The Industrial Disputes Act, 1947

•Applicability [Sec 1(2)]

Extends to whole of India

•Date of effect [Sec 1(3)]

The ACT came into force on the 1st day of April,
1947

•Sections and Schedules

81 Sections and 5 Schedules.

1
 Objectives of the law

• Investigation and settlement of industrial

disputes. However, it makes other provisions in
respect of lay off, retrenchment, closure etc.
• The purpose is to bring the conflicts
between employer and employees to an
amicable settlement. The Act provides
machinery for settlement of disputes, if dispute
cannot be solved through collective bargaining.

2
 Meaning of industry…

Industry means any business, trade,

undertaking, manufacture or calling
of employers and includes any
calling, service, employment,
handicraft or industrial occupation or
avocation of workmen. [section 2(j)].
Thus, the definition is very wide.

3
 What is industrial dispute…

• Industrial dispute means any dispute or

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 and conditions of
employment or with the conditions of labour, of
any person. [section 2(k)].
• Section 2A provides that dismissal, discharge,
retrenchment of even a single workman will be
industrial dispute‘ even if no other workman or any
union is a party to the dispute.
4
Workman
•Workman‘ means any person (including apprentice) employed in any
industry to do any manual, clerical or supervisory work for hire or
reward. It includes dismissed, discharged or retrenched person also.

•However, it does not include (i) Armed Forces i.e. those subject to Air Force
Act, Army Act or Navy Act (ii) Police or employees of prison (iii) Employed in
mainly managerial or administrative capacity or (iv) person in supervisory
capacity drawing wages exceeding Rs 1,600 per month or functions are is
mainly of managerial nature. [section 2(x)].

Wages [Sec 2(rr)]:

•Basic, D A, Value of house accommodation, traveling concession,
commission and or other remuneration payable under the contract .
Bonus, retirement benefits etc. are not wages

5
 settlement machinery

• There is a Works Committee in factories employing

100 or more workers. [section 3]. The committee will
consist of equal number of representatives of
employer and employees. Representatives of
employees will be selected in consultation with
Registered Trade Union. The Works Committee will
first try to settle disputes. If dispute is not solved, it
will be referred to Conciliation Officer. He is appointed
by Government. [section 4]. The matter may also be
referred to Board of Conciliation. [section 4].
• Unsolved matters may be referred to labour tribunal /
industrial tribunal / labour court (sec. 12 (5))

6
 Settlement machinery …

• Employer and employees can voluntarily refer

the matter to arbitration (mediation). [section
10A]. [This provision is very rarely used by
employer and workmen. Generally, they prefer
the Court route].
• If no settlement is arrived at, there is three tier
system of adjudication Labour Court, Industrial
Tribunal and National Tribunal. The order made
by them is award‘

7
 Meaning of award (judgement)

• Award‘ means an interim or final determination

of any industrial dispute or of any question
relating thereto by any Labour Court, Industrial
Tribunal or National Tribunal. It also includes
arbitration award. [section 2(b)]. The award‘ is
required to be published by State/Central
Government within 30 days. [section 17]. The
award becomes effective 30 days after its
publication. [section 17A].

8
 Meaning of settlement…

• Settlement‘ means a settlement arrived at

in the course of conciliation proceedings. It
includes a written agreement between
employer and workmen arrived at
otherwise than in course of conciliation
proceedings (i.e. outside the conciliation
proceedings).

9
 Duration of settlement…

• The settlement is binding during the period

it is in force. Even after that period is over,
it continues to be binding, unless a 2
month notice of termination is given by
one party to another. [section 19(2]. If no
period has been specified, settlement is
valid for 6 months and an award is valid
for one year.
10
 Difference between settlement and
award…
• The difference is that settlement arrived at in
course of conciliation or an arbitration award or
award of labour court or Tribunal binds all
parties to industrial dispute including present
and future workmen and all parties who were
summoned to appear in the proceedings.
[section 18(3)]. If settlement is arrived at by
mutual agreement, it binds only those who were
actually party to agreement. [section 18(1)]

11
 What is lay-off?

• When an employee is not given work due to

some reasons beyond the powers of the
employer. It means failure / refusal / inability of
the employer to give employment due to
following reasons :
• 1. shortage of raw material / power
• 2. accumulation of stocks
• 3. break down of machinery
• 4. natural calamity
• 5 other connected reasons (sec (2(kkk)))
12
 Nature of layoff…

• It is temporary
• It is due to situation beyond the control of
the employer
• Layoff compensation is given to the
employee (50%).
• It is relating to workers’ whose name is
there on the muster roll of the employer
• Employee has to come to the factory, but
is laid off in 2 hours (not given work)
13
 Lay off compensation…

• A factory employing 50 or more but less than

100 employees on an average per working day
can lay off the workmen, who have completed
one year of service, by paying compensation
equal to 50% of salary (basic plus DA) (section
25C of IDA). Employer can offer him alternate
employment, if the alternate employment does
not call for any special skill or previous
experience, and lay off compensation will not be
payable if employee refuses to accept the
alternate employment (section 25E).
14
 Meaning of retrenchment…

