In India various methods for the prevention and settlement of industrial disputes operate at two levels: Voluntary and Statutory level.

Prevention of Industrial Disputes at Voluntary Level:

At the voluntary level settlement of disputes takes place at:

i. Collective Bargaining

ii. Code of Discipline,


iii. Arbitration

iv. Permanent Negotiating Machinery and Joint Consultative Machinery, and

v. Tripartite Bodies.

i. Collective Bargaining:


Collective bargaining is a process of discussion and negotiation between parties, one or both of whom is a group of persons acting in concert. Resulting bargain is an understanding as to the terms or conditions under which a continuing service is to be performed.

More specifically, collective bargaining is the procedure by which an employer or employers and a group of employees agree upon the conditions of work. Prof. Allan Flanders has argued that collective bargain is primarily a political rather than an economic process.

Collective bargaining is a method by which management and labor may explore each other’s problems and viewpoints and develop a framework of employment relations and a spirit of cooperative goodwill for their mutual benefit. It can be described as a continuous, dynamic process for solving problems arising directly out of the employer-employee relationship.

ii. Code of Discipline:


The code of discipline was approved by all central organizations of workers and employers at the Sixteenth Session of Indian Labor Conference in June, 1958 at the initiative of the then Union Labor Minister. It has also been accepted by a large number of other employers and workers’ organizations.

The code applies to all public sector companies and corporations except defense, railways and ports and docks. The code applies with certain modifications to the Reserve bank of India, State Bank of India and the Department of Defense Production.

The Code consists of three sets of principles to be followed by the parties to labor relations.

These are:


i. Principles to which Management and Unions agree.

ii. Principles to which management agree.

iii. Principles to which Union(s) agree.

The Code does not have any legal sanction but the moral sanctions behind it.


iii. Arbitration:

The procedure of voluntary arbitration in India is governed by two different sets of rules according to whether the arbitration is instituted under the Central or State Acts or under the Code of Discipline. Where the parties invoke arbitration as per the provisions of legislation its process is entirely governed by statutory prescriptions.

(a) Procedure under the Industrial Disputes Act, 1947:

(I) Where any industrial dispute exists or is apprehended and the employer and the workmen agree to refer the dispute to arbitration, they may, at any time before the dispute has been referred under Section 10 to a Labour Court or Tribunal or National Tribunal, by a written agreement, refer the dispute to arbitration and the reference shall be to such person or persons (including the presiding officer of a Labour Court or Tribunal or National Tribunal) as an arbitrator as may be specified in the arbitration agreement.


(II) Where an arbitration agreement provides for a reference of the dispute to an even number of arbitrators, the agreement shall provide for the appointment of another person as umpire who shall enter upon the reference, if the arbitrators are equally divided in their opinion, and the award of the umpire shall prevail and shall be deemed to be the arbitration award for the purpose of this Act.

(III) An arbitration agreement referred to in sub-section (1) shall be in such form and shall be signed by the parties thereto in such manner as may be prescribed.

(IV) A copy of the arbitration agreement shall be forwarded to the appropriate Government and the conciliation officer and the appropriate Government shall, within [one month] from the date of the receipt of such copy, publish the same in the Official Gazette.

(V) Where an industrial dispute has been referred to arbitration and the appropriate Government is satisfied that the persons making the reference represent the majority of each party, the appropriate Government may, within the time referred to in sub-section (6), issue a notification in such manner as may be prescribed; and when any such notification is issued, the employers and workmen who are not parties to the arbitration agreement but are concerned in the dispute, shall be given an opportunity of presenting their case before the arbitrator or arbitrators.


(VI) The arbitrator or arbitrators shall investigate the dispute and submit to the appropriate Government the arbitration award signed by the arbitrator or all the arbitrators, as the case may be.

Where an industrial dispute has been referred to arbitration and a notification has been issued under sub-section (3A), the appropriate Government may, by order, prohibit the continuance of any strike or lock-out in connection with such dispute which may be in existence on the date of the reference.

(b) Procedure under the Code of Discipline. Where the parties agree to arbitration under the Code, they must first enter into a written agreement probably in the form prescribed by the NAP board. A copy of the agreement must be sent to the Chairman of the NAP Board. The parties are free to select any person or persons to arbitrate in a dispute and send the consent to such persons. After receiving the arbitration agreement the arbitrator should address the parties to file their respective statements. On receipt of the statements and comments of the parties, the arbitrator should arrange to hear the parties.

iv. Permanent Negotiating Machinery and Joint Consultative Machinery:

Permanent Negotiating Machinery operates in the Railways and Post and Telegraphs industries. The decision to set permanent negotiating machinery was announced by the Railway Board in Dec.1951. The machinery has three tiers.

The first tier consists of negotiation between the Divisional Superintendent and the branch of the recognized unions in the area and between the General Management of the Zonal Railways and the central executive of the recognized unions.


The second tier consists of negotiations between the Railway Board and the recognized federations of railway men’s union. The third tier assumes the form of an ad hoc railway tribunal which must have equal number of representatives of railway labour and railway administration with a neutral chairman.

Joint Consultative Machinery:

Joint Consultative Machinery deals with issues related to service conditions in the Government sector. This not only covers the industrial employees of the Central Government who come under the definition of a workman under the IDA. The machinery has three tiers. National Council at national level to deal with matters like minimum remuneration, dearness allowance, pay etc. There are Department Councils at the department levels and Regional or Office Councils at the regional or local levels.

