Industrial Disputes: Meaning, Features, Causes and Settlement


Everything you need to know about industrial disputes. Industrial disputes are conflicts, disorder or unrest arising between workers and employers on any ground.

Such disputes finally result in strikes, lockouts and mass refusal of employees to work in the organization until the dispute is resolved. Industrial Disputes harm both parties’ employees and employers and are always against the interest of both employees and the employers.

Industrial dispute crop up from dissatisfaction among the workers in the organisation in matters relating to low wages, long working hours, unhealthy work environment, retrenchment of employees and so on. It means disagreement among the employees and disagreement between the employees and the employer.


The Industrial Disputes Act, 1947, defines an industrial dispute as “any dispute or difference between employers and employers, or between employers and employees, or between employers and employees, which is connected with the employment, or non-employment, or the terms of employment or with the conditions of work of any person”.

In this article we will discuss about industrial dispute. Learn about:- 1. Introduction to Industrial Disputes 2. Meaning, Concept and Important Aspects of Industrial Disputes 3. Management 4. Causes 5. Effects 6. Impacts and Consequences 7. Methods and Machineries for the Settlement.

Industrial Disputes: Meaning, Features, Management, Causes, Effects, Impacts and Settlement


  1. Introduction to Industrial Disputes
  2. Meaning, Concept and Important Aspects of Industrial Disputes
  3. Management of Industrial Disputes
  4. Causes of Industrial Disputes
  5. Effects of Industrial Disputes
  6. Impacts and Consequences of Industrial Disputes
  7. Methods and Machineries for the Settlement of Industrial Disputes.

Industrial Disputes – Introduction

Industrial disputes are conflicts, disorder or unrest arising between workers and employers on any ground. Such disputes finally result in strikes, lockouts and mass refusal of employees to work in the organization until the dispute is resolved. Industrial Disputes harm both parties’ employees and employers and are always against the interest of both employees and the employers.


Patterson- “Industrial strife constituent militant and organized protest against existing industrial conditions, they are symptoms of industrial unrest in the same way that boils are symptoms of disorder of body.” Industrial Dispute Act 1947, Sec. 2 (k)-“Industrial Dispute is any dispute or difference between the employees and employers or between employers and workmen or between workmen and workmen, which is concerned with the employment or terms of employment or with the conditions of labour of any person.”

Industrial Dispute means a conflict or unrest or dispute or any sort of difference between employees and employers which may relate with the employment or the terms of employment or working conditions.

For a dispute to become industrial dispute there must be a dispute between:

(i) Employers and employees


(ii) Employers and workmen

(iii) Workmen and workmen.

Principles for judging the natures of industrial dispute:

(i) The dispute must affect large number of workmen


(ii) The dispute should be taken up by the Industry Union

(iii) The parties involved in dispute must have direct interest

(iv) The consulted demand must become grievance

(v) Workmen can raise Industrial Dispute himself under Section 2A of Industrial Disputes Act – 1947.

Industrial Disputes – Meaning, Concept and Important Aspects

Industrial dispute crop up from dissatisfaction among the workers in the organisation in matters relating to low wages, long working hours, unhealthy work environment, retrenchment of employees and so on. It means disagreement among the employees and disagreement between the employees and the employer.


The Industrial Disputes Act, 1947, defines an industrial dispute as “any dispute or difference between employers and employers, or between employers and employees, or between employers and employees, which is connected with the employment, or non-employment, or the terms of employment or with the conditions of work of any person”.

Industrial Disputes leads to strikes, pen-down strikes, hunger strikes, bandhs, gheraos and lockouts leading to closure of work.

Industrial dispute is hot merely difference of opinion resulting into conflict but when a controversial issue is specifically revealed and submitted to the employer for negotiation and settlement it becomes an “industrial dispute”.

Dispute, in a general sense, is the expression of differences over some issues of interest between two or more parties. However, since the settlement of industrial disputes proceeds according to the legal provisions contained in the Industrial Disputes Act, 1947, we have to go through the specific meaning of industrial dispute.

This definition is too broad and includes disputes among employers too. However, we shall take the meaning of industrial dispute arising between employers and workmen. While the management of discipline and grievances focuses on individuals, management of disputes focuses on collectivity of individuals.

The real test whether a dispute is an industrial dispute or not depends whether a majority or a large number of workmen are involved in the dispute. An individual dispute between an employer and one of his workmen is by itself not an industrial dispute which can be referred to under Section 10 of the Act.

But such a dispute may become an industrial dispute provided the cause of particular workman is taken up by a majority of workmen, or union of workmen, in the particular industrial establishment.

Important Aspects of Industrial Dispute:

The two most important components of the statistics on Industrial Disputes are- the maximum number of workers affected directly or indirectly on any day during the entire period of the work-stoppage and secondly, the number of man days lost which is obtained by adding up the actual resultant absences caused directly or indirectly by the work-stoppages, in each shift of the potential working day (excluding weekly-off and other scheduled holidays when the establishments would have otherwise remained closed even if no work- stoppages had taken place).

The other components are-

(i) The number of disputes,

(ii) Duration of a dispute,

(iii) Wages lost and

(iv) The value of production loss.

Industrial Disputes – Initiatives taken for Management: Labour Legislations and Administrations of the State, Statutory Machinery & Non-Statutory

Industrial dispute resolution is an issue of great strategic importance for organizations in terms of maintaining industrial harmony and peace.