• Retrenchment‘ means termination by the

employer of service of a workman for any
reason, other than as a punishment inflicted by a
disciplinary action. However, retrenchment‘ does
not include voluntary retirement or retirement on
reaching age of superannuation or termination
on account of non-renewal of contract or
termination on account of continued ill-health of
a workman. [section 2(oo)].
15
 Retrenchment is not a punishment…

• Retrenchment‘ means discharge of surplus

labour or staff by employer. It is not by way of
punishment. The retrenchment should be on
basis of last in first out‘ basis in respect of each
category, i.e. junior-most employee in the
category (where there is excess) should be
retrenched first. [section 25G]. If employer wants
to re-employer persons, first preference should
be given to retrenched workmen. [section 25H].

16
 Notice for retrenchment…

• A worker who has completed one year of

service can be retrenched by giving one
month notice (or paying one month‘s
salary) plus retrenchment compensation,
at the time of retirement, @ 15 days‘
average wages for every completed year
of service (section 25F).

17
 Calculation of compensation…

• In Parry’s Employees Union v. Third

Industrial Tribunal 2001 LLR 462 (Cal HC),
it was held that for purposes of
retrenchment compensation under ID Act,
the monthly salary should be divided by
30. [Under Gratuity Act, it has to be
divided by 26].

18
 Permission for retrenchment…

• If number of workmen are 100 or more,

prior permission of Appropriate
Government is necessary u/s 25N(1)].

19
 Meaning of closure…

• Closure‘ means permanent closing down of a

place of employment or part thereof. [section
2(cc)]. Thus, closure can be of part of
establishment also. 60 days notice should be
given for closure to Government, if number of
persons employed are 50 or more. 60 days
notice is not necessary if number of persons
employed are less than 50. [section 25FFA].
Compensation has to be given as if the workman
is retrenched. [section 25FFF(1)]
20
 Govt. permission for closure…

• If number of workmen employed are 100

or more, prior permission of Government
is necessary for closure u/s 25-O.

21
 Govt. permission required, if >=100
workers…

• Large industries employing 100 or more

workmen on an average for preceding 12
months cannot lay-off, retrench or close down
the undertaking without permission from
Government (sections 25M to 25-O of Industrial
Disputes Act). Invariably, such permission is
almost never given, whatever may be the merits
of the case.

22
 Meaning of strike…

• 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.
[section 2(q)].
23
 Prohibition of strike…

• As per section 23, workman should not go on

strike in * during pendency of conciliation
proceedings and 7 days thereafter * during
pendency of proceedings before Labour Court,
Industrial Tribunal or National Tribunal * During
period of arbitration proceedings * During period
when settlement or award is in operation in
respect of the matters covered by award or
settlement.
24
 Meaning of public utility

• Public Utility Service‘ includes railways, major

port and docks, section of industry on the
working of which safety of establishment
depends, postal/telegraph/ telephone services,
industry supplying power/ light/ water; system of
public conservancy or sanitation. [section 2(n)].
In addition, Government can declare industry
specified in Schedule I as Public Utility
Services‘. Such declaration can be made for 6
months at a time [section 2(n)(vi)].
25
 Strike in public utilities…

• In case of public utility, employees have to

give at least 14 days notice for strike. The
notice is valid only if strike commences
within 6 weeks. Otherwise, fresh notice is
required. Similarly, an employer cannot
declare lock out without giving 14 days
notice. [section 22]. If such notice is
received, Government authority should be
informed within five days.
26
 What is a lockout?

• Lock-out‘ means temporary closing or 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. [section 2(l)]. Workers
go on strike, while lock-out‘ is to be
declared by employer.

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 No work – no pay

• Principle of No work no pay‘ has been accepted

by Supreme Court. - Bank of India v. T S
Kelawala 1989 LLR 277 (1990 The principle of
no work no pay‘ is also applicable when a man
was eligible for promotion but was not promoted
and in fact did not work in the higher post. In
such case, he is not eligible to get pay for higher
scale - Paluru Ramkrishnaiah v. UOI - (1989) 2
SCR 92 - followed in State of Haryana v. OP
Gupta - 1996(1) SCALE 602.
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 Illegal strike …

• Strike or lock out in violation of sections 22

or 23 and when it is continuing in violation
of order issued by Government u/s 10(3)
(when matter is referred to Conciliation
Board or Tribunal) is illegal. [section 24].
Fine upto Rs 50 per day to workman and
Rs 1,000 to employer can be imposed. In
addition, he can be imprisoned upto one
month. [section 26].
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 No change in working conditions…

• Employer shall not make any change in

condition of service connected to dispute
without permission of authority before
whom proceedings are pending. [section
33(1)(a)]. Change which is not related to
dispute can be made in accordance with
standing orders without any permission.
[section 33(2)(a) ]

