NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

CHAPTER.1
THE INDUSTRIAL DISPUTES ACT, 1947
INTRODUCTION
The Industrial Disputes Act, 1947 regulates the Indian labour law so far as that concerns trade unions
as well as individual workmen employed in any industry in the Indian mainland. It was one of the last
legislative act before the passing of the Indian Independence Act of 1947. It came into force on the
first day of April 1947 [sec. 1(3)].
The act was drafted to make provision for the investigation and settlement of industrial disputes and
to secure industrial peace and harmony by providing mechanism and procedure for the investigation
and settlement of industrial disputes by conciliation, arbitration and adjudication which is provided
under the statute.

Objects and Scope of the Industrial Disputes Act

The object of the Industrial Disputes Act is to make provision for the investigation and settlement of
industrial disputes. The Act is primarily meant for regulating the relations of employers and workmen,
past, present and future. The principal aim of the Act is to encourage collective bargaining and to
maintain industrial peace by preventing illegal strikes and lockouts and to provide lay off and
retrenchment compensation.
The Act was passed with a view to removing certain shortcomings found in the working of the Trade
Disputes Act, 1929. It extends to the whole of India [Sec.1 (2)]. It extends to all industries whether
they are carried on by private owners or by the government. The Act has been amended from time to
time. The latest amendment was made in 1984.
Thus, though the main object of the Act is to provide for investigation and settlement of industrial
disputes, the amendment Act seeks to ensure speedier resolution of industrial disputes by removing
procedural delays. Besides creating an efficient statutory machinery for the settlement of industrial
disputes and thereby promoting industrial harmony, the Act also seeks to achieve certain other objects,
referred to as ‘certain other purposes’ in the preamble. The objects are:
1. Promoting measures for securing and preserving amity and good relations between employer
and workmen.
2. Enquiring into any matter connected with or relevant to an industrial dispute.
3. Promoting the settlement of industrial disputes.
4. Adjudication of industrial disputes.
5. Reference of individual disputes to grievance settlement authorities.
6. Voluntary reference of disputes to arbitration.
7. Prevention of illegal strikes and lock-outs.
8. Compensation for lay-off and retrenchment of workmen.
9. Provision for the payment of wages from the date of the award till the suit pending before
courts of law is decided.
THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 1
NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

10. Prevention of unfair labour practices.

These objects of the Act focus on the securing of industrial harmony and social justice.

Salient features of the Industrial Disputes Act, 1947

(1) Parties: Industrial disputes may be among different parties. Ordinarily, it is among the following
parties:
(i) Employers and employers,
(ii) Employers and workmen and
(iii) Workmen and Workmen.
(2) Relation: Matter of dispute may relate to worker or to employer or to both. Normally, it relates to
an appointment or termination of a person; conditions of employment or conditions of work.
(3) Forms: Industrial disputes may manifest themselves in different forms, such as strikes, lock-outs,
Gheraos, go slow tactics, pens down strike, etc.
(4) Oral or Written: Industrial dispute need not be written. It may be oral.
(5) Real: It should be real. It should relate to employment of the worker, termination of employment,
terms of employment, conditions of employment, etc. Matters relating to the personal life of the worker
do not constitute industrial dispute.
(6) Substantial Interest: In matter relating to industrial dispute interest either of the employer or the
worker must be involved.
(7) Related to Industry: A dispute can be included in industrial dispute when it concerns with
industry. Usually, disputes must belong to an industry which is functioning. Disputes belonging to an
industry that has since been closed down should not be included in it.
(8) Clarification: Industrial disputes should relate to matters which are clear. Unless, it is a transparent
case its settlement is not possible. Matters which are clear find settlement easily. Concerned party can
protect its interest when the issue is crystal clear.
(9) Origin: Ordinarily, dispute arises when the workers or trade unions put up their demands before
the employer and the latter refuses to consider them. In short, it can be said that industrial dispute
means lack of peace in industry. When in an industry, requirements of the two parties contradict each
other industrial dispute raises its ugly head.

MEANING AND CONCEPT

A. Industrial Dispute [Section 2 (k)]
A dispute is an argument or disagreement between people or groups.
Industrial Dispute is “any dispute of 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.”

