finsl module 3

7/31/2019 Finsl Module 3

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Definition- Industrial Disputes Act 1947,sec 2 (k)

Industrial dispute means any dispute or difference

between(essentials prerequisites for a dispute)

Employers and employersEmployers and workmen

Workmen and workmen.

Which is connected with the employment / nonemployment of the terms of employment

or with the conditions of the labor of any personbut not supervisor or manager orDrawing wages 1600 /-pm orRelationship between employer & employee

must exist.


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Industry

As per section 2 (J) of industrial disputes act

1947, Industry mean any systematic activity

carried on by cooperation between an employ

and his work man for the production supply or

distribution of goods and services with a view

of satisfy human wants or needs.


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Workman [(2) s]

All employees in an estt are not workmen under industrial

dispute act. Employees doing any manual , skilled , unskilled,

technical, operational ,work in respective of their salary.

Sec 2 (s) of Act- workmen means any personemployed in an industry to do any skilled or unskilledmanual, supervisory, technical or clerical work for hireor reward. The terms of employment may be either

express or implied. A workman has been dismissed,discharged or retrenchment comes within the definitionof the term workman if there is any disputes relating

to such dismissal, discharge or retrenchment.


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Who all dont come under workman

Person subject to Army Act 1950 or Navy Act1934 or Air Force Act 1950.

Persons employed in police service.

Employed for managerial or administrativecapacity.

Employed in supervisory capacity


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Objective of the act1)To

secure industrial peace

a) by preventing and settling industrial disputesbetween the employers and workmen.

b) by securing harmony and good relations ,throughan internal works committee,

c) by promoting good relations, through an external2) To ameliorate the condition of workmen in industry byproviding job security.

3) To provide Suitable machinery for investigation andsettlement of industrial dispute between 3 parties.

4) To Prevent illegal strikes & lockouts.

5) To provide relief to workmen lay offs, retrenchment

etc


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Causes of Industrial DisputesA. Economic causes

terms and conditionsof employment

Wages and other

benefits

B. Psychological causes

Poor relation with

peers or superiors

Demand for self

respect, clash of

personalities.

C. Organizational Causes

Non recognition of TU,multiple TU, lack of proper

communication sys.

Unfair practices

D. Physical causes

poor working conditions

improper plant andworkstations, worn out P&

M, technological issues.

Lack of adequate

maintenance


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Causes of Industrial Disputes

Industrial Factors

Managements attitude

Government machinerylabor laws implementation ,irrelevance of certain provisions

Other causes - affiliation of TU, political instability,centre state relations.


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Under this category, some of the causes of dispute may be :

(i) An industrial matter relating to employment, work,wages, hours of work, privileges, the rights andobligations of employees and employers, terms andconditions of employment including matters

pertaining to :(a) dismissal or non-employment of any person(b) Registered agreement , settlement or award : and(c ) demarcation (establishing limits) of the functions of

an employee(ii) An industrial matter in which both the parties are directlyand substantially interested.

(iii) disputes arising out of unemployment, inflation, change inthe attitude of employers and rivalry among unions.


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(II) :

(i) Management s unwillingness to talk over anydispute with their employees.(ii) Managements unwillingness to recognize a particular

trade union , delegating enough authority to the

representatives, etc.(iii) unwillingness to negotiation and settlement ofdisputes.

(iv) Managements insistence to take care of recruitments,

promotion etc without consulting the concernedemployees

(v) Managements unwillingness to provide services andbenefits to its employee's


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(a) Though there are number of enactments forpromotion of harmonious relations, it is ineffectiveand unsatisfactory due to various reasons like their

irrelevancy in the context of the challenges of presentindustrial climate /culture, incapability ofunderstanding and answering imperatives ofdevelopment, improper and inadequate implementation

by many employers.(b) The governments conciliation machinery has settled a

very negligible number of disputes .