If there is no agreement between the two sides then issues relating to pay and allowances weekly hours of work and leave must be referred to compulsory arbitration and all other issues can be decided by the Government itself according to its own judgement. In case of arbitration also, Government has power to modify the award in the national interest.

v. Tripartite Bodies:

There are a number of tripartite bodies that operate at the Central and State levels. The Indian Labour Conference, Standing Labour Committees, Wage Boards and Industrial Committees operate at the Central level and State Labour Advisory Boards operate the State level. All these bodies play an important role in reaching at voluntary agreements on various labour matters. The recommendations of these bodies are recommendatory in nature.

Prevention of Industrial Disputes at Statutory Level:


The Industrial Disputes Act provides for preventing industrial disputes for settling them.

The Act attempts to prevent disputes by:

1. Prohibiting Unfair Labour Practices

2. Regulating strikes and lockouts

3. Laying down law relating to lay off, retrenchment and closure

4. Prohibiting change in conditions of service of a worker.


1. Unfair Labour Practices:

On the part of employers and their unions:

i. To interfere with, restrain from, or coerce workmen in the exercise of their right to organize, form, join or assist a trade union or to engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection.

ii. To dominate, interfere with or contribute support, financial or otherwise, to any trade union.

iii. To establish employer-sponsored trade unions of workmen.

iv. To encourage or discourage membership in any trade union by discriminating against any workmen.


v. To discharge or dismiss workmen by way of victimization or by falsely implicating a workman in a criminal case on false evidence.

vi. To abolish the work of a regular nature being done by workmen, and to give such work to contractors as a measure of breaking a strike. On the part of workmen and trade unions:

vii. It would amount to unfair labour practice if workmen and trade union indulge in:

viii. To advise or actively support or instigate any strike deemed to be illegal.

ix. To coerce workmen in the exercise of their right to self-organization or to join a trade union or refrain from joining any trade union.

x. Force a recognised union to refuse to bargain collectively in good faith with the employer.


xi. To indulge in coercive activities against certification of a bargaining representative.

xii. To stage demonstrations at the residences of employers or the managerial staff members.

xiii. To incite or indulge in willful damage to employer’s property connected with the industry.

xiv. To indulge in acts of force or violence or to hold out threats of intimidation against any workman with a view to prevent him from attending work.

2. Regulation of Strikes and Lockouts:

The right of employees to go on strike and the right of employer to impose lock-out is not without regulation. The Industrial Disputes Act puts several restrictions on the rights of both the employees and employers. A strike or lock-out commenced or continued in contravention of these restrictions is termed illegal and there is severe punishment provided for the same. Illegal strikes and lockouts are those which are illegal from the time of their commencement and those which are not illegal at the time of commencement but become illegal later.

Section 22 and 23 of the Industrial Disputes Act provide for certain restrictions which if not followed make strikes and lock-outs illegal from their very commencement. Section 22 regulates strikes and lock-outs in public utility services only. Section 23 regulates strikes and lock-outs in any industrial establishment. If a strike or lock-out is continued in contravention of a prohibit order issued under Section 10(3) or Section 10-A (4-A) it becomes illegal under Sec.24.

3. Law Relating to Layoff, Retrenchment and Closure:

Section 25 – M of IDA prohibits layoff without prior permission of the appropriate government in case of an industrial establishment in which not less than one hundred workmen were employed on an average per working day for the preceding 12 months unless such layoff is due to shortage of power or to natural calamity, and in the case of a mine, such layoff is due also to fire, flood, excess of inflammable gas or explosion.

Section 25C provides for statutory compensation to be paid to a laid off worker equal to 50 % of the total of the basic wage and dearness allowance, for all days during which he is laid off, provided he has employed continuous service of one year or more.


Section 25F and 25N regulates retrenchment in industrial establishment. Section 25FD is applicable to those industrial establishments in which less than one hundred workmen have been employed on an average per working day for the preceding 12 months and Section 25N is applicable to those industrial establishments in which one hundred or more workmen have been employed on an average per working day for the preceding twelve months.

Under Sec.25-F no workman who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until the workman has been given one month’s notice or the workman has been paid in lieu of such notice, wages for the period of the notice.

Under Section 25N no workman who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until the workman has been given 3 months’ notice or the workman has been paid in lieu of such notice, wages for the period of the notice and the prior permission of the appropriate government has been obtained on an application made in this behalf.


Section 25 FFA requires an employer intending to close down an undertaking to serve a notice in the prescribed manner on the appropriate government in at least 60 days before the date on which the intended closure is to be effective stating the reasons for the intended closure of undertaking.

Where an undertaking is closed down for any reason whatsoever, Section 25FFF imposes a liability on the employer to give to every workman who has been in continuous service for not less than one year in that undertaking one month’s notice and compensation equal to fifteen day’s average pay for every completed year of continuous service, or any part thereof in excess of six months.

4. Change in Conditions of Service:

Section 9A of the Industrial Disputes Act prohibits an employer from making any change in the conditions of service of a worker in respect of matters listed in Schedule IV of the Act without giving to the working a 21 days notice in the prescribed form.

No notice is, however, required if the change is being effected in pursuance of any settlement, award or any rule or regulation notified by the appropriate government in the Official Gazette. If no objection is received from the workman till the expiry of the notice period, the employer may effect the proposed change after the notice period.

But if the proposed change is not acceptable to the concerned workman, he may raise an industrial dispute before the conciliation office.