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LABOUR AND INDUSTRIAL LAW

PAPER CODE - K-402

PART I - EVOLUTION OF INDUSTRIAL LEGISLATION IN INDIA

QUEST:- DESCRIBE THE EVOLUTION OF INDUSTRIAL LEGISLATION IN INDIA?

ANS:- EVOLUTION OF INDUSTRIAL LEGISLATION IN INDIA

The law relating to labour and employment is also known as Industrial law in India. The
history of labour legislation in India is interwoven with the history of British colonialism. The
industrial/labour legislations enacted by the British were primarily intended to protect the
interests of the British employers. Considerations of British political economy were naturally
paramount in shaping some of these early laws. Thus came the Factories Act. It is well known
that Indian textile goods offered stiff competition to British textiles in the export market and
hence in order to make India labour costlier

the Factories Act was first introduced in 1883 because of the pressure brought on the British
parliament by the textile magnates of Manchester and Lancashire. Thus India received the first
stipulation of eight hours of work, the abolition of child labor, and the restriction of women in
night employment, and the introduction of overtime wages for work beyond eight hours. While
the impact of this measure was clearly welfares the real motivation was undoubtedly
protectionist. The earliest Indian statute to regulate the relationship between employer and his
workmen was the Trade Dispute Act, 1929 (Act 7 of 1929). Provisions were made in this Act for
restraining the rights of strike and lock out but no machinery was provided to take care of
disputes.

The original colonial legislation underwent substantial modifications in the post-colonial era
because independent India called for a clear partnership between labor and capital. The content
of this partnership was unanimously approved in a tripartite conference in December 1947 in
which it was agreed that labor would be given a fair wage and fair working conditions and in
return capital would receive the fullest co-operation of labor for uninterrupted production and
higher productivity as part of the strategy for nation

al economic development and that all concerned would observe a truce period of three years free
from strikes and lockouts. Ultimately the Industrial Disputes Act (the Act) brought into force on
01.04.1947 repealing the Trade Disputes Act 1929.

Constitutional provisions with regard to labor laws

The relevance of the dignity of human labor and the need for protecting and safeguarding the
interest of labor as human beings has been enshrined in Chapter-III (Articles 16, 19, 23 & 24)
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LABOUR AND INDUSTRIAL LAW
and Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India keeping in line
with Fundamental Rights and Directive Principles of State Policy.

The legislations can be categorized as follows:

1) Labour laws enacted by the Central Government, where the Central Government has the sole
responsibility for enforcement.

2) Labour laws enacted by Central Government and enforced both by Central and State
Governments.

3) Labour laws enacted by Central Government and enforced by the State Governments.

4) Labour laws enacted and enforced by the various State Governments which apply to
respective States.

The Constitution of India provides detailed provisions for the rights of the citizens and also lays
down the Directive Principles of State Policy which set an aim to which the activities of the state
are to be guided. These Directive Principles provide:

a. for securing the health and strength of employees, men and women;

b. that the tender age of children are not abused;

c. that citizens are not forced by economic necessity to enter avocations unsuited to their age or
strength;

d. just and humane conditions of work and maternity relief are provided; and

e. that the Government shall take steps, by suitable legislation or in any other way, to secure the
participation of employee in the management of undertakings, establishments or other
organisations engaged in any industry.

NOTES

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PART II - INDUSTRIAL DISPUTE ACT, 1947

QUEST: WHAT IS THE SCOPE, FEATURES AND OBJECTS OF INDUSTRIAL

DESPUTE ACT, 1947?

ANS:-

SCOPE OF THE ACT

The scope of the Industrial Disputes Act, 1947 is to make provision for the investigation and
settlement of Industrial Disputes and certain other purposes. The words ―for certain purposes‖
essentially refer and include prevention of Industrial Disputes also as is clear from the Statement
Objects and Reasons. Thus two institutions prescribed for the prevention and settlement of
Industrial Disputes, provided for in the Bill are the Works Committees consisting of
representative of employers and workmen and Industrial Tribunals.

In the Industrial Disputes Act, 1947, the preliminary chapter defines various terms used in the
Act. There was a controversy in the circles of labour management about the correct interpretation
of some of those terms like ‗industry‘, ‗Industrial Dispute‘ and workmen because it is on the
current interpretation of these terms that the applicability of the provisions depend as a matter of
fact, some of the terms are so inter dependent that it could be difficult to interpret and applying
any one in isolation. The reason is very simple. One cannot call a ‗Dispute‘, and ‗Industrial
Dispute‘ unless the establishment or the undertaking in which that the dispute arisen is an
‗industry‘ and the employers of the establishment ‗workmen‘ within the meaning of the Act.

OBJECT OF THE ACT

The objects of the Industrial Disputes Act, 1947 are given below:

 To provide for prevention of industrial disputes through works committees;

 To provide for investigating the industrial disputes through Court of Inquiry;
 To provide for the settlement of industrial disputes through a three tier system of Labour
Courts, Industrial Tribunals and National Tribunals;
 To impose prohibition on commencement or continuation of strike and lock out during
specified period;
 To provide for payment of compensation in case of lay – off, Retrenchment and Closure;
 To define and prohibit the unfair labour practices.

MAIN FEATURES OF THE ACT

The main features of the Act are as follows:

 This act extends to the whole of India including the state of Jammu and Kashmir
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LABOUR AND INDUSTRIAL LAW
 It encourages arbitration over the disputes between employers and employees.
 It provides for setting up of works committees as machinery for mutual consultation
between employers and employees to promote cordial relation.
 This Act paved the way for setting up permanent conciliation machinery at various stages
having definite time limits for conciliation and arbitration.
 This Act emphasis on compulsory adjudication besides conciliation and voluntary
arbitration of Industrial Disputes

NOTES

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LABOUR AND INDUSTRIAL LAW
QUEST:- DEFINE INDUSTRY

ANS:- DEFINITION OF INDUSTRY

Section 2(j) of the Industrial Disputes Act, 1947 defines the term ‗industry‘, as any
business, trade, undertaking, manufacture, calling of employers, and includes any calling,
service, employment, handicraft, industrial occupation or avocation of workmen.

It is to be mentioned here that according to the phraseology of this definition one can easily
brand any business activity or trade as an industry in order to attract the provisions of the
Industrial Disputes Act, 1947.

Normally speaking by industry it is meant production of goods, and wealth and with the
cooperation of labour and capital, but it is not so under this Act.

The Courts have given different meaning to this concept at different times, and actually, the
interpretation has always depended on predictions of individual Judges.

For the first time such a situation arose in the case of Budge Municipality Vs P.R. Mukerjee
when Mr. Justice Chandra Shekara Iyer of the Supreme Court was asked to decide whether the
Municipality is an industry within the meaning of the Industrial Disputes Act, 1947.

The fact of this case was that two employees of the Municipality who were the members of
Municipality Workers Union were suspended by the Chairman on the charges of the negligence,
insubordination and indiscipline. The workers were dismissed from the service saying that their
explanations were unsatisfactory. The union questioned the dismissal and the matter was
referred by the Government of West Bengal to the Industrial Tribunal for adjudication. The
Tribunal directed the workers reinstatement in their respective offices by making an award
saying that suspension of two employees was of victimization. The Municipality under Article
226 of the Indian Constitution took the matter to the High Court. The petition was dismissed and
leave was granted under Article 132(1) of the Indian Constitution to make an appeal to the
Supreme Court.

The definition of industry is in two parts. The first part says that ‗industry‘ means any business,
trade, undertaking, manufacture or calling of employers and the second part of the definition of
‗industry‘ says that it includes any calling, service, employment, handicraft, or industrial
occupation or avocation of workmen.

In the case of Madras Gymkhana Club, Employees Union Vs Management of Madras

Gymkhana Club , it was observed that ―if the activity can be described as an industry with
reference to the occupation of the employers, the ambit of the industry, under the force of the
second part takes in the different kinds of activity of employees mentioned in the second part.
But the second standing alone cannot define industry. By the inclusive part of the definition the
labour force employed in any industry is made an integral part of the industry for the purpose of

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LABOUR AND INDUSTRIAL LAW
industrial disputes although industry is ordinarily something which employers create or
undertake‖.

All decisions of the Supreme Court agreed that an undertaking to be within the definition in
section 2(j) must be read subject to a limitation, namely, that it must be analogous to trade or
business. The Supreme Court in many cases evolved certain working principles to provide
guidance in determining attributes and characteristics which would specify that an undertaking is
analogous to trade or business.

The first of such principles was mentioned in the case of State of Bombay Vs. Hospital
Mazdoor Sabha The Supreme Court of India held ―hospital‖ to be industry within the scope of
Section 2 (j) and relied upon the ―inclusive part‖ of the definition and also the definition of
employer under Sec. 2 (g) which includes an industry carried on by or under the authority of any
department of the Central Government or a State Government.

Further, in Bangalore Water Supply Vs A. Rajappa, a seven Judges Bench of the Supreme
Court exhaustively examined and considered the scope of ‗industry‘ and prescribed the Triple
test which has practically reiterated the test projected in Hospital Mazdoor Sabha case.

The Triple test laid down in the Bangalore Water Supply case are that where there is

a) systematic activity,

b) organized by co-operation between employer and employee (the direct and substantial
element is chimerical),

c) for the production and/or distribution of goods and services calculated to satisfy human
wants and wishes, prima facie, there is an ―industry‖.

i. Absence of profit motive or gainful objective is irrelevant, be the venture in

public, joint, private or other sectors.

ii. The true focus is functional and the decision test is the nature of the activity
with special emphasis on the employer and employee relations.

d) If the organization is a trade or business, it does not cease to be one because of

philanthropy animating the undertaking.

In view of the above points and the consequences of the decision given in the Bangalore Water
Supply case activities that such as professions, clubs, educational institutions, cooperatives,
Researc institutes, charitable projects and other kindered adventures if they fulfill the above
Triple test, cannot be exempted from the scope of section 2(j) of the Industrial Disputes Act,
1947.

NOTES

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LABOUR AND INDUSTRIAL LAW
QUEST:- WHAT IS MEANT BY INDUSTRIAL DISPUTE AND INDIVIDUAL DIPUTE?

ANS:- INDUSTRIAL DISPUTE SECTION 2(K)

The important objective of the Industrial Disputes Act, 1947 as pointed out in the preamble is ―to
make provision for the investigation and settlement of industrial disputes‖. Therefore the
definition of ―industrial dispute‖ has got special significance.

The following are the important elements to constitute an industrial dispute

1. A dispute or difference between

a) employers and employers, or

b) employers and workmen, or

c) workmen and workmen;

2. The dispute or difference should be connected with

(a) employment or non – employment, or

(b) terms of employment, or

(c) conditions of labour of any person;

3. The dispute may be in relation to any workmen or workmen or any other person in whom they
are interested as a body.

The expression ―of any person‖ appearing in the last line of section 2(k) means that he may not
be a workman but he may be someone in whose employment, terms of employment or conditions
of labour the workman as a class have a true and substantial interest. Industrial dispute is not
restricted to dispute between employer and recognized majority union it also means difference
between employer and workmen including a minority union.( Workmen of Dimakuchi Tea
Estate Vs Management of Dimakuchi Tea Estate, AIR, 1958 SC)

The terms ‗employment‘ and ‗non–employment‘ include retrenchment as well as refusal to

reinstate.

