Causes of Industrial Disputes


Everything you need to know about the causes of industrial disputes. Industrial dispute is dispute or difference between employer and workers.

Such dispute arises when workers want to satisfy their physiological and psychological needs and management fails to satiate such needs.

In other words, workers want more wages, allowances, incentive, housing accommodation, medical benefits, transport facilities, canteen facilities, good working conditions, better welfare amenities, fringe benefits, social security measures, challenging job, authority, responsibilities, promotion, status, recognition, good treatment etc. but management fails or shows unwillingness to meet up their requirements.


In such situation, interactions between management and workers create difference / dispute between them which, in turn, takes the shape of industrial dispute.

The causes of industrial disputes can be studied under the following heads:-

1. Economic Causes 2.  Political Causes 3. Personnel Causes 4. Indiscipline 5. Misc. Causes 6. Psychological Causes 7. Terms and Conditions of Employment

8. Workers Conditions 9. Denial of Legal and Other Rights of Workers 10. Market Influences 11. Technological Factors 12. Legal Factors 13. Managerial Causes.


Additionally, learn about the measures taken to achieve good industrial relations.

What are the Causes of Industrial Disputes – Economic Causes, Political Causes, Personnel Causes, Misc. Causes and a Few Others

What are the Causes of Industrial Disputes – Economic Causes, Political Causes, Personnel Causes, Indiscipline and Misc. Causes (With Measures)

The disputes between the management and the workers may arise on account of the following factors:

1. Economic Causes:

These causes may be classified as:

i. Demand for increase in wages on account of increase in all-India Consumer Price Index for Industrial Workers.


ii. Demand for higher gratuity and other retirement benefits.

iii. Demand for higher bonus.

iv. Demand for certain allowances such as –

a. House rent allowance


b. Medical allowance

c. Night shift; allowance

d. Conveyance allowance

v. Demand for paid holidays


vi. Reduction of working hours.

vii. Better working conditions, etc.

2. Political Causes:

Various political parties control Trade unions in India. In many cases, their leadership vests in the hands of persons who are more interested in achieving their political interests rather than the interests of the workers.

3. Personnel Causes:

Sometimes, industrial disputes arise because of personnel problems like dismissal, retrenchment, layoff, transfer, promotion, etc.

4. Indiscipline:

Industrial disputes also take place because of indiscipline and violence on the part of the workforce. The managements to curb indiscipline and violence resort to lock outs.

5. Misc. Causes:

Some of the other causes of industrial disputes can be:

i. Workers’ resistance to rationalisation introduction of new machinery and change of place

ii. Non-recognition of trade union

iii. Rumours spread out by undesirable elements

iv. Working conditions and working methods

v. Lack of proper communication

vi. Behaviour of supervisors

vii. Inter trade union Rivalry etc.

Measures to Achieve Good Industrial Relation:

The following measures should be taken to achieve good industrial relations:

1. Progressive Management Outlook:

There should be progressive outlook of the management of each industrial enterprise. It should be conscious of its obligations and responsibilities to the owners of the business, the employees, the consumers and the nation. The management must recognize the rights of workers to organize unions to protect their economic and social interests.

2. Strong and Stable Union:

Strong and stable union in each industrial enterprise is essential for good industrial relations. The employers can easily ignore a weak union on the plea that it hardly represents the workers. The agreement with such a union will hardly be honoured by a large section of workforce. Therefore, there must be a strong and stable union in every enterprise to represent eh majority of workers and negotiate with the management about the terms and conditions of service.

Please understand that the workers should realize that they have to be united and represent themselves strongly.

3. Atmosphere of Mutual Trust:

Both management and labour should help in the development of art atmosphere of mutual cooperation, confidence, and respect. Management should adopt a progressive outlook and should recognize the rights of workers. Similarly, labour unions should persuade their members to work for the common objectives of the organization. Both the management and the unions should have faith in collective bargaining and other peaceful methods of settling disputes.

4. Mutual Accommodation:

The employers must recognize the right of collective bargaining of the trade unions. In any organization, there must be a great emphasis on mutual accommodation rather than conflict or uncompromising attitude.