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StrikesLockouts

PrimaryStrikes

SecondaryStrikes

Stay-away

Strikes

Sit downStay-in

Tool Downor

Pen Down

Strikes

Go -Slow

WorkToRule

Tokenor

ProtestStrikes

Industrial Disputes

Lightening orCat-Call

strikes

Picketing &Boyco

tt

Gherao

HungerStrikes


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Strikes :

Strikes are a result of more fundamentalmaladjustments, injustices and economic

disturbances.

Strike is a temporary termination of work by a

group of employees in order to expressgrievances or to enforce a demand concerning

changes in work conditions.

Strikes are divided into three types .They are

Primary strikes, secondary strikes and other

strikes.


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I. Primary strikes are generally against the employer

with whom the dispute exists. They are :

(i) Stay Away Strikes: In this strike workmen stay

away from the work place. They organize rallies,

demonstrations, etc.

(ii) Stay-in or sit Down Strikes : In this strike,

workmen come to the place , they stay at the work

place but they dont work.

(iii) Tools Down, Pen Down Strike : Here the strikers

lay down their tools in case of factory workers ,

office workers lay down their pens,


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(iv) Token or Protest Strikes : It is of very short duration

and is in nature of signal for the danger ahead. In this

strike workers do not work for an hour or a day.

(v) Lightening or Wild cat strike : In this strike, the strike

is done without any prior notice or with a shortest notice.

(vi) GoSlow : In this strike, the workers intentionally

reduce the speed of work.

(vii) Work to rule : In this strike, the strikers undertake thework according to rules or job description.

(viii) Picketing : It is an act of protesting by the workmen

in front of the premises of the employer


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(ix) Boycott: It aims at disrupting the normal

functioning of the enterprise.

(x) Gherao : It is a physical blockade of a target either

by encirclement, intended to block from and to a

particular office, workshop etc.

(xi) Hunger Strike : This type of strike is resorted to

either by the leaders of the union or by some workers

all at a time for a limited period or up to the period ofsettlement of disputes.


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II Secondary Strike :

Secondary strikes are against a third party. These strikes

are sympathetic strikes.

Secondary action (also known as a secondary

boycott or sympathy strike) is industrial action by

a trade union in support of a strike initiated by workersin another, separate enterprise.

The term "secondary action" is intended to be distinct

from a trade dispute with a worker's direct employer, andso may be used to refer to a dispute with the employer's

parent company (holding company), its suppliers,

financiers, contracting parties, or any other employer in

another industry.


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Lockouts:

Lockout means the closing of a place of

business of employment or the suspension of

work, or the refusal by the employer tocontinue to employ any number of persons

employed by him.

However, termination of employment or

retrenchment, and prohibiting an employee

are not lockouts.


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PREVENTIVE MEASURES OF INDUSTRIAL DISPUTES

LaborWelfareOfficer

TripartiteandBipartiteBodies

StandingOrders

GrievanceProcedure

CollectiveBargaining

StrongTrade

Unions

Labor Co-Partnership and

Profit sharing

Joint Consultations


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1] Labor Welfare Officer :

Section 49 (1) and (2) of the Factories Act, 1948

specifies that:-

every factory wherein 500 or more workers are

ordinarily employed at least one welfare Officermust be appointed,

where the number of workers are in excess of

2500,the assistant and / or additional welfareofficers are required to be appointed to assist the

Welfare Officer.

Th f i f L b W lf Offi i l d


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The functions of Labor Welfare Officer includes :

(I) Labor Welfare Functions :Advice and assistance in

implementing legislative and non-legislative provisions

relating to :(a)Health &Safety

(b)Sanitation & Cleanliness

(c)Welfare Amenities

(d) Housing(e)Implementation of welfare Acts.

(f)Working conditions

(g) Recreation

(h) Workers Education

(i) Formation of welfare committees


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(II) Labor Administration Functions :These may cover:

(a)Organizational Discipline

(b)Safety & Medical administration

(c)Wage& salary administration(d)Administration of Legislation covering Industrial

Relations

(III) Labor Relations Functions: These may consist of :

(a)Administration of standing orders.

(b)Settlement of Grievances.

(c)Settlement of Disputes through statutory procedures.