The use of the word ―non – employment raised a question whether an employee who had been
dismissed, removed, discharged, retrenched can be reinstated by an order of a Industrial
Tribunal.

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LABOUR AND INDUSTRIAL LAW
INDIVIDUAL DISPUTE WHEN BECOMES INDUSTRIAL DISPUTE:

The Supreme Court of India examined this concept in different cases and observed in the case of
News Papers Limited Vs State Industrial U.P., and others Whether a single man who is
aggrieved by an action can raise industrial dispute.

The Section 2(k) of the Industrial Disputes Act, 1947 provides that a dispute between employer
and workmen i.e. plural form has been used, the Supreme Court of India specifically observed
that ―before insertion of section 2(A) of the Act an individual dispute could not per say be an
industrial dispute, but it could become one if taken up by the trade union or a number of
workmen. The provision of the Act leads to the conclusion that its applicability to an individual
as oppose to dispute involving a group of workmen is excluded unless it acquires the general
characteristic of an industrial dispute viz., the workmen as a body or a considerable section of
them make common cause within the individual workmen‖.

The following are some of the principles laid to examine the nature of the dispute by the Courts.

1. The dispute must affect large group of workmen or employers who have community of
interest and the rights of these workmen must be affected as a class in the interest of common
good. In other words, considerable section of employees should necessarily make common cause
with the general lot.

2. The dispute should invariably be taken up by the industry union or by an appreciable number
of workmen.

3. There must be a concentrated demand by the workers for redress and the grievance becomes
such that if turns from individual complaint into the general complaint.

4. The parties to the dispute must have direct and substantial interest in the dispute, i.e., there
must be some nexus between the union which espouses the cause of the workmen and the
dispute. Moreover, the union must fairly claim a representative character.

5. If the dispute was in its inception an individual dispute and continued to be such till the date
of its reference by the Government for adjudication, it could not be converted into an industrial
dispute by support to the reference even of workmen interested in the dispute.

QUEST: WHAT IS THE RELATION BETWEEN WORKMAN AND EMPLOYEE?

ANS:- WORKMEN -

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LABOUR AND INDUSTRIAL LAW
Since the Industrial Disputes Act, 1947 is a piece of beneficial legislation, the courts have
enlarged the scope and applicability of this Act by giving wide interpretation to the term
"workman."

Section 2(s) defines workman as any person (including an apprentice) employed in any
industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory
work, for hire or reward, terms of employment be express or implied and includes any
such person who has been dismissed, discharged or retrenched in connection with, or as a
consequence of dispute.

It excludes persons employed in army/Navy/Air Force/Police and those employed in mainly

managerial or administrative, supervisory capacity and drawing wages of more than INR 6500.

The Courts have interpreted this definition and have identified various determining factors to
know whether a person is "workman" or not.

The factors which should be considered are

(a) whether there is a Master-Servant relationship;

(b) when a person is performing various functions which overlap in their characteristics, the
nature of main function for which the claimant is employed should be considered;

(c) work is either manual, skilled, unskilled, technical operational, clerical or supervisory in
nature, the mere fact that it does not fall within the exception would not render a person to be
workman; and

(d) that the exceptions are not applicable.

Further, designation, source of employment, method of recruitment, terms and conditions of

employment/contract of service, the quantum of wages/pay and the mode of payment should not
be considered while determining whether a person can be termed as "workman."

DISPUTE RELATING TO WORKMEN EMPLOYED BY THE CONTRACTOR.

In some cases, the workman may not be the direct employee of an organization but a workman
employed to perform certain works or duties under a contractor. In this regard certain cases are
mentioned. A few of them are given below.

The leading case on this point is the Standard Vacuum Refinery Company of India Vs Their
workmen and another. In this case the workmen under the contractor as said by the employers,
contractor‘s men were not entitled to any privilege and there was no security of employment by
which the workmen disputed raising an industrial dispute demanding the abolition of contract
system. The Supreme Court held in this case that the dispute to be an industrial dispute because

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LABOUR AND INDUSTRIAL LAW
there was a real and substantial disputes between the workmen and the company on the question
of contract labor for the work of the company.

NOTES

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LABOUR AND INDUSTRIAL LAW
QUEST:- WHAT ARE THE INDUSTRIAL DISPUTE SETTLEMENT MACHINERIES
FOR SETTLING INDUSTRIAL DISPUTES IN INDIA?

ANS:-

Some of the major industrial dispute settlement machinery are as follows:

1. Conciliation

2. Court of Inquiry

3. Voluntary Arbitration

4. Adjudication.

This machinery has been provided under the Industrial Disputes Act, 1947. It, in fact, provides a
legalistic way of setting the disputes. As said above, the goal of preventive machinery is to create
an environment where the disputes do not arise at all.

1. CONCILIATION:

Conciliation, is a form of mediation. Mediation is the act of making active effort to bring two
conflicting parties to compromise. Mediation, however, differs from conciliation in that whereas
conciliator plays only a passive and indirect role, and the scope of his functions is provided
under the law, the mediator takes active part and the scope of his activities are not subject to any
statutory provisions.

The Industrial Disputes Act, 1947 provides for conciliation, and can be utilised either by
appointing conciliation officers (permanently or for a limited period) or by constituting a board
of conciliation. This conciliation machinery can take a note of a dispute or apprehend dispute
either on its own or when approached by either party.

2. COURT OF INQUIRY:

In case of the failure of the conciliation proceedings to settle a dispute, the government can
appoint a Court of Inquiry to enquire into any matter connected with or relevant to industrial
dispute. The court is expected to submit its report within six months. The court of enquiry may
consist of one or more persons to be decided by the appropriate government.

On failure of conciliation proceedings, the conciliation officer many persuade the parties to refer
the dispute to a voluntary arbitrator. Voluntary arbitration refers to getting the disputes settled
through an independent person chosen by the parties involved mutually and voluntarily.

In other words, arbitration offers an opportunity for a solution of the dispute through an arbitrator
jointly appointed by the parties to the dispute. The process of arbitration saves time and money
of both the parties which is usually wasted in case of adjudication.
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LABOUR AND INDUSTRIAL LAW
3. VOLUNTARY ARBITRATION:

Voluntary arbitration became popular as a method a settling differences between workers and
management with the advocacy of Mahatma Gandhi, who had applied it very successfully in the
Textile industry of Ahmedabad. However, voluntary arbitration was lent legal identity only in
1956 when Industrial Disputes Act, 1947 was amended to include a provision relating to it.

The provision for voluntary arbitration was made because of the lengthy legal proceedings and
formalities and resulting delays involved in adjudication. It may, however, be noted that
arbitrator is not vested with any judicial powers.

He derives his powers to settle the dispute from the agreement that parties have made between
themselves regarding the reference of dispute to the arbitrator. The arbitrator should submit his
award to the government. The government will then publish it within 30 days of such
submission. The award would become enforceable on the expiry of 30 days of its publication.

Voluntary arbitration is one of the democratic ways for setting industrial disputes. It is the best
method for resolving industrial conflicts and is a close‘ supplement to collective bargaining. It
not only provides a voluntary method of settling industrial disputes, but is also a quicker way of
settling them.

It is based on the notion of self-government in industrial relations. Furthermore, it helps to curtail

the protracted proceedings attendant on adjudication, connotes a healthy attitude and a developed
outlook; assists in strengthening the trade union movement and contributes for building up sound
and cordial industrial relations.

4. ADJUDICATION:

The ultimate remedy for the settlement of an industrial dispute is its reference to adjudication by
labour court or tribunals when conciliation machinery fails to bring about a settlement.
Adjudication consists of settling disputes through intervention by the third party appointed by the
government. The law provides the adjudication to be conducted by the Labour Court, Industrial
Tribunal of National Tribunal.

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LABOUR AND INDUSTRIAL LAW
A dispute can be referred to adjudication if hot the employer and the recognised union agree to
do so. A dispute can also be referred to adjudication by the Government even if there is no
consent of the parties in which case it is called ‗compulsory adjudication‘. As mentioned above,
the dispute can be referred to three types of tribunals depending on the nature and facts of
dispute in questions.

These include:

(a) Labour courts,

(b) Industrial tribunals, and

(c) National tribunals.

NOTES

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LABOUR AND INDUSTRIAL LAW
QUEST:- WHAT DO YOU UNDERSTAND BY THE TERM "AWARD"?

ANS: - 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].

PERSONS ON WHOM SETTLEMENTS AND AWARDS ARE BINDING.-

1) A settlement arrived at by agreement between the employer and workman otherwise than in
the course of conciliation proceeding shall be binding on the parties to the agreement.

2) an arbitration award which has become enforceable shall be binding on the parties to the
agreement who referred the dispute to arbitration.

3) A settlement arrived at in the course of conciliation proceedings underthis Act or an

arbitration award in a case where a notification has been issued under sub-section (3A) of
Section 10A] or an award of a Labour Court, Tribunal or National Tribunal] which has become
enforceable] shall be binding on-

(a) all parties to the industrial dispute;

(b) all other parties summoned to appear in the proceedings

as parties to the dispute, unless the Board, arbitrator,Labour Court, Tribunal or National
Tribunal], as the case may be, records the opinion that they were so summoned without proper
cause;

(c) where a party referred to in clause (a) or clause (b) is an employer, his heirs,
successors or assigns in respect of the establishment to which the dispute relates;

(d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who
were employed in the establishment or part of the establishment, as the case may be, to which the
dispute relates on the date of the dispute and all persons who subsequently become employed in
that establishment or part.

PERIOD OF OPERATION OF SETTLEMENTS AND AWARDS

(1) A settlement shall come into operation on such date as is agreed upon by the parties to the
dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is
signed by the parties to the dispute.

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LABOUR AND INDUSTRIAL LAW
(2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no
such period is agreed upon, for a period of six months 104[from the date on which the
memorandum of settlement is signed by the parties to the dispute], and shall continue to be
binding on the parties after the expiry of the period aforesaid, until the expiry of two months
from the date on which a notice in writing of an intention to terminate the settlement is given by
one of the parties to the other party or parties to the settlement.

(3) An award shall, subject to the provisions of this section, remain in operation for a period of
one year [from the date on which the award becomes enforceable under section 17A]:

PROVIDED that the appropriate government may reduce the said period and fix such period as it
thinks fit:

PROVIDED FURTHER that the appropriate government, may, before expiry of the said period,
extend the period of operation by any period not exceeding one year at a time as it thinks fit so,
however, that the total period of operation of any award does not exceed three years from the
date on which it came into operation.