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 2

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

Industrial dispute as defined under Section 2(k) exists between: Parties to the dispute who may be
 Employers and workmen
 Employers and Employers
 Workmen and workmen

The criteria for determination of “Industry”

Sec. 2(j) gives the definition of industry, which was elaborated upon by the Supreme Court in the
Bangalore Water Supply and Sewerage Board v. R. Rajappa [AIR 1978 SC 548]. The term industry
has been given a wide scope and the judgment overruled several earlier decisions. The court held:
1. Any activity will be industry if it fulfils the ‘triple test’, as under:
a) Systematic and organized activity
b) With the cooperation between Employers and employees
c) For the production and distribution of good and services whether or not capital has been
invested for this activity.
2. It is immaterial whether or not there is profit motive or whether or not there is capital.
3. If the organization is a trade or business it does not cease to be one because of philanthropy
animating the triple test, cannot be exempted from scope of definition of industry.
4. Dominant nature test – whether there is complex of activities, the test would be predominant
nature of services and integrated nature of departments. All departments integrated with industry
will also be industry.
5. The exceptions to industry are:
a) Casual activities (because they are not systematic).
b) Small clubs, co – operatives, research labs, gurukuls which have an essentially non-
employee character.
c) Single door lawyer taking help from clerk (because there is no organized labour).
d) Selfless charitable activities carried on through volunteers, e.g. free legal or medical service.
e) Sovereign functions – strictly understood, i.e., maintenance of law and order, legislative
functions and judicial function.

Charitable Institutions
These fall into three categories:
(a) Those that yield profit, but the profits are not draw off for philanthropic purposes;
(b) Those that make no profit but hire the service of employees as in any other business, but the
goods/ services which are the output, are made available at a low or no cost to the indigent
poor; and

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 3

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

(c) Those that are oriented on a humane mission fulfilled by men who work, not because they are
paid wages, but because they share the passion for the cause and derive job satisfaction.
The first two categories are industries, but not the third, on the assumption that they all involve co-
operation between employers and employees.

Hospitals
In State of Bombay v. Hospital Mazdoor Sabha, the Supreme Court held that the State carrying an
‘undertaking’ within Section 2(j) when it runs a group of hospitals for purpose of giving medical relief
to the citizens and for helping to impart medical education. The court observed as follows:
a) An activity systematically or habitually undertaken for the production or distribution of goods
or for the rendering of material services to the community at large or a part of such community
with the help of employees is an ‘undertaking’.
b) It is the character of the activity in question which attracts the provisions of Section 2 (j), who
conducts the activity and whether it is conducted for profit or not, do not make a material
difference.
Thus, activities that have no commercial implications, such as hospitals carried on with philanthropic
motives would be covered by the expression ‘undertaking’. The mere fact that Government runs such
activity is immaterial. In case an activity is industry if carried on by a private person, it would be so,
even if carried on by the Government.

Legal Firm
In National Union of Commercial Employees v. M.R. Meher, it was held that a solicitor’s firm is not
an industry, although specifically considered, it is organized as an industrial concern. The court held
that a person following a liberal profession does not carry on his profession in any intelligible sense
with the active co-operation of his employees, and the principal/sole capital which he brings into his
profession is his special and peculiar intellectual and educational equipment.
However this was overruled by Bangalore Water Supply case [AIR 1978 SC 548] wherein it was held
that in view of the infrastructure of the offices of professional persons, the contribution to the success
of the institution comes not merely from the professional or specialist but from all those whose
excellence in their respective spheres makes for total proficiency. Thus functional co-operation
between employer and employees is essential for the total quality of service. But in the categories of
such and allied professions when such co-operation is missing they are not industries.

B. Deemed Industrial disputes (When an Individual Dispute Becomes an Industrial Dispute)

Before insertion of Section 2-A of the Act an individual dispute could not per se be an industrial
dispute, but it could become one if taken up by the Trade Union or a number of workmen. The Supreme
Court and majority of Industrial Tribunals held that, a dispute raised by a dismissed employee would
not be treated as an industrial dispute, unless it is supported by a trade union or by a body or Section
of workman.
For an individual dispute to be declared as an Industrial Dispute, the following conditions are to be
satisfied:

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 4

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

1. A body of workmen (trade Union ) or a considerable number of workmen, are found to have
made common cause with the individual workman;
2. That the dispute (individual dispute) was taken up or sponsored by the workmen as a body
(trade union) or by a considerable Section of them before the date of reference.
An individual dispute to fall within the definition of industrial dispute, it must be sponsored by the
Trade Union of the workmen or if there is no trade union, it must be sponsored by the majority of the
workmen or it must comply with the requirements of Section 2-A of the Industrial Disputes Act, 1947.
Section 2-A provides that “where any employer discharges, dismisses, retrenches or otherwise
terminated the services of any individual workman, any dispute or difference between that workman
and his employer connected with, or arising out of such discharge, dismissal, retrenchment or
termination shall be deemed to be an industrial dispute, notwithstanding that no other workman nor
any union of workmen, is a party to the dispute.”
a) Any workman may make an application directly to the labour court or Industrial Tribunal for
adjudication of such dispute after the expiry of 3 months when an application was made before
the conciliation officer. This has been done to prevent inordinate delay.
b) The said application however should be made within 3 years of the date of dismissal, discharge,
retrenchment or termination of service.
c) The court shall proceed to hear the matter as if it was referred to it U/S 10 of the ID Act.
Section 2A does not declare all individual disputes to be industrial disputes. It is only when a dispute
is connected with a discharged, dismissed retrenched or terminated workman that it shall be treated as
an industrial dispute. If the dispute or difference is connected with some other matter e.g. payment of
bonus/ gratuity etc. then it would have to satisfy the test laid down in judicial decisions. Thus only a
collective dispute could constitute an industrial dispute but collective dispute does not mean that the
dispute should either be sponsored by a recognized union or that all or majority of the workmen of an
industrial establishment should be parties to it [State of Bihar v. Kripa Shankar Jaiswal].

C. Employer
Employer is a person or business that employs one or more people, especially for wages or salary. An
employer is a person, company, or organization that employs people—pays them for work. The people
who are paid to work are called employees.
The term employer has been defined under the Industrial Dispute Act of 1947 under section 2(g) the
employer according to the definition is:
(i) in relation to an industry carried on by or under the authority of any department of the Central
Government or a State Government, the authority prescribed in this behalf, or where no
authority is prescribed, the head of the department;
(ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive
officer of that authority.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 5

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

D. Public utility services

Public Utility are those organizations, company or corporations which provide the essential services
to the public. The undertakings which supply the basic necessary services such as electricity, water,
gas, power, transport etc. comes under the purview of the public utility services.
These public utility services are maintained and regulated by the government vis local, state and
national government according to their respective level of authority.
According to Business Dictionary, “public utility is government or private sector owned provider of
energy, telecommunications, transportation, waste disposal, water or other such basic goods or
services”
The public utility includes all the services which are necessary for the livelihood, and for that reason
also they are to be regulated and should be available at reasonable rate. These services involve a huge
investment; government gives various incentives to these industries son that they can fulfil their
requirements along with providing the services at reasonable rate.
The Public utility status is also maintained under the industrial disputes act, 1947. The main features
of the public Utility services are:
1) Public Utility services includes those goods and services which are indispensable part of human
life and without them it would be a great hardship for the human to survive.
2) The Public utility services are mostly local in character and are regulated by the local
government.
3) These public utilities are organized as monopolies by the government as they provide basic
necessities, so any deficit in the quality of their product and services would lead to big social
problems.
4) Public utilities involve huge investments, the entire investments had to be, made prior to the
commencement of the operations.
5) There is significantly lower risk in public utilities as there is no fear of change in demand and
preferences of the customers. The demand and supply of the goods and services fon hand in
hand.
6) Public utilities also achieve economies of scale as they producer on a large scale for a wide
population.
The Public utility services are regulated under the Industrial dispute act. It is the duty of these utilities
to provide its services to all without any discrimination and at a reasonable price. It should indulge in
unfair trade practices and should not hype the prices. It should provide goods and services at a fair rate
and of good qualities to all. The Industrial Disputes act ensures it for the protection of the consumers.

AUTHORITIES UNDER THE INDUSTRIAL DISPUTE ACT

The following are the authorities specified under the Industrial Dispute Act.
a) Works Committee.
b) Conciliation Officers.
THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 6
NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

c) Board of Conciliation.
d) Court of Inquiry.
e) Labour Court.
f) Industrial Tribunal.
g) National Tribunal.

a. Works Committee
The works committee is considered to be a powerful social institution only to secure cooperation
between workers and employers, but to make the will of the employees effective on the management.
According to section 3 of the Industrial Disputes Act, in case of an industrial establishment which
contains 100 or more workmen are employed or have been employed on any day in the preceding
twelve months, the appropriate Government by ordinary or particular order, acquire the employer to
build a works committee containing of representatives of employers and workmen engaged in the
establishment. The number of representatives of workers on Works Committee should not be less than
the number of representatives of the employers.

Functions of Work Committee

1) To promote measures for securing and preserving good relations between the employer and the
workmen.
2) To communicate upon subjects of their common interest or concern.

b. Conciliation Officers
The appropriate government will appoint conciliation officers charged with the duty of mediating in
and promoting the settlement of the industrial disputes. Those conciliation officers are appointed for a
specified area or a specified industry in a specified area, and his appointment may be permanent or
temporary.

