36 The Industrial Disputes Act 1947: Object, Definitions, Authorities, Reference, Awards, Restrictions on Strikes and Lock-outs, Chapters V-A and V-B, Unfair Labour Practices, and the IR Code 2020
36.1 The Backbone of Indian Industrial-Dispute Law
For more than seventy years, the Industrial Disputes Act 1947 has been the central statute governing investigation and settlement of industrial disputes in India. It defines who is a worker and what is a dispute; sets up conciliation officers, boards, courts and tribunals; lays down rules on lay-off, retrenchment, transfer and closure; restricts strikes and lock-outs; lists unfair labour practices; and imposes penalties. The earlier topics in this chapter examined parts of this scheme in detail; this concluding topic provides a consolidating overview of the Act as a whole, and notes how the Industrial Relations Code 2020 has carried forward, modified or replaced its provisions.
36.2 1 · Object, Extent and Commencement
| Aspect | Detail |
|---|---|
| Year of enactment | 14 March 1947 |
| Came into force | 1 April 1947 |
| Object | To make provision for the investigation and settlement of industrial disputes, and for matters connected therewith |
| Extent | The whole of India |
| Successor statute | Industrial Relations Code 2020 |
The Act was modelled on the British Industrial Courts Act 1919 and the colonial Trade Disputes Act 1929, but expanded with provisions reflecting India’s tripartite tradition and the post-war reconstruction needs.
36.3 2 · Key Definitions — Section 2
| Term | Sub-section | Substance |
|---|---|---|
| Industry | 2(j) | Any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or occupation of workmen |
| Industrial dispute | 2(k) | Dispute between employers and employers, employers and workmen, or workmen and workmen — connected with employment, non-employment, or terms / conditions of labour |
| Workman | 2(s) | Any person employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work — with prescribed exclusions (managerial / administrative; supervisors above the wage ceiling; armed forces; police etc.) |
| Employer | 2(g) | Includes a central / state government department; local authority; for private establishments, the person responsible for the establishment |
| Strike | 2(q) | Cessation of work by a body of workmen acting in combination or a concerted refusal of any number to continue to work |
| Lock-out | 2(l) | Temporary closing of a place of employment; suspension of work; or refusal to continue to employ |
| Public utility service | 2(n) | Railways, ports, airports, postal service, water, light, power and any industry notified by the appropriate government |
| Lay-off | 2(kkk) | Inability of an employer to give employment due to shortage of inputs, breakdown, natural calamity or other connected reason — worker still on rolls |
| Retrenchment | 2(oo) | Termination of service for any reason other than disciplinary action, retirement, ill-health, or expiry of fixed-term contract |
| Closure | 2(cc) | Permanent closing of a place of employment or a part thereof |
| Settlement | 2(p) | A settlement arrived at in conciliation, or a written agreement between employer and workmen otherwise than in conciliation, signed and a copy sent to officer / authority |
| Award | 2(b) | An interim or final determination of any industrial dispute or of any question relating to it by a labour court, tribunal or national tribunal |
36.3.1 The Bangalore Water Supply Test for “Industry”
In the landmark case Bangalore Water Supply & Sewerage Board v. A. Rajappa (1978), a seven-judge bench of the Supreme Court gave the word “industry” the broadest possible interpretation — covering virtually every systematic activity organised for the production or distribution of goods or services through employer-employee cooperation. The triple test:
- Systematic activity.
- Organised by cooperation between employer and employee.
- For the production / distribution of goods or services to satisfy human wants.
The case continues to define the scope of who comes within the Act.
36.5 4 · Reference of Disputes — Section 10
Under Section 10, the appropriate government may, by order in writing, refer an industrial dispute that exists or is apprehended to:
- A Board of Conciliation for promoting a settlement.
- A Court of Enquiry for inquiring into any matter connected with or relevant to the dispute.
- A Labour Court for adjudication of any matter specified in Schedule II.
- An Industrial Tribunal for adjudication of any matter specified in Schedule II or III.
- A National Tribunal for adjudication where the dispute is of national importance or affects establishments in more than one state.
The government’s discretion to refer is wide but not unlimited — courts have ruled that it must be exercised reasonably and after considering the dispute’s merits.
36.5.1 Section 10A — Voluntary Arbitration
Parties may, by written agreement signed before reference to any authority, refer the dispute to one or more arbitrators. The agreement and the resulting arbitration award receive statutory recognition and are binding under Section 18.