(4) Where the appropriate government, whether of its own motion or on the application of any
party bound by the award, considers that since the award was made, there has been a material
change in the circumstances on which it was based, the appropriate government may refer the
award or part of it to a Labor Court, if the award was that of a Labor Court or to a Tribunal, if the
award was that of a Tribunal or of a National Tribunal], for decision whether the period of
operation should not, by reason of such change, be shortened and the decision of Labor Court or
the Tribunal, as the case may be] on such reference shall be final.

(5) Nothing contained in sub-section (3) shall apply to any award which by its nature, terms or
other circumstances does not impose, after it has been given effect to, any continuing obligation
on the parties bound by the award.

(6) Notwithstanding the expiry of the period of operation under sub-section (3), the award shall
continue to be binding on the parties until a period of two months has elapsed from the date on
which notice is given by any party bound by the award to the other party or parties intimating its
intention to terminate the award.

No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given by a
party representing the majority of persons bound by the settlement or award, as the case may be.

NOTES

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QUEST:- EXPLAIN " WHO ARE THE AUTHORITIES UNDER THIS ACT" AND
POINT OUT THEIR DUTIES?

ANS:- WORKS COMMITTEE:- In the case of any industrial establishment in which one
hundred or more workmen are employed or have been employed on any day in the preceding
twelve months, the appropriate Government may by general or special order require the
employer to constitute in the prescribed manner a Works Committee consisting of
representatives of employers and workmen engaged in the establishment, so however that the
number of representatives of workmen on the Committee shall not be less than the number of
representatives of the employer. The representatives of the workmen shall be chosen in the
prescribed manner from among the workmen engaged in the establishment and in consultation
with their trade union, if any, registered under the Indian Trade Unions Act, 1926 (16 of 1926).

DUTIES OF WORKS COMMITTEE:-

It shall be the duty of the Works Committee

 to promote measures for securing

 TO preserveg amity and good relations between the employer and workmen and, to that
end, to comment upon matters of their common interest or concern and
 endeavour to compose any material difference of opinion in respect of such matters.

CONCILIATION OFFICERS:- (1) The appropriate Government may, by notification in the

Official Gazette, appoint such number of persons as it thinks fit, to be Conciliation Officers,
charged with the duty of mediating in and promoting the settlement of industrial disputes.

(2) A Conciliation Officer may be appointed for a specified area or for specified industries in a
specified area or for one or more specified industries and either permanently or for a limited
period.
DUTIES OF CONCILIATION OFFICERS:- (1) Where any industrial dispute exists or is
apprehended, the conciliation officer may, or where the dispute relates to a public utility service
and a notice under shall, hold conciliation proceedings in the prescribed manner.

(2) The Conciliation Officer shall, for the purpose of bringing about a settlement of the dispute,
without delay, investigate the dispute and all matters affecting the merits and the right settlement
thereof and may do all such things as he thinks fit for the purpose of inducing the parties to come
to a fair and amicable settlement of the dispute.

(3) If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of
the conciliation proceedings the conciliation officer shall send a report thereof to the appropriate
Government [or an officer authorised in this behalf by the appropriate Government] together
with a memorandum of the settlement signed by the parties to the dispute.

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LABOUR AND INDUSTRIAL LAW
(4) If no such settlement is arrived at, the conciliation officer shall, as soon as practicable after
the close of the investigation, send to the appropriate Government a full report setting forth the
steps taken by him for ascertaining the facts and circumstances relating to the dispute and for
bringing about settlement thereof, together with a full statement of such facts and circumstances,
and the reasons on account of which, in his opinion, a settlement could not be arrived at.

(5) If, on a consideration of the report referred to in sub-section (4), the appropriate Government
is satisfied that there is a case for reference to a Board, [Labour Court, Tribunal or National
Tribunal],it may make such reference. Where the appropriate Government does not make such a
reference it shall record and communicate to the parties concerned its reasons therefor.

(6) A report under this section shall be submitted within fourteen days of the commencement of
the conciliation proceedings or within such shorter period as may be fixed by the appropriate
Government:

LABOUR COURT:- Labour Courts are constituted by State Governments u/s 7. It will be
presided over by Presiding Officer‗.

The Labour Court has powers in respect of

* Interpretation of Standing Orders

* Violation of Standing Orders

* Discharge or dismissal of a workman

* Withdrawal of any customary concession or privilege

* Illegality or otherwise of a strike or lock-out

* Other matters which are not under Industrial Tribunal.

INDUSTRIAL TRIBUNAL :-Industrial Tribunal is constituted by State Government u/s 7A.

The tribunal will be presided over by Presiding Officer.

The Industrial Tribunal has powers in respect of

* Wages, including period and mode of payment

* Compensatory and other allowances

* Hours of work and rest intervals

* Leave with wages and holidays

* Bonus, profit sharing, provident fund and gratuity

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LABOUR AND INDUSTRIAL LAW
* Shift working changes

* Classification by grades

* Rules of discipline

* Rationalization and retrenchment of workmen.

NATIONAL TRIBUNAL:-National Tribunal is formed by Central Government for

adjudication of industrial disputes of national importance or where industrial establishments
situated in more than one States are involved. [section 7B].

DUTIES OF LABOUR COURTS, TRIBUNALS AND NATIONAL TRIBUNALS:- Where

an industrial dispute has been referred to a Labour Court, Tribunal or National Tribunal for
adjudication, it shall hold its proceedings expeditiously and shall, [within the period specified in
the order referring such industrial dispute or the further period extended under the second
proviso to sub-section (2-A) of Section 10], submit its award to the appropriate Government.]

REFERENCE OF MATTERS BY GOVT. :-Appropriate Government can refer any dispute to

Board of Conciliation, Court of Enquiry, Labour Court or Industrial Tribunal. [section 10(1)].

Appropriate Government means

* Central Government in case of railways, docks, IFCI, ESIC, LIC, ONGC, UTI, Airport
Authority, industry carried on by or under authority of Central Government

* State Government in case of other industrial disputes [section 2(a)]

NOTES

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QUEST:- EXPLAIN THE PROCEDURE FOLLOWED BY THE AUTHORITIES?

ANS:-

PROCEDURE AND POWER OF CONCILIATION OFFICERS, BOARDS, COURTS

AND TRIBUNALS:-

(1) Subject to any rules that may be made in this behalf, an arbitrator, a Board, Court, Labour
Court, Tribunal or National Tribunal shall follow such procedure as the arbitrator or other
authority concerned may think fit].

(2) A conciliation officer or a member of a Board, [or Court or the presiding officer of a Labour
Court, Tribunal or National Tribunal] may, for the purpose of inquiry into any existing or
apprehended industrial dispute, after giving reasonable notice, enter the premises occupied by
any establishment to which the dispute relates.

(3) Every Board, Court, [Labour Court, Tribunal and National Tribunal] shall have the same
powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), when
trying a suit, in respect of the following matters, namely-

(a) Enforcing the attendance of any person and examining him on oath;

(b) Compelling the production of documents and material objects;

(c) Issuing commissions for the examination of witnesses;

(d) In respect of such other matters as may be prescribed;

and every inquiry or investigation by a Board, Court, [Labour Court, Tribunal or or National
Tribunal] shall be deemed to be a judicial proceeding, within the meaning of Sections 193 and
228 of the Indian Penal Code (45 of 1860).

(4) A Conciliation Officer may enforce the attendance of any person for the the purpose of
examination and inspect any document which he has ground for considering to be relevant to the
industrial dispute (5) A Court, Labour Court, Tribunal or National Tribunal may, if it so thinks
fit, appoint one or more persons having special knowledge of the matter under consideration as
assessor or assessors to advise it in the proceeding before it.

(6) All conciliation officers, members of a Board or Court and the presiding officers of a Labour
Court, Tribunal or National Tribunal shall be deemed to be public servants within the meaning of
Section 21 of the Indian Penal Code.

POWERS OF LABOUR COURTS, TRIBUNALS AND NATIONAL TRIBUNALS

Where an Industrial dispute relating to the discharge or dismissal of a workman has been referred
to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the
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LABOUR AND INDUSTRIAL LAW
adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is
satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside
the order of discharge or dismissal and direct reinstatement of the workman on such terms and
conditions, if any, as it thinks fit, or give such other relief to the workman including the award of
any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may
require.

POWERS OF THE COURTS :-section 11A- the Labour Court and Tribunal have wide powers.

 They can reappraise evidence.

 They can also see whether the punishment is disproportionate to the gravity of the
misconduct proved. If the Court or Tribunal is of the view that the punishment is
disproportionate, it can impose lesser punishment or even set aside the termination and
order reinstatement.
 If Court orders reinstatement and employer files appeal in Higher Court, the employer is
required to pay full wages to the employee during the period of pendency of proceedings
with High Court or Supreme Court.
 However, if the workman was gainfully employed elsewhere, Court can order that
payment of such wages is not to be made. [section 17B]

NOTES
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QUEST:- EXPLAIN THE TERM STRIKE , CLOSURE AND LOCK OUT AND DISCUSS
ITS PROVISIONS UNDER INDUSTRIAL DISPUTE ACT, 1947?

ANS:-

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)].

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.

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

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

LLEGAL 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].

PROHIBITION OF FINANCIAL AID TO ILLEGAL STRIKES AND LOCK-OUTS.-

No person shall knowingly expend or apply any money in direct furtherance or support of any
illegal strike or lock-out .

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LABOUR AND INDUSTRIAL LAW
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.

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

Govt. permission required, if >=100 workersLarge 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).

NOTES

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LABOUR AND INDUSTRIAL LAW
Q. WHAT DO YOU UNDERSTAND BY THE TERM ' RETRENCHMENT' UNDER THE
PROVISION INDUSTRIAL DISPUTE ACT, 1974?

Retrenchment is something akin to downsizing. When a company or government goes through

retrenchment, it reduces outgoing money or expenditures or redirects focus in an attempt to
become more financially solvent. Many companies that are being pressured by stockholders or
have had flagging profit reports may resort to retrenchment to shore up their operations and
make them more profitable. Although retrenchment is most often used in countries throughout
the world to refer to layoffs, it can also label the more general tactic of cutting back and
downsizing.

