Settlement of Industrial Disputes — Authorities, Arbitration & Awards — Labour Law I Notes

Authorities for Settlement of Industrial Disputes

Picture a dispute as a patient. First it sees the general physician (the works committee and conciliation officer) who tries to talk both sides into a cure. If that fails, it is referred to the specialist surgeon (the tribunal) whose decision binds. The law builds exactly this ladder — from friendly talk to a binding award.

The machinery, rung by rung

The Government does not decide disputes itself; it provides a ladder of authorities who investigate and settle. Under the Industrial Disputes Act, 1947, carried into the Industrial Relations Code, 2020, these are:

Works Committee (s.3 ID Act / s.3 IR Code) — a joint committee of employer and worker representatives in every establishment with 100 or more workers. Its job is to promote goodwill and settle small differences before they grow. It is advisory, not adjudicatory.
Grievance Redressal Committee (s.4 IR Code) — a new internal body in establishments with 20 or more workers, to resolve individual grievances quickly.
Conciliation Officer (s.4 ID Act / s.43 IR Code) — a Government officer who mediates: he brings the parties together, suggests a fair settlement, and if they agree he records a settlement (binding). He cannot impose a decision. He submits a report — within 14 days — and if conciliation fails the matter can go up.
Board of Conciliation (s.5 ID Act) — a larger conciliation body for bigger disputes; same mediating (not deciding) character.
Court of Enquiry (s.6 ID Act) — inquires into the facts of a dispute and reports; it does not make a binding award. Think fact-finder, not judge.
Adjudication — the binding tier:
1. Labour Court (s.7 ID Act) — decides matters in the Second Schedule: dismissal, standing orders, legality of a strike/lock-out, individual disputes.
2. Industrial Tribunal (s.7A ID Act / s.44 IR Code) — decides the bigger Third Schedule matters: wages, bonus, hours, retrenchment, closure.
3. National Industrial Tribunal (s.7B ID Act / s.46 IR Code) — for disputes of national importance or affecting establishments in more than one State, constituted by the Central Government.

How a dispute reaches adjudication — the reference (s.10 ID Act). Under the old Act the appropriate Government referred the dispute to the appropriate authority. It forms an opinion that a dispute exists or is apprehended and refers it; a refusal to refer must be for reasons. The IR Code streamlines this: the parties (or the Government) may take the dispute directly to the Industrial Tribunal (s.53), so the Government’s gate-keeping role shrinks.

Section 7A, Industrial Disputes Act, 1947 (Industrial Tribunal — close paraphrase; now s.44 IR Code): “The appropriate Government may … constitute one or more Industrial Tribunals for the adjudication of industrial disputes relating to any matter … and for performing such other functions as may be assigned to them…”

In Simple Terms: small talk first (works committee, conciliation), fact-finding next (court of enquiry), and only if peace fails does a court or tribunal give a binding decision.

💡 EXAM TIP — how to structure the “authorities” essay

The trap. Candidates list the bodies as a jumble and lose the logic.

What to write. Present them as a ladder in two groups: (i) conciliatory/ advisory (works committee, conciliation officer/board, court of enquiry) and (ii) adjudicatory/binding (Labour Court, Industrial Tribunal, National Tribunal) — and add the reference under s.10 that carries a dispute from one to the other.

Why it scores. The examiner is testing whether you understand the flow from talk to binding award, not just the names.

flowchart TD
    ROOT["Industrial dispute"]:::root
    ROOT --> WC["Works Committee / Grievance Committee"]:::leaf
    WC --> CO["Conciliation Officer / Board"]:::leaf
    CO --> CE["Court of Enquiry (fact-finding, reports)"]:::leaf
    CO --> REF["Reference (s.10) / direct application (s.53 IR Code)"]:::leaf
    REF --> LC["Labour Court (2nd Schedule)"]:::good
    REF --> IT["Industrial Tribunal (3rd Schedule)"]:::good
    REF --> NT["National Tribunal (national importance)"]:::good
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Case Laws

Associated Cement Companies v P.N. Sharma (1965) — a tribunal exercising adjudicatory functions acts quasi-judicially.
State of Madras v C.P. Sarathy (1953) — the Government’s reference under s.10 is an administrative act; the tribunal decides the merits.