These initiatives can be classified as:

1. Labour legislations and administrations of the state

2. Statutory machinery for resolving disputes

3. Non-statutory measures

1. Labour Legislations and Administrations of the State:

State intervention in industrial relations is essentially a modern development. With the emergence of the concept of welfare state, new ideas of social philosophy, national economy and social justice sprang up with result that industrial relation no longer remains the concern of labour and management alone. In all the countries, over a period of time, the state has assumed power to regulate industrial relations.

It is the state which is now the most significant element in determining the legal environment within which industrial relations operate. The state operates as an actor within industrial relations performing a number of distinct roles.

The distinct role that state performs are broadly, categorized fall into five categories, namely:

I. Firstly, it acts as a third party regulator promoting a legal framework which establishes general ground rules for union-management interaction, particularly in the procedure for collective bargaining.

II. Secondly, and additionally, as a means of supporting and underpinning collective bargaining or as a supplement to it the law can be used establish minimum standards while collective bargaining exploits particular advantages to secure higher standards whenever it can.

III. The third well established function in many countries is the provision of state service for conciliation, mediation and arbitration with a view to facilitating the settlement of industrial disputes.

IV. A fourth aspect of the role of the state that has become increasingly important is that of a direct and primary participation as a major employer in the public sector. In this respect, it influences the pattern of industrial relations by its own behaviour and example.

V. A fifth role that the state has come to play in many countries is that of a regulator of incomes. As a result, direct and active state involvement in the industrial relations has become much more pronounced in recent years.

(a) Role of Department of Labour in Industrial Dispute:

The Departments of Labour in the States and Regional Labour Commissioners (Central) collect the basic information in respect of the work stoppages in the State and Central Spheres respectively on account of strikes and lockouts.

They collect the required information from the units under their jurisdiction on uniform lines laid down for the purpose whenever such occurrence of a work-stoppage becomes known either directly or from the police records as per the practice in vogue in different States/areas. This information is collected on a voluntary basis and furnished by the aforesaid authorities in consolidated monthly returns and submitted to the Labour Bureau in each succeeding month.

(b) Role of the Local Offices of Central Government:

The labour commissioner appoints regional officers to represent the central government in each state.

(c) Industrial Tribunals:

Industrial tribunals are set up in different regions of India. Presently there are eight Tribunals who deal with industrial disputes.

(d) State Government Agencies:

Labour ministry of each state government has its regional offices set up at each district attached to the collectorate as state labour officers, whose jobs are to ensure implementation of the state legislations and intervene to settle industrial disputes in the region.

The Organization of Chief Labour Commissioner (Central Industrial Relations Machinery /CIRM):

The Organization of the Chief Labour Commissioner (C) known as Central Industrial Relations Machinery was set up in April, 1945 in pursuance of the recommendation of the Royal Commission on Labour in India and was then charged mainly with duties of prevention and settlement of industrial disputes, enforcement of labour laws and to promote welfare of workers in the undertakings falling within the sphere of the Central Government.

Combining the former organizations of the Conciliation Officer (Railways) and Supervisor of Railway Labour and the Labour Welfare Advisor, it started with a small complement of staff comprising Chief Labour Commissioner (C) at New Delhi, 3 Regional Labour Commissioners at Bombay, Calcutta & Lahore and 8 Conciliation Officer and increased gradually consequent upon expanding labour legislation’s in the Post-independence period, increased industrial activity in the country and growing responsibilities of the Organization.

Presently there are 18 regions each headed by a Regional Labour Commissioner (C) with Headquarters at Ajmer, Ahmedabad, Asansol, Bangalore, Bombay, Bhubaneswar, Chandigarh, Cochin, Calcutta, Guwahati, Hyderabad, Jabalpur, Madras, New Delhi, Patna, Nagpur, Dhanbad and Kanpur. Out of these, 14 regions have been placed under the supervision of three zonal Dy. CLCs (C) and 4 regional offices are supervised directly by Headquarters office of CLC(C).

CIRM is headed by the Chief Labour Commissioner (Central) [CLC (C)]. It is entrusted with the task of maintaining good industrial relations in the Central sphere. At the headquarters, CIRM has a complement of 25 officers who perform line and staff functions. In the field, the machinery has a complement of 253 officers and their establishments are spread over different parts of the country with zonal, regional and unit level formations as presented in the organogram.

Objectives of the CLC(C) Organization:

a. Promotion of peaceful and harmonious Industrial Relations in the Central Sphere through prevention and settlement of Industrial disputes in the Industries for which Central Govt. is the appropriate Govt.

b. Verification of the Trade Union’s Membership.

c. Enforcement of labour laws in central sphere.

Specific Functions of CIRM:

The CIRM administers the Labour Laws in the industries for which the Central Govt. is the ‘appropriate Government’ under that Act.

Its functions therefore are:

1. Prevention and settlement of industrial disputes

2. Enforcement of Labour Laws

3. Verification of membership of Trade Unions

4. Enforcement of Awards and Settlements

5. Conduct of inquiries into the breaches of Code of Discipline

6. Promotion of Works Committees and Workers’ Participation in Management

7. Collection of statistical information

8. Defense of court cases and writ petitions arising out of implementation of labour laws.

Some of the important causes of an industrial dispute are:

1. Demand for higher wages and allowances.

2. Demand for payment of bonus and determination of its rate thereof.

3. Demand for higher social security benefits.

4. Demand for good and safer working conditions, including length of a working day, the interval and frequency of leisure and physical work environment.