Retrenchment: The Legal Aspect

The above is a very informal definition of retrenchment. Retrenchment has more to it than just
termination of employment by a employer. There are a host of legal provisions which govern the
practice of retrenchment. Section 2 (oo) of the Industrial Disputes Act, 1947 defines
Retrenchment as -

‖ the termination by the employer of the service of a workman for any reason whatsoever,
otherwise than as a punishment inflicted by way of disciplinary action, but does not include -

(a) voluntary retirement of the workman, or

(b) retirement of the workman on reaching the age of superannuating if the contract of
employment between the employer and the workman concerned contains a stipulation in that
behalf; or

(b) termination of the service of the workman as a result of the non-removal of the contract of
employment between the employer and the workman concerned on its expiry or of such contract
being terminated under a stipulation in that behalf contained therein; or

(c) termination of the service of a workman on the ground of continued ill-health;

The definition of retrenchment was not included in the Industrial Disputes Act, 1947 in its
original form. It was inserted by Amendment to the Act in 1953. Thus the Industrial Disputes A
ct, 1947 provides for certain conditions in which the termination of employment would not be

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LABOUR AND INDUSTRIAL LAW
considered as retrenchment. It is intersting to note here that the provision (bb) to Section 2(oo)
was inserted later through the Amendment Act 49 of 1984. Section 2(oo)(bb) provides that
termination of employment on non - renewal of employment agreement upon its expiry shalll not
be considered as ‗retrenchment‘. Before this provision was added to the Act, the Courts were of
the opinion that non - renewal of such contracts of employment would constitute retrenchment
for the purpose of this Act. This opinion was expressed by the Supreme Court in Hindustan
Aluminum Corporation v. State of Orissa. It was later realized that the judgment was a bad
judgment and the provision (bb) was subsequently added to the section.

Some landmark case laws

The Supreme Court in Byram Pestonji Gariwala v. Union Bank of India and othershad
restricted the definition of ‗Retrenchment‘ under S.2(oo)(bb) to occur only when there is a
‗discharge of excess labor‘ by the employer. Later the Supreme Court in State Bank of India v.
N. Sundara Money, Punjab Land Development and Reclamation Corporation Ltd., Chandigarh
v. Presiding Officer, Labour Court, Chandigarh and subsequent decisions rejected the narrow
interpretation adopted by the Court in the earlier decision and held that any retrenchment, as
defined in Section 2(oo), means termination by the employer of the service of a workman for any
reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action and
those expressly excluded by Clauses (a), (b) and (c) of the definition. In view of these decisions,
it cannot be said that retrenchment means termination by the employer of the service of a
workman as surplus labor.

The Supreme Court excluded closure from the scope of retrenchment in Hariprasad
Shivshankar Shukla vs. A.D. Divelkar. Further, in the State Bank of India vs. Sundara Money,
the Supreme Court adopted the literal meaning of retrenchment, which is exhaustive and
comprehensive and held that the expression "for any reason whatsoever" was very wide and
admitted almost no exceptions. So, retrenchment means termination of a worker's services for
any reason whatsoever, other than those specified in Section 2(oo).

The Bombay High Court, in State Bank of India v. Sundaramony held that wherein the court
held that an analysis of the definition reveals four essential ingredients, namely

1) There must be a termination of the service of a workman.

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LABOUR AND INDUSTRIAL LAW
2) The termination must be by the employer,

3) For any reason whatsoever, and

4) Otherwise than as by way of punishment inflicted by way of disciplinary action.

Procedure for calculation of retrenchment compensation

While effecting retrenchment of the workmen, it is obligatory on the part of the employer to pay
retrenchment compensation at the rate of 15 days wages (for every completed yaer) to be
calculated at the last drawn salary of an employee. The calculation of compenstation is to be
based from the date of appointment and in case an employee has completed 240 days, he will be
entitled to 15 days retrenchment compensation besides one month‘s noice or salary in lieu
thereof as if he has worked for one year. 240 days includes Sundays or off days as well as
festival or national holidays.

In case an employee has worked for more than one year, the procedure is that in case the
subsequent period of one year is less than six months then it will be counted as one year for
calculation of compensation. While making calculations the period of notice is also to be taken
into consideration.

Provisions related to retrenchment

Now that the law is settled on what retrenchment is, let us proceed to the provisions contained in
the Industrial Disputes Act, 1947, regarding the procedure to be followed in cases of
retrenchment.

Condition precedent to retrenchment

Section 25F provides the conditions precedent to retrenchment. According to this section the
employer must satisfy the following conditions before retrenching an employee employed for a
period of continuous period of not less than one year -

(a) the workman has been given one months notice in writing indicating the reasons for
retrenchment and the period of notice has expired, or the workman has been paid in lieu of such
notice, wages for the period of the notice:

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LABOUR AND INDUSTRIAL LAW

(b) the workman has been paid, at the time of retrenchment, compensation which shall be
equivalent to fifteen days average pay [for every completed year of continuous service] or any
part thereof in excess of six months; and

(c) notice in the prescribed manner is served on the appropriate Government [or such authority as
may be specified by the appropriate Government by notification in the Official Gazette].

Calculation of average pay is done by dividing the last drawn monthly salary by 25 and then
multiplying the dividend by 15 for every completed year of continuous work.

Section 25N also lays down the conditions precedent to retrenchment -

1) No workman employed in any industrial establishment to which this Chapter applies, who has
been in continuous service for not less than one year under an employer shall be retrenched by
that employer until,-

(a) the workman has been given three months notice in writing indicating the reasons for
retrenchment and the period of notice has expired, or the workman has been paid in lieu of such
notice, wages for the period of the notice; and

(b) the prior permission of the appropriate Government or such authority as may be specified by
that Government by notification in the Official Gazette (hereafter in this section referred to as the
specified authority) has been obtained on an application made in this behalf.

(2) An application for permission under sub-section (1) shall be made by the employer in the
prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such
application shall also be served simultaneously on the workmen concerned in the prescribed
manner.

(3) Where an application for permission under sub-section (1) has been made, the appropriate
Government or the specified authority, after making such inquiry as it thinks fit and after giving
a reasonable opportunity of being heard to the employer, the workmen concerned and the
persons interested in such retrenchment, may, having regard to the genuineness and adequacy of
the reasons stated by the employer, the interests of the workmen and all other relevant factors, by

27
LABOUR AND INDUSTRIAL LAW
order and for reasons to be recorded in writing, grant or refuse to grant such permission and a
copy of such order shall be communicated to the employer and the workmen.

(4) Where an application for permission has been made under sub-section (1) and the appropriate
Government or the specified authority does not communicate the order granting or refusing to
grant permission to the employer within a period of sixty days from the date on which such
application is made, the permission applied for shall be deemed to have been granted on the
expiration of the said period of sixty days.

Procedure of retrenchment

Section 25G lays down the procedure of retrenchment. Where any workman in an industrial
establishment, who is a citizen of India, is to be retrenched and he belongs to a particular
category of workmen in that establishment, in the absence of any agreement between the
employer and the workman in this behalf, the employer shall ordinarily retrench the workman
who was the last person to be employed in that category, unless for reasons to be recorded the
employer retrenches any other workman. The employer is also required to maintain a seniority
list of the workmen. The system of last in first out is to be followed in retrenching workmen.

Conclusion

Globalization induces labour market flexibility which India is yet to attain due to its unyielding
labour law system. It has started making attempts to achieve full employment of all resources
and optimal social welfare but several issues are left unanswered, including retrenchment.

Ordinarily, retrenchment is discharge of surplus labour by the employer. According to Section

2(oo) of the Industrial Disputes Act, 1947 (IDA), retrenchment is the termination of service of a
worker "for any reason whatsoever", but excludes termination by way of punishment inflicted
pursuant to disciplinary action, voluntary retirement, retirement on reaching the age of
superannuation if the contract of employment contained such stipulation, non-renewal of the
contract of employment, and continued ill health.

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LABOUR AND INDUSTRIAL LAW
Retrenchment may be due to inevitable reasons including rationalization or installation of new
labour-saving machinery. An employer has a right to organize his business in any lawful manner
he considers best and courts cannot question its propriety. If re-organization results in surplus
employees, no employer is expected to carry their burden. There is consensus of judicial opinion
in deciding retrenchment on the facts and circumstances of each case.

Courts have decided that termination of services due to loss of confidence in an employee,
inefficiency or misconduct does not amount to retrenchment. Termination for unauthorized
absence from duty, discontinuance of service of casual, daily employees, invalid initial
appointment, compulsory retirement, and closure or transfer of business have been held to be
retrenchment.

Indian employers have responded to the restrictive retrenchment laws in several ways including
the greater use of contract, temporary and/or casual labour, the use of golden handshakes, and
setting up production in states where labour is not organized. The government is pursuing
privatization and disinvestment. Any anomaly in retrenchment laws, which address the basic
functioning of companies, needs the immediate attention of lawmakers.

Notes

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

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LABOUR AND INDUSTRIAL LAW
Q. WHAT DO YOU UNDERSTAND BY THE TERM ' LAY-OFF' UNDER THE
PROVISION INDUSTRIAL DISPUTE ACT, 1974?

Section 2(kkk) - Lay off

Lay-off means failure, refusal, or inability of a employer to give employment to a workman

whose name is on the muster rolls of his industrial establishment and who has not been
retrenched, on the account of lack of coal, lack of power, lack of raw material, over stocking of
output, failure of machinery, due to natural calamity, or due to any other connected reason.

Central India Spinning, Weaving, and Manufacturing Co. Ltd. Nagpur vs State Industrial
Court 1959 - Held that the words, "failure, refusal, or inability" are key to the definition and
means that the unemployment is due to a cause independent of any action or inaction of the
workmen.

 Temporary
 Due to reasons beyond employer's control
 Due to economic reasons
 non-intentional

Rights and Obligations Resulting from lay-off

Layoff is not a right conferred upon the employer but an obligation that the unemployment is
temporary in nature and in a reasonable time the laid off worker will be restored his position.
However, there is no indication regarding the time layoff will continue.

25c. Right Of Workmen Laid Off For Compensation

Whenever a workman (other than a badli workman or a casual workman) whose name is borne
on the muster rolls of an industrial establishment and who has completed not less than one year
of continuous service under an employer is laid off, whether continuously or intermittently, he
shall be paid by the employer for all days during which he is so laid off, except for such weekly
holidays as may intervene, compensation which shall be equal to fifty per cent of the total of the
basic wages and dearness allowance that would have been payable to him had he not been so laid
off :

30
LABOUR AND INDUSTRIAL LAW
Provided that if during any period of twelve months, a workman is so laid-off for more than
forty-five days, no such compensation shall be payable in respect of any period of the lay-off
after the expiry of the first forty-five days, if there is an agreement to that effect between the
workman and the employer :

Provided further that it shall be lawful for the employer in any case falling within the foregoing
proviso to retrench the workman in accordance with the provisions contained in section 25F at
any time after the expiry of the first forty-five days of the lay-off and when he does so, any
compensation paid to the workman for having been laid-off during the preceding twelve months
may be set off against the compensation payable for retrenchment.

Explanation : "Badli workman" means a workman who is employed in an industrial

establishment in the place of another workman whose name is borne on the muster rolls of the
establishment, but shall cease to be regarded as such for the purposes of this section, if he has
completed one year of continuous service in the establishment.

25m. Prohibition Of Lay-Off -

(1) No workman (other than a badli workman or a casual workman) whose name is borne on the
muster-rolls of an industrial establishment to which this Chapter applies shall be laid-off by his
employer except with the prior permission of the appropriate Government or such authority as
may be specified by that Government by notification in the Official Gazette (hereinafter in this
section referred to as the specified authority), obtained on an application made in this behalf
unless such lay-off is due to shortage of power or to natural calamity, and in the case of a mine,
such lay-off is due also to fire, flood, excess of inflammable gas or explosion.

