute goes to court, iii] person or persons to be
appointed specified in agreement
 The Industrial Disputes Act, 1947

Procedure, Powers & Duties of Authorities

Every conciliation officer or a member of the

Board, Court or Tribunal is deemed to be a public
servant and thus can enter premises related to the
dispute.
They exercise all the powers of a Civil Court &
their proceedings are considered to be judicial.
Conciliation officer has authority to enforce
attendance of any person for examination.
 The Industrial Disputes Act, 1947

Procedure, Powers & Duties of Authorities

Duties of Conciliation Officers
must hold proceedings where dispute relates to a
public utility or if a strike notice is served and may
hold in case of other disputes.
investigate the dispute to bring the parties to
amicable settlement
send report to the Government with a
memorandum of settlement signed by parties
 The Industrial Disputes Act, 1947

Procedure, Powers & Duties of Authorities

Duties of Conciliation Officers
if settlement not reached, send full report to the
Government on steps taken to ascertain facts & why
settlement was not possible.
send report within 14 days of settlement or
non settlement
On receipt of the report , where settlement is not
reached, the Government may refer the dispute to
Board or Tribunal, or provide reasons why no such
reference was made.
 The Industrial Disputes Act, 1947

Procedure, Powers & Duties of Authorities

Duties of Boards
are similar to those of Conciliation Officers, but
they have two months period to submit their report.

Duties of Courts

The court has to inquire in the matters referred

to it and submit report to Government in six months
of commencement of inquiry.
 The Industrial Disputes Act, 1947

Procedure, Powers & Duties of Authorities

Duties of Tribunals
Labour Courts, Tribunal or National Tribunal
shall hold their adjudication proceedings
expeditiously and submit their report as soon as
practicable.
Reports & Awards
Must be in writing , signed by all members [ a
member may record a minute of dissent] and needs
to be published by the government within one month
from the receipt.
 The Industrial Disputes Act, 1947
Power of Labour Courts & Industrial Tribunals
Prior to introduction of section 11A in 1971,
the courts and tribunals could intervene in the orders
for discharge or dismissal of workman only if i]
finding of the managements domestic inquiry was
perverse or the punishment harsh to make it case of
victimization.
Labour Courts, Tribunals after introduction of
section 11A can now satisfy itself that misconduct
was established by evidence at the inquiry and
findings recorded are correct and then decide on
punishment or relief to be granted.
 The Industrial Disputes Act, 1947

Settlements & Awards

Settlement between management and

workmen can be arrived in course of conciliation or
an agreement arrived at by the two parties outside
conciliation.
The agreements in the second category must
be in writing signed by the parties to the dispute.
Settlement is valid for the period agreed by the
two parties and in absence of such agreement for a
period of six months.
 The Industrial Disputes Act, 1947

Settlements & Awards

An award is binding and comes into operation

on the expiry of 30 days from its publication when it
becomes enforceable.
The award is valid for a period of one year.
This period can be reduced and extended by one year
at a time by the government .
Even after expiry of validity period , an award
remains in operation for a period of two months from
the date on which any party serves notice of its
intention to terminate it.
 The Industrial Disputes Act, 1947

Strikes and Lockouts

Strike means concerted refusal by workmen

to carry work or accept employment.
Lockout means the closing of a place of
employment or suspension of work or refusal by an
employer to continue to employ any number of
persons employed by him.
Definition of strike postulates [i] plurality of
workmen; [ii] cessation of work or refusal to continue
work; [iii] acting in combination under a common
understanding.
 The Industrial Disputes Act, 1947

Strikes and Lockouts

Workmen may not strike if [i] conciliation is

going on before a Board; [ii] adjudication is on before
Labour Court or Tribunal; [iii] when Government in
its reference prohibits strike; [iv] arbitration is on
and [v] when a settlement or award is in operation
strike issues.
For public utilities there are more restrictions on
strikes.
Employers right to lock out is subject to same
restrictions as for strikes above.
 The Industrial Disputes Act, 1947

Lay- off, Retrenchment and Closure

Lay-off means the failure, refusal or

inability of an employer on account of shortage of
coal, power, raw materials or on account of
accumulation of stocks, or the break down of
machinery or for any other reason to give
employment to a workman whose name is borne on
the muster rolls of his industrial establishment and
who has not been retrenched.
 The Industrial Disputes Act, 1947

Lay- off, Retrenchment and Closure

Lay-off provisions of the Act are applicable to
those factories, mines and plantations employing 50
or more employees.
Workman so laid off shall be paid 50% of his
basic wages and DA as lay-off compensation for the
period he is laid off.
No such compensation be paid if i] workman
refuses to accept alternative employment, ii] does not
present himself for work at appointed time each day
or iii] if the layoff is consequent upon any strike or
slow down.
 The Industrial Disputes Act, 1947