36.6 5 · Procedure of Authorities — Sections 11 to 16
| Section | Provision |
|---|---|
| 11 | Authorities follow such procedure as they think fit; powers of a civil court for examining witnesses, taking evidence on oath, compelling production of documents |
| 11A | Power of labour courts, tribunals and national tribunals to give appropriate relief in cases of discharge or dismissal — including reinstatement even if punishment was not shockingly disproportionate (1971 amendment) |
| 12 | Duties of conciliation officers — investigate, mediate, send settlement report within 14 days or failure report |
| 13 | Duties of Board of Conciliation — two-month report |
| 14 | Duties of Court of Enquiry — report within six months |
| 15 | Duties of labour court / tribunal / national tribunal — submit award as soon as practicable |
| 16 | Form of report and award — written, signed and copies submitted to the government |
36.6.1 Section 11A — A Powerful Tool
Section 11A, inserted in 1971, dramatically expanded judicial review of disciplinary action. A labour court or tribunal can:
- Set aside the order of discharge or dismissal.
- Direct reinstatement with full, partial or no back-wages.
- Substitute a lesser punishment.
- Re-appraise the evidence and decide the proportionality of punishment.
This converted the labour judiciary from a deferential reviewer into a substantive guardian against arbitrary management action.
36.7 6 · Publication and Operation of Awards — Sections 17 to 19
| Section | Provision |
|---|---|
| 17 | Award published in the official gazette within 30 days of receipt by the appropriate government |
| 17A | Award becomes enforceable on the expiry of 30 days from publication |
| 17B | Where a labour court / tribunal orders reinstatement, employer must pay full wages last drawn pending appeal in the High Court / Supreme Court (1982 amendment) |
| 18 | Binding effect of settlements and awards |
| 19 | Period of operation — usually 1 to 3 years; continues until two months’ notice of termination |
36.7.1 Binding Effect — Section 18
| Outcome | Binding on |
|---|---|
| Settlement in conciliation | Parties to dispute, their representatives, heirs, successors, assigns |
| Bilateral settlement (outside conciliation) | Only the signatories |
| Adjudication award | All parties to the dispute and any party summoned |
| Arbitration award (Section 10A) | Parties to the agreement |
36.8 7 · Restrictions on Strikes and Lock-outs — Sections 22 to 25
Already covered in detail in Topic 33. Summary:
- Section 22 — public-utility notice (14 days within 6 weeks); mandatory conciliation.
- Section 23 — general prohibition during pendency of conciliation / adjudication / arbitration; settlement / award period.
- Section 24 — illegal strikes and lock-outs.
- Section 25 — prohibition of financial aid to illegal action.
36.9 8 · Chapter V-A — Lay-Off, Retrenchment and Transfer (Sections 25A to 25J)
Inserted in 1953, Chapter V-A applies to industrial establishments employing 50 or more workmen (with exceptions) and provides for the rights of workmen affected by lay-off, retrenchment, transfer and re-employment.
36.9.1 Section 25A — Application
The Chapter does not apply to seasonal industrial establishments or establishments employing fewer than 50 workmen on an average per working day during the preceding calendar month.
36.9.2 Section 25B — Continuous Service
A workman is in continuous service if for the preceding calendar year he has worked at least 240 days for the same employer (190 days for underground mines).
36.9.3 Section 25C — Lay-Off Compensation
A laid-off workman is entitled to 50% of basic wages plus dearness allowance for the period of lay-off, for a maximum of 45 days in any 12-month period.
36.9.4 Section 25F — Retrenchment Conditions
No workman who has been in continuous service for at least one year may be retrenched until:
- One month’s notice in writing has been given (or wages in lieu).
- Retrenchment compensation equal to 15 days’ average pay for every completed year of continuous service has been paid.
- Notice to the appropriate government has been served as prescribed.
36.9.5 Section 25G — Last In First Out
Where workmen of a particular category are to be retrenched, the employer must ordinarily retrench the workman who was the last to be employed in that category — the LIFO principle.
36.9.6 Section 25H — Re-Employment
If the employer proposes to re-employ workmen after retrenchment, an opportunity must be given to the retrenched workmen to offer themselves for re-employment in preference to other persons.
Section 25F — three mandatory pre-conditions before retrenchment: (i) one month’s notice or wages in lieu; (ii) retrenchment compensation = 15 days’ average pay per completed year of service; (iii) notice to government. Failure makes the retrenchment invalid.