(2) An application for permission under sub-section (1) shall be made by the employer in the
prescribed manner stating clearly the reasons for the intended lay-off and a copy of such
application shall also be served simultaneously on the workmen concerned in the prescribed
manner.

(3) Where the workmen (other than badli workmen or casual workmen) of an industrial
establishment, being a mine, have been laid-off under sub-section (1) for reasons of fire, flood or
excess of inflammable gas or explosion, the employer, in relation to such establishment, shall,

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LABOUR AND INDUSTRIAL LAW
within a period of thirty days from the date of commencement of such lay-off, apply, in the
prescribed manner, to the appropriate Government or the specified authority for permission to
continue the lay-off.

(4) Where an application for permission under sub-section (1) or sub-section (3) has been made
the appropriate Government or the specified authority, after making such inquiry as it thinks fit
and after giving a reasonable opportunity of being heard to the employer, the workmen
concerned and the persons interested in such lay-off, may, having regard to the genuineness and
adequacy of the reasons for such lay-off, the interests of the workmen and all other relevant
factors, by order and for reasons to be recorded in writing, grant or refuse to grant such
permission and a copy of such order shall be communicated to the employer and the workmen.

(5) Where an application for permission under sub-section (1) or sub-section (3) has been made
and the appropriate Government or the specified authority does not communicate the order
granting or refusing to grant permission to the employer within a period of sixty days from the
date on which such application is made, the permission applied for shall be deemed to have been
granted on the expiration of the said period of sixty days.

(6) An order of the appropriate Government or the specified authority granting or refusing to
grant permission shall, subject to the provisions of sub-section (7), be final and binding on all the
parties concerned and shall remain in force for one year from the date of such order.

(7) The appropriate Government or the specified authority may, either on its own motion or on
the application made by the employer or any workman, review its order granting or refusing to
grant permission under sub-section (4) or refer the matter, or, as the case may be, cause it to be
referred, to a Tribunal for adjudication :

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass
an award within a period of thirty days from the date of such reference.

(8) Where no application for permission under sub-section (1) is made, or where no application
for permission under sub-section (3) is made within the period specified therein, or where the
permission for any lay-off has been refused, such lay-off shall be deemed to be illegal from the

32
LABOUR AND INDUSTRIAL LAW
date on which the workmen had been laid-off and the workmen shall be entitled to all the
benefits under any law for the time being in force as if they had not been laid-off.

(9) Notwithstanding anything contained in the foregoing provisions of this section, the
appropriate Government may, if it is satisfied that owing to such exceptional circumstances as
accident in the establishment or death of the employer or the like, it is necessary so to do, by
order, direct that the provisions of sub-section (1), or, as the case may be, sub-section (3) shall
not apply in relation to such establishment for such period as may be specified in the order.

(10) The provisions of section 25C (other than the second proviso thereto) shall apply to cases of
lay-off referred to in this section.

Explanation : For the purposes of this section, a workman shall not be deemed to be laid-off by
an employer if such employer offers any alternative employment (which in the opinion of the
employer does not call for any special skill or previous experience and can be done by the
workman) in the same establishment from which he has been laid-off or in any other
establishment belonging to the same employer, situate in the same town or village, or situate
within such distance from the establishment to which he belongs that the transfer will not involve
undue hardship to the workman having regard to the facts and circumstances of his case,
provided that the wages which would normally have been paid to the workman are offered for
the alternative appointment also.

Notes

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LABOUR AND INDUSTRIAL LAW
Q. WHAT DO YOU UNDERSTAND BY REGULATION OF MANAGEMENTS
PREROGATIVE DURING PENDENCY OF PROCEEDING?

Introduction

The object of the Industrial relations legislation in general is industrial peace and economic
justice. The prosperity of any industry is very much dependent upon its growing production. The
furtherance of such production is only possible if the industry functions uninterrupted. The
working of any industry without any hindrance largely depends upon the state policy so framed
or legislated for the very purpose. The factor which is to be taken into consideration for the
smooth functioning of industries is the relationship between the labour and the management.
Therefore what can be safely presumed is the very fact that any industrial legislation so
legislated necessarily aims at providing conditions congenial to the industrial peace. Besides the
Trade Unions Act, 1926, the Industrial Disputes Act, is the most important Act that govern
industrial relations in India.

Social and economic justice is the ultimate ideal for any industrial adjudication[ii] and the basis
for this ideal lies in the guiding principles of social welfare, common good and the directive
principles of state policy enshrined in the Constitution.[iii] The essential function of industrial
adjudication is to assist the State by helping a solution of industrial disputes.[iv] The two fold
objective behind any industrial adjudication is industrial peace and goodwill in industry so as to
place labour as well as capital on the same threshold. Industrial harmony helps in providing a
boost to the production which would invariably lead to strengthening the economy of the nation.
It is in lieu of the above mentioned that the Industrial Disputes Act, 1947 was legislated or
brought into force.

Noteworthy is the observation of Justice Krishna Iyer in the case of L.I.C of India v. D J
Bahadur where he has duly observed that the Industrial Dispute is a

―Benign measure which seeks to pre-empt industrial tensions, provide the mechanics of dispute
resolutions and set-up the necessary infrastructure so that the energies of partners in productions
may not be dissipated in counter-productive battles and assurance of industrial justice may create
a climate of goodwill.‖

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LABOUR AND INDUSTRIAL LAW

As illustrated by the preamble and long title of the Act, the Act was brought into existence for
the very purpose for providing a machinery and forum for the investigation and settlement of
disputes thereof. Furthermore the Apex Court in the case of Dimakuchi Tea Estate v. Dimakuchi
Tea State[vi] has attempted to lay down the objectives of the Act in clear terms. The court has
stated that the Act attempts to promote good relations between the employer and workmen,
secondly to investigate and settle industrial disputes, between employers and employees,
employers and workmen or workmen and workmen, with a right of representation by registered
trade union or a federation of trade unions or an association of employees. Thirdly, the Act also
aims at preventing illegal strikes and lock outs and provides relief to workmen in the matter of
lay-off and retrenchment.

In this paper the researcher will limit himself to only particular aspect of the Industrial Disputes
Act, 1947; the aspect being Section 33A of the said Act. Section 33A of the Act states that:

33A. Special provision for adjudication as to whether conditions of service, etc., changed
during pendency of proceedings. – Where an employer contravenes the provisions of section 33
during the pendency of proceedings before a conciliation officer, Board, an arbitrator, a Labour
Court, Tribunal or National Tribunal, any employee aggrieved by such contravention may, make
a complaint in writing, in the prescribed manner, –

(a) to such conciliation officer or Board, and the conciliation officer or Board shall take such
complaint into account in mediating in, and promoting the settlement of, such industrial dispute;
and

(b) to such arbitrator, Labour Court, Tribunal or National Tribunal and on receipt of such
complaint, the arbitrator, Labour Court, Tribunal or National Tribunal, as the case may be, shall
adjudicate upon the complaint as if it were a dispute referred to or pending before it, in
accordance with the provisions of this Act and shall submit his or its award to the appropriate
Government and the provisions of this Act shall apply accordingly.

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LABOUR AND INDUSTRIAL LAW
In this paper the researcher will attempt to deal with the legislative history of the Section which
will include the object and the legislative background of the Section in Part I. Following it up in
Part II the researcher will deal with the mode of application of the Section per se. Part III will
deal with the ambit of adjudication under the Section and in the last part the researcher will
attempt to put forth his suggestions as to what reformations should be brought about in the law.

Object of the Section

This section is designed to provide an instant remedy to a workman aggrieved by the

contravention of Sec.33. In other words, where an employer has contravened the provisions of
Sec.33, the aggrieved workman has been given the option to make a complaint in writing, to the
authority before which an industrial dispute is pending, with which the aggrieved workman is
concerned. By virtue of the Amending Act 46 of 1982, the complaint of such contravention can
be made not only to the adjudicatory authorities, but to the conciliatory authorities also. Where
the complaint is to a conciliatory authority it will take into account such complaint in the course
of mediating or promoting the settlement of the dispute. But where the complaint is made to an
adjudicatory authority i.e. to an arbitrator, labor court, tribunal or national tribunal, it will
adjudicate upon the dispute as if it is a dispute referred to or pending before it. Thus, the
workman is saved of the botheration of moving the government for referring this dispute for
adjudication for referring this dispute for adjudication which it may or may not refer.

Section 33A of the Act is attracted when the following conditions precedent are satisfied per se.
Firstly, that there should have been a contravention by the management, of the provisions of
Sec.33 of the Act and secondly, that the contravention should have been during the pendency of
the proceedings before the labor court, tribunal or national tribunal, as the case may be. Thirdly,
that the complainant should have been aggrieved by the contravention and lastly, that the
application should have been made to the labor court, tribunal or national tribunal in which the
original proceedings are pending. This provision enables a workman aggrieved by a wrongful
order passed against him in contravention of Sec.33, to move the authorities enumerated in it, for
redress of his grievances without recourse to Sec.10 of the Act.

MODE OF APPLICATION OF SECTION 33A

On contravention of Section 33

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The basic question that falls to be considered by the concerned authority in any complaint made
to the tribunal under Sec. 33A is whether there has been a contravention by the employer of the
provisions of Sec.33, and if it is in case found that there has been a contravention of the
provisions of Sec.33 then the occasion arrives for the authority to embark upon the exercise to
adjudicate about the matter so complained in the complaint, on its merits. Thus, a contravention
or a violation of the provisions of Sec.33 would be the justification for the authorities concerned,
to entertain an application under Sec.33A.

Before giving any relief to an aggrieved employee under this section, therefore, the authority has
first to determine that the employer‘s act fell within the ambit of one of the blanket prohibitions
of Sec.33. If the dispute pending adjudication has nothing to do with the alteration in conditions
of service complained of and if the alteration is not to the prejudice of the workman, the
application under Sec.33A will be wholly incompetent. Hence, a contravention of the provision
of Sec.33 is the foundation for the exercise of the power under Sec.33A of the Act. If this issue is
answered against the employee, nothing further can be done under Sec.33A of the Act.[xvi] In
other words, an application under Sec.33A without proof of a contravention of Sec.33 would be
incompetent.

Contravention of the provisions of Sec.33 for the purposes of Sec.33A, takes place where during
the pendency of an industrial dispute before a tribunal when the employer alters the working
conditions of the workmen under his service in contravention of Sec. 33(1)(a), or when the
employer alters the condition of service of a ‗protected workman‘, in contravention of
Sec.33(3)(a). Further the conditions which may lead to invoking the provisions of Sec.33A may
be when the employer discharges or punishes a workman, by dismissal or otherwise, for a
misconduct connected with the pending dispute, without obtaining a prior express permission in
writing, of the authority as stipulated under Sec. 33(i)(b).