Functions of Conciliation Officers

1) In case of any industrial disputes exist, the conciliation officer should maintain conciliation
proceedings in a prescribed manner without delay to have the right settlement.
2) Whether the settlement is reached or not, the conciliation officer has to submit the report within
14 days of the commencement of the conciliation proceedings or within the date fixed by the
appropriate government.
3) If the report proposed in satisfied to the respective Government, it may refer or not refer the
dispute to any concerned authority under the Act. If the Government is not performing any
endorsement, it should record and communicate the reason to the relevant parties.
4) The duty of a conciliation officer is administrative and not judicial.

c. Board of Conciliation
Similarly, a board of conciliation also be constituted to promote the settlement of industrial disputes.
A board should consist of a chairperson and two or four other members, as the appropriate government
THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 7
NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

thinks fit. The chairman should be an independent person, and the other member should be a person
appointed in equal numbers to represent the parties to the dispute on the recommendation of the parties
concerned. If any party refuses to make a recommendation within the prescribed time, then the
appropriate government can appoint such persons eligible to represent the party.

Functions of Board of Conciliation

1) When a dispute has been proposed to a Board, the board will investigate the matter affecting
the merits and right settlement of the dispute without delay.
2) Whether settlement reached or not, the Board must submit the report within two months of the
date on which the dispute was proposed to it.
3) If no settlement has arrived, the Government may refer the dispute to the labour court, Industrial
Tribunal or National Tribunal.
4) The time for submission of the report will be extended by the period as agreed by all the parties
to the disputes
5) The report of the Board should be in the written notice and has to be signed by all the members
of the Board.
6) The appropriate Government should publish the report submitted within 30days from the
receipt
7) A Board of Conciliation only has the power to bring about a settlement. It has no authority to
impose a settlement on the parties to the dispute.

d. Courts of Inquiry
The appropriate government will constitute a court of inquiry consisting thirteen of one or more
independent persons to inquire into any subject connected with or relevant to an industrial dispute
where a court consists of two or more members any one of them will be appointed as chairman.

Functions of Courts of Inquiry

1) A Court will inquire into the request raised to it and report to the appropriate government within
six months from the commencement of the inquiry.
2) The report of the court will be in the form of a written statement and signed by all the members
of the court.
3) Members are free to record their dissent. The report submitted will be published within 30 days
of its receipt by the Government.

e. Labour Courts
The appropriate government will constitute one or more labour courts to adjudicate industrial disputes
relating to any of the following entities.
1) The propriety or legality of an order passed by an employer under the standing orders.
2) The application and interpretation of standing orders.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 8

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

3) Discharge or dismissal of workers, including the retirement, grant of relief to workers

wrongfully dismissed.
4) Withdrawal of any customary concession or privilege.
The appropriate government will appoint a labour court which consists of one person with the
necessary judicial qualifications and will be appointed by the appropriate government.

Functions of Labour Courts

a) Adjudicate upon the industrial disputes regarding any subject specified in the Second Schedule.
b) When an industrial dispute has been proposed to a Labour Court for adjudication, within the
specified period, it should submit award to the appropriate Government.
c) The appropriate Government will publish it within 30 days from the date of its receipt.

f. Industrial Tribunals
The appropriate Government by notification in the legal Gazette will constitute one or more industrial
tribunals for the adjudication of industrial disputes relating to any matters specified above as in the
case of Labour Court, or the following matters, namely
1) Wages include the period and mode of payment
2) Compensatory and other allowances;
3) Hours of work and rest intervals.
4) Leave with wages and holidays.
5) Bonus, profit sharing, provident fund and gratuity.
6) Shift working otherwise than by standing orders.
7) Rules of discipline
8) Rationalisation
9) Retrenchment of workers and closure of establishment and
10) Any other subject which is prescribed.

Functions of Industrial Tribunals

a) It should submit its request to the appropriate Government within a specified period if an
industrial dispute is proposed to an Industrial Tribunal.
b) The request should be in written format and also be signed by its presiding officer.
c) The request made should be published by the appropriate government within 30 days in a
prescribed manner.
d) Then the judicial body needs to serve notice upon the parties to the reference by name before
making any request.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 9

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

g. National Tribunal
The Central Government by notification in the legal Gazette, constitute one or more National Industrial
Tribunals for the adjudication of industrial disputes in the opinion of the Central Government involve
questions of the national importance of industrial establishments situated in more than one State are
likely to be interested or affected by such disputes.
A National Tribunal will consist of one person to be appointed by the Central Government. To be
qualified as a Presiding Officer of a National Tribunal, a person must be or must have been a Judge of
a High Court, or must have held the office of the Chairman or any other member of the Labour
Appellate Tribunal for at least two years. The Central Government may appoint two assessors to advise
the National Tribunal, in proceedings before it.