Voluntary Arbitration

Instead of waiting for the Government to refer their fight to a tribunal, two sides can shake hands and say: “let’s pick our own judge and accept what he decides.” That is voluntary arbitration — the parties choose the referee.

What it is

Adjudication is imposed by the Government; voluntary arbitration is chosen by the parties. Under s.10A of the ID Act, 1947 (now s.42 IR Code), where an industrial dispute exists, the employer and workers may, by written agreement, refer it to an arbitrator of their choice before the dispute is referred to a Labour Court or Tribunal. The arbitrator hears both sides and makes an arbitration award, which is published and becomes binding like an adjudicator’s award.

Who, when, how: who — the parties by agreement; when — before the dispute is referred to a court/tribunal; how — a signed arbitration agreement naming the arbitrator(s), a hearing, and a binding award submitted to Government for publication.

Section 10A, Industrial Disputes Act, 1947 (close paraphrase; now s.42 IR Code): “Where any industrial dispute exists or is apprehended and the employer and the workmen agree to refer the dispute to arbitration, they may … by a written agreement, refer the dispute to arbitration and the reference shall be to such person or persons … as an arbitrator or arbitrators as may be specified in the arbitration agreement.”

In Simple Terms: the two sides jointly hire their own judge, agree in writing, and promise to obey his award.

Arbitration vs Adjudication (the exam’s favourite contrast)

Source of authority. Arbitration — the parties’ agreement. Adjudication — the Government’s reference.
Choice of forum. Arbitration — parties choose the arbitrator. Adjudication — Government appoints the presiding officer.
Consent. Arbitration — voluntary. Adjudication — compulsory once referred.
Both produce a binding award; both further industrial peace.

flowchart LR
    A["Industrial dispute"]:::root
    A --> B["Written arbitration agreement (s.10A / s.42)"]:::leaf
    B --> C["Arbitrator of parties' choice"]:::leaf
    C --> D["Arbitration award - published & binding"]:::good
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Case Laws

Karnal Leather Karamchari Sanghatan v Liberty Footwear Co. (1989) — an arbitration reference under s.10A must be given due publicity so all affected workers may be heard.
Gujarat Steel Tubes v Mazdoor Sabha (1980) — an arbitrator under s.10A has wide powers, including to reinstate.

Appropriate Government

Two governments, one worker — which one runs his dispute? A bank employee’s dispute is the Centre’s business; a local factory’s is the State’s. Naming the wrong government sinks the whole reference, so the law defines exactly who is “appropriate”.

What it means

“Appropriate Government” is the Government — Central or State — that has authority over a given establishment for the purposes of the Code. It decides who refers a dispute, appoints the officers, and frames the rules. Under s.2(a) of the ID Act, 1947 (now s.2(b) IR Code):

The Central Government is appropriate for establishments carried on by or under the authority of the Central Government, and for railways, major ports, mines, oil-fields, banking and insurance companies, and central public-sector undertakings.
For all other establishments, the State Government is appropriate.

Section 2(b), Industrial Relations Code, 2020 (close paraphrase of s.2(a) ID Act): “‘appropriate Government’ means — in relation to any industrial establishment carried on by or under the authority of the Central Government, or concerning railways, mines, oil-fields, major ports, banking or insurance companies, or a central public sector undertaking, the Central Government; and in relation to any other industrial establishment, the State Government.”

In Simple Terms: if the Centre runs it or it is on the “central list” (railways, banks, mines, ports, central PSUs), the Centre is appropriate; otherwise the State.

🧩 WORKED EXAMPLE — who is appropriate for a nationalised bank?

Facts. Employees of a nationalised bank raise a dispute.

Rule. s.2(b) IR Code — banking companies fall in the central list.

Apply. A bank is expressly named, so the Centre, not the State, is the appropriate Government.

