What Are the Causes of Industrial Disputes?

The industrial revolution set the stage for the capitalist economy and engineered social reorganisation to split the industrial society into workers and capitalists. Capitalists own resources and have the means of production, whereas labour sells their services to capitalists. The two groups do not share any common interests.

Workers want higher wages and better working conditions, whereas capitalists exploit the fact that workers have limited power in negotiations and deny them their rights. Furthermore, employers want more work done. When these conflicting interests clash, industrial disputes arise.

Although many problems can lead to industrial disputes, figuring out the main problems can be challenging. Work stoppages may appear to be caused by benign problems, but on closer inspection they may be caused by profound, fundamental causes that cannot be figured out at first glance.

Industrial relations experts have revealed that the cause of the disagreements between the two sides is the same in all capitalist economies.

Industrial Disputes

An industrial dispute may occur in the event of a disagreement between employees and employers or between employers and workers, or between workers and workers concerning their employment or termination or their terms and conditions of employment or work (The Industrial Disputes Act 1947, Section 2K).

Nature of Industrial Disputes

  1. A disagreement or difference in opinion can exist between employers, among employers and labourers, or between labourers.
  2. The subject must have something to do with a person’s:
    • employment or
    • lack of employment,
    • the terms of their job, or
    • the way they work, or
    • an industrial matter
  3. A relationship should exist between an employer and employee, wither on a contract basis or permanent hiring

Causes of Industrial Disputes

Demand for wages and allowances

The primary cause of industrial disputes in India is demand for higher wages and benefits. Even though prices are increasing fast, the wage growth has not kept pace with inflation. Therefore, workers go on strike to demand an increase in their wages. Most of India’s labour disputes arise from workers demanding increased pay. Disagreements would have been decreased if employers had taken steps to ensure wages and prices changed automatically.

Demand for bonus

The demand for more bonuses is another big reason for industrial disputes in India. Workers want employers to share the profits of the industrial units, but employers do not relent on profits so easily. During the emergency, the Government changed its mind and lowered the bonus rate from 8.33% to 4%. Subsequently, the minimum bonus rate was increased to 8.33%. Between 1961 and 1971, wages and bonuses were the cause of 46%–50% of industrial disputes in India. Between 1976 and 1984, wages and bonuses caused 32%–40% of industrial disputes in the country.

Personnel and retrenchment

Retrenchment and personnel issues are also a big cause of industrial disputes in India and are the primary causes of industrial disputes. Between 1961 and 1976, they caused almost 29% of all disputes. From 1981 to 1984, 21% to 22% of all industrial disputes in the country were attributed to retrenchment and personnel issues.

Demand for Improving Working Conditions

Industrial disputes in India arose because workers wanted improved work conditions, such as time off, fewer hours, better safety measures, canteens, among other amenities. These demands cause approximately 2% to 3% of all disagreements.


Lock-outs are also a major cause of industrial disputes in the country. Lock-outs occur when strikes last too long and trade unionists do not act in a timely and responsible manner.

Settlement of Industrial Disputes

Settlement of industrial disputes is crucial because long-lasting disputes indicate unhealthy industrial development in the country. Thus, the government has already taken different steps and set up multiple policies to effectively settle labour disputes in the country.

The objectives of these policies are:

  • to prevent and peaceful settle industrial disputes and
  • to encourage better relationships between workers

In 1947, the Government of India passed the Industrial Disputes Act, which was subsequently revised in 1956. This act was passed to settle and prevent industrial disputes. Some important provisions of the act include the following:


This act stipulates that the Government can appoint conciliation officers and constitute conciliation boards to settle disputes between employers and employees.

Work Committees

A working committee should be formed to maintain healthy relations between employees and employers in all firms employing more than 100 workers.

Court of Enquiry

If conciliation cannot resolve the dispute, the dispute should be referred to a court of enquiry for investigation and report.

Labour Courts

Governments established labour courts for resolving disputes regarding dismissals, suspensions, strikes, lock-outs, and other factors.


India passed the Industrial Disputes Act in 1947 to promote peace and harmony among industrial establishments. If a dispute arises, the act facilitates an orderly and equitable resolution in which all parties are satisfied, and decisions are just and fair. The Industrial Disputes Act of 1947 governs labour disputes comprehensively. Under the act, the Central Government and Industrial Law Board are empowered to supervise, regulate, and monitor the activities of industries. Enacting Business and Industrial regulations, can protect employee rights, and resolve problems consistently.


When do industrial disputes arise?

An industrial dispute refers to any dispute between employees and employers, between employers and workers or between workers and workers relating to the terms of employment or any individual’s work conditions.

What has the Government done to reduce industrial disputes?

To ensure industrial peace and harmony, the Industrial Disputes Act of 1947 empowers governments to appoint appropriate authorities when necessary to settle industrial disputes.

Which authorities play a role in industrial disputes?

The act sets up various authorities, including a works committee, a conciliation officer, a conciliation board, a court of inquiry, a labour court, a tribunal, and a national tribunal.

What is the most dominant cause of industrial disputes in India?

Demand for higher wages is the most dominant cause of industrial disputes.