Industrial Dispute Act 1947: History, Objectives, Authorities, Powers & More for UPSC

The Industrial Disputes Act 1947 extends to the entire Indian mainland and regulates labour laws related to trade unions and individual workmen employed in any industry that governs labour regulations for all workers. The Act came into force on April 1, 1947. It was enacted with an objective to investigate and resolve industrial disputes and serve other related purposes.

The Industrial Disputes Act 1947 is an important topic under the Polity section of the UPSC Mains General Studies Paper-II and General Studies Paper-I of the UPSC Prelims syllabus. This article aims to help you understand the key features and significance of the Act. It also supports your preparation of major Indian Economy topics relevant to the UPSC exams.

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What is Industrial Dispute Act 1947?

The Industrial Disputes Act 1947 is the most recent milestone in the industrial growth of India. In recent years, the Act has seen fresh additions. The 1947 Industrial Disputes Act governs all industrial entities in India that employ one or more people. Collective disputes or disputes sponsored by trade unions or a considerable number of workers and individual disputes involving the termination of services are examples of conflicts.

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What is an Industrial Dispute?

An industrial dispute is a conflict or disagreement between employers and employees or among employees themselves regarding matters related to employment such as wages, working hours, conditions of service or job security.

The disputes particularly arise within industrial establishments and may involve a series of issues affecting the terms of employment. Industrial disputes are defined to include any disagreement that affects the rights, duties or interests of employers and workmen thereby influencing the smooth function of industries in India.

According to Section 2k of Industrial Disputes Act 1947 an "industrial dispute" means any dispute or difference between employers and employers or between employers and workmen or between workmen and workmen which is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person. The Industrial Dispute definition serves as the foundation for resolving disputes originating in industrial establishments in India.

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History of Industrial Disputes Act 1947

The Industrial Disputes Act 1947 has its roots in early labour unrest during British rule. Worker movements gained momentum after World War I which highlighted the need for legal protection. The following developments led to the enactment of the Industrial Dispute Act of 1947 -

• World War I sparked a new awakening among working-class individuals who had previously been ruled by employers regarding service and compensation.
• To meet their goals employees went on strike while bosses countered by announcing lockouts. Several strikes and lock-outs in 1928-29 compelled the government to pass the Trade Disputes Act 1929.
• The Trade Dispute Act of 1929 was enacted to resolve industrial disputes. The Trade Union Act established trade unions as legal entities.
• The fundamental flaw of the Act was that no provision was provided for the procedures launched under the Act to be rendered when restrictions on the right to strike and lock-out in public utility services were enforced.
• However, this flaw was eventually remedied by authorising under Rule 81-A of the Defense of Indian Rules, the referral of industrial conflicts to adjudicators for resolution during the Second World War (1938-1945).
• Rule 81-A was going to expire on October 1, 1946 with the end of the Second World War but it was saved using the Government’s Emergency Powers. The major clause was kept in the 1947 Industrial Disputes Act.

Learn the Difference between Act and Law here.

Highlights of Industrial Disputes Act 1947

The Industrial Disputes Act 1947 was enacted to provide a legal structure for the investigation and resolution of industrial disputes in India. The following are some important highlights of the Act -

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Objectives of the Industrial Dispute Act 1947

The Industrial Disputes Act 1947 was enacted to acknowledge disputes in industrial settings and ensure smooth employer-employee relations. The main objectives of the Act are as follows -

• Promote Industrial Peace: The Act aims to lessen conflicts between employers and workers. It encourages a stable and peaceful working environment.
• Resolve Industrial Disputes: It provides legal methods like conciliation, arbitration and adjudication to settle disputes.
• Protect Workers’ Rights: The Industrial Dispute Act 1947 safeguards workers against unfair practices like illegal layoffs, retrenchments and closures.
• Encourage Collective Bargaining: It fosters dialogue between employers and employee unions to settle employment terms.
• Prevent Illegal Strikes and Lockouts: The Act defines legal procedures for strikes and lockouts to avoid disruptions.
• Ensure Fair Practices: It seeks to establish fairness in labour relations and prevent exploitation.
• Support Social Justice: The Industrial Dispute Act 1947 works to balance the interests of both employers and employees and promotes equity.