When the employer discharges or punishes a workman for any form of misconduct not connected
with the pending dispute without obtaining a prior permission from the concerned authority then
the employee can also seek relief under this section. Thus, all the orders of punishment whether

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by dismissal or otherwise imposed on the workman for any misconduct unconnected with the
dispute are covered by Sec.33(2) and would require compliance with its provisions.

If an employer discharges or dismisses a workman, without making an application for the

permission of the authority for the proposed action of dismissal or discharge as stipulated under
Sec. 33(1) or without making an application for approval of the action of dismissal or discharge
and without paying one month‘s wages to the workman as required by the proviso to
Sec.33(2)(b), he contravenes the provisions of Sec.33. A withdrawal of the application before it
is heard in the forum or before any relief is decreed stands on the same threshold as not making
an application at all. Such a violation attracts the penal consequences of Sec.31(1) of the Act. It
also entitles the aggrieved workman to make a complaint under Sec.33A to the authorities,
instead of waiting for a reference of the dispute being made under Sec.10.

What is to be taken into due account at this juncture is that when the termination of the service of
a workman is automatic as a result of the employee‘s own act, such as resigning from the
employment, abandoning the job or over staying the sanctioned leave then there would be no
contravention of the provisions of Sec.33 of the Act. Similarly, if the workman who complains
under Sec. 33A is not a ‗workman concerned in the dispute‘ then there would be no
contravention.[xxi] Nor can a contravention take place when there is no ‗pendency‘ of a
proceeding before the concerned authority at the time of the alleged contravention.

Pendency

Noteworthy is the fact that not every violation of Sec.33 falls under the scope of Sec.33A. To
invoke this section, it must be established that the contravention complained of took place during
the pendency of a proceeding before any one of the authorities so mentioned above.[xxiii] In
simple parlance if at the time of alleging such a contravention of Sec.33 there exists no pendency
of a proceeding then the provisions of Sec. 33A are not attracted.[xxiv]

Before an adjudicatory authority can embark upon the adjudication on a complaint under this
section, it is imperative for it to confirm that there indeed was a pending proceeding before it in
respect of an industrial dispute. Furthermore, a decision on the question whether the pending
dispute was an industrial dispute must also precede any adjudication upon a complaint under
Sec. 33A of the Act.

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The use of the word ‗such‘ in this section does not imply that at the time when the complaint is
preferred by the aggrieved workman, the main dispute must be pending before the authority to
which the complaint is preferred; it clearly refers to the dispute which was referred to its
adjudication and it has no reference to the pendency of the main dispute.[xxvii] In other words it
is sufficient that at the time of the contravention of Sec. 33 the main dispute was pending before
the adjudicatory authority and it is not necessary that the dispute must continue to be pending to
the time of making the complaint.

COMPLAINT IN WRITING

A complaint under Sec.33A should adhere to the procedure so laid down in Rule 59 of the
Industrial Disputes (Central Rules) 1957. In the absence of a complaint with regard to any
violation of condition of service causing any detriment to his interests, the employee cannot
make a grievance of the same under Sec. 33 of the Act and the violation of Sec. 33A. In order to
avail the relief so provided under Sec. 33 of the Act the following requirements have to satisfied;
firstly, the workman should be a workman within the definition of workman under Sec. 2(s) of
the Act. Secondly, he should be a workman concerned in the pending dispute and lastly, he
should be aggrieved by the alleged contravention of Sec. 33 by the employer.

Workman concerned in the pending dispute

The expression workman includes all workmen on whose behalf the dispute has been raised as
well as those on who would be bound by the award to be made in the dispute. The expression
does not limit itself to merely mean a workman directly or immediately concerned. However
where a dispute referred is not a collective dispute, other workmen who are not parties to the
dispute are not workmen concerned in it. The question as to whether a particular workman was a
workman concerned in the dispute is a mixed question of fact and law. In an allegation so tabled
before the tribunal the workman should satisfy the tribunal by proving the nature of the dispute
pending before it and that he was a workman concerned in the pending dispute before asking the
tribunal to make finding on the question whether Sec. 33(2) has been contravened.

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Role of a trade union in representing a workman

A registered trade union to which the aggrieved employee belongs has no right to avail the relief
so provided under Sec. 33A on behalf of the employee; unless it has been expressly authorized to
do so.[xxxiv] The right to complain against the contravention of Sec. 33 has been conferred on
the employee aggrieved by such contravention. It is therefore only the employee who can avail
the relief so provided in the section. The onus to show that a union had no authority from the
aggrieved workman cannot be laid on the employer. The union must adduce evidence to show
that there has been an authority by the aggrieved workman authorizing it to file an application.

ADJUDICATION UNDER SECTION 33A

Jurisdiction

The rationale behind legislation of Sec. 33 and Sec. 33A is to provide protection of an employee
and a tribunal has jurisdiction to do complete justice between the parties with regard to the
matter in dispute and also give such relief as the nature of the case may require.[xxxvi] The basic
object of these two sections broadly speaking is to protect the workmen concerned in the
disputes which form the subject matter of the pending conciliation proceedings or proceedings
by way of reference under Sec. 10 of the Act and to bring about the resolution of such disputes in
a peaceful manner.

In furtherance of the above stated objective a ban subject to certain conditions has been imposed
by Sec. 33 on the ordinary right of the employer to alter the terms of his employees‘ service to
their prejudice or to determine their services under the general law governing the contract of
employment, and Sec. 33A provides for a relief against complaints by aggrieved workmen
considering them to be disputes referred to or pending adjudication in accordance with the
provisions of the Act.

The insertion of clause (b) provides an aggrieved workman to make a complaint to the
appropriate authority who in turn will adjudicate upon the matter as if it were a dispute referred
to or pending before it for adjudication. The respective authority under whose forum the
complaint has been filed is then required to submit its award in accordance with the provisions of

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the Act to the appropriate government. Thus, a workman aggrieved by the contravention of Sec.
33 does not have to wait for a reference of his dispute under Sec. 10 but can himself prefer his
complaint, which is to be treated in the same way as a dispute referred under Sec. 10 of the Act.

Sec. 33 and 33A do not in any way compel the adjudicating authority to order reinstatement as
soon as it finds that there has been a violation of Sec.33.[xl] The scope of inquiry as the
precedents suggest have been a very dicey subject matter giving way to a lot of controversy and
it is in lieu of such a controversy that the case of Automobile Products of India Ltd v. Rukmaji
Bala[xli] provided the apex court the opportunity for the very first time to consider the matter.
The apex court in the above mentioned case observed that the scheme of the section clearly in
illustrative terms lays down the authority to which the complaint is to be made in respect of
issues arising due to contravention of Sec. 33 and the merits of the act or order of the employer.
Simply put the jurisdiction of the authority is not only to merely adjudicate upon the matter and
decree the relief but to also to indulge into the merits of the case.

The court in the above mentioned case rejected the plea that the tribunal‘s duty was only to find
whether there was a contravention of Sec. 33 and if it found that there was a contravention to
make a declaration regarding the same and no further question should be considered in such an
inquiry.[xlii] The question was again raised before the court in the case of Equitable Coal Co Ltd
v Algu Singh[xliii] in which it followed the rule laid down in Automobile Products.[xliv] In the
case of Punjab National Bank Ltd v. Their Workmen[xlv] the court was asked to adjudicate upon
the question as to whether inquiry so made under Sec. 33A is strictly limited to determine as to
whether there has been a contravention of the provisions of Sec. 33A. The court rejected the
contention so raised and remarked that

Relief

In the case of Kumarhatty Co Ltd v. Ushnath Pakrashi[xlvii] the Apex court has categorically
stated that a complaint under Sec. 33A of the Act is to be placed on an equal threshold as
compared to a complaint made under Sec. 10 and the adjudicatory body has every right vested in
it to deal with the complaint under Sec. 33A by following the similar procedure as it would have
done had the complaint been filed under Sec. 10 of the Act. Therefore it can be safely assumed at
this juncture that the adjudicatory body is vested with the power to decree the relief as may be

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permissible in the light of Sec. 11A. Moreover in a complaint lodged by the employee against the
employer on grounds of dismissal being in breach of Sec. 33 the adjudicatory body has the
power to order a reinstatement if it is found that there indeed has been a breach of Sec. 33.\

The wordings used in Sec. 33A clearly illustrate the rationale behind insertion of the section i.e.
to provide a speedy remedy to an employee who has been dismissed by the employer in
contravention of Sec. 33. Sec. 33 saves the distressed employee from going through the lengthy
procedure of raising a dispute and getting it referred under Sec. 10(1). Simply put otherwise Sec.
33A cannot be invoked nor can it have any application whatsoever if the employer complies with
the provisions of Sec. 33.

Award

The words ‗and the provisions of this Act shall apply accordingly‘ as mentioned in Sec. 33A
signify that the adjudicating body has to submit its award to the appropriate government. In such
a scenario the provisions of Sec. 11A get automatically attracted. The awards after being
published under Sec. 17A will have the same effect and force as awards made on a reference
under Sec.10. Noteworthy is the fact that an award under Sec. 33A will operate as res judicata to
a subsequent reference under Sec. 10 of the same subject matter.[xlviii]

Judicial review on adjudication

The findings of an adjudicatory authority that the concerned workman was guilty of the
misconduct alleged against him or not is a finding of fact arrived at by the authority on evidence
and such findings cannot be interfered with by the Supreme Court in an under appeal Art. 136 or
by a High Court in a writ petition under Art. 226 or 227 of the Constitution. If the adjudicating
authority after presiding over the matter arrives at the conclusion that the action of an employer
against his employee was justified and the breach so alleged happens to be merely technical in
nature and unless there are compelling reasons in favor of the employee so that the court may
decree an order of compensation in favor of the employee the decision of the adjudicating
authority stands. As to what compensation would be adequate in case of a technical breach is
dependent upon the facts and circumstances of each case.

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REFORMING THE LAW- CONCLUSION

The procedures so laid down in Sec. 33A which have evolved through the dicta of the apex court
over a period of time have not solved the very purpose for which it was legislated in the first
place but has rather given birth to a state of perplexity and have given way to multiple litigations.
As has been notably put forth by a single judge of the Karnataka High Court that Sec. 10 should
be appropriately amended thereby enabling a workman to directly approach an adjudicatory body
in regards of an industrial dispute falling under the ambit of Sec. 2A of the Act, instead of
following the tiresome procedure of reference under Sec. 10 which happens to be an unnecessary
formality.[lii] Not only that the single judge further points out that it is of utmost necessity that
Sec. 2A, 11A, 33, 33A and 33C are completely deleted from the Act and in their place some
simple provisions should be enacted which would enable an aggrieved workman to seek redress
in cases where there has been an alteration in the condition of his service or disciplinary action
taken against him.

Furthermore the requirement of making a reference of such disputes for adjudication to the
appropriate government should also be done away with. Furthermore the adjudicatory bodies
should be vested with the original jurisdiction to adjudicate upon such disputes by holding a
detailed inquiry into facts and circumstances of a case. The above mentioned suggestions on
implementation will help in providing a conducive environment to solve the industrial dispute
thereby leading to the avoidance of unnecessary protracted and expensive litigation.

