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Reform of Settlement of Industrial Disputes in the Industrial Relations Code: Some Facts and Some Critical Reflections

10th October, 2020

Much of the popular commentaries and recommendations for enabling ease of doing business (EODB) have concentrated on the so-called rigid clauses governing retrenchment of workers and closure of establishments and onerous processes involving thousands of forms, returns, etc. The continuation of the latter in popular writings belie the raft of reforms introduced including Shram Suvidha. But these have totally ignored an important and genuine rigidity existent in the industrial relations system (IRS) and promote inefficiencies.

However the recently enacted Industrial Relations Code (IRC) which subsumes three laws including the Industrial Disputes (ID) Act, 1947 (IDA). According to the government, the objects of IRC are to "to minimise the friction between the employers and workers and to provide provisions for investigation and settlement of industrial disputes." and to "achieve industrial peace and harmony as the ultimate pursuit in resolving industrial disputes (sic) and to advance the progress of industry by bringing about the existence of harmony and cordial relationship between the employers and workers.

IDA conceives multiple institutions to prevent and resolve ID, viz. Works Committee (WC), Grievance Redressal Machinery (GRC), Conciliation Officer (CO) Conciliation Board (CB), the Court of Inquiry (CoI), Voluntary Arbitration (VA), and Labour Court (LC) and Industrial Tribunal (IT). IRC has retained all institutions save CB and CoI. However, it has in its pursuit of rationalisation removed 'Labour Court" and retained IT only. It has removed the existing power of the government to refer or not to refer industrial disputes prevalent in IDA [Section 10(1)] save in case of national tribunals. These are welcome reforms. But are they adequate to achieve the stated objectives?

WC and GRC in IRC are preventive and bipartite institutions, hence assume importance. It is difficult to comprehend as to why the threshold for formation of WC is 100 workers after more than 70 years and their formation is not a natural outcome but be subjected to will and pleasure of the government ("special or general orders")? The clauses concerning WC and GRC completely ignore the possible existence of a recognised union/council. Research evidence shows that absence of recognised union was one of the reasons for failure of bipartite institutions and now as IRC provides for the same, they should naturally be playing an important role in these institutions. Trade unions are not mere institutions of protest and strikes but play constructive role in shaping sound IR in a firm. Chapter II, dealing with bipartite forums, is rather casually framed as it includes clauses concerning individual worker's employment termination [Sections 4(9-11)].

Conciliation and Industrial Tribunal: Complex Web

IRC requires the CO to intervene in ID (apprehended or actual) and where strike/lockout notices have been received. But in case of ID the conciliation officer has a realistic work-time of 45 days since the date of commencement (DoC) of conciliation [Section 53(5)] and only 14 days in case of strike/lockout contexts. Research and anecdotal evidence show that much longer time is generally taken for conciliation while common sense instructs us that work-stoppages often present far more explosive contexts hence the CO should be given a longer time to work on them. The CO often perform multiple functions relating to labour administration and hence need more time even though laws have been amalgamated the duties will mostly remain the same as there are so many laws in a Code!

Unlike in the existing system, in IRC a Tribunal will have two members, judicial and administrative [Section 44(2)] and the former presides the two-members' bench. The next clause speaks of possible constitution of a "bench" comprising two members or a single member. The Bench of two members will adjudicate on matters relating to standing orders, trade union disputes, legality of work stoppages, and individual employment terminations (similar to those adjudicated by LC in IDA, Second Schedule) and remaining cases, viz. wages, allowances, hours of work, bonus, etc. will be decided by a Single Member Bench. It is difficult to comprehend this classification as the two types of benches replace the LC and IT in IDA. It is a poor rehash of existing scheme of compulsory adjudication.

The two-members' bench must decide on ID by consensus [Section 47(1)]. Now the twist comes. In cases where two members do not agree, their differences will be referred to the government which will then add a judicial member from "other Tribunal" and the three of them will decide the ID based on majority! The whole scheme is utterly convoluted and complex and will delay adjudication proceedings.

The Second National Commission on Labour (SNCL, 2002) like its predecessors envisaged a settlement system comprising independent Labour Relations Commissions (a multi-member body), LC (which subsumes IT) and Lok Adalat. While it is a good move to add administrative members as recommended by some commissions, they have created a poor kichadi, untasteful and inelegant. In IDA Section 10(2A) (with effect from 21-8/1984) empowers the government to "specify the period within which" the adjudicator shall his/her award to the government. This clause is missing in IRC. Inordinate delays as we note later is an abiding feature of ID settlement systems in India and lawmakers did not apply their mind on this important aspect.

The Performance Deficit

The three important features of adjudication in India are, viz. inadequacy of judicial institutions, lack of uniformity in awards and decisions, and undue delays in delivery of justice. As on October 30, 1998, 333 adjudicating bodies (LC & IT) existed in India (Indiastats) and taking 145.81 million workers in the non-agricultural sectors (1999-2000), there existed one adjudicating body per 4,37,868 workers. The situation is unlikely to have improved now even if it did the deficit will not be far from this. The very absence of data on them is shocking. For example, to a question to the Labour Ministry as to "the number of labour courts and tribunals functioning in the country as on date, State-wise" the Minister gave details of those falling in the Central Sphere and did not include those existing in the State Spheres.

The Law Commission of India's (LCI) report in 1987 spoke of the inordinate delay in delivery of justice due to the present legal system. Briefly, industrial disputes post-conciliation go to labour adjudication and if either party is unhappy with its award appeals to the High Courts (HC) utilising Articles 226-227 in the Constitution and later to the Supreme Court (SC) using Articles 32/136 as suitable. Then, the ID clog the working of HCs and the SC. The LCI noted during 1973-1987, 690 pending cases (as on 1-10-1987) under Article 136 (special leave petition) and 953 pending appeals in 1987 (1-1-1986). Be the end of 1985, 14, 818 cases relating to labour were pending in the HCs save Madras, Calcutta, Madhya Pradesh, and Jammu & Kashmir. It asks a pertinent question which must be answered by lawmakers: "Can it [case] be kept pending for ten years till the Supreme Court finds time to pronounce its decision on it... to bring about uniformity in industrial relations?" There is no all-India labour judicial body with all-India jurisdiction hence cases go to SC. The Labour Appellate Tribunal in the 1950s had a very short life due to legal infirmities. It is worth to relook it.

On September 21, 2020 the Labour Minister informed the Parliament that there are 22 LC and IT and 8008 cases in the Central Sphere (which he did not mention) were pending before them. Analysing the data at the National Law Grid, I found that 35.74 percent of total cases before labour judiciary in India were pending for more than a year and 37.01 percent of cases pending for more than three years.

Together all these mean that the objective of cheaper and expeditious justice delivery has been belied in the existing system. Justice delivery is important to both parties and should also be seen as a vital parameter for assessing EODB. These aspects have been totally ignored in popular discourses on Reforms and hence the Codes and regional reforms concentrated more on the probably inconsequential reforms pertaining to hire and fire. The government must rework the dispute settlement institutions to achieve what various commissions have recommended, appoint more judicial bodies and presiding officers and set timelines for justice delivery both in law and in practice and audit them from time to time.

Prof. K.R. Shyam Sundar
The writer is a faculty in HRM area