5. Demand for improved labour welfare and other benefits. For example, adequate canteen, rest, recreation and accommodation facility, arrangements for travel to and from distant places, etc.

6. Besides, poor personnel management; conflicting legislative measure or government policies; and psychological factors such as denial of opportunity to the worker for satisfying his/ her basic urge for self-expression, personal achievement and betterment may also result in labour problems.

In India, the Industrial Disputes Act, 1947 is the main legislation for investigation and settlement of all industrial disputes. The Act enumerates the contingencies when a strike or lockout can be lawfully resorted to, when they can be declared illegal or unlawful, conditions for laying off, retrenching, discharging or dismissing a workman, circumstances under which an industrial unit can be closed down and several other matters related to industrial employees and employers.

The Act is administered by the Ministry of Labour through its Industrial Relations Division. The Division is concerned with improving the institutional framework for dispute settlement and amending labour laws relating to industrial relations. It works in close coordination with the Central Industrial Relations Machinery (CIRM) in an effort to ensure that the country gets a stable, dignified and efficient workforce, free from exploitation and capable of generating higher levels of output.

The CIRM, which is an attached office of the Ministry of Labour, is also known as the Chief Labour Commissioner (Central) [CLC(C)] Organization. The CIRM is headed by the Chief Labour Commissioner (Central). It has been entrusted with the task of maintaining industrial relations, enforcement of labour laws and verification of trade union membership in central sphere.

It ensures harmonious industrial relations through:

(1) Monitoring of industrial relations in Central Sphere;

(2) Intervention, mediation and conciliation in industrial disputes in order to bring about settlement of disputes;

(3) Intervention in situations of threatened strikes and lockouts with a view to avert the strikes and lockouts;

(4) Implementation of settlements and awards.

The basic objectives of the act are:

(1) To provide a suitable machinery for the just, equitable and peaceful settlement of industrial disputes.

(2) To promote measures for securing and preserving amity and good relations between employers and employees.

(3) To prevent illegal strikes and lockouts.

(4) To provide relief to workers against layoffs, retrenchment, wrongful dismissal and victimization.

(5) To promote collective bargaining.

(6) To ameliorate the conditions of workers.

(7) To avoid unfair labour practices.

2. Statutory Machinery of Resolving Industrial Disputes in India:

As per Industrial Dispute Act, 1947, the following are considered as statutory machinery for resolving Industrial disputes in India:

i. Works committee

ii. Mediation and Conciliation

iii. Investigations

iv. Conciliation officers

v. Board of conciliation

vi. Voluntary arbitration

vii. Adjudication (compulsory arbitration)- (a) Labour Courts (b) Industrial Tribunals (c) National Tribunals

i. Works Committee:

In any Industrial Establishment in which 100 or more workmen are employed or have been employed in the preceding 12 months, the Government may, by general or special order, require the employer to constitute a Works Committee, consisting of representatives of the employers and the workmen engaged in the establishment.

The number of representatives of workmen on such Committee shall not be less than the number of representatives of the employer. The representatives of workmen shall be chosen in the prescribed manner from amongst the workmen, engaged in the establishment and in consultation with the Trade Union.

It is the duty of the Works Committee to promote measures for securing and preserving amity and good relations between the employer and workmen and, to that end, to comment upon matters of their common interest and endeavour to compose any material difference of opinion in respect of such matters.

Their task is only to smooth away friction that may arise between the workmen and the management in day-to-day work. They cannot decide any alteration in the conditions of service by rationalization. Even if the workman’s representatives on the Works Committee agree to a scheme of rationalization, that is not binding either on the workers or on the mills.

ii. Mediation and Conciliation:

Under the Industrial Disputes Act 1947, effective conciliation machinery has been provided which can take cognizance of the existing as well as apprehended dispute, either on its own or on being approached by either of the parties to the dispute. The Act further makes conciliation compulsory in majority of disputes. As per ILO conciliation is defined as “the practice by which the services of neutral third party are used in a dispute as a means of helping the disputing parties to reduce the extent of their differences and to arrive at an amicable settlement or agreed solution.”

Conciliation is not “judicial” but “administrative” in character. It must start working within 14 days of reporting and must put their efforts and result in a report to the Govt. stating reasons if the conciliation has failed.

Conciliation Officers:

Labour officers can act as conciliation officers for establishments having less than 20 workers. The labour commissioner, Additional Labour Commissioner or Deputy Labour Commissioner can also act as conciliation officers for establishments having more than 20 workers.

Board of Conciliation:

This is a higher forum formed on adhoc basis. This is not a permanent body like conciliation officers. Board of conciliation consists of equal number of representatives from either side, presided over by an independent person appointed by the government. The board must complete the assignment within two months and submit its report to the government.

What are Conciliation Proceedings?

Conciliation Proceedings refer to any proceedings, held by a conciliation officer or board. Conciliation proceedings are therefore the machinery or means of promoting the settlement of disputes.


Section 6 of the Act empowers the government to constitute a court of inquiry, for inquiring into any matter pertaining to an Industrial Dispute. The procedure of the court of inquiry has also been prescribed by Section 11. While the report of the court is not binding on the parties, many time it paves the way for an agreement.