Conclusion. The reference must be made by the Central Government; a State reference would be void.

flowchart TD
    Q{"Which Government is 'appropriate'?"}:::root
    Q --> C["Central: run by Centre; railways, mines, ports,<br/>banks, insurance, central PSUs"]:::good
    Q --> S["State: every OTHER establishment"]:::leaf
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Case Laws

Heavy Engineering Mazdoor Union v State of Bihar (1969) — a company is not “under the authority of” the Central Government merely because the Centre owns its shares; the test is control, so the State was appropriate.
Air India Statutory Corporation v United Labour Union (1997) — clarified the “authority of the Central Government” test for central control.

Award & Settlement

Two ways a dispute finally ends: either the parties agree (a settlement) or a tribunal decides (an award). One is a handshake, the other a verdict — and they bind different people.

Award — the tribunal’s verdict

An award is the determination of an industrial dispute by a Labour Court, Tribunal or National Tribunal (or an arbitrator). Under s.2(b) ID Act / s.2(e) IR Code, it is the interim or final decision on the dispute. It is published by the Government, comes into operation 30 days after publication, and normally remains binding for one year (s.17A/s.19 ID Act), continuing until terminated.

Section 2(b), Industrial Disputes Act, 1947 (award — close paraphrase; now s.2(e) IR Code): “‘award’ means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and includes an arbitration award made under section 10A.”

Settlement — the parties’ agreement

A settlement is an agreement between employer and workers to end a dispute. Two kinds, with different binding reach:

A settlement reached in the course of conciliation binds all parties to the dispute, and all present and future workers — it has wide effect.
A settlement reached outside conciliation (a private settlement) binds only the parties who actually signed it.

In Simple Terms: an award is imposed by a tribunal and binds broadly; a settlement is agreed by the parties — a conciliation settlement binds everyone, a private one only the signatories.

⚠️ Trap — do NOT say every settlement binds everyone. Only a settlement in conciliation binds all workers; a private settlement outside conciliation binds only those who signed it.

flowchart TD
    ROOT["End of a dispute"]:::root
    ROOT --> AW["AWARD (tribunal decides)<br/>operates 30 days after publication;<br/>binding ~1 year"]:::good
    ROOT --> ST["SETTLEMENT (parties agree)"]:::leaf
    ST --> A["In conciliation: binds ALL workers"]:::good
    ST --> B["Outside conciliation: binds only signatories"]:::leaf
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Case Laws

Sirsilk Ltd v Government of Andhra Pradesh (1964) — where parties settle after an award but before publication, the settlement can prevail to preserve industrial peace.
Barauni Refinery Pragatisheel Shramik Parishad v Indian Oil Corporation (1991) — a conciliation settlement binds all workmen, even non-members of the signing union.

Notice of Change

An employer cannot spring a change in shift timings or wages on workers overnight. He must warn them first — that warning is the “notice of change”.

What it is

Under s.9A of the ID Act, 1947 (now s.40 IR Code), an employer who intends to change the conditions of service listed in the Fourth Schedule (wages, hours, leave, shifts, classification, etc.) must give the affected workers 21 days’ written notice before effecting the change. This protects workers from sudden, unilateral alterations and gives time to object or negotiate.

Exceptions: no notice is needed where the change is made under a settlement or award, or where the workers are governed by certain government rules.

Section 9A, Industrial Disputes Act, 1947 (close paraphrase; now s.40 IR Code): “No employer … shall effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, without giving to the workmen … notice of the nature of the change … and within twenty-one days of giving such notice.”

In Simple Terms: want to change pay, hours or shifts? Give 21 days’ written notice first — unless a settlement, award or rule already covers it.

flowchart LR
    A["Employer wants a Fourth-Schedule change<br/>(wages/hours/shift/leave)"]:::root
    A --> B["Give 21 days' written notice (s.9A / s.40)"]:::leaf
    B --> C["Then the change may take effect"]:::good
    A --> D["Exception: change under award/settlement/rules = no notice"]:::leaf
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    classDef good fill:#E8F5E9,stroke:#1B5E20,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

North Brook Jute Co. Ltd v Their Workmen (1960) — a change in the Fourth-Schedule conditions without the s.9A notice is illegal.

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