Notes

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Q. Explain the important Definitions related to Trade Union ?

Appropriate Government [Sec. 2]: In relation to Trade Unions whose objects are not confined
to one state 'the appropriate Government' is the Central Government. In relation to other Trade
Unions, the 'appropriate Government' is the State Government.

Executive [Sec. 2(a)]: Executive means the body of which the management of the affairs of a
Trade Union is entrusted.

Trade Dispute [Sec. 2(g)]: A trade dispute means any dispute between the employers and
workmen, the workmen and workmen and the employers and employers which is connected with
the employment or non-employment, or the terms of employment, or the conditions of labour of
any person. 'Workmen' mean all persons employed in trade or industry whether or not in the
employment of the employer with whom the trade dispute arises.

Trade Union [Sec. 2(h)]: Trade Union means any combination, whether temporary or
permanent, formed primarily for the purpose of regulating the relations between workmen and
employers or between workmen and workmen or between employers and employers for
imposing restrictive conditions on the conduct of any trade or business and includes any
federation of two or more Trade Unions.

Provided that this Act shall not affect -

(i) any agreement between partners as to their own business;

(ii) any agreement between an employer and those employed by him as to such employment; or

(iii) any agreement in consideration of the sale of the goodwill of a business or of instruction in
any profession trade or handicraft.

5. Registered Trade Union [Sec. 2(e)]: A registered Trade Union means a 'Trade Union'
registered under the Act.

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Q. What is process of Registration of Trade Union under Trade Union Act? What are the
benefit of being registered as a Trade Union?

REGISTRATION OF TRADE UNIONS

[Sec 3] Appointment of Registrars.

The government will appoint a person to be a Registrar.

The government will appoint required number of person as the Addition and deputy Registrar of
the Trade Unions. These office will be under the Registrar of the Trade Union.

[Sec 4] Mode of registration

Minimum Requirement of Registration of Trade Union (2001 amendment)

(1) Any seven or more members of a trade union may, by subscribing their names to the rules of
the trade union and by otherwise complying with the provisions of this Act with respect to
registration, apply for registration of the trade union under this Act.

Provided that no Trade Union of workmen shall be registered unless at least ten per cent. or one
hundred of the workmen, whichever is less, engaged or employed in the establishment or
industry with which it is connected are the members of such Trade Union on the date of making
of application for registration:

Provided further that no Trade Union of workmen shall be registered unless it has on the date of
making application not less than seven persons as its members, who are workmen engaged or
employed in the establishment or industry with which it is connected .''.

(2) Where an application has been made under sub-section (1) for the registration of a trade
union, such application shall not be deemed to have become invalid merely by reason of the fact
that, at any time after the date of the application, but before the registration of the trade union,
some of the applicants, but not exceeding half of the total number of persons who made the
application, have ceased to be members of the trade union or have given notice in writing to the
Registrar dissociating themselves from the application.

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Commentary:

It is understood that for the purpose of registration a minimum of seven members are necessary
to form a trade union. the reason for fixation of minimum seven members is to encourage
formation of more trade unions so that the trade union would grow.

[Sec 5] Application for Registration

Every application for registration of a trade union shall be made to the Registrar and shall be
accompanied by a copy of the rules of the trade union and a statement of the following
particulars, namely-

(a) the names, occupations and addresses of the members making application;

(aa) in the case of a Trade Union of workmen, the names, occupations and addresses of the place
of work of the members of the Trade Union making the application;''.

(b) the name of the trade union and the address of its head office; and

If Trade Union has already been existing for one year or more, for its registration the members
should submit all the details such as general statement of the assets and liabilities of the Trade
Union going to be registered by the Registrar of Trade Union.

[sec. 6] Provisions to be contained in the rules of a Trade Union (2001 amendment)

For registration of the Trade Union, provision or rules mentioned below should be followed by
the member for registration of the Trade Union according to this act.

a) The name of the Trade Union.

b) The object of the Trade Union.

c) General funds of the Trade Union by its members should be properly used for Lawful purpose.

d) Maintenances of list of members in the Trade Union and their facilities to be provided.

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e) Half of the members of the trade union must be the member who actually engaged in an
industry with which trade union is connected.

(ee) the payment of a minimum subscription by members of the Trade Union which shall not be
less than—

(i) one rupee per annum for rural workers;

(ii) three rupees per annum for workers in other unorganized sectors; and

(iii) twelve rupees per annum for workers in any other case;

f) Disciplinary action against member of the Trade Union and procedures in imposition of fines
on members.

g) the manner in which the rules shall be amended, varied or rescinded;

h) the manner in which the members of the executive and the other of the Trade Union shall be
elected and removed

(hh) executive members and other office bearers should be elected for the period of maximum 3
years..

i) Funds of the Trade Union should be safe guarded, annual audit is necessary, and account
books should be maintained for the purpose of inspection if necessary.

j) Procedure how to wind up the Trade Union

Power to call for further particulars and to require alteration of name. [Sec 7]

If Registrar is not satisfy with information provided by the members of the Trade Union going to
be registered, Registrar is having power to call its members for submitting the additional and
required information for registering the Trade Union.

If the Name of the Trade Union is already existed or similar to other Trade Unions names,
registrar is having power to order for changing of the name.

Registration [Sec 8]

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All the documents submitted with details and information is correct by the members of the Trade
Union going to be registered, the Registrar will register the Trade Union.

Certificate of Registration. [Sec 9]

The Registrar registering a Trade Union under Section 8, shall issue a certificate of registration
in the prescribed form which shall be conclusive that the Trade Union has been duly registered
under this Act.

A Supreme Court judgment poses an old question to India‘s labour movement: how to unionise
contract workers.

[Ambit of Sec 9A]

As per the Trade Unions Act, 1926, any workman who works in a factory can join a union of that
factory. But trade unions typically have only permanent workers as members. The reason cited is
that contract workers are not employees of the employer in question (the manufacturing unit),
and so should not find representation in a union body formed for the purpose of negotiating with
the said employer. Contract workers are hired by the labour contractor, who is empanelled with
the employer as a supplier of contract labour, and who pays their salaries.

But not being on the rolls of an employer does not disqualify a contract worker from being a
member of a factory‘s union. Labour law experts point to section 2 (g) of the Trade Union Act,
which defines ―workmen‖, for the purposes of a trade union, as ―all persons employed in trade or
industry whether or not in the employment of the employer with whom the trade dispute arises‖.

This question of who can become a member of a trade union also came up recently in the case of
Chander Bhan, etc versus Sunbeam Autoworkers Union in the Gurgaon District Court. In a
judgment that went largely unnoticed, the court ruled that any workman employed by a factory
— irrespective of whether he was a permanent worker or not, fulfilled the Industrial Dispute (ID)
Act‘s definition of workman or not — was eligible to participate in union activities.

In the Gurgaon industrial belt, Sunbeam Autoworkers Union is probably the only union that
gives membership to workers with less than 240 days‘ service, and it needed a court intervention
to be able to do so. But even it does not offer membership to contract workers. In fact, no union

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anywhere gives membership and voting rights to contract workers. The reasons are many. First,
in an industrial climate extremely hostile to any union activity, workers believe that forming a
union that also includes contract workers is bound to provoke the management into even greater
hostility. Second, managements refuse point blank to discuss with unionists any issues
concerning contract workers. Third, contract workers are far more insecure compared to regular
workers. In an era where companies frequently terminate even a permanent worker for engaging
in union mobilisation, the stakes are too high for contract workers, who could be summarily
dismissed, without any consequences, by the management.

Fourth, and this is an unpalatable truth for most trade unionists, permanent workers themselves
don‘t want to extend union membership to contract workers. In a factory, say, that employs 300
permanent workers and 1,200 contract workers, any union that gives voting rights to contract
workers would instantly marginalise permanent workers. Given that permanent workers‘ salaries
are much higher, economic self-interest militates against the inclusion of contract workers in
union membership.

As a result, India‘s contract workers, with the exception of some PSUs in select sectors such as
steel and coal, remain both heavily exploited and largely un-unionised, with the lack of
unionisation and exploitation reinforcing each other.

Minimum requirement about membership of a Trade Union. [Sec 9A]

A registered Trade Union of workmen shall at all times continue to have not less than 10% or
100 of the workmen, whichever is less, subject to a minimum of seven, engaged or employed in
an establishment or industry with which it is connected, as its members.

Cancellation of registration [sec. 10] (2001 amendment)

Registrar of the Trade Union can cancel the registration of the Trade Union in following
circumstances

When Trade Union registration certificate has been obtained by fraud or other illegal means.

Disobey the rules and regulation of Trade Union act.

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All the provision contained in section 6 of this act not followed by the members of the Trade
Union.

When there are no minimum required numbers of members in the Trade Union.

Notes

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Q. What are the Rights and Liabilities of Registered Trade Unions?

Liabilities of a registered Trade Union

A registered trade union must follow the provisions of the Trade Unions Act 1926. In particular,
the following are some restrictions in a registered trade union:

A Trade Union cannot spend the funds on anything the office bearers want. It can spend funds
only on the activities specified in Section 15.

These include:

 salaries of the office bearers.

 expenses required for the administration of the trade union
 compensation to workers due to loss arise of any trade dispute.
 welfare activities of the workers including housing, clothing, or any such activity.
 benefits to the workers or their dependents in the case of unemployment, disability, or
death.
 publishing material for creating awareness in the workers.
 legal expenses required for defending or bringing a suit.
 education of workers or their dependents.
 expenses for medical treatment of workers.
 taking insurance policies for workers.

Mario Raposo vs H M Bhandarkar and others 1994 - Office bearers of a trade union invested
the money from general fund into shares of UTI. This was held invalid because it is a speculative
investment.

A trade union cannot force members to subscribe to political fund under section 16.

Under section 20 a trade union must make available all its record books of accounts and list of
membership for inspection upon request of any member or his representative.

Section 21 allows minors more than 15 yrs of age to be members of a trade union. However,
such minors cannot hold office.

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LABOUR AND INDUSTRIAL LAW
Under section 21-A, a trade union cannot appoint a person who has been convicted of a crime
involving moral turpitude and has been imprisoned for 6 months or more within last 5 years.

As per section 22, at least half of the office bearers of a trade union of workers of unorganized
sector must be engaged or employed in an industry to which the trade union is connected. Also,
while a union has a right to remove any office bearer, this power must be used judiciously and
rules of natural justice must be followed.

Under section 28, a general statement, audited in a prescribed manner, of all income and
expenses must be sent to the registrar every year.

Rights and Privileges of a registered Trade Union

As per section 13, upon registration, a trade union becomes a legal entity and as a consequence,
it gets perpetual succession and a corporate seal, it can acquire and hold movable and immovable
property, contract through agents, and can sue and get sued.

Under section 15 a registered trade union has a right to establish a general fund.

Under section 16, a registered trade union has a right to establish a political fund. Subscription to
this fund is not necessary for a member.

