Starting with the Bengal Regulation VII of 1891, labour laws has come a long way with the enactment of the Industrial Disputes act, 1947. The Act relates to all the relevant aspects of the industrial relations machinery, namely, collective bargaining, mediation and conciliation, arbitration, adjudication and matters incidental thereto. According to the preamble, the Act makes provision for the investigation and settlement of industrial disputes and certain other purposes. The objective of this legislative act is to achieve the promotion of harmony in labour-capital relationship and to ensure social justice and economic progress by fostering industrial harmony. As observed by the Hon’ble Supreme Court of India in Steel Authority of India v. Union of India, AIR 2006 SC 3229, the act was enacted for investigation and settlement of industrial disputes. It envisages collective bargaining and settlement between the union representing the workmen and the management.
The act came into force on 1st April, 1947 and extends to the whole of India. It applies to the state of Jammu and Kashmir only to the extent to which the Act applies to Government of India workmen. Although section 1 provides that the Act applies to the whole of India, it may be noted that the subject matter of the Act is in the Concurrent List of the Indian Constitution, and therefore the States are also entitled to make their own laws on the subject.
The Act is applicable to all industries falling within the ambit of section 2(j) of the Industrial Disputes Act, 1947. An “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. Pursuant to the decision in the Bangalore Water Supply and Sewage Board v. Rajappa (AIR 1978 S.C 584), the ambit of the term “industry” was widened. Institutions like hospitals and dispensaries, educational, scientific research and training institutes, institutes engaged in charitable, social and philanthropic services etc. were included if such institutions carried out any industrial activity. It also laid down tests to help determine whether and activity is an “industry” as defined in the industrial Disputes Act.
The tests, as laid down in the judgement are broadly as follows:
1. Where systematic activity is organized by so-operation between employer and employee for the production and distribution of goods and services to satisfy human wants and wishes, prima facie, there is an “industry” in that enterprise.
2. The absence of the profit motive or gainful objective is irrelevant, irrespective of whether the venture is in the public, joint, private or any other sector.
3. The true test is functional, and the decisive aspect is the nature of the activity, with special emphasis on the employer-employee relationship.
4. If the organization engages in activity in the nature of trade or business, it does not cease to be an “industry” because of the philanthropy animating its objects.
The effect of this judgement was to bring within the scope of the term “industry” almost all undertakings, calling and services, analogous to the carrying on of trade of business. Thus, if these conditions are fulfilled, a business will fall under the definition of an “industry” under the act.
Moreover, all persons employed in an establishment for hire or reward including contract labour, apprentices and part-time employees to do any manual, clerical, skilled, unskilled, technical, operational or supervisory work, are covered under the Act.
Importance for business entities of pvt companies etc
Section 2(k) of the act states what constitutes into an industrial dispute. An “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 of employment or with the conditions of labour, of any person working in an industry.
If you are a business owner be it a private business and your falls under the definition of “industry” as defined in the Act, then you must have encounter having certain disagreements with your employees at some point of time. This act understands that there is a high possibility that certain disagreements may arise between the employer and the employee related to working hours, wages, overtime pay etc. and thus, provides various methods with which the party to dispute may resolve the problem. Disputes which affect the production/quality of products is a huge concern for the employer as it would affect his business and eventually the economy of a country, and thus, it is important for an employer to know how to resolve such disputes fast. This Act acts as a communication tool when there is an industrial dispute.
Following are the various authorities under the act which help in settling an industrial dispute:
1. Works Committee
The works committee is a committee consisting of representatives of employers and workmen. The main objective of the works committee is to solve the problems arising in the day-to-day working of a concern and to secure industrial harmony and to arrive at some agreement. The committee is formed by general or special order by the appropriate Government in an industrial establishment in which 100 or more workmen are employed or have been employed on any day in the preceding 12 months. Sch works committee consists of representatives of employers and workmen employed in the establishment.
2. Conciliation officer
The appropriate Government may by notification in the official Gazette, appoint such number of conciliation officer as it thinks fit. The main objective of appointing conciliation officer is to mediate in the settlement of industrial dispute and to promote the settlement of industrial disputes. Conciliation officer has to hold conciliation proceedings, investigate the disputes and do all such things as he thinks fit for the purpose of inducing the parties to arrive at a fair settlement/agreement. He has to send a report and memorandum of settlement to appropriate Government. The report by the conciliation officer has to be submitted within 14 days of the commencement of the conciliation proceeding or shorter period as may be prescribed by the appropriate Government.
3. Boards of Conciliation
The appropriate Government may by notification in the official Gazette, constitute a Board of Conciliation for the settlement of industrial disputes. The Board shall consist of a chairman and 2 or 4 other members in equal numbers representing the parties to the disputes as the appropriate Government thinks fit. The Chairman shall be an independent person. The Board of Conciliation has to bring about a settlement of the dispute. The board has to send a report and memorandum of settlement to appropriate Government along with mentioning the steps taken by the Board in case no settlement is arrived at. The Board of Conciliation has to communicate the reasons to the parties if no further reference is made. The Board has to submit its report within 2 months of the date on which the dispute was referred to it within the period what the appropriate Government may think fit.
4. Court of Inquiry
The appropriate Government i.e the State or the Central government, may by notification in the official Gazette, constitute a court of inquiry into any matter appearing to be connected with or relevant to settlement of industrial disputes having an independent person or of such independent persons as the appropriate Government may think fit. The court of inquiry are expected to inquire into matters referred to them and to report thereon to the appropriate government, within a period of 6 months from the commencement of the enquiry.
5. Labour Court
The appropriate Government may by notification in the Official Gazette, constitute one or more labour court for adjudication of industrial disputes relating to any matters specified in the Second Schedule. A labour court consists of one person only to be appointed by the appropriate Government. Where an industrial dispute has been referred to a labour court for adjudication, it is bound to hold its proceedings expeditiously and submit its award to the appropriate government.
6. Labour/Industrial Tribunals
The appropriate Government may by notification in the official Gazette, constitute one or more Industrial Tribunals for adjudication of industrial disputes. A Tribunal shall consist of one person to be appointed by the appropriate Government. The Appropriate Government may appoint two persons as assessors to advise the Tribunal. The proceedings before an Industrial Tribunal are quasi-judicial in nature with all the attributes of a Court of Justice. Industrial tribunal has the same duties and function that of a labour court.
7. National Tribunals
The Central Government may, by notification in the official Gazette, constitute one or more National Industrial Tribunals for the adjudication of industrial disputes. National Industrial Tribunals are involved only in case of the questions of national importance or if they are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such industrial disputes.
The above methods have been proved to be effective methods in settling an industrial dispute. However, such process turned out to be time consuming and can take years to settle an industrial dispute. Thus, the Act also provides for voluntary reference of disputes to arbitration. Section 10A provides that when an industrial dispute is not referred to the above-mentioned boars/tribunals for adjudication, the employer and the workmen through a written agreement can agree to settle the matter via arbitration mentioning the names of the arbitrators. Such an agreement should be made in prescribed form and should be signed by the parties.
The Act also provides for directions for lay-off, lockout and retrenchment that should be followed by an employer at all costs. These sections also help an employer from malicious strikes and acts as a safeguard for the employer.