Machinery for settlement of industrial disputes

1. Bipartite forums (Chapter II)

Works Committee — section 3 (old section 3). In an industrial establishment employing one hundred or more workers on any day in the preceding twelve months, the appropriate Government may require the employer to constitute a Works Committee of representatives of the employer and workers, the workers' side being not fewer than the employer's. Its duty is to promote measures for securing amity and good relations, to comment on matters of common interest and to try to compose material differences. It is a consultative body; it cannot alter conditions of service fixed by settlement or award.

Grievance Redressal Committee — section 4 (old section 9C). Every establishment employing twenty or more workers must have one or more such committees for disputes arising out of individual grievances.

• Equal members from employer and workers, total not exceeding ten; the chairperson rotates each year between the two sides; women workers are to be represented at least in proportion to their numbers.
• An aggrieved worker applies within one year of the cause of action; the committee may finish within thirty days.
• A decision needs a majority that includes more than half the workers' representatives.
• A worker dissatisfied, or whose grievance is not decided in time, may within sixty days apply for conciliation through his trade union (section 4(8)).

2. Conciliation (sections 43, 53 and 60)

The appropriate Government appoints conciliation officers for specified areas or industries (section 43; old section 4). Where an industrial dispute exists or is apprehended, or a strike or lock-out notice has been given, the officer shall hold conciliation proceedings (section 53(1)), but not after two years from the date the dispute arose. His job is to investigate the dispute and do whatever he thinks fit to induce a fair and amicable settlement.

• If settlement is reached, he sends a report with the memorandum of settlement signed by the parties (section 53(3)).
• If not, he sends a failure report to the parties and the Government (section 53(4)) within forty-five days, or fourteen days where a strike or lock-out notice was given, extendable by agreement (section 53(5)).
• Within ninety days of receiving the failure report, any party may apply to the Tribunal (section 53(6)).

For conciliation and evidence, the officer has civil-court powers of summons and production (section 49). Proceedings start on the first meeting held after receipt of a strike or lock-out notice and end on settlement, recorded failure, or reference to the National Industrial Tribunal (section 60). The old Act's Boards of Conciliation (section 5) and Courts of Inquiry (section 6) have no counterpart in the Code.

3. Voluntary arbitration (section 42)

Corresponding to old section 10A. Where a dispute exists or is apprehended, the employer and the workers may by written agreement refer it to an arbitrator of their choice; an even number of arbitrators must provide for an umpire. A copy goes to the Government and the conciliation officer. If the Government is satisfied that those making the reference represent the majority of each party, it may notify the reference, and then others concerned get a hearing and the Government may prohibit any continuing strike or lock-out (section 42(5) and (7)). The arbitrator submits a signed award to the Government. The Arbitration and Conciliation Act, 1996 does not apply (section 42(8)).

4. Adjudication

Industrial Tribunal — section 44. The appropriate Government constitutes Industrial Tribunals of two members, a Judicial Member and an Administrative Member. A bench may be the two together or either sitting alone, but only a two-member bench may decide cases about: the application and interpretation of standing orders; discharge or dismissal and reinstatement; legality of a strike or lock-out; retrenchment and closure; and trade union disputes (section 44(7)). The decision is by consensus; if the members differ, a Judicial Member of another Tribunal hears the point and the majority decides (section 47).

National Industrial Tribunal — sections 46 and 54. Constituted by the Central Government for disputes involving questions of national importance or affecting establishments in more than one State. It has a Judicial Member (a present or former High Court Judge) and an Administrative Member (of the rank of Secretary to the Government of India). Unlike the Industrial Tribunal, it receives disputes only by reference of the Central Government (section 54) or transfer under section 92.

What replaced the old forums. The old Act had Labour Courts (section 7, Second Schedule matters such as dismissal and standing orders), Industrial Tribunals (section 7A, Third Schedule matters such as wages and hours) and National Tribunals (section 7B). Under section 51, cases pending before Labour Courts and Tribunals pass to the Industrial Tribunal, and those before National Tribunals pass to the National Industrial Tribunal. The Industrial Relations Code (Amendment) Act, 2026 added section 104(1A), under which the old Tribunals and authorities continue to function until the new ones become functional.

