THE INDUSTRIAL DISPUTES ACT NO.43 OF 1950

The preamble to this Act states that it is an Act for the prevention, investigation and settlement of industrial disputes. Although the preamble refers to the term “prevention” of industrial disputes, the mechanism under the Act does not have anything concrete for prevention of an industrial dispute. The dispute settlement mechanism such as conciliation, arbitration etc set out therein are procedures which need to be followed after an industrial dispute has arisen. Therefore, the dispute settlement mechanism under the Act pre-supposes the existence of an industrial dispute and merely lays down the procedure that needs to be followed with regard to settlement. This reflects a total reactive approach rather than being proactive.

Employers and employees who have been successful in creating a healthy industrial relations environment in their work places have on their own formulated mechanisms to prevent industrial disputes. Some of the grievance handling procedures that operate in enterprises are good examples in this regard. Therefore, the prevention of industrial disputes should be introduced through legislation, and mechanisms such as Codes of Conduct/grievance handling procedures, given more recognition by law which will create an enabling environment for the promotion of social dialogue and ensuring industrial peace. In this context, it is also important that the right to strike should also be regulated through these Codes of Conduct in a manner that would prevent sudden work stoppages without any notice to employers.

The main dispute resolution mechanism set out under the Act, apart from conciliation and entering into collective agreements which relate to mutual agreement, are Labour Tribunals and arbitrations. Both these mechanisms enable an Arbitrator or a Labour Tribunal to grant just and equitable relief to a workman. This concept of “equity” has been stretched to the maximum and sometimes even amounts to “sympathy”. In fact, in certain circumstances it may be argued that it may be more beneficial for an employee to be terminated by an employer and eventually obtain some payment either by way of a settlement or through an order of compensation based on “equity” (in addition to terminal benefits), rather than having an unblemished record of service and receive nothing more than the terminal benefits under the law on resignation or retirement from service. A dismissed employee may, therefore, be in a more “enviable” position as opposed to his counterpart with faithful service to the employer. In the case of a termination of service of a workman, an Arbitrator or a Labour Tribunal is empowered to grant the relief of reinstatement or compensation. The ability to award the relief of reinstatement in service in the case of an unjustified termination has been pointed out by us on many occasions as being counter productive to healthy industrial relations. What needs to be appreciated in this context is that the contract of employment is a contract for personal service and therefore arbitrarily imposing an employee on an unwilling employer will not result in any productive outcome either to the employer or the employee. It will only result in an unhealthy industrial relations situation within a work place. Therefore there needs to be a change in the law to require that a reinstatement order should always grant an option to the employer to make payment of compensation in lieu.

The rationale underlying the establishment of Labour Tribunals invested with equitable jurisdiction was primarily to cater to an ordinary employee who may not have the means to pursue his case in a court of law. In other words, Labour Tribunals were primarily set up having regard to the lower category of workers and not necessarily the top management executives such as chief executives and managing directors. Therefore, we need to review the type of worker who should be given access to a Labour Tribunal and limit it to the ones who really require relief from such a Tribunal, as in the case of India.

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