Court of Enquiry:

The Industrial Disputes Act, 1947 provides the procedure for a court of enquiry and its proceedings are quasi-judicial in nature as per sections 193 and 228 of the Indian Penal Code (1980). This has been set up by the government so as to facilitate voluntary settlement of industrial disputes. It must submit its report or recommendations within six months.

iii. Voluntary Arbitration:

Voluntary arbitration is a part of the infrastructure of resolving the industrial dispute in the industrial adjudication. Section 10 of the Act provides for the provision for resolving the industrial dispute by way of arbitration, which leads to a final and binding award. However, in India arbitration is not a preferred way of resolving industrial disputes.

Voluntary arbitration is a binding, adversarial dispute resolution process in which the disputing parties choose one or more arbitrators to hear their dispute and to render a final decision or award after an expedited hearing.

Voluntary arbitration implies that the two contending parties, unable to compromise their differences by themselves or with the help of mediator or conciliator, agree to submit the conflict/dispute to an impartial authority, whose decisions they are ready to accept. In other words, under voluntary arbitration the parties to the dispute can and do they refer voluntarily and dispute to arbitration before it is referred for adjudication. This type of reference is known as “voluntary reference”, for the parties themselves volunteer to come to a settlement though an arbitration machinery.

The essential elements in voluntary arbitration are as follows:

a. The voluntary submission of dispute to an arbitrator.

b. The subsequent attendance of witnesses and investigations.

c. The enforcement of an award may not be necessary and binding because there is no compulsion.

d. Voluntary arbitration may be specially needed for disputes arising under agreements.

iv. Adjudication:

Adjudication means a mandatory settlement of industrial disputes by labour courts, industrial tribunals or national tribunals under the Act or by any other corresponding authorities under the analogous state statutes. Adjudication is the legal process by which an arbiter or judge reviews evidence and argumentation including legal reasoning set forth by opposing parties or litigants to come to a decision which determines rights and obligations between the parties involved.

Three types of disputes are resolved through adjudication:

i. Disputes between private parties, such as individuals or corporations.

ii. Disputes between private parties and public officials.

iii. Disputes between public officials or public bodies.

By and large, the ultimate remedy of unsettled dispute is by way of reference by the appropriate government to the adjudicatory machinery for adjudication. The adjudicatory authority resolves the industrial dispute referred to it by passing an award, which is binding on the parties to such reference.

There is no provision for appeal against such awards and the same can only be challenged by way of writ under Articles 226 and 227 of the constitution of India before the concerned High Court or before the Supreme Court by way of appeal under special leave under Article 136 of the constitution of India.


Arbitration is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons (the “arbitrators”, “arbiters” or “arbitral tribunal”), by whose decision (the “award”) they agree to be bound. It is more helpful, however, simply to classify arbitration as a form of binding dispute resolution, equivalent to litigation in the courts, and entirely distinct from the various forms of non-binding dispute resolution, such as negotiation, mediation, or non-binding determinations by experts.

Arbitration is, today, most commonly used for the resolution of commercial disputes, particularly in the context of international commercial transactions.

Compulsory Arbitration is a non-binding, adversarial dispute resolution process in which one or more arbitrators hear arguments, weigh evidence and issue a non-binding judgement on the merits after an expedited hearing. The arbitrator’s decision addresses only the disputed legal issues and applies legal standards. Either party may reject the ruling and request a trial de novo in court.

Compulsory arbitration is one where the parties are required to accept arbitration without any willingness on their part. When one of the parties to an industrial dispute feels aggrieved by an act of the other, it may apply to the appropriate government to refer the dispute to adjudication machinery.

Such reference of a dispute is known as “compulsory” or “involuntary” reference, because reference in such circumstances does not depend on the sweet will of either the contending parties or any party to the dispute. It is entirely the discretion of the appropriate govt. based on the question of existing dispute, or on the apprehension that industrial dispute will emerge in particular establishment.

Under compulsory arbitration, the parties are forced to arbitration by the state when:

a. When there is a national emergency which requires that the wheels of production should not be obstructed by frequent work-stoppages.

b. The parties fail to arrive at a settlement by a voluntary method

c. The country is passing through a grave economic crisis

d. There is a grave public dissatisfaction with the existing industrial relations

e. Public interest and the working conditions have to be safeguarded and regulated by the state.

f. Compulsory arbitration leaves no scope for strikes and lockouts; it deprives both the parties of their very important and fundamental rights.

Advantages and Disadvantages of Arbitration:

Parties often seek to resolve their disputes through arbitration because of a number of perceived potential advantages over judicial proceedings:

a. When the subject matter of the dispute is highly technical, arbitrators with an appropriate degree of expertise can be appointed

b. Arbitration is often faster than litigation in court

c. Arbitration can be cheaper and more flexible for businesses

d. Arbitral proceedings and an arbitral award are generally secret

e. Because of the provisions of the New York Convention 1958, arbitration awards are generally easier to enforce in other nations than court judgements

f. In most legal systems, there are very limited avenues for appeal of an arbitral award