Access. Under the old Act the gateway to adjudication was a reference by the Government under section 10, which the Government could refuse. Under the Code a party applies to the Tribunal after conciliation fails (section 53(6)), and a dismissed worker may apply after forty-five days of conciliation (section 4(10)).

Powers. Civil-court powers to summon, compel production and issue commissions; proceedings are judicial proceedings (section 49(3)). Awards and settlements before the Tribunal are executed as civil-court decrees under Order XXI CPC (section 49(9)). Section 50 gives the power to set aside a dismissal and order reinstatement or a lesser punishment (old section 11A).

5. Awards: form, enforceability and duration

• An award is an interim or final determination of an industrial dispute by a Tribunal or National Industrial Tribunal, and includes an arbitration award (section 2(e)).
• It is signed, communicated to the parties and the Government, and becomes enforceable thirty days after communication (section 55(3); old section 17A). Where the Government is itself a party to a Tribunal award, or the award is of the National Industrial Tribunal, it may declare on grounds of national economy or social justice that the award shall not become enforceable, and within ninety days reject or modify it, laying the order before the legislature (section 55(3)–(5)).
• An award runs for one year, extendable up to three years in all, and continues to bind until sixty days after notice of termination (section 58(3)–(6); old section 19).
• If the employer challenges a reinstatement award in the High Court or Supreme Court, he must pay the worker full wages last drawn during the pendency, if the worker files an affidavit that he is unemployed (section 56; old section 17B).

6. Settlements and their binding effect

A settlement (section 2(zi); old section 2(p)) is one arrived at in conciliation, or a written agreement otherwise reached, signed as prescribed and sent to the authorised officer and the conciliation officer. The distinction in section 57 (old section 18) is central:

• A settlement reached outside conciliation binds only the parties to the agreement (section 57(1)).
• A settlement reached in conciliation, and an enforceable award of an arbitrator or Tribunal, bind all parties to the dispute, others summoned as parties, the employer's heirs, successors and assigns, and, where the party is composed of workers, all workers employed in the establishment on the date of the dispute and all who join later (section 57(3)).
• A settlement runs for the agreed period or six months, and continues until sixty days after notice of termination (section 58(1)–(2)).

The wider reach of a conciliation settlement is explained by the presence of the conciliation officer, a neutral public official, which the law treats as a safeguard of fairness. In P. Virudhachalam v. Management of Lotus Mills, 1997 INSC 796, (1998) 1 SCC 650, the Court held that a settlement under old section 18(3) binds all workmen, and individual workmen cannot claim benefits that conflict with it. A settlement signed by a union with the support of most workers is judged as a whole and is not to be upset merely because one term is less favourable than an award might have given: Herbertsons Ltd. v. Workmen of Herbertsons Ltd., 1976 INSC 281, (1976) 4 SCC 736.

Breach of a binding settlement or award is punishable with fine from Rs 20,000 to Rs 2 lakh or imprisonment up to three months, or both (section 86(17)); money due under it is recoverable as arrears of land revenue (section 59; old section 33C).

7. Problem

A factory has two unions. Union A, with 70 per cent of the workers, signs a wage settlement before the conciliation officer. Union B, with 30 per cent, refuses to sign and raises a fresh dispute demanding higher wages. Advise the employer.

Issue. Whether the settlement binds members of Union B.

Law. Section 57(3): a settlement in conciliation binds all workers employed in the establishment on the date of the dispute and those who join later. Section 62(1)(g): no strike on matters covered by a settlement in operation. Herbertsons and Virudhachalam.

Application. The settlement was arrived at in the course of conciliation, so it binds every worker in the factory, including Union B's members, for its period of operation. Union B's fresh dispute on the same matter cannot be pursued while the settlement runs, and a strike on it would be illegal under section 63. Had the settlement been a private bipartite agreement under section 57(1), it would have bound only Union A's members.

Conclusion. The employer may rely on the settlement against all workers until it is terminated by sixty days' notice under section 58(2), given by a party representing the majority of those bound (section 58(7)).

How this is examined

As an essay: “Explain the authorities for investigation and settlement of industrial disputes” (old papers listed works committee, conciliation officer, board of conciliation, court of inquiry, labour court, tribunal, national tribunal). Answer with the Code's forums and note in one line each which old forums were dropped. Short notes: works committee, grievance redressal committee, voluntary arbitration, binding nature of settlements.