One must clearly understand that conflicting attitude does not lead to amicable labour relations; it may foster union militancy as the union reacts by engaging in pressure tactics. The approach must be of mutual “give and take” rather than “Take or leave.” The management should be willing to co-operate rather than blackmail the workers.

5. Sincere Implementation of Agreements:

The management should sincerely implement the settlements reached with the trade unions. The agreements between the management and the unions should be enforced’ both in letter and spirit. If the agreements are not implemented then both the union and management stop trusting each other. An environment of uncertainty is created. To avoid this, efforts should be made at both ends to ensure the follow up of the agreements.

6. Workers’ Participation in Management:

The participation of workers in the management of the industrial unit should be encouraged by making effective use of works committees, joint consultation and other methods. This will improve communication between managers and workers, increase productivity and lead to greater effectiveness.

7. Sound Personnel Policies:

The following points should be noted regarding the personnel policies.

The policies should be:

i. Formulated in consultation with the workers and their representatives if they are to be implemented effectively

ii. Clearly stated so that there is no confusion in the mind of anybody.

iii. Implementation of the policies should be uniform throughout the organisation to ensure fair treatment to each worker.

8. Government’s Role:

The Government should play an active role for promoting industrial peace. It should make law for the compulsory recognition of a representative union in each industrial unit. It should intervene to settle disputes if the management and the workers are unable to settle their disputes. This will restore industrial harmony.

What are the Causes of Industrial Disputes – Different Causes that Lead to Industrial Disputes

The Industrial Disputes Act, 1947, and the many judicial decisions by courts and tribunals provide that industrial disputes may be raised on any one of the following issues:

1. Retrenchment of workers following the closing down of a factory, lay-offs, discharge or dismissal, reinstatement of dismissed employees, and compensation for them.

2. Denial of benefit awarded to a worker.

3. Wages, fixation wages, and minimum rates, modes of payment.

4. Lockout and claim for damages by an employer because employees resorted to an illegal strike.

5. Payment of gratuity, provident fund, pension and traveling allowance;

6. Disputes between rival unions, and

7. Disputes between employers and employers.

Different causes that lead to industrial disputes are listed below:

1. Psychological Causes:

i. Difficulty in adjusting with each other (i.e., employer and worker)

ii. Clash of personalities with co-workers or employer

iii. Authoritative Leadership and ill treatment by supervisor

iv. Demand for self-respect and recognition by workers.

v. Strict discipline, Absence of cooperation and mutual understanding.

2. Terms and Conditions of Employment:

i. Long work hours

ii. Unjust layoff, retrenchment, dismissal, etc.

3. Workers Conditions:

i. Unhealthy work environment

ii. Insufficient safety measures

iii. Improper plant and workstation layout.

4. Economic Causes:

i. Inadequate wages

ii. Inadequate fringe benefits

iii. No bonus or other incentives, etc.

5. Denial of Legal and Other Rights of Workers:

i. Non-compliance of per labour laws and regulations, standing orders, etc.

ii. Violation of mutual agreements (i.e., between employer and workers).

What are the Causes of Industrial Disputes

Industrial dispute is dispute or difference between employer and workers. Such dispute arises when workers want to satisfy their physiological and psychological needs and management fails to satiate such needs.

In other words, workers want more wages, allowances, incentive, housing accommodation, medical benefits, transport facilities, canteen facilities, good working conditions, better welfare amenities, fringe benefits, social security measures, challenging job, authority, responsibilities, promotion, status, recognition, good treatment etc. but management fails or shows unwillingness to meet up their requirements. In such situation, interactions between management and workers create difference / dispute between them which, in turn, takes the shape of industrial dispute.

Pocket Book of Labour Statistics indicates the following factors responsible for work stoppages:

(i) Wages and allowances

(ii) Indiscipline

(iii) Personnel

(iv) Charter of demands

(v) Standing Orders / Rules / Service Conditions / Safety measures

(vi) Bonus

(vii) Non-implementation of agreements

(viii) Better amenities

(ix) Leave, hours of work and shift

(x) Inter / intra union rivalry

(xi) Retrenchment and lay off

(xii) Violence

(xiii) Work load

(xiv) Suspension/change of manufacturing process

(xv) Other factors.

Industrial Disputes Act 1947, prescribe the causes of industrial disputes.