(d)Trade unions& union management relations

(e)Steps to increase productivity efficiency.


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2]Tripartite and Bipartite Bodies :

Industrial relations in India have been shaped

largely by the policies and practices of Tripartite and

Bipartite bodies.

The purpose of consultative machinery is to bringthe partners together for mutual settlement of

differences in spirit of cooperation and goodwill.

Bipartite consultative machinery comprises twoparties i.e. employees and employer, the important

bipartite body is works committees.


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3] Standing Orders : It was made obligatory that standing

orders should govern the conditions of employment under

the Industrial Employment (Standing Orders ) Act of

1946. The Standing Orders regulate the conditions ofemployment from the stage of entry to the stage of exit.

4] Grievance Procedure :

5] Collective Bargaining :

6] Strong Trade unions :

7] Labor Co-partnership and profit sharing :

8] Joint Consultation :

C f ID


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Consequences of ID

For Employers

Decrease in output Increase in cost of

prod.

Fall in sales and fall inprofits

In long run loss ofgoodwill

For Employees

Loss of income

Threat Loss ofemployment

Psychological andphysical consequencesof forced idleness.

For the Nation

Cause wastage of national resources.

An adverse effect on the national

productivity, national income


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Types of Industrial Disputes

1. Disputes of interest

Determination of new wage level and other employment

conditions

2. Disputes of rights

Grievance disputesretrenchment, dismissal, workingtime etc.

3. Disputes over unfair labour practices

Discrimination of mgmt against workers on the grounds of

TU.

4. Recognition dispute

Refuse to recognize TU.


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Settlement of Disputes:


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CollectiveBargaining

Code ofDiscipline

GrievanceProcedure

Dispute

Settlement

ConsultativeMachinery

Arbitration

Conciliation

Adjudication

StandingOrder


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Collective Bargaining:

It helps for settlement of issues and prevention of

industrial disputes.

It occurs when representatives of a labor union meet

management representatives to determine employees

wages and benefits, to create or revise work rules andto resolve disputes or violations of the labor contract.

The bargaining is collective in the sense that the

chosen representative of the employees (i.e. union ) acts

as a bargaining agent for all the employees in carryingout negotiations and dealings with the management.

Code of Discipline :


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Code of Discipline :

It defines duties and responsibilities of employers and

workers. The objectives of the code are:1. To ensure that employers and employees recognize

each others rights and obligations.

2. To promote consecutive co-operation between parties

concerned at all levels.3. To eliminate all forms of coercion (force), pressure

and violence in IR.

4. To avoid work stoppages.

5. To facilitate the growth of trade unions.6. To maintain discipline in the industry.


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Grievance Procedure :

This is another method of resolving disputes.

Grievance is any discontent or dissatisfaction, arising

out of employment relationship, which an employee

thinks , believes or feels to be unfair, unjust or

inequitable.A grievance procedure is a formal process which is

preliminary to arbitration, which enables the parties

involved to attempt to resolve their differences in a

peaceful and orderly manner.When the grievance redressal machinery works

effectively, it satisfactorily resolve most of the disputes

between labor and management.


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Voluntary

Arbitration

Committee of union

& Management

Representatives

Manager

Grievance Committee

Departmental

Representatives

DepartmentRepresentatives

Head of the

department

Supervisor

Foreman

Grievant Employee

VI stage within7 days

V stage Appeal toManagement forrevision

IV stage communicatesthe decision within 7days

II stage

decisionwithin 3days

I stage answer tobe given within

48 hrs

III stage conveysverbally

NS

NS

NS

NS

NS

NS

NS- Not satisfied


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Arbitration :

Arbitration is a procedure in which a neutral third

party studies the bargaining situation, listens to both the

parties, gathers information and then makes

recommendations that are binding on both the parties.

Arbitration is effective means of resolving disputesbecause it is :

1. Established by the parties themselves and the

decision is acceptable to them.2. Relatively expeditious when compared to courts

and tribunals.


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Process of Arbitration :

1) The labor union generally takes initiative to go for

arbitration. when the union decides, it notifies the

management.