However, some of the disadvantages of arbitration can be that:

a. Consumers and employees usually do not know in advance that they have been forced into mandatory binding pre-dispute arbitration by purchasing a product or taking a job

b. If the arbitration is mandatory binding pre-dispute arbitration, the individual must, in advance, give up his or her right to access the courts and have a judge or jury decide the case

c. The parties need to pay for the arbitrators, which adds an additional layer of legal cost that can be prohibitive, especially in small consumer disputes

d. A recovery of attorneys’ fees is usually unavailable, making it difficult or impossible for consumers or employees to get legal representation

e. The arbitrator depends on the corporation for repeat business, so there is an inherent incentive to rule against the consumer or employee

f. There are very limited avenues for appeal, which means that an erroneous decision cannot be overturned

g. Although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays

h. In some legal systems, arbitral awards have fewer enforcement remedies than judgements

i. Arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of an award, such as the relocation of assets offshore

j. Rule of applicable law is not binding, and arbitrators not subject to overturn on appeal may be more likely to rule according to their personal ideals

k. Large corporations may exert inappropriate influence in consumer disputes, pressuring arbitrators to decide in their favour or lose future business

Drafting an Arbitration Agreement:

Before signing an Arbitration Agreement the following must be properly addressed:

i. Applicable law to arbitration

ii. Location of arbitration

iii. Number of arbitrators

iv. Language of arbitration

v. Discovery procedure

vi. Limitation to arbitration powers

vii. Interim measures/Provisional remedies

viii. Privacy

ix. Rules applicable

x. Appeal and enforcement

xi. Be aware of local peculiarities

xii. Survival after termination of the main agreement.

The arbitration agreement should be modified as applicable under different circumstances.

3. Non-Statutory Machinery of Resolving Industrial Disputes:

Code of Discipline:

Indian Labour Conference held in New Delhi in July 1957, formulated a “code of discipline” for Indian industries after thorough discussions. The code was developed for the purpose of maintaining discipline both in public and private sector industries.

Following are the salient features of this:

Mutual Agreement between Management and Unions:

a. There shall be no strike or lockout due notice.

b. No unilateral action on industrial matter.

c. Industrial disputes must be settled at appropriate level utilizing existing machinery.

d. Affirm faith in democratic principles.

e. Bind themselves to settle disputes/grievances by mutual negotiations or through voluntary arbitration.

f. Neither party take the line of coercion, intimation or “go-slow tactics”.

g. Avoid litigation, “sit-down” and “stay-in” strikes or lockouts.

h. Promote constructive cooperation.

i. Agree to establish mutually accepted procedure for settling grievances and do not resort to arbitrary actions.

j. Educate management personnel and workers in regards to their duties, responsibilities and obligations.

Agreement on the Part of the Management:

a. Do not increase workload unilaterally.

b. Discourage unfair labour practice like discrimination, coercion, victimization etc.

c. Take prompt actions for redressal of grievances and implementation of settlements and awards.

d. Publicize Code of Discipline in local language and display the same promptly.

e. Follow laid down sequential steps in disciplinary action taking like warning, suspension, etc.

f. Take disciplinary actions against officers/management staff who are found guilty of precipitating indiscipline among workers.

g. Recognize trade union according to criteria evolved at the 16th session of Indian Labour Conference held in May 1958.

Agreement on the Part of the Trade Unions:

i. Do not encourage physical duress.

ii. Do not permit rowdyism and violent demonstrations.

iii. Do not allow members to engage in any union activity during working hours.

iv. Discourage unfair labour practices such as “go-slow” damage, carelessness etc.

v. Take prompt action to implement awards and settlement.

vi. Display at a prominent place the “code of discipline” for the knowledge of workers.

vii. Take actions against office bearers of unions who are found violating Code of Discipline.

Industrial Disputes – 4 Major Causes: Wages and Allowances; Lay-Offs and Retrenchment;  Indiscipline and Violence and Union Rivalry

Disputes, by and large, are mostly traceable to economic as well as industry specific causes like wages, bonus, allowances, and conditions for work, working hours, leave and holidays without pay, unjust lay-offs and retrenchments. The non-economic factors will include exploitation of workers, ill treatment by staff members, sympathetic strikes, political factors, indiscipline, insubordination non- recognition of unions, unfair practices, etc.

Cause # 1. Wages and Allowances:

Workers would want their wages to run in sync with the ever-rising cost of living index. Employers are reluctant to foot the high wage bill in an era of intense competition. They want wages to be cut down to size so as to compete effectively.

So the fight goes on and on everywhere disputes relating to inadequate wages, poor allowances, bonus and allowances; and petty fights over other conditions of work would ignite workers to strike work every now and then. Over 20 per cent of industrial disputes in recent times are traceable to this category only.

Cause # 2. Lay-Offs and Retrenchment:

Unable to fight competition, employers nowadays show the door to employees not gifted with requisite skills. This would spark off fires immediately. In such a charged and heated atmosphere, passions get ignited. Unions and political parties begin to fish in troubled waters.

Representatives of management become targets of mob frenzy and victims of brutal attacks. Many supervisors have lost their lives in recent times trying to put out fires sparking off over the suspension or dismissal of employees even on grounds of indiscipline.

Cause # 3. Indiscipline and Violence:

When workers join a factory from different parts of the country, and hail from different regions and belong to different religions with differing perceptions and attitudes, it becomes easy to provoke passions even on petty issues. Not surprisingly, issues relating insubordination, indiscipline, ill treatment, undeserved punishment, verbal abuse and physical assaults have sparked off conflicts of various kinds in factories all over India in recent periods.