In terms of section 2(k) of the Act, causes of industrial disputes are:

(i) Employment causes

(ii) Non-employment causes

(iii) Terms of employment causes

(iv) Causes concerning conditions of labour of any person.

From the survey conducted by the author in the sampled collieries in West Bengal during 1970-72 it is revealed that the following factors contribute to the causes of strike as expressed/ opined by the workers, union leaders and management personnel of those sampled collieries –

(i) Economic factor

(ii) Employment conditions

(iii) Promotion

(iv) Working condition

(v) Welfare measures

(vi) Living condition

(vii) Unionism

(viii) Management / supervisor’s attitude

(ix) Social Security

(x) Others viz., political causes, individual interest, instigation by management.

The survey conducted by the author indicates that the following factors contribute to the causes of lockouts in sampled collieries of West Bengal –

(i) Counter measure

(ii) Union attitude

(iii) Management attitude

(iv) Contingent factor

(v) Economic factor

(vi) Others viz., conflict between partners, investment of capital from one venture to other, employers’ arbitrary decision to close down mines etc.

In the present changing scenario, tough competition for survival, growth and development amongst indigenous companies and MNCs/TNCs is evident in the market. Hence, expectations, demands, needs, requirements of workers, trade unions and management change considerably.

In such situation, industrial disputes/conflicts arise out of the following:

1. Wages and allowances (higher wages and allowance to meet up physiological needs.)

2. Monetary reward, incentives

3. Promoting quality of work life (QWL)

4. Designing and implementation of unambiguous career planning and development

5. Welfare benefits-both statutory and non-statutory (i.e., subsidised canteen facilities, creches, drinking water, housing accommodation, transport facilities, supply of articles through cooperative societies at a reasonable price, medical benefits, hospitalization facilities)

6. Fringe benefits-leave encashment, leave travel concession, paid holidays, scholarship to employees’ children, education allowance, canteen allowance, concessionary benefits.

7. Bonus, gratuity, retiral benefits, additional retirement benefits.

8. Lay off, retrenchment, dismissal, discharge.

9. Disciplinary issues-issuance of show cause, charge sheet, suspension, orders of punishment.

10. Disposal of grievances, pending issues.

11. Implementation of agreed issues, provisions of bi-partite settlement, standing orders.

12. Implementation of the court orders, tribunal awards.

13. Employment of casuals, temporary workers, badlis

14. Management attitude, treatment, behaviour, style of functioning, approaches.

15. Trade union attitude, response to organizational requirements, demands, attitudes towards company policies, procedures, practices.

16. Introduction of new machines, computers.

17. Downsizing/right sizing of employees, voluntary retirement, sabbatical

18. Hiring of employees, promotion, transfer.

19. Diversification of business, closing of sections/ departments, acquisition, merger.

20. OD intervention, change management.

21. Financial health of the company, apprehension of violence, unusual situation, retaliation

22. Intra-union rivalry, inter union rivalry, violent attitude, physical assault.

23. Working conditions

24. Recognition of unions

25. Unfair labour practices

26. Settlement through collective bargaining process, participation in decision making.

27. Expression of sympathy towards other workers, workforce solidarity, political causes.

What are the Causes of Industrial Disputes – Factors Leading to Industrial Disputes in Organizations: Economic Factors, Social Factors, Political Factors and a Few Others

There are various factors leading to industrial disputes in organizations.

These are discussed below:

1. Economic factors – Compensation, Incentive schemes, Benefits, Bonus etc.

2. Social factors – Impact of Globalization, Privatization and Liberalization, Poor QWL, Poor work environment, poor hygiene, unemployment, economic recession, bureaucratic management, red tapism, illiteracy in workers etc.

3. Political factors – Political unrest caused by inter party rivalry and violence, Political influence on trade unions, Unstable state and central governments

4. Psychological factors – Attrition rates in the industry, loss of job, increasing job dissatisfaction

5. Market influences – Competition, New Products, Products/services offered by MNCs, Recession of the industry

6. Technological factors – Fear of loss of jobs caused by automation, mechanization and computerization, rapid technological changes

7. Legal factors – Changing legislations, lack of legal help and support for the workers etc.

The causes of industrial disputes can be broadly classified into two categories- economic and non- economic causes. The economic causes will include issues relating to compensation like wages, bonus, allowances, and conditions for work, working hours, leave and holidays without pay, unjust layoffs and retrenchments. The non-economic factors will include victimization of workers, ill treatment by staff members, sympathetic strikes, political factors, indiscipline etc.

