Industrial Dispute Conciliation Machinery in India

An industrial dispute is a quarrel between an employer and workers about jobs, pay or working conditions. The Industrial Relations Code, 2020 sets a ladder for settling it. Talks come first. A tribunal hears the case only if talks fail.

1.1 What counts as an industrial dispute?

The Code covers three kinds of quarrel. They are employer against employer, employer against worker, and worker against worker. The quarrel must connect to employment, the terms of employment or the conditions of labour.

A single worker can raise a dispute too. This happens when the employer discharges, dismisses, retrenches or otherwise ends that worker’s job.

Retrenchment means the employer ends a worker’s job for any reason except punishment. Retirement and the end of a fixed-term contract are not retrenchment.

1.2 Step 1: who hears the worker first?

Every industrial establishment with 20 or more workers must have one or more Grievance Redressal Committees. A committee hears complaints from individual workers.

• It has equal numbers of members from the employer and the workers.
• It can have at most ten members.
• Women must be represented. Their share cannot be less than the share of women among the workers.
• Its chairperson comes alternately from the employer’s side and the workers’ side, each year.

A worker can apply within one year of the cause of the dispute. The committee may complete its work within 30 days of the application. The Code uses the word “may”.

The committee decides by majority. More than half of the workers’ members must agree. If they do not, the committee is taken to have made no decision.

1.3 Step 2: what does the Conciliation Officer do?

Conciliation means a neutral officer helps both sides reach a fair deal. A worker who is unhappy with the committee’s decision can ask for it. The time limit is 60 days. It runs from the committee’s decision. It also runs from the day the committee’s 30 days end without a decision.

The worker applies to the Conciliation Officer through the Trade Union of which he is a member. A Trade Union is a group of workers formed to manage their dealings with the employer.

The officer must investigate the dispute without delay. The officer may do whatever seems fit to bring about a fair and friendly settlement.

• If the sides settle, the officer sends a report and a memorandum of settlement signed by both.
• If they do not, the officer sends a full report. It lists the steps taken and the reasons the talks failed.
• The report is due within 45 days of the start of conciliation, or a shorter time fixed by the Government.
• If the officer has received a strike notice, the report is due within 14 days.
• The parties can agree in writing to extend the time, with the officer’s approval.
• The officer cannot hold proceedings on a dispute more than two years after it arose.

1.4 Step 3: what if talks fail?

A party can then apply to the Industrial Tribunal. A tribunal is a special body that hears labour disputes. The application must be made within 90 days of receiving the failure report.

No government officer has to refer the case first. PIB calls this the direct access mechanism. Earlier, a discretionary reference by government officials was needed.

Each Industrial Tribunal has two members. One is a Judicial Member and the other is an Administrative Member. The Code moved the pending cases of the old Labour Court and the old Tribunal to the new Tribunal.

1.5 Can workers strike whenever they like?

No. The Code sets rules for a lawful strike. A strike means workers stop work together, or refuse together to keep working. It includes mass casual leave. That means casual leave taken on one day by 50 per cent or more of the workers.

Under section 62, a worker in breach of contract cannot strike in these cases:

• without giving the employer notice, within 60 days before striking;
• within 14 days of giving that notice;
• before the date of strike named in the notice;
• while conciliation is pending, and for 7 days after it ends;
• while a Tribunal case is pending, and for 60 days after it ends;
• while a settlement or award covers the matter.

Employers face matching limits on lock-outs.

The ladder runs under the Industrial Relations Code, 2020. It is one of four Labour Codes. The Government made all four effective on 21 November 2025. Together they rationalise 29 existing labour laws.

2.1 Which old laws did the Code absorb?

The Code consolidates three older Acts:

• the Industrial Disputes Act, 1947;
• the Trade Unions Act, 1926;
• the Industrial Employment (Standing Orders) Act, 1946.

PIB says this cut the number of rules from 105 to 51, forms from 37 to 18 and registers from 3 to zero.

Section 104 lets the Centre repeal the three Acts by notification, from a date it names. Reports on Justices Nagarathna’s and Narasimha’s opinions say the 1947 Act stands repealed from 21 November 2025. Things done under the old Acts continue as if done under the Code, unless they clash with it.