Functions of National Tribunals

a) When an industrial dispute is requested to the National Tribunal for adjudication, it should
submit its request to the appropriate government.
b) The request should be in written format and also be signed by the presiding officer of the
National Tribunal.
c) It should publish the request made within a period of 30days from the date of its receipt by
Central Government.

Methods for Settlement of Industrial Disputes

The settlement machinery as provided by the Act consists of the three methods:
1. Conciliation
2. Arbitration
3. Adjudication
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:
(ii) The conciliator or mediator tries to remove the difference between the parties.
(iii) He/she persuades the parties to think over the matter with a problem-solving approach, i.e.,
with a give and take approach.
(iv) He/she only persuades the disputants to reach a solution and never imposes his/her own
viewpoint.
(v) The conciliator may change his approach from case to case as he/she finds fit depending on
other factors.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 10

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

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
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

On whom Awards and Settlements are binding

Section 2(b) of the Industrial dispute Act 1947 defines Award. Award means an interim or a final
determination of any industrial dispute or of any question relating thereto by any Labour Court,
Industrial Tribunal or National Industrial Tribunal and includes an arbitration award made under

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 11

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

Section 10-A. It is the decision given by the arbitrator, Labour Court or Industrial Tribunal. It
resembles the judgment of a Court. It is to be signed by the Presiding Officer.
Section 2(p) of the Industrial dispute Act 1947 defines Settlement. Settlement means a settlement
arrived at in the course of conciliation proceeding and includes a written agreement between the
employer and workmen arrived at otherwise than in the course of conciliation proceeding where such
agreement has been signed by the parties thereto in such manner as may be prescribed and a copy
thereof has been sent to an officer authorized in this behalf by the appropriate Government and the
conciliation officer. It is arrived at as a result of conciliation between the parties to the settlement. It
resembles a gentleman agreement. It is signed by the parties to the dispute.
According to Section 18 of the Industrial Disputes Act, 1947 Awards and Settlements are binding on
the following persons:
1) A settlement arrived at by agreement between the employer and workman otherwise than in
the course of conciliation proceeding shall be binding on the parties to the agreement.
2) Subject to the provisions of sub-section (3), an arbitration award which has become enforceable
shall be binding on the parties to the agreement who referred the dispute to arbitration.
A settlement arrived at in the course of conciliation proceedings and an award of a Labour Court,
Tribunal or National Tribunal shall be binding on-
1) All parties to the industrial dispute;
2) All other parties summoned to appear in the proceedings as parties to the dispute, unless the
Board, arbitrator Labour Court, Tribunal or National Tribunal, as the case may be, records the
opinion that they were so summoned without proper cause;
3) Where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors or
assigns in respect of the establishment to which the dispute relates;
4) All persons who were employed in the establishment or part of the establishment on the date
of the dispute and all persons who subsequently become employed in that establishment or part.
If any person who commits breach of any terms of a settlement or Award is liable for punishment. The
punishment provided for is imprisonment which may extend to 6 months or with fine or with both.

LAY-OFF AND RETRENCHMENT

Lay-off
Section 2 (kkk) of the Industrial Disputes Act, 1947 defines the term ‘Layoff’’ as the inability, failure,
or refusal of the employer to provide employment to a workman whose name is mentioned in the
muster roll of his industrial establishment and who is not retrenched due to the lack of power, coal,
raw materials, accumulation of stocks, breakdown of machinery or natural calamity for any other
relevant reason.

Conditions essential for a lay-off

a) There must exist an inability, failure or refusal from the employer’s side to provide employment
to the workmen.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 12

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

b) Such inability, failure or refusal must be due to lack of power, coal, raw materials, accumulation
of stocks, breakdown of machinery or natural calamity for any other relevant reason.
c) The name of the workman must be mentioned in the muster roll of the employer’s industrial
establishment.
d) The workman must not have been subjected to retrenchment.
A layoff is a measure that is used only in continuing businesses. If the employer decides to permanently
shut down his industrial establishment then layoff is of no use. Layoff must adhere to the conditions
provided in Section 2 (kkk) of the Industrial Disputes Act, 1947 or else it will not be considered right
as per the law. Layoff means there will be immediate removal of the employees, however, such
unemployment is temporary in nature so it does not result in the termination of the already existing
employer-employee relation and leads to no alteration of the terms of such employment.