What are the Causes of Industrial Disputes – With Effects of Industrial Disputes

It is not easy to identify a single factor as a cause of industrial conflicts as multifarious cause’s blended together result in industries disputes. Deep seated and basic causes of disputes can be identified through in-depth probe though surface manifestations appear to be responsible for conflicts.

The relative importance of these causes, when more than one present is often very difficulty to gauge. According to Mukerjee, “The development of capitalistic enterprise, which means the control of the tools of production by small entrepreneur class has brought to the fore the acute problem of friction between management and labour throughout the world”. The cause of industrial disputes can be divided into economic causes, managerial causes, political causes and other causes.

Their brief discussion is as follows:

Cause # 1. Managerial:

These reasons include wrongful managerial treatment and wrong labour policies, these are as follows:

(a) Defective recruitment and worker’s development policies – Indian industries have recruitment through contract system by which workers are more troubled. Beside this the management’s partial policy towards labour likes to promotion and demotions have dissatisfied the workers.

(b) Defective forced leave and discharge – Labour disputes arise due to unlawful discharge of the innocent persons. Indian industrialists do not stick to human behaviour. They adopt the policy of hire and fire.

(c) No recognition to labour unions – Management does not recognise a particular union, have increased its competitive union, have increased unrest. Employers were not sympathetic to the labour unions from beginning. They do not like to see them united. Hence, they try to divide them.

(d) Misbehaviour by inspectors – At the time of working inspectors, misbehaviour has been the reason for struggle. Internal struggle increases because of such small things.

(e) Inefficient and deference leadership – Then reason for industrial disputes is not getting the able leadership by management and labour unions. Inefficient management leadership does not care the problems of workers. They neither attempt to improve the human and labour relations nor do they try to develop close contact and mutual understanding between workers and themselves.

(f) Breaking of settlements – Workers oppose when there is breaking of personnel-collective or personnel service terms or settlement.

(g) Excessive discipline.

Cause # 2. Economic:

Mostly the reasons for industrial disputes are economic reasons like demand for increase in salary, dearness allowance, bonus, etc. According to Royal Commission on labour in India “Although workers may have been influenced by persons with nationalist, communist or commercial ends top serve, we believe that there has rarely been a strike of any importance which has not been due entirely or largely due to economic reasons”.

Chief economic causes are as follows:

(a) Low Wages – Due to lower wages, demands are raised for higher wages with rise in prices. This has been the main reason for the industrial disputes in India and everywhere.

(b) Working Conditions – In India working conditions in factories are not proper. Light and water arrangement are not suitable. Old machine are not replaced. Security provisions are not suitable. Undeserved punishments, mass lay off, abuses and mis-behaviours have also led to several strikes.

(c) Dearness Allowance and Bonus – Next comes the demand for dearness allowance and bonus. The price rise kinds to demand of wages rise. These are co-related. If one rises the other does rise. This brings the unrest. There are also strikes to get more bonuses.

(d) Heavy Industrial Profits – Increasing industrial profits have made workers to demand wage rise and bonus. They demand an extra share from the industrial profits as they think themselves to be a partner in industry and hence they feel that it is their right to demand a share in it.

(e) Working Hours – Working hours are more in India, but the wages are not paid accordingly. They demand for less working hours. This unrest has lessened the working hours. There is interval in the mid-day.

(f) Demand for Other Benefits – Besides wages and bonus other extra facilities are demanded by workers such as – houses, medical facilities, education, communication. These have recourses to unrest.

(g) Job Insecurity – The demand of the workers in respect of security of his job is sometime the cause of industrial disputes.

(h) Pre-supposing and Forced Leave – During depression employers, pre-supposing the economic loss, wish the labour to have forced leave. The strikes were done against this for three months continuously in textile industry. Life Insurance Corporation started using computers and this also leads to strikes.

