Industrial Disputes – Meaning, Prevention and Settlement

Industrial disputes are organised protests against existing terms of employment or conditions of work. According to the Industrial Dispute Act, 1947, an Industrial dispute means “Any dispute or difference between employer and employer or between employer and workmen or between workmen and workmen, which is connected with the employment or non-employment or terms of employment or with the conditions of labor of any person”

In practice, Industrial dispute mainly refers to the strife between employers and their employees. An Industrial dispute is not a personal dispute of any one person. It generally affects a large number of workers’ community having common interests.

Prevention of Industrial Disputes:

The consequences of an Industrial dispute will be harmful to the owners of industries, workers, economy and the nation as a whole, which results in loss of productivity, profits, market share and even closure of the plant. Hence, Industrial disputes need to be averted by all means.

Prevention of Industrial disputes is a pro-active approach in which an organisation undertakes various actions through which the occurrence of Industrial disputes is prevented. Like the old saying goes, “prevention is better then cure”.

1. Model Standing Orders: Standing orders define and regulate terms and conditions of employment and bring about uniformity in them. They also specify the duties and responsibilities of both employers and employees thereby regulating standards of their behavior. Therefore, standing orders can be a good basis for maintaining harmonious relations between employees and employers.

Under Industrial Dispute Act, 1947, every factory employing 100 workers or more is required to frame standing orders in consultation with the workers. These orders must be certified and displayed properly by the employer for the information of the workers.

2. Code of Industrial discipline: The code of Industrial discipline defines duties and responsibilities of employers and workers. The objectives of the code are:

  • To secure settlement of disputes by negotiation, conciliation and voluntary arbitration.
  • To eliminate all forms of coercion, intimidation and violence.
  • To maintain discipline in the industry.
  • To avoid work stoppage.
  • To promote constructive co-operation between the parties concerned at all levels.

3. Works Committee: Every industrial undertaking employing 100 or more workers is under an obligation to set up a works committee consisting equal number of representatives of employer and employees. The main purpose of such committees is to promote industrial relations. According to Indian Labor Conference work committees are concerned with:-

  • Administration of welfare & fine funds.
  • Educational and recreational activities.
  • Safety and accident prevention
  • Occupational diseases and protective equipment.
  • Conditions of work such as ventilation, lightening, temperature & sanitation including latrines and urinals.
  • Amenities such as drinking water canteen, dining rooms, medical & health services.

The following items are excluded from the preview of the work committees.

  • Wages and allowances
  • Profit sharing and bonus
  • Programs of planning and development
  • Retirement benefits
  • PF and gratuity
  • Housing and transport schemes
  • Incentive schemes
  • Retirement and layoff

4. Joint Management Councils: Just to make a start in labour participation in management, the govt: suggested in its Industrial Resolution 1956 to set up joint management councils. It consists of equal numbers of workers and employers (minimum 6 & maximum 12) decisions of the JMC should be unanimous and should be implemented without any delay. JMC members should be given proper training. JMC should look after 3 main areas:-

  1. information sharing
  2. consultative
  3. administrative

Representation of workers to the JMCs should be based on the nomination by the representation.


  • Satisfy the psychological needs of workers
  • Improve the welfare measures
  • Increase workers efficiency
  • Improve the relation and association between workers, managers and promoters.

JMC deals with matters like:-

  • Employee welfare
  • Apprenticeship scheme

5. Suggestion Schemes:

6. Joint Councils: Joint Councils are set up for the whole unit and deals with matters relating optimum production and efficiency and the fixation of productivity norms for man and machine for the as a whole. in every industrial unit employing 500 and more workers there should be a Joint Council for the whole unit.


  • Members of the council must be actually engaged in the unit.
  • The chief executive of the unit will be the chairman of the council and vice chairman will be nominated by worker members.
  • Term of the council will be two years.
  • JC shall meet at once in a quarter.
  • Decision of the council will be based on consensus and not on voting.


  • Optimum use of raw materials and quality of finished products
  • Optimum production, efficiency and function of productivity norms of man and machine as a whole.
  • Preparation of schedules of working hours and of holidays.
  • Adequate facilitates for training.
  • Rewards for valuable and creative suggestions received from workers.

7. Collective Bargaining: Collective Bargaining is a process in which the representatives of the employer and of the employees meet and attempt to negotiate a contract governing the employer-employee-union relationships. Collective Bargaining involves discussion and negotiation between two groups as to the terms and conditions of employment.

8. Labour welfare officer: The factories Act, 1948 provides for the appointment of a labour welfare officer in every factory employing 500 or more workers. The officer looks after all facilities in the factory provided for the health, safety and welfare of workers. He maintains liaison with both the employer and the workers, thereby serving as a communication link and contributing towards healthy industrial relations through proper administration of standing orders, grievance procedure etc.