2) The union & the management select the potential

arbitrator by carefully studying the previousdecisions given by the particular arbitrator, to detect

any biases.

3) After the arbitrator is selected, the time & place for

hearing will be determined.4) Each side represents its case at the hearing.

5) Each party has to submit formal written statements.


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1) Witness , cross-examination, transcripts & legal

counsel may be used.

2) After hearing, the arbitrator studies the materials

submitted and reaches the decision within 30 60

days.

3) The decision given usually is a written opinion

mentioning the reasons.

4) The report is submitted by the arbitrator to the

appropriate government

Conciliation :


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Conciliation :

representatives of workers and employers are brought

together before a third party with a view to persuadingthem to arrive at an agreement by mutual discussion

between them.

The third party may be an individual or a group ofpeople. The third party may also be called as mediators.

The ID Act, 1947and other state enactments authorize

the governments to appoint conciliators charged with

duty of mediating in and promoting the settlement of

industrial disputes.


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In Conciliation , the ultimate decision rests with the

parties themselves but the conciliator may offer a

solution to the dispute acceptable to both the parties

and serve as a channel communication .

The parties may accept his recommendation or reject it.

If the conciliation fails, the next stage may be

compulsory adjudication or the parties may be left with

their own choice

Adjudication :


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Adjudication :

Adjudication means a mandatory settlement of an

industrial dispute by a labor court or a tribunal.

The government has a discretionary powers to accept

or reject recommendations of the conciliation officer.

It is obvious that once referred for adjudication , the

verdict of a labor court or tribunal is binding on both the

parties.

This is the most significant instrument of resolving

disputes. But, it has been criticized because of the delay

involved in resolving conflicts.


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Consultative Machinery :

set by the government to resolve conflicts.

The main function is to bring the parties together for

mutual settlement of differences in the spirit of co-operation and goodwill.

A consultative machinery operates at plant ,

industry , state and national levels.

Being bipartite in character, works committee are

constituted as per the provisions of industrial Disputes

Act, 1947 and joint management councils are set up

following the trust laid down in the Industrial PolicyResolution,1956.

The bodies operating at state and national level, are

tripartite in character , representing government, labor

and management.


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When strikes are justified

Economic demands

Unfair labour practices

When no response from mgmt. Existing facility withdrawnPF etc.


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Causes of strike


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Laws relating to Lockouts

Section 2(1) of the Industrial Disputes Act, 1947defines Lock-out as the closing of a place ofbusiness of employment or the suspension of work, orthe refusal by an employer to continue to employ anynumber of persons employed by him.

It is declared by employers to put pressure on theirworkers. It is counterpart of a strike.

Every employer has the option to lock out workers, if


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Every employer has the option to lock out workers, if

1) a dispute has been referred to a council or the Commission

for Conciliation, Mediation and Arbitration (CCMA); a

certificate that a dispute remains unresolved has beenissued; 30 days have elapsed since the referral; and

II ) 48 hours written notice of a strike is given to

a. the employer; or

b. a council (if the dispute relates to a collective agreementto be concluded in a council); or

c. to an employers organisation (if the employer is a

member of an organisation that is a party to the dispute); or

III) 48 hours written notice of a lockout is given toa. the trade union; or

b. to the workers (if they are not trade union members); or

c. a council (if the dispute relates to a collective agreement to

be concluded in a council)

F ll i d i


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Following do not constitute a

lockoutTermination of employment by retrenchment.

Prohibiting an individual employee is notlockout.

Declaration by employer - on the grounds thatthe workman has refrained from attending towork.

ff


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Layoff

Layoff implies temporary removal of an employee from

the payroll of the organization due to circumstancesbeyond the control of the employer.

It may last for an indefinite period. But the employee is

not terminated permanently and is expected to be called

back in future.

The employer employee relationship does not come to an

end but is merely suspended during the period of layoff.

It is temporary denial of employment. The purpose

of layoff is to reduce the financial burden on the

organization when the human resources cannot be utilized

profitably.