Cause # 4. Union Rivalry:

Disputes have also arisen in the past when employers failed to recognise a union as a bargaining agent, or when employers deliberately encouraged the formation of a rival union (with obvious leanings toward management) just to cut the union enjoying the support of most workers.

i. Sympathetic Strikes:

Workers struck work in one plant / industry when they wanted to exhibit their solidarity with striking workers from another plant or industry.

ii. Psychological / Social Causes:

On occasion, family, friends, community, environmental pressures and concerns also instigated the workers to take to the streets.

iii. Institutional Causes:

Disputes arose on account of institutional factors such as: recognition of unions, membership of unions, scope of collective bargaining, unfair practices.

Unfair practices would mean any of the following- management refusing to talk to a representative union enjoying support of majority workers; Management showing reluctance to recognise the union having majority support, management deliberately encouraging the formation of a rival union, management unilaterally deciding terms and conditions of employment affecting the lives of majority of workers, management trying to fix wage and allowances without taking workers or unions into confidence etc.

iv. Political Interference:

Political leaders have used unions as powerful weapons to build tensions inside a plant / industry with a view to satisfy their own private ends on a number of occasions, especially in unionised places like Mumbai, Ahmedabad, Kanpur, Calcutta, etc.

In recent times, the total number of strikes and also the number of workers involved in the strike has fallen. However, the number of man-days lost has increased quite significantly due to the prolonged stalemate between labour and management.

Industrial Disputes – 4 Major Effects: Strikes, Lockouts, Picketing and Gherao

Effect # 1. Strikes:

A strike is a very powerful weapon used by trade unions and other labor associations to get their demands accepted. It generally involves quitting of work by a group of workers for the purpose of bringing the pressure on their employer so that their demands get accepted. When workers collectively cease to work in a particular industry, they are said to be on strike.

According to Industrial Disputes Act 1947, a strike is “a cessation of work by a body of persons employed in an industry acting in combination; or a concerted refusal of any number of persons who are or have been so employed to continue to work or to accept employment; or a refusal under a common understanding of any number of such persons to continue to work or to accept employment”.

Types of Strike:

A. Primary Strikes:

Generally against the employer with whom the dispute exists.

(i) Stay away strike

(ii) Stay-in strike or sit-down strike

(iii) Tools -down, pen -down or mouth-shut strike

(iv) Lightening or wildcat strike

(v) Token or protest strike

(vi) Go slow

(vii) Work to rule/Work to designation

(viii) Picketing

(ix) Boycott

(x) Gherao

(xi) Hunger strike

B. Secondary Strike:

Against a third party. These strikes are sympathetic strike.

Causes of Strikes:

(i) Dissatisfaction with company policy

(ii) Salary and incentive problems

(iii) Increment not up to the mark

(iv) Wrongful discharge or dismissal of workmen

(v) Withdrawal of any concession or privilege

(vi) Hours of work and rest intervals

(vii) Leaves with wages and holidays

(viii) Bonus, profit sharing, Provident fund and gratuity

(ix) Retrenchment of workmen and closure of establishment

(x) Dispute connected with minimum wages

Effect # 2. Lockouts:

A lockout is a work stoppage in which an employer prevents employees from working. It is declared by employers to put pressure on their workers. This is different from a strike, in which employees refuse to work. Thus, a lockout is employers’ weapon while a strike is raised on part of employees.

Effect # 3. Picketing:

Picketing involves walking up and down outside the work place indicating a strike is in process. When workers are dissuaded from work by stationing certain men at the factory gates, such a step is known as picketing. Pickets are workers who are on strike that stand at the entrance to their workplace. It is basically a method of drawing public attention towards the fact that there is a dispute between the management and employees.

The Purpose of Picketing:

(i) To stop or persuade workers not to go to work,

(ii) To tell the public about the strike.

(iii) To persuade workers to take their union’s side.

Effect # 4. Gherao:

Gherao in Hindi means to surround. It denotes a collective action initiated by a group of workers under which members of the management are prohibited from leaving the industrial establishment premises by workers who block the exit gates by forming human barricades, The workers may gherao the members of the management by blocking their exits and forcing them to stay inside their cabins. The main object of gherao is to inflict physical and mental torture to the person being gheraoed and hence this weapon disturbs the industrial peace to a great extent.

Industrial Disputes – Impacts and Consequences

Industrial disputes cause incalculable harm to the nation. The impacts and consequences of industrial disputes are going to be lethal. Workers suffer badly in the form of loss of income and employment. The reputation of the employer takes a serious hit and the image in the marketplace gets badly bruised.

Let’s examine these briefly:

1. Impact on the Employer:

Industrial disputes result in stoppage of work — putting inevitable breaks to the production process. The average cost of production shoots up since fixed expenses need to be incurred whether production activity is there or not. This could lead to fall in sales, turnover and profits. The employer may also be liable to compensate his customers with whom he may have contracted for regular supply.

Apart from the immediate economic effects, loss of prestige and credit, alienation of the labour force, and other non-economic, psychological and social consequences may also arise. Other impacts in the form of destruction of property, personal injury, physical intimidation, threats of various kinds to family members could also be felt.

2. Impact on the Employee:

From the standpoint of employees, disputes result in immediate loss of income, violent demonstrations may push them to the extreme breaking point where some of the workers may suffer injuries. The employer could draw the shutters down and force them to lose employment for a while. If the disputes continue for painfully longer periods, there would be loss of employment permanently.