9. Tripartite bodies: Several tripartite bodies have been constituted at central, national and state levels. The India labor conference, standing labor committees, Wage Boards and Industries Committees operate at the central level. At the state level, State Labor Advisory Boards have been set up. All these bodies play an important role in reaching agreements on various labor-related issues. The recommendations given by these bodies are however advisory in nature and not statutory.

Machinery for settlement of Industrial Disputes:

1. Conciliation: Conciliation refers to the process by which representatives of employees and employers are brought together before a third party with a view to discuss, reconcile their differences and arrive at an agreement through mutual consent. The third party acts as a facilitator in this process. Conciliation is a type of state intervention in settling the Industrial Disputes. The Industrial Disputes Act empowers the Central & State governments to appoint conciliation officers and a Board of Conciliation as and when the situation demands.

Conciliation Officer: The appropriate government may, by notification in the official gazette, appoint such number of persons as it thinks fit to be the conciliation officer. The duties of a conciliation officer are:

a) To hold conciliation proceedings with a view to arrive at amicable settlement between the parties concerned.

b) To investigate the dispute in order to bring about the settlement between the parties concerned.

c) To send a report and memorandum of settlement to the appropriate government.

d) To send a report to the government stating forth the steps taken by him in case no settlement has been reached at.

The conciliation officer however has no power to force a settlement. He can only persuade and assist the parties to reach an agreement. The Industrial Disputes Act prohibits strikes and lockouts during that time when the conciliation proceedings are in progress.

2. Arbitration: A process in which a neutral third party listens to the disputing parties, gathers information about the dispute, and then takes a decision which is binding on both the parties. The conciliator simply assists the parties to come to a settlement, whereas the arbitrator listens to both the parties and then gives his judgement.

Advantages of Arbitration:

  • It is established by the parties themselves and therefore both parties have good faith in the arbitration process.
  • The process in informal and flexible in nature.
  • It is based on mutual consent of the parties and therefore helps in building healthy Industrial Relations.


  • Delay often occurs in settlement of disputes.
  • Arbitration is an expensive procedure and the expenses are to be shared by the labour and the management.
  • Judgement can become arbitrary when the arbitrator is incompetent or biased.

There are two types of arbitration:

  • Voluntary Arbitration: In voluntary arbitration the arbitrator is appointed by both the parties through mutual consent and the arbitrator acts only when the dispute is referred to him.
  • Compulsory Arbitration: Implies that the parties are required to refer the dispute to the arbitrator whether they like him or not. Usually, when the parties fail to arrive at a settlement voluntarily, or when there is some other strong reason, the appropriate government can force the parties to refer the dispute to an arbitrator.

3. Adjudication: Adjudication is the ultimate legal remedy for settlement of Industrial Dispute. Adjudication means intervention of a legal authority appointed by the government to make a settlement which is binding on both the parties. In other words adjudication means a mandatory settlement of an Industrial dispute by a labor court or a tribunal. For the purpose of adjudication, the Industrial Disputes Act provides a 3-tier machinery:

  • Labor court
  • Industrial Tribunal
  • National Tribunal

a) Labor Court: The appropriate government may, by notification in the official gazette constitute one or more labor courts for adjudication of Industrial disputes relating to any matters specified in the second schedule of Industrial Disputes Act. They are:

  • Dismissal or discharge or grant of relief to workmen wrongfully dismissed.
  • Illegality or otherwise of a strike or lockout.
  • Withdrawal of any customary concession or privileges.

Where an Industrial dispute has been referred to a labor court for adjudication, it shall hold its proceedings expeditiously and shall, within the period specified in the order referring such a dispute, submit its report to the appropriate government.

b) Industrial Tribunal: The appropriate government may, by notification in the official gazette, constitute one or more Industrial Tribunals for the adjudication of Industrial disputes relating to the following matters:

  • Wages
  • Compensatory and other allowances
  • Hours of work and rest intervals
  • Leave with wages and holidays
  • Bonus, profit-sharing, PF etc.
  • Rules of discipline
  • Retrenchment of workmen
  • Working shifts other than in accordance with standing orders

It is the duty of the Industrial Tribunal to hold its proceedings expeditiously and to submit its report to the appropriate government within the specified time.

c) National Tribunal: The central government may, by notification in the official gazette, constitute one or more National Tribunals for the adjudication of Industrial Disputes in

  • Matters of National importance
  • Matters which are of a nature such that industries in more than one state are likely to be interested in, or are affected by the outcome of the dispute.

It is the duty of the National Tribunal to hold its proceedings expeditiously and to submit its report to the central government within the stipulated time.

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