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Industrial Disputes Act, 1947

Objective of the Act
1. To promote industrial peace and harmony by providing mechanisms for the
investigation and settlement of industrial disputes.
2. To establish cordial industrial relations between employees and employers.
3. To minimize differences and resolve disputes through settlement mechanisms.
4. To provide suitable machinery for investigation and settlement of industrial
disputes.
5. To prevent illegal strikes and lockouts by employees and employers.
6. To protect the rights of workmen and ensure fair treatment in industrial
establishments.
7. To establish rules and regulations to provide relief to workmen in cases of layoffs
and retrenchments.
8. To set guidelines for fair labor practices.
9. To promote collective bargaining.

Short Title, Extent, and Commencement (Section 1)

• Known as the Industrial Disputes Act, 1947.
• Comprises VII chapters and 40 sections.
• Extends to the whole of India.
• Came into force on April 1, 1947.

Key Definitions (Section 2)

1. Industrial Dispute (Section 2(k)):
• Any dispute or difference between:
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o Employers and employers.

o Employers and workmen.
o Workmen and workmen.
• Relates to employment, non-employment, terms of employment, or conditions of
labor.
2. Workman (Section 2(s)):
• Includes any person employed in manual, skilled, unskilled, technical, operational,
clerical, or supervisory work for hire or reward.
• Excludes:
o Armed forces personnel.
o Managerial or administrative employees.
o Supervisory employees earning above a specified salary threshold.
3. Industry (Section 2(j)):
• Any business, trade, undertaking, manufacture, or calling of employers.
• Includes systematic activities carried out by cooperation between employers and
workmen for production, supply, or distribution of goods/services.
• Supreme Court clarifications:
o Bangalore Water Supply v. A. Rajappa: Defined "industry" broadly.
o D.N. Banerjee v. P.R. Mukherjee: Municipalities are industries.
o State of Bombay v. Hospital Mazdoor Sabha: Hospitals are industries.
4. Layoff (Section 2(kkk)):
• Employer’s inability to provide work due to:
o Shortage of raw materials, power, or coal.
o Machinery breakdown.
o Natural calamities.
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5. Retrenchment (Section 2(oo)):

• Termination of a workman’s service for any reason other than:
o Voluntary retirement.
o Superannuation.
o Contract expiration.
o Ill-health.
6. Strike (Section 2(q)):
• Cessation of work by employees acting in combination or refusal to work under a
common understanding.
7. Lockout (Section 2(l)):
• Temporary closure or suspension of work by the employer.
8. Wages (Section 2(rr)):
• Includes remuneration, allowances, and benefits.
• Excludes bonuses, pension contributions, and gratuity.

Authorities Under the Act

1. Works Committee (Section 3):
o Joint committee of employers and employees to discuss common problems.
2. Conciliation Officers (Section 4):
o Appointed to mediate disputes and promote settlements.
3. Board of Conciliation (Section 5):
o Two or four members appointed by the government to investigate disputes.
4. Arbitration (Section 6):
o Disputes referred to arbitration by mutual agreement of the parties.
5. Adjudication (Sections 7, 7A, 7B):
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o Disputes resolved by Labor Courts, Industrial Tribunals, or National

Tribunals.

Machinery for Industrial Dispute Settlement

1. Notice of Change (Section 9A):
• Employers must give 21 days' notice before changing service conditions.
• Applies to matters specified in the Fourth Schedule.
2. Conciliation (Section 12):
• Conciliation officers investigate disputes and attempt to bring about settlements.
3. Voluntary Arbitration (Section 10A):
• Disputes can be referred to arbitration by mutual agreement of the parties.
4. Adjudication (Sections 7, 7A, 7B):
• Disputes are referred to Labor Courts, Industrial Tribunals, or National Tribunals for
adjudication.

Strikes and Lockouts

1. Legal Strikes and Lockouts (Section 22):
• Strikes in public utility services require:
o 14 days' notice.
o No strike during conciliation proceedings or 7 days after their conclusion.
• Lockouts follow the same rules.
2. Illegal Strikes and Lockouts (Section 24):
• Declared illegal if:
o Violates Sections 22 and 23.
o Conducted during pending disputes or adjudication.
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Layoff and Retrenchment

1. Layoff (Section 25C):
• Workers with 1+ year of service entitled to 50% wages during layoff.
• Casual workers excluded.
• Prior government permission required (Section 25M).
2. Retrenchment (Section 25F):
• Conditions:
o 1 month’s notice or wages in lieu.
o Compensation: 15 days’ wages for every completed year of service.
o Notice to the government.
• Principle: Last Come, First Go.

Closure of Establishments (Section 25O)

• Employers must seek government permission before closing establishments
employing 100 or more workers.
• Compensation equivalent to 15 days' average pay for every completed year of
service is mandatory.

Unfair Labor Practices (Section 25T)

• Both employers and unions can be penalized for unfair practices.
• Fifth Schedule outlines fair labor practices to:
o Protect workers' rights.
o Prevent employer interference in union matters.
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Duties of Various Authorities

1. Conciliation Officers (Section 12): Mediate disputes.
2. Board of Conciliation (Section 13): Investigate and promote settlement.
3. Labor Courts/Tribunals (Section 15): Adjudicate disputes.

Publication of Reports and Awards (Section 17)

• Reports and awards must be published within 30 days of receipt by the
government.
• Awards are final and cannot be challenged in court.

Penalties
Section Offense Punishment
25-U Unfair labor practices Up to 6 months' imprisonment or ₹3,000
fine.
26 Illegal strikes/lockouts Up to 1 month imprisonment or ₹50-
₹1,000 fine.
27 Instigation of illegal strikes Up to 6 months' imprisonment or ₹1,000
fine.
28 Financial aid to illegal strikes Up to 6 months' imprisonment or ₹1,000
fine.
29 Breach of settlement/award Up to 6 months' imprisonment or fine.
30 Disclosing confidential Up to 6 months' imprisonment or ₹1,000
information fine.
31-A Closure without notice Up to 6 months' imprisonment or ₹5,000
fine.
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Schedules in the Act

1. First Schedule: Industries classified as public utility services (e.g., transport,
banking, defense).
2. Second Schedule: Matters under Labor Court jurisdiction (e.g., dismissals, standing
orders).
3. Third Schedule: Matters under Industrial Tribunal jurisdiction (e.g., wages,
retrenchments).
4. Fourth Schedule: Conditions requiring notice before changes (e.g., working hours,
wages).
5. Fifth Schedule: Unfair labor practices by employers and workmen.

Recent Amendments and Developments

1. Integration with Labor Codes:
o The Industrial Relations Code, 2020 consolidates the Industrial Disputes
Act, Trade Unions Act, and Standing Orders Act.
o Key changes include:
▪ Simplified procedures for layoffs and retrenchments.
▪ Introduction of a reskilling fund for retrenched workers.
2. Judicial Interpretations:
o Lenin Kumar Ray v. M/s. Express Publications (2024): Clarified the
definition of "workman."
o M/s Bharti Airtel Limited v. A.S. Raghavendra (2024): Reinforced the
distinction between managerial and non-managerial roles.
3. Digitalization of Dispute Resolution:
o Online platforms introduced for filing and resolving disputes.
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Key Case Laws

1. State of Bombay v. K.P. Krishnan (1960):
o Government discretion under Section 10 must be exercised judiciously.
2. Karnal Leather Karamchari v. Liberty Footwear Co. (1990):
o Highlighted the importance of transparency in arbitration processes.
3. Southern Ispat Ltd. v. State of Kerala (2004):
o Reinforced the principle of non-interference in concurrent factual findings
by lower courts.

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