Mechanism of settlement of Industrial Disputes

Disputes arise constantly in every industry. The relationship between employees and their pay raises the most concerns, and a disagreement between two parties over pay parity is common, which results in labour disputes.

Conventionally, the employer is generally considered to be in a powerful position, and representatives are on the lower rung of the power dynamic. This disparity should be corrected so that the representative and business employers have an equal chance to communicate their needs.

Depending on his/her contributions, an employee has the right to fair compensation. The employer should provide the employee with a decent pay and other benefits that amount to fair employment. Therefore, the settlement of industrial disputes under the Industrial Dispute Act of 1947 is crucial to prevent the company from suffering losses or harm.

Industrial Disputes Act, 1947

The Industrial Disputes Act of 1947 was formulated to ensure equal and fair treatment for employers and employees. The objective of the act is to settle disagreements between two parties and promote a harmonious work environment.

The Industrial Dispute Act of 1947 governs Indian labour rules related to trade unions. Section 2(k) of the act outlines disputes between employers and employers, employers and workers, and employees and employees related to employment.

A mechanism to resolve an industrial dispute if the parties cannot reach an amicable agreement is adjudication on the recommendation of the relevant government. For parties to settle an issue amicably, voluntary arbitration is essential.

Other methods have been proposed for settling disputes. The most effective method for settling conflicts is through collective bargaining, which represents the workers’ diversity in the sector. If collective bargaining is unsuccessful, other dispute resolution methods include mediation, arbitration, and voluntary arbitration.

Mechanism for the settlement of industrial disputes

Concrete machinery regulates resolving industrial disputes in a just and fair manner for the involved parties. This machinery ensures or guarantees a standardised situation in which the employer and the employee can coexist and work amicably, which is necessary for the development of the industry.

Conciliation and mediation are the two methods for resolving industrial disputes.

  • Conciliation:

    A well-known method for resolving disputes under the Industrial Dispute Act of 1947 is conciliation. This method of resolving disputes is used globally and is not unique to India. A third party helps disputing parties to openly discuss their problems through conciliation.

    The following are the two categories of jurisdiction used to perform conciliation functions:

    • Through the Department of Labor’s conciliation staff
    • A chairperson and two and four members who speak for the employers and employees make up the Conciliation Board. Based on the suggestions from the parties, the administration chooses these candidates.

    As per Section 4 of the Industrial Dispute Act of 1947, a conciliation officer’s role is to foster a collaborative culture to help parties settle industrial disputes. Rather than judicial duty, this role is an operational role.

  • Voluntary Arbitration

    A dispute between two parties is resolved through arbitration when a third party, typically a lone arbitrator or panel of arbitrators, is tasked with doing so. The term “voluntary arbitration” indicates that the parties voluntarily accept arbitrators’ decisions or board of arbitrators.

    Voluntary arbitration is allowed under Section 10A of the Industrial Dispute Act of 1947. However, the process is fully managed through adjudication. The margin of distinction between arbitration and adjudication is narrow. In arbitration, the parties involved in the dispute choose the judge, whereas in adjudication, the State appoints the judge.

  • Adjudication

    Adjudication does not entirely substitute conciliation; instead, it intervenes to accomplish the task that the conciliation process intends to complete but attempts to settle a disagreement among two parties fails. Adjudication only provides an additional avenue for recourse should the necessity arise. Adjudication is the last resort for resolving a labour dispute.

    Labour dispute adjugation includes the following three-tiered structure:

  • Labor court:

    Section 7 of the Act, 1947, lays the guideline for establishing a labour court. The competent government may create a labour court by publishing a notice in the official gazette. One judge from the High Court, District Court, or an independent judge presides over the labour court. The judge could be a former labour court judge with a minimum of 5 years of experience.

  • Industrial tribunal:

    Section 7A of the act outlines requirements for creating an industrial tribunal. One or even more courts may be established by the government, with both the courts exercising greater authority than the labour court. Such courts should not be regarded as a permanent structure but as courts established for sporadic hearings. Many problems will be explored because of an extensive range of authority.

  • National tribunal:

    The Central Government forms a national tribunal through an official gazette to resolve national-level labour disputes. Based on their credentials, the government chooses two individuals to act as evaluators in such a tribunal. The labour court and the industrial tribunal are stripped of jurisdiction when a dispute involving two industry parties enters the national tribunal.


The 1947 Industries Dispute Act established guidelines for resolving employee disputes and rules for controlling an enterprise’s running.

The Industrial Disputes Act established internal and external agencies for the settlement of industrial disputes. The act forbade unlawful strikes, lockouts, and unfair labour practices, but from the perspective of compliance, having efficient internal systems is crucial for resolving disagreements.

External methods such as arbitration and conciliation frequently require considerable effort, price, and time, which strains the connection between the employer and the employee. Therefore, internal processes are advantageous because they reduce the necessity for adjudication or other forms of conflict resolution, which improves the working environment and productivity.


What is an industrial dispute?

Any disagreement or conflict among employers, between employers and employees, or between employees and themselves related to employment, non-employment, conditions of full-time work, or working conditions is referred to as an "industrial dispute."

Which types of establishments are covered under the Industrial Disputes Act of 1947?

This act applies to establishments with employee collaboration and engages in a planned activity with or without the goal of making a profit.

What are the critical elements of the 1947 Industrial Disputes Act?

The primary objective of this act is to ensure industrial harmony. In the event of layoffs, reductions, or closure, the industry with an average of 100 or more workers over the previous 12 months should first acquire the prior approval of the designated authority.

How to raise industrial disputes?

If a discharge, dismissal, layoff, or service ends, a worker may immediately petition a dispute before a conciliation officer.

How is the arbitration award decreed?

An award is enforceable after 30 days have passed from the date of its publication in the Official Gazette. Authorities are responsible for enforcing the awards.