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 No discharge without permission (on
matters related to dispute)
• Employer shall not discharge, dismiss or punish
any workman in matter for any misconduct
concerned to dispute, without permission of
authority before whom proceedings are pending.
[section 33(1)(b)]. Punishment which is not
connected to dispute can be made in
accordance with standing orders without any
permission. However, dismissal or discharge of
workman will require approval of the action.
Application for approval should be made after
action is taken. [section 33(2)(b)].
31
 Protected workmen…

• In every establishment, 1% of total workmen are

recognised as Protected workman‘ u/s 33(3) (but
minimum 5 and maximum 100). In case of such
workmen, order for his dismissal, discharge or
punishment cannot be passed without
permission of authority before whom
proceedings are pending, whether the issue is
related to dispute or not. Such permission is
required only during the period proceedings are
pending and not after main reference is decided.
32
 What is unfair labour practices…

• Section 25T prohibits unfair labour

practices by employer or workman or a
trade union. If any person commits unfair
labour practice, he is punishable with fine
upto Rs 1,000 and imprisonment upto 6
months. [section 25U]. Fifth schedule to
Act gives list of what are Unfair Labour
Practices‘.

33
 Unfair labour practices by employer…
• Threatening workmen with discharge or dismissal, if they join a trade union
threatening a lock-out or closure, if a trade union is organised granting wage
increase to workmen at crucial periods of trade union organisation, with a view
to undermining the efforts of the trade union at organisation an employer taking
an active interest in organising a trade, union of his workmen.
• To establish employer-sponsored trade unions of workmen discharging or
punishing a workman, because he urged other workmen to join or organise a
trade union discharging or dismissing a workman for taking part in any strike
(not being a strike which it deemed to be an illegal strike under this Act)
changing seniority rating of workmen because of trade union activities.
• Refusing to promote workmen to higher posts on account of their trade union
activities giving unmerited promotions to certain workmen with a view to
creating friction amongst other workmen, or to undermine the strength of their
trade union discharging office bearers or active members of the trade union on
account of their trade union activities

34
Contd..
• To discharge or dismiss workmen – by way of victimisation; by falsely
implicating a workman in a criminal case on false or fabricated evidence;
on untrue allegations of absence without leave; in utter disregard of the
principles of natural justice in the conduct of domestic enquiry or with
undue haste; for misconduct of a minor or technical character, without
having any regard to the nature of the particular misconduct or the past
record of service of the workman.
• To abolish the work of a regular nature being done by workmen, and to
give such work to contractors as a measure of breaking a strike. To
transfer a workman mala fide from one place to another, under the
excuse of following management policy. To insist upon individual
workmen, who are on a legal strike to sign a good conduct bond, as a
precondition to allowing them to resume work.
• To show favoritism or partiality to one set of workers regardless of merit.
• To employ workmen as "badlis" casuals or temporaries and to continue
them as such for years, with the object of depriving them of the status
and privileges of permanent workmen.
35
Contd..

• To discharge or discriminate against any workman for filing charges

or testifying against an employer in any enquiry or proceeding
relating to any industrial dispute
• To recruit workmen during a strike when the strike is not illegal
• Failure to implement award, settlement or agreement
• To indulge in acts of force or violence
• To refuse to bargain collectively, in good faith with the recognised
trade unions. Proposing or continuing a lock-out deemed to be
illegal under this Act

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UNFAIR LABOUR PRACTICES on the part of workmen :

• Advise, support or instigate any strike deemed to be

illegal under this Act.
• Coerce workmen to join a trade union or refrain from
joining any trade union, picket in such a manner that
non-striking workmen are physically debarred from
entering the work places indulge in acts of force or
violence or intimidation in connection with a strike
against non-striking workmen or against managerial
staff.
• For a recognised union; to refuse to bargain collectively
in good faith with the employer.

37
Contd..

• To indulge in coercive activities against certification of

bargaining representative. To stage, encourage or instigate
such forms of coercive actions as wilful "go slow", squat on
the work premises or "gherao" of any of the members of
the managerial or other staff.
• To stage demonstrations at the residences of the
employers or the managerial staff members.
• To motivate or indulge in willful damage to employer's
property.
• To indulge in acts of force or violence or to hold out threats
of intimidation against any workman with a view to
preventing him from attending work.

38
Case : wokmen of subong Tea estate /v/s
subong Tea Estate (1964)
• Supreme court said :
1. Management can retrench employes only for
proper reasons
2. Management can decide the number of labour
force to employ
3. Surplus workers can be retrenched
4. Workers may become surplus due to
rationalisation
5. The right to retrench cannot normally be
challenged – however, it can be questioned,
whether it was done for proper reason.
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 Mention 7 authorities under Industrial
Disputes Act…
1. Works committee (sec. 3)
2. Conciliation officer (sec. 4)
3. Board of conciliation (Sec. 5)
4. Courts of inquiry (sec. 6)
5. Labour court (sec. 7)
6. Tribunal (sec. 7 a)
7. National Tribunals (sec. 7 b)

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