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Settlement of Disputes

Whatever may be the cause of industrial disputes, the consequences are harmful to all stakeholders-management, employees, economy, and the society. For management, disputes result in loss of production, revenue, profit and even sickness of the plant.

Employees would be hard hit as the disputes may lead to lockouts and consequent loss of wages and even jobs. Industrial establishments are pillars of the economy and the economy is bound to collapse if industries are tom by industrial strife. The cumulative effect of all these is felt by society.

Methods of Settlement of Disputes

A dispute, therefore, needs to be settled as early as possible. Various methods are available for resolving disputes. More important of them are :

1: Collective bargaining

2: Code of discipline

3: Grievance procedure

4: Arbitration

5: Conciliation

6: Adjudication

7: Consultative machinery

Collective Bargaining

Collective bargaining is probably the most effective method of resolving industrial disputes. It occurs when representatives of a labour union meet management representatives to determine employees’ wages and benefits, to create or revise work rules, and to resolve disputes or violations of the labour contract.

The bargaining is collective in the sense that the chosen representative of the employees (i.e. the union) acts as a bargaining agent for all the employees in carrying out negotiations and dealings with the management. The process may also be considered collective in the case of the corporation in which the paid professional managers represent the interests of the stockholders and the board of directors in bargaining with the union leaders. On the employer side, it is also collective in those common situations in which the companies have joined together in an employer association for purposes of bargaining with a union.

Approaches to Collective Bargaining

Collective bargaining has been viewed from three perspectives:

1. As a process of social change,
2. As a peace treaty between the conflicting parties, and
3. As a system of industrial jurisprudence

Collective bargaining benefits both employees as well as employers. This means that the basic interests of the management are protected and also the rights of the employees. The two sides have a responsibility towards each other. For example, unions should not expect the management to concede on issues which would ultimately impair the company’s ability to stay in business. Likewise, the management must recognize the rights of employees to form unions and to argue for improved wages and working conditions.

Collective bargaining infuses democratic principles into the industrial world. Workers participate in decisions that affect their work and work life. Thus, collective bargaining may be viewed as a form of participative management.

Code Discipline

The code of discipline 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 constructive co-operation between the parties concerned at all levels;
3. To secure settlement of disputes and grievances by negotiation, conciliation and voluntary arbitration
4. To eliminate all forms of coercion, intimidation, and violence in industrial relations;
5. To avoid work stoppages;
6. To facilitate the free growth of trade unions; and
7. To maintain discipline in industry

Grievance Procedure

Grievance procedure is another method of resolving disputes. All labour agreements contain some form of grievance procedure. And if the procedure is followed strictly, any dispute can easily be resolved.

In the meanwhile, a grievance may be understood as an employee’s dissatisfaction or feeling of personal injustice relating to his or her employment relationship. A grievance is generally well-defined in a collective-bargaining agreement. It is usually restricted to violations of the terms and conditions of employment. Other conditions which may give rise to a grievance are:

l. A violation of law,
2. A violation of the intent of the parties as stipulated during contract negotiations,
3. A violation of company rules,
4. A change in working conditions or past company practices, and
5. A violation of health and/or safety standards.

When an employee believes that the labour agreement has been violated, he or she files a grievance. The grievance needs to be ‘resolved according to a set procedure.

Grievance procedures generally establish the following:

l. How the grievance will be initiated?
2. The number of steps in the process.
3. Who will represent each party?
4. The specified number of working days within which the grievance must be taken to the next step in the hearing.

There may be variations in the procedures followed for resolving employee grievances. Variations may result from such factors as organizational or decision-making structures or size of the plant or the company. Larger organizations do tend to have more formal procedures involving a succession of steps. Some general principles which should guide any procedure are:

l. Grievance must be addressed promptly.
2. Procedures and forms airing grievances must be easy to utilize and well-understood by employees and their supervisors.
3. Ego clashes should not be allowed to impede the resolution of disputes.
4. Occurrence of similar grievances must be avoided.


Arbitration is a procedure in which a neutral third party studies the bargaining situation, listens to both the parties and gathers information, an then makes recommendations that are binding on the parties. Arbitration is effective as a means of resolving disputes because it is:

I. Established by the parties themselves and the decision is acceptable to them, and
2. Relatively expeditious when compared to courts or tribunals. Delays are cut down and settlements are speed up.


Conciliation is a process by which representatives of workers and employers are brought together before a third party with a view to persuade them to arrive at an agreement by mutual discussion between them. The third party may be one individual or a group of people. The alternative name for third party is mediators.

It may be stated that the conciliator has no power to force a settlement, but can work with the parties separately to determine their respective positions, explains a position more fully to the opposition, points out bases for agreement that may not have been apparent previously, helps in the search for solutions, and generally facilitates the reach of an agreement.

In effect, mediators act as communications catalyst, and their effectiveness depends on their impartiality and on their capacity to win the trust of both parties


Adjudication means a mandatory settlement of an industrial dispute by a labour court or a tribunal. Generally, the government refers a dispute or adjudication depending on the failure of conciliation proceedings. Section 10 of the Industrial Disputes Act, 1947, provides for reference of a dispute to labour court or tribunal. The Act also lays down rules regarding the composition and powers of labour courts and tribunals.

Disputes are generally referred to adjudication on the recommendation of the conciliation officer who had dealt with them earlier. However, the government has discretionary powers to accept or reject recommendations of the conciliation officer. It is obvious that once a dispute is referred for adjudication, the verdict of a labour court or tribunal is binding on both the parties.

The system of adjudication is the most significant instrument of resolving disputes. But, it has been criticized because of the delay involved in resolving conflicts. Continued dependence on adjudication deprives the trade unions of their right to recognize and consolidate their strength.

Consultative Machinery

Towards the end it is essential to refer to the consultative machinery set by the government to resolve conflicts. The main function of consultative machinery is to bring the parties together for mutual settlement of differences in a spirit of co-operation and goodwill. A consultative machinery operates at the plant, industry, state and the national levels. At the plant level, there are works committees and joint management councils. Being essentially bipartite in character, works committees are constituted as per the provisions of the Industrial Disputes Act, 1947.

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About Sonia Kukreja

I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. I hold a degree in MBA from well known management college in India. After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people.