Under section 17, 18, and 19 a registered trade union gets immunity in certain criminal, civil, and
contractual proceedings.

Under section 24, trade unions have the right to amalgamate.

Under section 28-F, the executive of a registered trade union has a right to negotiate with the
employer the matters of employment or non-employment or the terms of employment or the
condition of labor of all or any of the members of the trade union and the employer shall receive
and send replies to letters and grant interviews to such body regarding such matters. It further
provides that the executive is entitled to post notices of the trade union meant for its members at
any premises where they are employed and that the employer shall provide reasonable facilities
for that.

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Immunities available to a registered Trade Union

Section 17 confers immunity from liability in the case of criminal conspiracy under section 120-
B of IPC, committed by an office bearer or a member. However, this immunity is partial in the
sense that it is available only with respect to the legal agreements created by the members for the
furtherance of valid objects of a trade union as described in section 15 of the act. The immunity
cannot be claimed for an act that is an offence. Registered Trade Unions have certain rights to do
in furtherance of their trade disputes such as calling for strike, persuading members.

In the case of West India Steel Company Ltd. vs Azeez 1990 Kerala, a trade union leader
obstructed work inside the factory for 5 hrs while protesting against the deputation of a workman
to work another section. It was held that while in a factory, the worker must submit to the
instructions given by his superiors. A trade union leader has no immunity against disobeying the
orders. A trade union leader or any worker does not have any right by law to share managerial
responsibilities. A trade union can espouse the cause of workers through legal ways but officials
of a trade union cannot direct other workers individually or in general about how to do their
work. They do not have the right to ask a worker to stop his work or otherwise obstruct the work
of the establishment. An employer may deal with a person causing obstruction in work
effectively.

Section 18 confers immunity from civil proceedings in certain cases to a trade union or its office
bears or members. In general, a person is liable in torts for inducing another person to breach his
contract of employment or for interfering with the trade or business of another. However, a trade
union, its officers, and its members are immune from this liability provided that such an
inducement is in contemplation or furtherance of a trade dispute. Further, the inducement should
be lawful. There is no immunity against violence, threats, or any other illegal means.

In the case of P Mukundan and others vs Mohan Kandy Pavithran 1992 Kerala, it was held
that strike per se is not an actionable wrong. Further, it was held that the trade union, its officers,
and its members are immune against legal proceedings linked with the strike of workmen by the
provisions of section 18.

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LABOUR AND INDUSTRIAL LAW
In the leading case of Rohtas Industries Staff Union vs State of Bihar AIR 1963, it was held
that employers do not have the right to claim damages against the employee participating in an
illegal strike and thereby causing loss of production and business.

In the case of Simpson & Group Companies Workers & Staff Union vs Amco Batteries Ltd
1992 Karn., it was held that physical obstruction of movement of management officials,
contractors, goods, or vehicles carrying raw materials, is not a trade union right or a fundamental
right under art 19. Immunity under section 18 cannot be claimed for such activities. Right to
picket is a very intangible right and it extends only up to the right of free movement of others.
The methods of persuasion are limited to oral and visual and do not include physical obstruction
of vehicles or persons.

Section 19 Enforceability of agreements - In India, an agreement in restraint of trade is void as

per section 25 of Indian Contract Act. However, such an agreement between trade union
members is neither void nor voidable. It is important to note that this right is available only to
registered trade unions. An unregistered trade union must follow the principles of general
contract law.

Activities of a Trade Union

 Problems with Trade Unions

 Too many unions causes intra-union and inter-union rivalry and thus loss of precious
resources that can be used for worker's welfare.
 Due to politicization of unions causes the union to overlook the true welfare and benefits
of the worker.
 Outside Leadership causes unions to lose focus because such leadership does not
understand the problems of the laborers.
 Closed Shop/Union Shop companies forces laborers to join the union and thus causes
monopoly. Close shops/Union Shops are now illegal in many countries.
 Sometime the employers do not recognize unions.

54
LABOUR AND INDUSTRIAL LAW
Q. What is Collective Bargaining? Explain the collective bargaining in terms of employers
and employees?

The term collective bargaining is made up of two words, ‗collective‘ – which means a ‗group
action‘ through representation and ‗bargaining‘, means ‗negotiating‘, which involves proposals
and counter-proposals, offers and counter-offers. Thus it means collective negotiations between
the employer and the employee, relating to their work situations. The success of these
negotiations depends upon mutual understanding and give and take principles between the
employers and employees.

Definitions

The phrase collective bargaining is made up of two words collective which implies group action
through its representatives; and bargaining which suggests haggling and / or negotiating. The
phrase, therefore, implies collective negotiation of a contract between the management‘s
representatives on one side and those of the workers on the other. Thus collective bargaining is
defined as a process of negotiation between the employer and the organized workers represented
by their union in order to determine the terms and conditions of employment.

Stevens: Collective Bargaining as a ‗social control technique for reflecting and transmitting the
basic power relationships which underlie the conflict of interest in an industrial relations system.‘

Prof. Allan Flanders: Collective Bargaining is primarily a political rather than an economic
process. He describes collective bargaining as a power relationship between a trade union
organization and the management organization. The agreement arrived at is a compromise
settlement of power conflicts. Collective Bargaining has also been described as ―the great social
invention that has institutionalized industrial conflict‖ Dubin

Richardson says, ―Collective bargaining takes place when a number of work people enter into
negotiation as a bargaining unit with an employer or a group of employers with the object of
reaching agreement on conditions of the employment of the work people‖.

The ILO has defined collective bargaining as "negotiations about working conditions and terms
of employment between an employer and a group of employees or one or more employees'
organizations with a view to reaching an agreement wherein the terms serve as a code of defining

55
LABOUR AND INDUSTRIAL LAW
the rights and obligations of each party in their employment relations with one another; fix a
large number of detailed conditions of employment, and derivatives validity, none of the matters
it deals which can in normal circumstances be given as a ground for a dispute concerning an
industrial worker".

A collective bargaining process generally consists of four types of activities- distributive

bargaining, integrative bargaining, attitudinal restructuring and intra-organizational bargaining.

Distributive bargaining:

It involves haggling over the distribution of surplus. Under it, the economic issues like wages,
salaries and bonus are discussed. In distributive bargaining, one party‘s gain is another party‘s
loss. This is most commonly explained in terms of a pie. Disputants can work together to make
the pie bigger, so there is enough for both of them to have as much as they want, or they can
focus on cutting the pie up, trying to get as much as they can for themselves. In general,
distributive bargaining tends to be more competitive. This type of bargaining is also known as
conjunctive bargaining.

Integrative bargaining:

This involves negotiation of an issue on which both the parties may gain, or at least neither party
loses. For example, representatives of employer and employee sides may bargain over the better
training programme or a better job evaluation method. Here, both the parties are trying to make
more of something. In general, it tends to be more cooperative than distributive bargaining. This
type of bargaining is also known as cooperative bargaining.

Attitudinal restructuring:

This involves shaping and reshaping some attitudes like trust or distrust, friendliness or hostility
between labor and management. When there is a backlog of bitterness between both the parties,
attitudinal restructuring is required to maintain smooth and harmonious industrial relations. It
develops a bargaining environment and creates trust and cooperation among the parties.

Intra-organizational bargaining:

56
LABOUR AND INDUSTRIAL LAW
It generally aims at resolving internal conflicts. This is a type of maneuvering to achieve
consensus with the workers and management. Even within the union, there may be differences
between groups. For example, skilled workers may feel that they are neglected or women
workers may feel that their interests are not looked after properly. Within the management also,
there may be differences. Trade unions maneuver to achieve consensus among the conflicting
groups.

Characteristics Of Collective Bargaining

It is a group process, wherein one group, representing the employers, and the other, representing
the employees, sit together to negotiate terms of employment.

Negotiations form an important aspect of the process of collective bargaining i.e., there is
considerable scope for discussion, compromise or mutual give and take in collective bargaining.

Collective bargaining is a formalized process by which employers and independent trade unions
negotiate terms and conditions of employment and the ways in which certain employment-
related issues are to be regulated at national, organizational and workplace levels.

Collective bargaining is a process in the sense that it consists of a number of steps. It begins with
the presentation of the charter of demands and ends with reaching an agreement, which would
serve as the basic law governing labor management relations over a period of time in an
enterprise. Moreover, it is flexible process and not fixed or static. Mutual trust and understanding
serve as the byproducts of harmonious relations between the two parties.

It a bipartite process. This means there are always two parties involved in the process of
collective bargaining. The negotiations generally take place between the employees and the
management. It is a form of participation.

Collective bargaining is a complementary process i.e. each party needs something that the other
party has; labor can increase productivity and management can pay better for their efforts.

Collective bargaining tends to improve the relations between workers and the union on the one
hand and the employer on the other.

57
LABOUR AND INDUSTRIAL LAW
Collective Bargaining is continuous process. It enables industrial democracy to be effective. It
uses cooperation and consensus for settling disputes rather than conflict and confrontation.

Collective bargaining takes into account day to day changes, policies, potentialities, capacities
and interests.

It is a political activity frequently undertaken by professional negotiators.

The collective bargaining process comprises of five core steps:

1. Prepare: This phase involves composition of a negotiation team. The negotiation team should
consist of representatives of both the parties with adequate knowledge and skills for negotiation.
In this phase both the employer‘s representatives and the union examine their own situation in
order to develop the issues that they believe will be most important. The first thing to be done is
to determine whether there is actually any reason to negotiate at all. A correct understanding of
the main issues to be covered and intimate knowledge of operations, working conditions,
production norms and other relevant conditions is required.

2. Discuss: Here, the parties decide the ground rules that will guide the negotiations. A process
well begun is half done and this is no less true in case of collective bargaining. An environment
of mutual trust and understanding is also created so that the collective bargaining agreement
would be reached.

3. Propose: This phase involves the initial opening statements and the possible options that exist
to resolve them. In a word, this phase could be described as ‗brainstorming‘. The exchange of
messages takes place and opinion of both the parties is sought.

4. Bargain: negotiations are easy if a problem solving attitude is adopted. This stage comprises
the time when ‗what ifs‘ and ‗supposals‘ are set forth and the drafting of agreements take place.

5.Settlement: Once the parties are through with the bargaining process, a consensual agreement
is reached upon wherein both the parties agree to a common decision regarding the problem or
the issue. This stage is described as consisting of effective joint implementation of the agreement
through shared visions, strategic planning and negotiated change.

Functions

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LABOUR AND INDUSTRIAL LAW
Prof. Butler has viewed the functions as:

 a process of social change

 a peace treaty between two parties
 a system of industrial jurisprudence

1. Collective bargaining as a process of social change

Collective bargaining enhances the status of the working class in the society. Wage earners have
enhanced their social and economic position in relation to other groups.

Employers have also retained high power and dignity through collective bargaining.

2. Collective bargaining as a peace treaty

Collective bargaining serves as a peace treaty between the employers and employees. However
the settlement between the two parties is a compromise.

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