Retrenchment
Section 2(oo) of the Industrial Disputes Act, 1947 talks about retrenchment. As per the said section,
retrenchment refers to the termination of a workman for any reason except for a form of punishment
in furtherance of imposing disciplinary action. However, retrenchment does not include voluntary
retirement of a workman, workman retiring upon reaching the age of superannuation as mentioned in
the employment contract, removal of a workman on basis of continued ill-health, and removal of the
workman because the employment contract is terminated or is non-renewed after its expiry.

Section 25F: Conditions precedent to retrenchment

a) As per this Section, the employer must give one month’s written notice to the workman that
includes the reasons for retrenchment, or in lieu of such notice, the workman must be paid
wages for the period of the notice.
b) The employer at the time of retrenchment must pay the workman the compensation which is
equal to the average pay of 15 days for each year of continuous service provided by such
workman.
c) The notice regarding retrenchment must be served to the appropriate Government as well.

Section 25G: Procedure of retrenchment

The procedure of retrenchment as per this Section is as follows:
If an employer decides to retrench a workman belonging to a certain class of workmen working in the
establishment of such employer, he must ensure to retrench such a workman who was considered as
the last candidate to be employed for such work at the time of employment. Usually, the rule followed
during retrenchment is that it must start with beginners or new workmen and then progress towards
the experienced or senior workmen.
However, the exceptions to the above-mentioned method are if a contract exists between the employer
and the workmen that is contrary to the rule or if the employer states the grounds to retrench any other
workman. The employer in good faith is allowed to continue the employment of those workmen who
possess special skills and whose service is imperative for the establishment’s proper functioning.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 13

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

Differences between layoff and retrenchment

1. Layoff refers to the provisional termination of the employee, at the instance of the employer.
Retrenchment means involuntary separation of an employee due to the replacement of labour
by machines or the close of the department.
2. The layoff is an action step, whereas retrenchment is a business strategy to reduce company’s
expenses.
3. The layoff is defined in section 2 (kkk) of the Industrial Disputes Act, 1947. Conversely,
Retrenchment is defined in section 2 (oo) of the Industrial Disputes Act, 1947.
4. The layoff is of a temporary nature, i.e. it is for a definite period, in which the employees are
recalled after the expiry of the term. As opposed to retrenchment, is permanent in nature.
5. After the declaration of layoff, the company’s operations stops because of the shortage of raw
material, the breakdown of machinery, economic recession and so on. On the other hand, the
operations of the company continue even after retrenchment is declared.
6. As soon as the layoff period is over, the employees are re-appointed to their previous posts.
Unlike Retrenchment, in which the employees are not taken back by the company, once they
are terminated.

STRIKES AND LOCKOUTS

Strike
The term strike has been defined in a wide variety of branches of human knowledge, viz. etymology,
sociology, political economy, law and political science
Strike has been defined in Section 2 (q) of the Industrial Disputes Act as under:
Strike means a cessation of work by a body of persons employed in any industry acting in
combination, or a concerted 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.
The analysis of the definition would show that there are the following essential requirements for the
existence of a strike:
(2) There must be cessation of work.
(3) The cessation of work must be by a body of persons employed in any industry;
(4) The strikers must have been acting in combination;
(5) The strikers must be working in any establishment which can be called industry within the
meaning of Section 2(j); or
(6) There must be a concerted refusal; or
(7) 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;

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 14

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

(8) They must stop work for some demands relating to employment, non-employment or the terms
of employment or the conditions of labour of the workmen.

Types of strikes
Workers in the industrial world have resolved to various types of strikes. The strikes differ in their
mode of actions they come along with. Some strikes produce different impacts on the industry at stake
though they all aim at the same results.
The various types of strikes include:
1) General Strike: A General Strike is said to be a legal strike since it follows all the protocols as
stated in the Act of Industrial Disputes. Employees begin by giving a strike notice to the
management of the industry they work for. If the management fails to settle the dispute within
the given time in the strike notice, the strike will be launched after the expiry of the notice. All
trade unions linked to the demand at hand participate in the General Strike.
2) Sit down Strike: This kind of strike involves employees reporting for duty in their workplaces
normally, take their positions in their various areas of work but here comes the game changer;
they simply sit and do nothing. They might also choose to just hang around the industry’s
premises. The objective of this strike is to cripple production. The industry ends up incurring
huge losses due to no work being done at all. It is also of great pain and shame to the employers
since the rate of production is going down in the presence of workers who have reported for
duty to work which they eventually end up not doing.
3) Pen/Tool down Strike: This type of strike shares some similarities with the sit down strike. For
the pen down, it mostly takes place among people with white-collar jobs or rather people who
work in offices. Tool down is for workers in production industries like factories to be specific.
This type of strike qualifies to be a strike since the members drop down their items of work in
unison and refuse to work.