Punitive actions could also follow when workers indulge in illegal acts of violence, scarce national resources could be wasted or put to reckless use. The heat and controversy generated may come in the way of healthy labour management relations and the hatred may continue to haunt both parties even after resolution of disputes.

The inevitable shocks arising out of disputes that take a volcanic form could shake the entire nation and uproot the political system as a whole.

3. Impact on the General Public:

The public / society, too, is not spared, industrial unrest creates law and order problems, necessitating increased vigilance on the part of the state. Further, even when disputes are settled, strife and bitterness continue to linger, endangering social relations.

4. Impact on the National Economy:

Industrial disputes also affect the national economy. The affected workers would have to forgo their regular income. The demand for goods and services would come down drastically, as a result of work stoppages of various kinds at different points of time. When demand contracts, the supply side needs to be contained.

When both the supply and demand for goods and services fall, national income would be impacted negatively. All developmental work would come to a standstill due to paucity of funds.

Industrial Disputes – Top 2 Methods for Dispute Settlement: With Advantages and Disadvantages

The methods for settling industrial disputes may be kept in two broad categories:

A. Without Direct State Intervention:

1. Collective Bargaining:

It will, however, be relevant here to make a mention of the steps involved in the method.

These are as follows:

i. Presentation of demands to the employer collectively by employees or their union.

ii. Negotiations on the demands which are usually based on the principle of give-and-take.

iii. Signing of a formal agreement or reaching a common understanding about the points of agreement.

iv. A possible resort to work-stoppage in the form of strikes or lock-outs in the event of failure of negotiations.

In many cases, the parties also utilise the services of a conciliator or a mediator to help in the resolution of the dispute. These services have been made available by the government in many countries, including the USA, the UK and India. The conciliator or the mediator tries to persuade the parties to break the deadlock, assuage feelings and make the parties aware of one other’s view-points. However, the final agreement is actually reached between the parties themselves.

Although the employer and workmen themselves find out the solution of their disputes or differences, certain procedural aspects in collective bargaining increasingly have come to be regulated by legislation. These include the following – determination of the bargaining agent and its certification, recognition of representative union, certification of collective agreements and their legal enforceability; and regulation of work-stoppages and other forms of industrial action.


Major advantages of collective bargaining as a method of settling industrial disputes are as follows:

(i) It is based on the principle of freedom of the parties to resolve their differences on their own.

(ii) As the dispute is resolved by the parties themselves, there is a greater possibility of durable industrial peace.

(iii) The method is more appropriate for safeguarding and promoting members’ interest in a better way than what is expected from a third party.

(iv) It has a greater measure of flexibility.

(v) Collective bargaining has contributed substantially to strengthening of trade unions and to establishing stable industrial relations.


Some of the notable drawbacks of the method are as follows:

(i) The method is based on the principle of trial by combat with all its adverse repercussions.

(ii) The final outcome in collective bargaining generally is based on the relative strength of the parties rather than on fairness and just cause.

(iii) Generally, it leads to wide diversities in labour standards even in the same industry and the locality.

(iv) There is a greater possibility of work-stoppages, often causing avoidable hardships to the consumers and people at large.

(v) The method often creates additional burden on the government’s machineries for maintaining law and order.

2. Voluntary Arbitration:

In this method, the parties to an industrial dispute agree to refer it to a third independent and impartial person for decision. While referring the dispute to the arbitrator, the parties may agree in advance to abide by the award. In some cases, voluntary arbitration has also been accorded due recognition under labour laws such as the Industrial Disputes Act, 1947 in India and the Industrial Courts Act, 1919 of the UK.

Under the Code of Discipline in Industry (1958), the managements and unions have affirmed their faith in democratic principles with a view to ensure better discipline in industry and have bound themselves “to settle all future differences, disputes and grievances by mutual negotiations, conciliation and voluntary arbitration”.

The Gandhian technique for resolving industrial disputes has also given special importance to voluntary arbitration. In the USA, arbitration also constitutes the last step in most of the grievance procedures in both unionised and non-unionised establishments.


(i) Element of fairness and impartiality in decision;

(ii) Greater chances of acceptability of award;

(iii) Negation of imposition and coercive approach;

(iv) Encouragement to co-operation in industrial relations;

(v) Simple and free from cumbersome procedure.


(i) Probability of insufficient knowledge about the problem;

(ii) Uncertainties in regard to the nature of award;

(iii) Probability of rejection of the award on account of the element of voluntarism in the process;

(iv) Difficulties in locating a suitable arbitrator and obtaining his consent.

B. With Direct State Intervention:

1. Compulsory Establishment of Bipartite Committees:

In many countries, employers are statutorily required to constitute bipartite committees to resolve differences with workers on specified issues. For example, in India, the Industrial Disputes Act, 1947 requires specified categories of employers to constitute works committee and grievance redressal committee.

The works committee is required “to promote measures for securing and preserving amity and good relations between the employer and workmen and, in order to achieve the 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.” [Sec. 3]. The “grievance redressal committee” is intended to settle industrial disputes connected with individual workman of the establishment.

Although, in practice, works committees have outlived their contemplated utility, in some establishments they have proved effective in resolving many contentious issues. Industrial relations laws of Australia and New Zealand also provide for the formation of some forms of joint bodies for the resolution of industrial disputes.