Cause # 3. Political:

Industrial disputes sometime arise due to some political reasons also as under:

(a) Strikes against the government while the nation was not independent. Labour class actively participated in the struggle of independence, but after independence now they use the same weapon for the fulfilment of their objectives.

(b) Influenced by politicians – All labour unions in India are concerned with some or other political party, which uses workers for its own selfish motives. Gear, strikes, lockouts and breakages are the effects of these.

Other Causes:

Other causes like sympathetic strike, strikes due to opposition of themselves in foreign countries also create industrial unrest. Recently the study group of the National Labour Commission, reporting industrial relations in the different regions has pinpointed various reasons for growing industrial tension in the country, viz., excessive legislation, legal complexities in regard to preservation of peace and settlement of industrial disputes, combination of too much law and too little respect for the law even at high levels.

It is thus obvious that the causes of industrial disputes in India are both economic as well as non- economic. Often many causes blended together produce a dispute and it is difficult to isolate one cause from the other.

Effects of Industrial Disputes:

Industrial disputes resulting in the strikes and lockouts disturb the economic, social and political life of a country.

But every coin has two sides:

1. Good and

2. Bad;

Both types of effects here are as follows:

1. Good Effects:

Generally, industrial disputes have bad effects but there are a few good effects too as follows:

(a) Progress of labour unions – Labour unions progress of during labour disputes period. With the hopes of gains there is growth in numbers.

(b) Growth in worker’s unity – Unity is the basis of industrial disputes. While disputing all workers are organised and a demand and since of cooperation grows.

(c) Enactment of labour laws – Problems arise because of unions and for settling it, the government enacts laws which protect the labour interest.

(d) Improvement and working condition and wages – Labour disputes are for the improvement of wages and working condition. Being victorious, they get these benefits.

(e) Improvement in industrialist’s behaviour – With the fear of disputes industrialists behave better with workers, they get high place of honour.

2. Bad Effects:

Industrial disputes are not unmixed blessings. They harm all class-labour, industrialist, government and society.

The following are the bad effects:

(a) Loss to Industrialists – There is loss of production to industries during disputes; hence less profit due to permanent workers. After production, demand diminishes as people purchase stabilized goods. Effect to aid strikes also involves expenses. Hence cost increases.

(b) Loss of Workers – Because of disputes there is loss of wages for disputes period, loss, in chances of future progress, distress due to efforts made to suppress disputes by governments and industrialists. All these affect labour class which influences their living standard. If the dispute is unsuccessful they are to undergo more hardship.

(c) Loss of Consumers – Due to stoppage of production because of disputes, goods are not available and substitute goods are purchased, cost of goods increase and black market prevails.

(d) Reduction in National Income – Due to shortage of production revenue is reduced, national income goes down and standard of national living reduced.

(e) Odd Labour Relations – Because of disputes labour relations become bad and bitter and dissention increases more.

(f) Social Disorders – Discipline is not found among workers. They try to fulfil each demand by disputes. Social wealth is destroyed. Everywhere uncertainty prevails.

(g) Other Disadvantages – Industrial disputes hinder the progress of the country as a number of Mondays are lost and tension prevails in the economic environment. Hence, the possibilities of future development become weak.

What are the Causes of Industrial Disputes?

The following causes of industrial disputes are:

1. Economic Causes – Demand for higher wages, bonus, fringe benefits and overtime payment are the economic causes. Besides these, lack of proper promotional system also plays an important role in industrial dispute.

2. Technological Causes – In adequate technology, technological changes, and fear of unemployment are the major resources of technological causes of industrial disputes.

3. Psychological Causes – Conflict between individual and organizational goals, poor interpersonal relations, personality and attitude, non-systematic performance appraisal system, faulty transfer policy and so on.

4. Social Causes – Non satisfactory social values, norms and low morale are social causes of industrial disputes.

5. Physical Causes – Improper communication system, poor working conditions, insufficient equipment and tools and lack of proper maintenance system and so on.

6. Legal Causes – Unfair labour practices, inadequate labour machinery, overlapping of labour laws and lack of understanding of labour acts are some major legal causes of industrial disputes.

7. Market Situation – Problem of supply and demands, very fast changing customer’s needs, flute market conditions and price rise and so on.

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