Features of the Industrial Disputes Act 1947

The Industrial Disputes Act 1947 lays down important provisions to manage and resolve industrial conflicts. The following are some of the important features of the Act -

• Strikes and Lockouts During Proceedings: The mediation and adjudication are underway, strikes and lockouts are unlawful.
• Reference to Industrial Tribunal: Any industrial dispute can be referred to an industrial tribunal by consent of the parties involved or by the State Government.
• Binding Nature of Awards: An award must be binding on both parties to the dispute for no more than one year, and the government must enforce it.
• Declaration of Public Utility Services: In the public interest or an emergency the competent authority may declare the transportation, coal, iron and steel industries public utility services under the Industrial Disputes Act for six months.
• Compensation for Layoffs and Retrenchment: When an employee is laid off or reduced in size the company is required to provide compensation.
• Provision for Workers’ Compensation: Workers compensation is also covered in the Industrial Dispute Act 1947.
• Dispute Resolution Mechanisms: Several agencies are available to resolve industrial disputes including a works committee, Conciliation Officer, Board of Conciliation, Labor Court and Tribunal.

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Authorities Under the Industrial Disputes Act

The Industrial Dispute Act 1947 establishes various authorities including the works committee, conciliation officer, conciliation board, courts of inquiry, labour court, tribunal and national tribunal.

Works Committee

The Works Committee is one of the key dispute resolution bodies under the Industrial Disputes Act 1947. It aims to promote harmony between employers and workers at the establishment level.

• This is stated in section 3 of Industrial Dispute Act 1947 which states that each industrial establishment must have a works committee with equal participation from both the employer and the employee. 
• It is to settle the issue in the first instance through the mediation procedure in the early stages of the conflict. The works committee also makes remarks on disputed issues from time to time.

Conciliation officer

The Conciliation Officer plays an important role in the early resolution of industrial disputes under the Industrial Disputes Act 1947. Appointed by the appropriate government they act as mediators between employers and workers.

• The provisions of the conciliation officer are discussed in Section 4 of Industrial Disputes Act of 1947.
• It specifies that the competent government i.e., federal government, state government or local authority will appoint as many conciliation officers as necessary.
• The conciliation officer is responsible for mediating and facilitating the resolution of industrial disputes. The conciliation officer might be appointed permanently or temporarily.

Board of Conciliation

The Board of Conciliation is another dispute resolution body established under the Industrial Disputes Act 1947. It is constituted to encourage the settlement of industrial disputes through negotiation and mutual agreement.

• The competent government appoints the board of conciliation under Section 5. The Board of Conciliation was formed to promote the resolution of industrial disputes. The board comprises the chairman and two or four additional members.
• The board's chairman is independent, and the other members are appointed in equal numbers to represent the parties in disputes. The party appoints the person who represents the party.
• The party must designate such representatives within the time frame specified. If the party fails to do so, the competent government may appoint the individual to be the party’s representative.

Courts of Inquiry

Courts of Inquiry are constituted under the Industrial Disputes Act 1947 to investigate matters related to industrial disputes. The courts aim to fact-find and provide reports to assist in dispute resolution.

• Section 6 of Industrial Dispute Act 1947 goes on to discuss the establishment of a court of inquiry to investigate the topic at hand. 
• The court of inquiry will be presided over by an independent person or individuals chosen by the competent authorities. If the court has two or more members, any one of them may be selected as chairman.

Labour Court

Labour Courts are established under the Industrial Disputes Act 1947 to adjudicate specific types of industrial disputes. They primarily deal with matters listed in the Second Schedule of the Act.

• Section 7 of Industrial Dispute Act 1947 discusses the competent authorities' establishment of the labour court. It may establish as many labour courts as it sees proper for adjudicating industrial disputes as indicated in Schedule II.
• It is made up of one individual who the appropriate government selects.

Tribunal

Section 7A of Industrial Dispute Act 1947 deals with the provision for the establishment of one or more tribunals for the adjudication of disputes concerning the features stated in schedules second or third. The tribunal will be composed of one person chosen by the relevant government.