36.10 9 · Chapter V-B — Special Provisions Relating to Lay-Off, Retrenchment and Closure (Sections 25K to 25S)
Inserted in 1976, Chapter V-B applies to industrial establishments — not being seasonal — employing 100 or more workmen (raised to 300+ under IR Code 2020) on an average per working day during the preceding 12 months.
| Section | Provision |
|---|---|
| 25K | Chapter applies to non-seasonal establishments with 100+ workmen (300+ under IR Code 2020) |
| 25M | Prior permission of the appropriate government required for lay-off (with exceptions for shortage of power or natural calamity) |
| 25N | Prior permission required for retrenchment; three months’ notice or wages |
| 25O | Prior permission required for closure; ninety days’ notice |
| 25P | Government may direct re-opening of an establishment after closure |
| 25Q | Penalty for unauthorised lay-off, retrenchment or closure — imprisonment up to one month or fine up to Rs 1,000 or both |
| 25R | Penalty for closure without permission — imprisonment up to six months or fine up to Rs 5,000 or both |
36.10.1 Constitutional Challenge — Section 25-O
In the Excel Wear v. Union of India (1979) case, the Supreme Court struck down the original Section 25-O (closure provision) as unreasonable under Article 19(1)(g). The provision was redrafted to require reasons for refusal and provide a time-limited government response — restoring its constitutionality.
36.11 10 · Unfair Labour Practices — Schedule V
Schedule V — inserted in 1982 — enumerates unfair labour practices on the part of employers and workmen / unions. Engaging in any of these is an offence under Section 25T and 25U punishable with imprisonment up to six months or fine up to Rs 1,000.
36.11.1 Schedule V — Illustrative Items
| By employers | By workmen / unions |
|---|---|
| Interfering with the right of workmen to organise | Advising or instigating work-to-rule contrary to procedure |
| Threatening workmen with discharge for joining a union | Coercing workmen to join or refuse to join a union |
| Discrimination against union members in promotion / transfer | Refusing to bargain collectively in good faith |
| Recruitment from outside during a legal strike | Engaging in violence or intimidation |
| Refusal to bargain with the recognised union | Demonstrations against management with gheraos |
| Establishment of “company union” | Wilful damage to property |
| Discharge of a union office-bearer for union activity | Demonstrations at office-bearers’ residences |
36.12 11 · Recovery of Money Due — Section 33C
Section 33C provides a summary recovery procedure:
- Section 33C(1) — the appropriate government may recover money due to a workman under a settlement / award by issuing a certificate to the collector who will recover it as arrears of land revenue.
- Section 33C(2) — where any workman is entitled to benefit capable of being computed in money, the labour court may compute the amount in terms of money.
The provision lets workers cash in awards and settlements without a fresh proceeding.
36.13 12 · Penalties — Sections 26 to 31
| Section | Offence | Punishment (original Act) |
|---|---|---|
| 26 | Illegal strike / lock-out | Workmen: 1 month or Rs 50; Employer: 1 month or Rs 1,000 |
| 27 | Instigation of illegal action | 6 months or Rs 1,000 |
| 28 | Financial aid to illegal action | 6 months or Rs 1,000 |
| 29 | Breach of settlement / award | 6 months or Rs 1,000 + Rs 200 per day |
| 30 | Disclosure of confidential information | 6 months or Rs 1,000 |
| 30A | Closure without notice | 6 months or Rs 5,000 |
| 31 | Other contraventions | 6 months or Rs 100 |
Penalties are substantially enhanced under the IR Code 2020.
36.14 13 · Other Important Provisions
| Section | Provision |
|---|---|
| 33 | Conditions of service to remain unchanged during pendency of proceedings — protective provision for workmen |
| 33A | Adjudication of complaints regarding violation of Section 33 |
| 33B | Power to transfer proceedings between authorities |
| 34 | Cognisance of offences only on government complaint |
| 36 | Representation of parties — by union office-bearers, federations, lawyers in restricted cases |
| 36A / 36B | Power to interpret awards; conferment of jurisdiction |
| 38 / 39 | Power to make rules and delegate |
36.15 14 · The ID Act and the Industrial Relations Code 2020
The Industrial Relations Code 2020 subsumes the ID Act 1947 along with the Trade Unions Act 1926 and the Industrial Employment (Standing Orders) Act 1946. Most of the substantive scheme survives, but several thresholds and procedural details have been recalibrated.
| Provision | ID Act 1947 | IR Code 2020 |
|---|---|---|
| Strike notice | Public utilities only (14 days) | Universal 14 days for all establishments |
| Lay-off / retrenchment / closure approval | 100+ workmen | 300+ workmen |
| Standing orders threshold | 100+ workmen | 300+ workmen |
| Recognition of union | Voluntary (Code of Discipline 1958) | Statutory — sole at 51%, council at 20%+ |
| Industrial Tribunal | Single member (judicial) | Two members — judicial + administrative |
| Labour Court | Separate Section 7 tribunal | Merged into Industrial Tribunal |
| Fixed-term employment | Limited statutory recognition | Formal recognition with proportionate benefits |
| Re-skilling fund | None | Established — employer contributes 15 days’ wages per retrenched worker |
| Grievance Redressal Committee | 20+ workmen (Section 9C) | Continued — with women’s representation, time limits |
| Penalties | Modest | Substantially enhanced |
36.16 15 · Legacy and Continuing Significance
- The Act remained the central spine of Indian industrial-dispute law for over 70 years.
