Page 82 - DCOM207_LABOUR_LAWS

Unit 5: Industrial Disputes Act

5.2 Objectives and Scope of Industrial Disputes Act Notes

The Industrial Disputes Act is to secure industrial peace and harmony by providing machinery
and procedure for the investigation and settlement of industrial disputes by negotiations.
Various studies indicate that Indian labour laws are highly protective of labour, and labour
markets are relatively inflexible. These laws apply only to the organised sector. Consequently,
these laws have restricted labour mobility, have led to capital-intensive methods in the organised
sector and adversely affected the sector’s long-run demand for labour. Labour being a subject in
the concurrent list, State-level labour regulations are also an important determinant of industrial
performance. Evidence suggests that States, which have enacted more pro-worker regulations,
have lost out on industrial production in general.
The Industrial Disputes Act (IDA) of 1947. Particular attention has been paid to its Chapter V-B,
introduced by an amendment in 1976, which required firms employing 300 or more workers to
obtain government permission for layoffs, retrenchments and closures. A further amendment in
1982 (which took effect in 1984) expanded its ambit by reducing the threshold to 100 workers. It is
argued that since permission is difficult to obtain, employers are reluctant to hire workers whom
they cannot easily get rid of.

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Caution Job security laws thus protect a tiny minority of workers in the organised
sector and prevent the expansion of industrial employment that could benefit the mass
of workers outside. It is also argued that the restriction on retrenchment has adversely
affected workplace discipline, while the threshold set at 100 has discouraged factories from
expanding to economic scales of production, thereby harming productivity.
Several other sections of the IDA allegedly have similar effects, because they increase workers’
bargaining strength and thereby raise labour costs either directly through wages or indirectly by
inhibiting work reorganization in response to changes in demand and technology. The Act also
lays down.

5.2.1 Objectives of Industrial Disputes Act

Following are the objectives of Industrial Disputes Act:
l z promotion of measures for securing amity and good relations between employer and
workmen
l z Investigation and settlement of industrial disputes
l z Prevention of illegal strike and lock-outs

l z Relief to workmen in the matter of lay-off, retrenchment and closure of an undertaking
l z Promotion of Collective Bargaining
5.2.2 Scope and Coverage of Industrial Disputes Act

The Industrial Disputes Act, 1947, extends to the whole of India, and is applicable to all industrial
establishments employing one or more workmen. It covers all employees both technical and non-
technical, and also supervisors drawing salaries and wages upto ` 1600 per month. It excludes
persons employed in managerial and administrative capacities and workmen subject to Army Act,
Navy Act, Air Force Act and those engaged in police, prison and civil services of the Government.
As regards disputes, it covers only collective disputes or disputes supported by trade unions or
by substantial number of workers and also individual disputes relating to termination of service.
For purposes of this act the term “dispute” is defined as dispute or difference between employers

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