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Industrial Relations - Dispute and Settlement Notes

This post gives quick bullet points on the first chapter of the Industrial Management book by T.N. Chhabra in the IP University syllabus. It is concisely edited to contain the maximum info in the minimum amount of text. It is also pretty comprehensive, and is probably all you need to know for the exams.


Industrial relations invariably a combination of cooperation, collaboration and conflict management. The degree of conflict always remains because of :

  1. labour and management have different orientations and perceptions, generate negative images of each other
  2. claim complete rationality for demands since no mutually accepted norms
  3. both don’t come to the negotiation table with a clean slate

Industrial relations are an integral aspect of social relations arising out of employer-employee interactions in modern industries, which are regulated by the state in varying degrees, in conjunction with organized social forces and influenced by the existing institutions. Industrial relations denote the relations between employers and employees in the industry. On a broad sense, the term also includes the relations between the various unions, between the states and the unions as well as those between the employers and the state.

Importance of good industrial relations

  1. Contribution to economic growth, higher productivity and income
  2. Establishment of industrial democracy, motivates employees to contribute their best
  3. High morale of workforce, with confidence, cooperation, trust and respect
  4. Enactment of sound labour legislation, full stop of unfair practices in the industry
  5. Facilitation of change, taking full advantage of the latest inventions and innovations
  6. Optimum use of scarce resources, due to the absence of industrial unrests and disputes

Essentials of good industrial relations

  1. Mutual trust and respect
  2. Sound personnel policies, formed in consultation with workers and their representatives
  3. Collective bargaining
  4. Management support in handling employees grievances and complaints
  5. Training of supervisors/foremen to convey the significance of organizational policies and practices
  6. Co-operation with government agencies
  7. Workers education, to provide appropriate training in human relations

Industrial unrest and disputes

Industrial peace fundamental, but relations between employees and employers are frequently clouded by feelings of exploitation, distrust and discontent. Symptoms of industrial unrest are high labour turnover, disciplinary problems, high absenteeism and tardiness, low morale, restriction of output, etc.

Industrial disputes

Industrial disputes means any difference or dispute between employers and employers or employers and workmen or workmen and workmen, which is connected with the employment of non-employment or the terms of employment or conditions of labour of any person. (Industrial Disputes Act, 1947, Section 2)

Individual disputes such as reinstatement and compensation for wrongful termination, or collective disputes such as wages, bonus, profit sharing, hours of work, etc are collective disputes.

Weapons of Labour

When industrial disputes arise, workers usually resort to one or more of the following weapons:

  1. Strike When workers collectively cease to work in an industry. Various types of strikes are :
    1. Economic strike
    2. General strike
    3. Hunger strike
    4. Sympathetic strike
    5. Stay-in strike
    6. Wild cat strike
    7. Slow down strike
  2. Boycott The workers may decide to boycott the company by not using its products (primary), and an appeal may be made to the general public as well for the same (secondary).

  3. Picketing When workers are dissuaded from work by stationing certain men at the factory gates. If it does not involve any violence, it’s perfectly legal.

  4. Gherao Workers may gherao the members of the management by blocking their exits and forcing them to stay inside just like prisoners. Legally gherao amounts to imposing wrongful restrictions on a persons ability to move. Hence, courts have held it as an illegal act. Promises made by people under a gherao are justified in going back on.

Weapons of Management

When industrial disputes arise, management usually resorts to one or more of the following weapons:

  1. Employers Association, to collectively oppose the working class
  2. Lockout, meaning closing the place of work down temporarily
  3. Termination of service, and even blacklist them to minimize their chances of getting jobs with other employers

Causes of Industrial Disputes

  1. Economic causes
    1. Demand of increase in wages
    2. Higher gratuity and other retirement benefits
    3. Higher bonuses
    4. Certain allowances such as rent house allowance, night shift allowance, conveyance allowance.
    5. Paid holidays
    6. Reduction of working hours
    7. Better working conditions
  2. Political causes, as trade unions in India, are often controlled by political parties, which are often interested in advancing their own political pursuits
  3. Personnel causes like retrenchment, layoff, transfer, promotion, etc
  4. Indiscipline and violence on the part of the workforce
  5. Miscellaneous Causes
    1. Workers resistance to rationalisation, the introduction of new machinery and change of factory location
    2. Non-recognition of trade union
    3. Rumours spread out by undesirable elements
    4. Behaviour of supervisors
    5. Trade union rivalries
    6. Lack of proper communication