Lay- off, Retrenchment and Closure

Retrenchment means the termination by

employer of the service of the workman for any
reason whatsoever otherwise than a punishment
inflicted by way of disciplinary action.
Employee cannot be retrenched unless i] 30
days notice is served to him indicating reasons for
retrenchment; ii] compensation equal to 15 days
wages for every completed year of service and for any
part thereof exceeding six months, is paid to him
 The Industrial Disputes Act, 1947

Lay- off, Retrenchment and Closure

iii] notice in the prescribed form is served on
the appropriate government.
The employer can pay wages for 30 days in
lieu of the required notice.
In case of transfer of ownership or
management of an undertaking above retrenchment
compensation has to be paid to workman in
continuous service for a year. No such compensation
is payable if the service of workman is not
interrupted and terms and conditions after transfer
are not less favourable after the transfer.
 The Industrial Disputes Act, 1947

Lay- off, Retrenchment and Closure

Closure means permanent closing down of a

place of work or a part thereof.
In case employer employs 50 or more
employees, 60 days notice of closure has to be served
to the appropriate government. Undertaking set up
for construction work of buildings, bridges etc. is
exempted from the notice.
On closure, workman with continuous service
of a year is entitled to retrenchment compensation.
 The Industrial Disputes Act, 1947

Penalties

1. Workman proceeding on illegal strike can be

penalized with imprisonment up to 30 days or fine
of Rs. Fifty or both.
2. An employer commencing illegal lock out can be
penalized with imprisonment as above or fine of
Rs. One thousand or both.
3. A person instigating others to take part in illegal
strike or lockout is punishable with imprisonment
of up to six months or fine of up to Rs. One
Thousand or both.
 The Industrial Disputes Act, 1947

Penalties

4.Similar punishment can be given to a person

providing financial assistance to illegal strike or
lockout.
5. A person who commits a breach of any settlement
or an award is punishable by imprisonment up to
six months or fine or both.
6. Up to six months sentence or fine of up to Rs. One
Thousand is leviable on a person willfully
disclosing confidential information .
 The Industrial Disputes Act, 1947

Penalties

7. Up to six months sentence or fine of up to Rs. Five

Thousand is leviable on a person closing down any
undertaking without complying with provisions of
this Act.
8. Several penalties are prescribed in the Act for other
offences.

Section [33] spells out certain restrictions on

employers in penalizing workmen for alleged
misconduct.
 The Industrial Disputes Act, 1947
Penalties [Sec 33 ]
Prior permission of the authority concerned is
required before any action is inflicted on a
workman for misconduct connected with dispute
pending in conciliation, adjudication or
arbitration.
No such restriction exists on punishment other than
dismissal or discharge if misconduct is not
connected with dispute as above. In case of
discharge or dismissal in such case, 30 days
wages have to be offered and an application for
approval filed on the same day.
 The Industrial Disputes Act, 1947

Penalties
Restrictions are also placed on employers, under the
section 33 , to safeguard interests of a protected
workman - workman representing the recognized
trade union- from any disciplinary action during
pendency of conciliation, adjudication or
arbitration.
If employer has to take any disciplinary action in
such a case , he has to obtain specific approval from
the appropriate authority.
 The Industrial Disputes Act, 1947
Summary
The Industrial Disputes Act, 1947 is a piece of
central legislation enacted to secure industrial
peace and harmony. It is calculated to ensure social
justice to both employers and employees and
thereby promote industrial progress.
The Act extends to the whole of India and applies to
every industrial establishment carrying on any
business, trade, manufacture or distribution of
goods and services , irrespective of the number of
workmen employed therein.
 The Industrial Disputes Act, 1947

Summary

The Act provides for the settlement of industrial

disputes through conciliation, arbitration or
adjudication. The Act empowers the appropriate
government, that is the central or State
Government , to appoint conciliation officers with
the duty of mediating in and promoting the
settlement of industrial disputes.
 The Industrial Disputes Act, 1947

Summary

For the purpose of adjudication, there is a three tier

system of labour courts, industrial tribunals and
national tribunals. The Act prescribes pre-
conditions for legality of strikes and lockouts. It
also provides for payment of compensation to
workmen in cases of lay-off, retrenchment and
closure.
 The Industrial Disputes Act, 1947

The End!

In the next session we cover chapter twenty one on

The Industrial Employment (Standing Orders)

Act, 1946

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