Powers and Duties of Authorities

The Industrial Disputes Act 1947 outlines various powers and duties of authorities involved in resolving industrial disputes. The provisions ensure transparency, fairness and legal compliance during proceedings. The powers and duties include -

• Notice to enter premises: An official or board member, for investigating an existing or past industrial dispute, can enter the premises of the relevant establishment after giving reasonable notice.
• Production of documents before Tribunals: An official can summon individuals for assessment or request and review necessary documents related to the industrial dispute.
• Cost: The council, national council or labour courts have the authority to decide and determine the payment of costs incurred in the proceedings.
• Granting of adjournments: The bench of judges in various tribunals and courts may grant adjournments to the concerned parties.
• Powers of the Tribunal: Tribunals and courts under Industrial Dispute Act 1947 have similar powers as vested in a common court under the Code of Civil Procedure, 1908 for various issues.
• Fixation of wage structure: Compensation for supervisory work and those drawing more than 1600 per month for activities primarily of a managerial nature.
• Retirement age on account of industrial workers: Workers may retire upon reaching the superannuation age as per the contract between the employer and employee.
• Incentive Payment Scheme: Incentives are given to those wrongfully terminated from their services.
• Jurisdiction to decide the dispute regarding factory closure: Courts under Industrial Dispute Act 1947 can resolve disputes related to factory closure based on relevant facts, ensuring individual or party rights are protected.
• Power of the Tribunal to interfere with the action taken by the management: The tribunal can interfere with management actions only under court supervision.
• Award of Industrial Tribunal: The tribunal's award must be in writing and signed by the presiding officer.
• Power of Labour Court: The labour court can decide industrial disputes through adjudication as per the second schedule.
• The finding of fact by Labour Court: The labour court can ascertain facts through formal investigation.
• Power of the High Court to issue a writ against decisions of the Tribunal: The High Court can issue a writ against the tribunal's decisions upon an official appeal.
• Special leave under Article 136 of the Constitution against the decision of the Industrial Tribunal: Special leave petition allows anyone to be heard in the case of any tribunal/national tribunal verdict.

Penalties under Industrial Disputes Act

The Industrial Disputes Act 1947 prescribes penalties for various offences to ensure compliance and maintain industrial harmony. The penalties are aimed at both workers and employers for unlawful actions during industrial disputes.

Section 26: Penalty for illicit strikes and lock-outs

According to Section 26 of Industrial Dispute Act 1947 any workman who participates in an unlawful strike will face imprisonment for up to six months, a fine of up to 60 rupees, or both. Any employer initiating an illegal lock-out will be imprisoned for up to one month, a fine of up to 1000 rupees, or both.

Section 27: Penalty for inducement, etc.

Section 27 of Industrial Dispute Act 1947 states that anyone inducing or encouraging others to participate in an unlawful strike or lockout will be liable for imprisonment of up to six months, a fine of up to 1000 rupees, or both.

Section 28: Penalty for providing financial aid to unlawful strikes and lock-outs

According to Section 28 of Industrial Dispute Act 1947 anyone providing financial aid directly to support any unlawful strike or lockout will face imprisonment for up to six months, fine of up to 1000 rupees or both.

Section 29: Penalty for breach of settlement or award

A person under Section 29 of Industrial Dispute Act 1947 breaks any term of a settlement or award binding on them under this Act will face imprisonment for up to six months, a fine, or both. An additional fine of up to 200 rupees per day may be imposed if the breach is continuous.

Section 30: Penalty for disclosing secret information

Section 30 of Industrial Dispute Act 1947 clearly states that any willfully revealing confidential information as referred to in Section 21, contrary to its provisions, will face imprisonment for up to six months, a fine of up to one thousand rupees or both.

Section 30-A: Penalty for closure without notice

Section 30A of Industrial Dispute Act 1947 states that an employer shutting down an undertaking without complying with the above provisions will face imprisonment for up to six months, a fine of up to 5000 rupees or both.

Section 31: Penalty for various offences

According to Section 31 of Industrial Dispute Act 1947 an employer violating the provisions of Section 33 will face imprisonment for up to six months or a fine of up to one thousand rupees, or both. Anyone contravening any provisions of this Act or any rules made under it, for which no specific penalty is given elsewhere, will be liable to a fine of up to 100 rupees.