Adverse effects of poor industrial disputes

  1. Tense relations
  2. Lower morale
  3. Frustration among employees
  4. Intensification of social tension
  5. Resistance to change
  6. Impact on the economy
  7. Lower profitability
  8. Agony to workers and their families

Measures to improve Industrial Relations

  1. An atmosphere of mutual trust, cooperation, confidence
  2. Effective communication, effective two-way transfer of ideas
  3. Fair personnel policies formed in consultation with the representatives of the employees
  4. Proactive management, anticipate problems and take timely steps to correct these problems
  5. Strong unions, which negotiate with the management and guide the workers
  6. Industrial democracy
  7. Effective implementation of agreements in both letter and in spirit
  8. Role of government, the government should intervene for speedy settlement of an industrial dispute

Industrial relations machinery in India

Machinery for handling industrial disputes

  1. Preventive machinery (voluntary/non-statutory)
    1. Workers participation in management
    2. Collective bargaining
    3. Tripartite bodies
    4. Code of Discipline
    5. Standing orders
  2. Settlement machinery (statutory)
    1. Conciliation
      1. Labour courts
      2. Industrial tribunals
    2. Court of enquiry
    3. Voluntary arbitration
    4. Adjudication
      1. Labour courts
      2. Industrial tribunals
      3. National tribunals

Preventive machinery

Tripartite bodies

Industrial relations in India have been shaped largely by principles and policies evolved through tripartite consultative machinery at industry and national levels. The aim is to “bring parties together for mutual settlement of differences in a spirit of cooperation and goodwill”. 2 tripartite bodies - ILC (Indian Labour Conference) and SLC (Standing Labour Committee)

ILC functions:

  1. to promote uniformity in labour legislation
  2. to lay down a procedure for the settlement of industrial disputes
  3. to discuss matters of All-India importance as between employers and employee

SLC function:

  1. to consider and examine such questions as may be referred to it by the central government and to render advice
  2. take into account the suggestions made by various governments, workers and employers.

Code of discipline

It is a set of self-imposed mutually agreed voluntary principles of discipline and relations between the management and workers in the industry. At the 16th ILC held in 1958, the final form of a formal “Code of Conduct” was approved, which details a set of principles of discipline which should be adopted by labour and management voluntarily.

Standing orders

The Industrial Employment (Standing Orders) Act 1946 requires that employers have terms including working hours, leave, productivity goals, dismissal procedures or worker classifications, approved by a government body. The purpose of the Act is to require employers in industrial establishments to formally define conditions of employment under them, and they act as a code of conduct for the employees during their working life within the organisation.

Settlement machinery

(Provided under the Industrial Disputes Act, 1947)


Conciliation is a process whereby the parties to a dispute use a conciliator, who meets with the parties both separately and together in an attempt to resolve their differences. They do this by lowering tensions, improving communications, interpreting issues, encouraging parties to explore potential solutions and assisting parties in finding a mutually acceptable outcome.


  1. Conciliation ensures party autonomy.
  2. Conciliation ensures the expertise of the decision maker.
  3. Conciliation is time and cost efficient.
  4. Conciliation ensures confidentiality.

Conciliation machinery:

  1. Conciliation officers: enjoys powers of a civil court, he can call and witness parties on oath
  2. Board of Conciliation: appointed when a conciliation officer fails to settle a dispute within 14 days, (chairman + 2-4 other members)
  3. Court of Enquiry: expected to give its report within 6 months


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 judgment


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


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


Adjudication is the ultimate legal remedy for settlement of Industrial Dispute. Adjudication means the 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 labour court or a tribunal. For the purpose of adjudication, the Industrial Disputes Act provides a 3-tier machinery:

  1. Labour court - Deals with:
    1. the propriety or legality of an order passed by an employer under standing orders
    2. application and interpretation of standing orders
    3. dismissal or discharge or grant of relief to workmen wrongfully dismissed.
    4. illegality or otherwise of a strike or lockout.
    5. withdrawal of any customary concession or privileges.
  2. Industrial Tribunal Deals with:
    1. wages
    2. compensatory and other allowances
    3. hours of work and rest intervals
    4. leave with wages and holidays
    5. bonus, profit-sharing, PF etc.
    6. rules of discipline
    7. retrenchment of workmen
    8. working shifts other than in accordance with standing orders
  3. National Tribunal Deals with:
    1. matters of national importance
    2. 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 all 3 tiers to hold its proceedings expeditiously and to submit its report to the central government within the stipulated time.

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