The main impetus to the establishment of joint bodies may be traced back to 1918 when the Whitley Commission in Great Britain suggested the formation of works committees in particular industrial establishments, district councils at the district level and joint industrial councils in organised industries. These joint bodies were, however, essentially intended to promote labour- management co-operation.

2. Compulsory Collective Bargaining:

In a few countries, employers and recognised representative unions are statutorily required to bargain collectively with each other. In the USA, for example, the Wagner Act, 1935 (National Labour Relations Act) made it an unfair labour practice on the part of the employer to refuse to bargain collectively with the recognised representative union. Later, the Taft-Hartley Act, 1947 (Labour Management Relations Act) made it an unfair labour practice on the part of both the employer and the recognised representative union to refuse to bargain with each other collectively.

As a result, a large number of disputes in the country have come to be settled through the process of collective bargaining. In many countries, laws also require certification of collective agreements to ensure their legal applicability. In India, an amendment to the Industrial Disputes Act, in 1982 made refusal to bargain collectively in good faith both by the employer and the recognised trade union an unfair labour practice. However, in the absence of making recognition of representative union statutorily compulsory, these clauses do not have much significance.

3. Compulsory Conciliation and Mediation:

In many countries, conciliation and mediation services have been established by the government either under labour laws or by administrative arrangements. These services generally are in two forms. First, there are conciliation services which the parties may utilise at their discretion for solving differences. Second, there is a provision of compulsory conciliation under specified situations.

In India, the Industrial Disputes Act, 1947 provides for both types of conciliation. The parties to an industrial dispute may jointly approach the conciliation officer with a request to help the resolution of their dispute. In such a case, it is up to the conciliation officer to accept the request or decline. The normal duty of the conciliation officer is to investigate into the dispute and all matters affecting its merits and right settlement, and to do all such things which he considers appropriate for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute. [Sec. 12(2)].

However, in the case of public utility service (as specified under the Act), for which a notice of strike or lock-out has been served, he is required to hold conciliation proceedings. A settlement arrived at during the course of conciliation proceeding is binding on all parties of dispute. The Act also provides for the appointment of Board of Conciliation.

In the USA and the UK, the Government has established a network of conciliation and mediation services, which the parties can make use of, if they so desire. In Australia, the Commonwealth Conciliation and Arbitration Act provides for the appointment of commissioners to convene a compulsory conciliation conference consisting of representatives of employers and employees and presided over by a commissioner or conciliator.

Conciliation has all the major advantages and disadvantages of collective bargaining because, even in this method, the final outcome is essentially the result of negotiations between the main parties, the role of conciliator being primarily that of a moderator.

4. Adjudication or Compulsory Arbitration:

Adjudication or compulsory arbitration is a method of settling industrial disputes by an independent judicial or quasi-judicial authority appointed by the government under law. Reference of an industrial dispute to the adjudication authority may vest in the government, or it may be made by mutual agreement between parties. The award of the adjudication authority is generally binding on the parties, but in some cases, the parties are given the option to abide by the award or not to accept it.

In India, the Industrial Disputes Act, 1947 provides for the appointment of adjudication authorities in the forms of Labour Court, Tribunal and National Tribunal. Although Labour Courts and Tribunals are appointed by both the central and state governments in respect of industrial disputes in their respective jurisdictions, the National Tribunal can be appointed only by the Central Government.

Reference of an industrial dispute to an adjudication authority can be made only by the government at its discretion, but on the joint request of the parties, the government or an authorised authority is required to make such a reference. The Act also specifies the subjects of disputes on which these authorities can give their awards. [Second and Third Schedules of the Act]. The award of an adjudication authority is binding on the parties. Provision of compulsory arbitration for settling industrial disputes has also been made on a wide scale in Australia and New Zealand.


The major advantages of adjudication/compulsory arbitration are as follows:

(i) It introduces the element of fairness and justice in the resolution of disputes.

(ii) It has been of substantial help in developing norms on many contentious issues such as minimum wages, bonus, dearness allowance and gratuity. Many of these norms have been incorporated in labour laws.

(iii) The provision of adjudication has also reduced the scope of work-stoppages. So long as an industrial dispute is pending before an adjudication authority or an adjudication award is in operation, strikes and lock-outs on the issues are prohibited.

(iv) It is conducive to establishing peaceful industrial relations.

(v) The recalcitrant parties cannot waver over the acceptance of the award.


The main disadvantages of the method are as follows:

(i) It contains element of authoritarian imposition by a decisions by a third party.

(ii) It negates democratic freedom of the parties to settle their differences on their own.

(iii) It generally encourages litigious atmosphere in industrial relations.

(iv) The method is generally expensive and time-consuming.

(v) In the absence of proper guidelines, the decision of the adjudicator is very often arbitrary.

(vi) The power of the government to refer an industrial dispute to an adjudication authority is likely to be influenced by political and extraneous considerations.

It was on account of these limitations of adjudication that V.V. Giri vehemently opposed the method.

Compulsory Investigation:

It is an indirect method of settling industrial disputes. Quite a few industrial disputes laws provide for the appointment of court of inquiry with the main purpose of finding out the relevant facts and issues involved in an industrial dispute and give them adequate publicity so that the pressure of public opinion may force the recalcitrant party to give up its rigid stand and agree on its rightful settlement.

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