Lockout
Lockout is the opposite of a strike. Strike is a tool in the hands of the workmen to compel the
management to agree to their demands. Similarly, lockout is a tool in the hands of the management to
force the workmen to further negotiate on their demands which are related to the terms and conditions
of the workers’ employment.
As per the Industrial Disputes Act, 1947, Lock-out 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.
This definition consists of the following three components of a lockout:
1) Temporary closing of a place of employment; or
2) Suspension of work, or
3) Refusal to continue to employ any number of persons employed by the employer.
When a lockout takes place, the workers are asked by the management to stay away from work, and
therefore, they are not obliged to attend work.
THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 15
NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

Provisions for general prohibition of Strikes & Lockouts

Sections 22 and 23 of Industrial Disputes Act, 1947 also contain provisions for a general prohibition
of strikes and lockout. Regarding strike, Section 22(1) of the Industrial Disputes Act, 1947 provides
that no person employed in a public utility service shall go on strike, in breach of contract:
(a) without giving the employer notice of a strike, as from now on provided, within six weeks
before striking; or
(b) within fourteen days of giving such notice; or
(c) before the expiry of the date of strike specified in any such notice as aforesaid; or
(d) during the pendency of any conciliation proceedings before a conciliation officer and seven
days after the conclusion of such proceedings.
Section 22(2) of the Industrial Disputes Act, 1947 provides that no employer of any public utility
service shall lock-out any of his workmen:
(a) without giving them notice of lock-out as hereinafter provided, within six weeks before locking
out; or
(b) within fourteen days of giving such notice; or
(c) before the expiry of the date of lock-out specified in any such notice as aforesaid; or
(d) during the pendency of any conciliation proceedings before a conciliation officer and seven
days after the conclusion of such proceedings.
Thus, Section 22(2) of Industrial Disputes Act, 1947 prohibits employer to declare lockout without
complying with above conditions. Any lockout without complying with above conditions is illegal.
Where there is already in existence a strike or, as the case may be, lockout in the public utility service,
the notice of lock-out or strike shall not be necessary but the employer or workmen as the case may be
shall send intimation of such lock-out or strike on the day of which it is declared, to such authority as
may be specified by the appropriate Government either generally or for a particular area or a particular
class of public utility services.
However, there are certain restrictions according to Section 23 of Industrial Disputes Act, 1947 which
provide that no workman who is employed in any industrial establishment shall go on strike in breach
of contract, and no employer of any such workman shall declare a lock-out:
(a) during the pendency of conciliation proceedings before a Board and seven days after the
conclusion of such proceedings;
(b) during the pendency of proceedings before a Labour Court, Tribunal or National Tribunal] and
two months, after the conclusion of such proceedings; during the pendency of arbitration
proceedings before an arbitrator and two months after the conclusion of such proceedings,
where a notification has been issued under sub-section (3A) of Section 10 A ;
(c) During any period in which a settlement or award is in operation, in respect of any of the matters
covered by the settlement or award.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 16

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

Section 23 provides that in the case of General Industries during the pendency of any conciliation
proceedings before an officer conciliation strike or lockout can be resorted to. While section 22 dealing
with public utility services provides that no strikes or lockout can resort to if any conciliation
proceedings are pending before a conciliation officer.

Circumstances making strikes and lockouts illegal in public utility service (Section. 24)
Strikes and lockouts shall also be declared illegal when:
1. They are done contrary to the contract stating the terms of employment.
2. A notice of the lockout is not given to the employees or notice of strike is not given to the
employers; within six weeks before the commencement of the lockout or strike.
3. Employees strike or employers lock out the employees before the end of 14 days after the notice
has been given.
4. The employers commence a lockout or employees commence a strike while conciliation
proceedings are pending before the Conciliation Officer and before the end of 7 days after the
proceedings have been settled.