Significant Objectives of the Industrial Disputes Act 1947

The Industrial Disputes Act 1947 was enacted with several objectives to ensure fair and peaceful industrial relations. Some of its significant objectives include -

• To promote good relations between labour and industry and to offer a forum for conflict resolution through adjudicator authority.
• To establish a committee for conflict resolution between industry and labour, with the right of representation by a registered trade union or an employer organization.
• Prevent illegal strikes and lockouts.
• Reach out to workers who have been laid off, unfairly terminated, etc.
• Give workers the right to collective bargaining and encourage conciliation.

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Applicability of Industrial Disputes Act 1947

The Industrial Disputes Act 1947 applies to a wide range of industrial establishments and workers across India. Its scope of applicability is defined as follows:

• The Industrial Disputes Act applies across India to every industrial institution engaged in any business, commerce, production, or distribution of products and services, regardless of the number of workers employed.
• The Act applies to everyone hired in an institution for hire or reward, including contract labour, apprentices, and part-time workers, to do any manual, clerical, skilled, unskilled, technical, operational, or supervisory work.
• This Act does not apply to persons primarily engaged in a managerial or administrative capacity, persons engaged in a supervisory capacity and persons subject to the Army Act, Air Force Act, and Navy Act, or those in police service or officers or employees of a prison.

Controversy Related to Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947 has faced criticism and legal scrutiny over the years, particularly regarding its provisions related to employment security. One of the most debated aspects of the Act is found in Chapter V-B. The key points of controversy are:

• The two sections of Chapter V-B of the Industrial Disputes Act are considered labour market rigidity.
• This provision’s principal goal is to ensure that an employer cannot recruit or fire an employee at will.
• To take such action, they must first obtain approval from the labour commissioner. Because this issue is also on the concurrent list, various states have imposed even harsher restrictions and requirements, making layoffs, reductions, and closure much more difficult.
• This provision raises concerns about the legislation, particularly about Chapter V-B. This provision has been subjected to several changes throughout the years.
• The legislation was enacted to create equipment and procedures for investigating and resolving workplace disputes that were applicable to everybody, regardless of size or sector.
• It even includes measures for layoffs, reduction (reducing the extent of activities), and industry collapse.

Protection of People Under Industrial Dispute Act of 1947

The Industrial Disputes Act 1947 contains several protective provisions aimed at safeguarding the rights and interests of workers during industrial disputes. These measures ensure fair treatment, job security, and access to legal remedies. Key protections under the Act include:

• Layoff and Retrenchment: The Act places restrictions on the layoff and retrenchment of workers, ensuring job security to a certain extent.
• Compulsory Recognition of Trade Unions: It provides for the compulsory recognition of trade unions by employers, allowing workers to collectively bargain for their rights.
• Prohibition of Unfair Labor Practices: The Act prohibits unfair labor practices by both employers and trade unions, safeguarding the interests of employees.
• Right to Strike: While it recognizes the right to strike the Industrial Dispute Act lays down specific conditions and procedures to be followed before workers can resort to strikes.
• Settlement of Disputes: It establishes mechanisms for the settlement of industrial disputes, including the formation of boards and labor courts.
• Retrenchment Compensation: In cases of retrenchment the Act mandates the payment of compensation to affected workers, offering them financial protection.
• Reemployment of Retrenched Workers: The Industrial Dispute Act 1947 also provides for the reemployment of retrenched workers when job opportunities become available.
• Health and Safety Measures: It includes provisions for the protection of the health and safety of workers, ensuring their well-being in industrial environments.
• Payment of Wages During Strikes: The Act outlines rules regarding the payment of wages during strikes, balancing the interests of workers and employers.
• Legal Remedies: Workers have access to legal remedies under the Act, allowing them to seek justice and protection against unfair labor practices.

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Conclusion

The Industrial Disputes Act 1947 is India’s major legislation controlling dispute settlement. It was adopted to allow for the investigation and resolution of industrial disputes, to prevent illegal strikes and lockouts, and to offer assistance to workers facing layoffs, reduction, or unfair dismissal. The Industrial Disputes Act of 1947 governs Indian labour law regarding trade unions and individual workers engaged in business on the Indian mainland.

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