- Provided the conceptual vocabulary — industrial dispute, workman, settlement, award, retrenchment, closure, lay-off — that the IR Code 2020 continues to use.
- Generated a vast body of case-law — Bangalore Water Supply, Workmen of Firestone Tyre, Excel Wear, T.K. Rangarajan and many others — that remains the interpretive foundation under the new Code.
- Embedded the tripartite model of dispute settlement in Indian industrial practice.
- Established judicial control over arbitrary management action through Sections 11A, 25F and the unfair labour practice schedule.
36.17 Practice Questions
The Industrial Disputes Act came into force in:
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The "triple test" for the definition of "industry" was laid down in:
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Retrenchment compensation under Section 25F is at the rate of:
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"Continuous service" under Section 25B requires at least how many days of work in the preceding year (above ground)?
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Lay-off compensation under Section 25C is payable for how many days in any 12-month period?
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Chapter V-A of the ID Act 1947 applies to non-seasonal industrial establishments with:
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Chapter V-B of the ID Act 1947 originally applied to non-seasonal establishments with at least:
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Section 11A — empowering labour courts / tribunals to re-appraise disciplinary action — was inserted in:
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The Excel Wear v. Union of India (1979) judgment struck down the original Section:
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Match the section with its content:
| (i) | Section 25F | (a) | Recovery of money |
| (ii) | Section 25G | (b) | Conditions for retrenchment |
| (iii) | Section 25-O | (c) | Last in first out |
| (iv) | Section 33C | (d) | Closure permission |
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Section 33 of the ID Act 1947 protects workmen by:
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Schedule V of the ID Act 1947 lists:
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Closure under Section 25-O requires advance application to the government how many days before the intended closure?
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Section 33C of the ID Act 1947 deals with:
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The Bangalore Water Supply triple test for "industry" includes all except:
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Section 25H of the ID Act 1947 gives retrenched workmen:
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Section 17B of the ID Act 1947 requires the employer to pay full last-drawn wages to a reinstated workman pending:
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Under the IR Code 2020, Chapter V-B-type provisions (lay-off / retrenchment / closure approval) apply at:
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The Worker Re-Skilling Fund under the IR Code 2020 is financed by:
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Penalty for unauthorised lay-off, retrenchment or closure under Section 25Q is up to:
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36.18 Quick Recall
- ID Act 1947 — central spine of Indian industrial-dispute law; in force 1 April 1947; subsumed within IR Code 2020.
- Key definitions (Section 2): industry — 2(j); industrial dispute — 2(k); workman — 2(s); strike — 2(q); lock-out — 2(l); public utility — 2(n); lay-off — 2(kkk); retrenchment — 2(oo); closure — 2(cc); settlement — 2(p); award — 2(b).
- “Industry” defined broadly in Bangalore Water Supply v. A. Rajappa (1978) — triple test: systematic activity, employer-employee cooperation, production or distribution of goods or services.
- Authorities (Sections 3-9C): Works Committee, Conciliation Officer, Board of Conciliation, Court of Enquiry, Labour Court (Schedule II), Industrial Tribunal (Schedule III), National Tribunal, Grievance Redressal Committee (Section 9C, 2010).
- Reference: Section 10 (government); Section 10A (voluntary arbitration).
- Section 11A (1971) — labour court / tribunal may re-appraise disciplinary action and grant reinstatement / lesser punishment.
- Awards: Section 17 — publication within 30 days; Section 17A — enforceable after 30 days; Section 17B (1982) — full wages during appeal; Section 18 — binding effect; Section 19 — period of operation (two months’ notice to terminate).
- Restrictions on strikes / lock-outs: Sections 22-25.
- Chapter V-A (1953, 50+ workmen): 25B continuous service (240 days), 25C lay-off compensation (50% for 45 days), 25F retrenchment (1 month notice + 15 days’ pay per year + government notice), 25G LIFO, 25H re-employment preference.
- Chapter V-B (1976, 100+ workmen, now 300+ under IR Code 2020): 25M lay-off permission, 25N retrenchment permission, 25-O closure permission (90 days advance application). Excel Wear 1979 struck down original 25-O.
- Schedule V (1982) — unfair labour practices; offences under Sections 25T-25U.
- Section 33 — service conditions frozen during pendency.
- Section 33C — summary recovery of money due to workman.
- IR Code 2020 changes: universal 14-day strike notice; 300+ thresholds; statutory recognition (51% sole, 20% council); two-member Industrial Tribunal; fixed-term employment with proportionate benefits; Re-skilling Fund (15 days’ wages per retrenched worker); enhanced penalties.