Provisions for penalty for illegal strikes and lock-outs

Penalties provided under Section 26 of Industrial Disputes Act for illegal strikes and lockouts also act
as a deterrent against strikes and lockouts. There is a provision for punishment of imprisonment for a
term which may extend to one month, or with fine which may extend to fifty rupees, or with both for
an illegal strike. Similarly, there is a provision for punishment for imprisonment for a term which may
extend to one month, or with fine which may extend to one thousand rupees, or with both for illegal
lockout.
The objective of Industrial Disputes Act is to regulate the right of workmen to strike and right of the
employer for lockout without denying them their respective rights. This legislation has also provided
machinery for peaceful investigation, settlement, arbitration and adjudication of the disputes.
Where such industrial legislation is not applicable, the contract of employment and service rules
provides for are suitable machinery for resolution of the disputes. Where the law of contract for
employment or service rules provides machinery for resolution of disputes, resort to lockout or strike
as a direct action in contravention of contract or service rules is illegal.

UNFAIR LABOUR PRACTICE

Before the enactment of labour legislation, workmen and labourers were dominated by employers, but
gradually labour welfare provisions were introduced, such as the Trade Union Act of 1926, the
Factories Act of 1948, and the Minimum Wages Act of 1948, which gave recognition to the rights of
labourers and protected them from exploitation and unfair labour practices.
In simple terms, unfair labour practices are deceitful practices by either employers or labourers to
obtain profits that are prohibited by the statutes. Unfair labour practices are defined under the Fifth
Schedule, Section 2(ra) of the Industrial Dispute Act, 1947, which was added after the Industrial
Disputes (Amendment) Act, 1982. The Fifth Schedule of the Act listed certain practices which amount
to unfair labour practices, and Sections 25-T and 25-U laid down the provisions for the same.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 17

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

Section 25-T deals with prohibited unfair labour practices. It states that an employer or worker cannot
engage in such activities which are against the welfare and peace of the employers and labourers as
well. This Section also includes registering and unregistering trade unions. Section 25-U provides a
penalty of imprisonment, fine, or both for unfair trade practices.

Unfair labour practices by the employer

As per the Industrial Dispute Act, 1947, unfair labour practices can be done by employers and trade
unions as well. The Fifth Schedule has mentioned the activities which amount to unfair labour
practices. The practices which are prohibited by employers are the following:
1. The employer can not prohibit their employees from joining or establishing any trade union or
can not interfere in their work.
2. If an employee joins a union, the employer is not permitted to harass or control them.
3. The employer can not bully an employee for being a part of legal lock-outs or strikes.
4. Imposing any penalty or giving threats to dismiss them from the services.
5. No discrimination or partiality for their workmen’s trade union.
6. Create workmen’s trade unions supported by employers.
7. Refuse to promote a worker because they supported unions.
8. Promoting ineligible workers instead of eligible workers.
9. Firing any employee on false allegations, and little technical mistakes made by the workers.
10. Assigning work to contractors instead of workmen.
11. Maliciously transferring workers.
12. Appointing contract workers to cut down on the wages and compensation that permanent
workers must receive.
13. Appointment of new workmen when a legal strike is going on by the existing workmen.
14. Refusing collective bargaining with trade unions.
15. Not awarding the workmen for their work.
16. Creating violence among the workmen.
17. Discriminating against the employee who reported any false or illegal practice, discrimination,
or any other practice against
18. Paying fewer wages concerning the work assigned to workmen.
19. Demotion of the workmen because they took part in trade union activities.
20. Dismissing the workers who are members of any trade union.

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 18

NOTES: THE INDUSTRIAL DISPUTES ACT, 1947

Unfair labour practices by Trade Unions

Unfair labour practices are not only done by employers, trade unions also sometimes contribute to
unfair labour practices. The Fifth Schedule of the Industrial Dispute Act mentions the following
practices which are prohibited for trade unions:
1. Promoting and supporting illegal strikes.
2. Threatening the workers to join trade unions.
3. Prohibiting any worker from entering the workplace who is not participating in illegal strikes.
4. Using criminal force against workers who are not participating in strikes or lockouts that are
not permitted as per the provisions of the legislation.
5. Not aiming for workers’ welfare.
6. Refusing collective bargaining as representatives of workmen.
7. Entering the residence of the employers and damaging their personal property.
8. Encourage the workers to demolish the industrial assets.
9. Imposing illegal strikes such as going slow, or gherao (surrounding the employers to fulfil the
demands of the workers).
10. Threatening or harassing the workers who are going to work.

***

THE LAW CLASSES - KOLKATA LABOUR AND INDUSTRIAL LAWS II | 19