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Under Section 2(KKK) of the Industrial

Disputes Act, 1947, layoff is defined as

the failure, refusal or inability of an employer, on

account of shortage of coal, power or raw materials or

accumulation of stocks or breakdown of machinery or by

any other reason, to give employment to a workman whosename appears on the muster rolls of his industrial

establishment and who has not been retrenched.

Layoff is restored in cyclical and seasonal industries. In

mines workers are laid off due to excess of inflammablegas, flood, fire and explosion.


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According to Section 25(c) of the Industrial Disputes

Act, 1947, a laid off worker is entitled to compensation

equal to 50 per cent of the basic wages and dearness

allowance that would have been payable to him had he not

been laid off. To claim this compensation, the laid off

workman must satisfy the following conditions:

a) he should not be a badli or a casual worker,

b) his name must appear on the muster rolls of the

industrial establishment,

c) he must have completed not less than one year ofcontinuous service, and

d) he must present himself for work at the appointed time

during normal working hours at least once a day.


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Badli workman" means a workman who is

employed in an industrial establishment in the

place ofanother workman whose name isborne on the muster rolls of the establishment,

but shall cease to be regarded as such for thepurposes of this section, if he has completed one

year of continuous service in the establishment.


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Retrenchment

Retrenchment means permanent termination of service ofan employee for economic reasons in a going concern.

The Industrial Disputes Act, 1947 defines retrenchment

as the termination by the employer of the services of

workman for any reason other than termination of

services as punishment given by way of disciplinary

action, or retirement either voluntary or reaching age of

superannuation, or continued ill-health or the closure andwinding up of abusiness.

Retrenchment however does not


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Retrenchment however does not

include the following:

Voluntary retirement of the workman

Retirement of the workman on reaching the ageof superannuation

Termination in terms of non renewal of thecontract

Termination due to continued ill health

The Act lays down the following conditions


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y g

for retrenchment.

1.The employee must be given one months

notice in writing indicating the reasons for

retrenchment or wages in lieu of such notice.

2. The employee must be paid compensation

equal to 15 days for every completed year of

service.

3. Notice in the prescribed manner must be

served on the appropriate Government authority.

4. In the absence of any agreement to the

contrary, the worker employed last must be

terminated first.


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For this purpose, average pay will be calculated asunder:

if the workman is entitled to monthly salary,then on the basis of the salary of last threecalendar months;(90/3) or

if the workman is entitled to weekly wages,then on the basis of wages of last fourcompleted weeks; or

if the workman is entitled to daily wages, thenon the basis of wages of last twelve fullworking days.

M ABC h k d i i i f 24 5


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Mr ABC has worked in an organization for 24 years, 5

months and his last drawn package is as under

Basic WagesRs 5, 000 + Dearness AllowanceRs 3, 000

+ Conveyance AllowanceRs 1, 500 + Washing Allowance

Rs 1, 000 + House Rent AllowanceRs 1, 000 + Canteen

facility worth Rs 1, 000 + Dress AllowanceRs 1, 000. The

total amount to be considered for retrenchment compensation

is Rs 13, 500.

13, 500/26 days = 519.23 (1 Day salary)

519.23 X 24 years X 15 days = Rs 1, 86, 922. 80/-

Therefore the amount of retrenchment compensation to be

payable to Mr ABC is Rs 1, 86, 922. 80/-

Mr. X is an employee of Bajaj Auto. Due to his ill behavior, he


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COMPUTATIONLeast of the following is exempt:

Amount actually received 3,00,00015 days average pay* no.of yrs served 1,35,000(45000*3/90)*6*15

3.Maximum exemption limit 5,00,000

___________Exempted amount 1, 35,000

Taxable amount 1,65,000

p y j jis retrenched from the services of the Co. after serving 5 years7 months. He received an amount of Rs 3, 00,000. During his

employment he was getting a monthly salary of Rs 45,000


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Authorities under this act

Works committee

Conciliation officers

Boards of conciliation

Courts of inquiry

Labor court

Tribunals National tribunals

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