2.2 Is it fully working everywhere?

Labour is a shared subject. Entry 22 of the Concurrent List reads “Trade unions; industrial and labour disputes”. So the Centre and the States can both make laws on it.

The Code names an appropriate Government. For railways, mines, oil fields, major ports, air transport, telecommunication, banking and insurance, it is the Central Government. For any other establishment, it is the State Government.

The appropriate Government makes the rules. The Centre notified the Industrial Relations (Central) Rules, 2026 on 8 May 2026, as G.S.R. 342(E). They cover the central sphere.

2.3 What else did the Code change?

• Sole negotiating union: with several unions, the one holding 51 per cent of the workers on the muster roll becomes sole negotiator.
• Negotiating council: if no union reaches 51 per cent, the employer forms a council of unions with at least 20 per cent support each.
• Re-skilling fund: the employer pays an amount equal to 15 days’ wages for every retrenched worker. It is credited to the worker’s account within 45 days. PIB says this is in addition to retrenchment compensation.
• Retrenchment: a worker with one year of continuous service needs one month’s written notice, or pay in lieu. The worker also gets compensation equal to 15 days’ average pay. This is for each completed year of service, or any part thereof in excess of six months.
• Special provisions: the special-provisions chapter on lay-off, retrenchment and closure (Chapter X) applies at 300 or more workers. The Government may notify a higher number. The count is the average per working day in the past twelve months.

Labour law protects workers in an industry. So the wider the meaning, the more workers it covers. Justice Dipankar Datta called it “perhaps the most litigated word in Indian labour jurisprudence” in the August 2026 case.

3.1 What did the 1978 case decide?

The case is Bangalore Water Supply and Sewerage Board v. A. Rajappa. A seven-judge Bench decided it on 21 February 1978. Justice V.R. Krishna Iyer wrote the leading opinion, for himself and two other judges. It gave “industry” a wide meaning under section 2(j) of the 1947 Act.

The judgment set a triple test. An activity is an industry if it is:

1. a systematic activity,
2. organised by cooperation between employer and employee,
3. for the production or distribution of goods and services meant to satisfy human wants and wishes. Wants that are only spiritual or religious are left out.

Profit was not needed. An organisation could be an industry even if it was not engaged in profit-making.

3.2 Who came under it, and who stayed out?

Professions, clubs, educational institutions, cooperatives, research institutes and charitable projects could not be exempted if they met the triple test. The Indian Express says hospitals, educational institutions, philanthropic bodies and even government welfare departments ended up under the Act.

Small simple ventures with almost no employees might still be exempt.

Only sovereign functions, strictly understood, were exempt. Welfare activities and economic ventures of the Government were not. In 2026, Justice Bagchi described sovereignty as restricted to core, inalienable duties of the State.

3.3 How does the new Code define “industry”?

Section 2(p) of the Code has its own definition. It starts the same way. Industry means any systematic activity carried on by co-operation between an employer and a worker. Its aim is to produce, supply or distribute goods or services to satisfy human wants. It does not matter whether capital is invested or profit is the motive.

Then it lists what is not an industry:

• institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic service;
• activities of the appropriate Government relatable to its sovereign functions, including defence research, atomic energy and space departments of the Centre;
• any domestic service;
• any other activity the Central Government notifies.

In fixed-term employment, a worker is hired on a written contract for a fixed period. The Code defines it in section 2(o).

4.1 Where did it come from?

Fixed-term employment was first notified for the apparel manufacturing sector, in February 2017. The Standing Orders amendment of 16 March 2018, notified as G.S.R. 235(E), extended it to all sectors.

4.2 What does the Code say now?

A fixed-term worker gets equal treatment while the contract runs:

• hours of work, wages, allowances and other benefits cannot be less than those of a permanent worker doing the same or similar work;
• statutory benefits come in proportion to the service given, even if the usual qualifying period is not reached;
• gratuity is payable after one year of service under the contract.

PIB adds that the direct contract with the employer is meant to cut the use of middlemen.

4.3 What happens when the term ends?

The job ends on its own. The 2018 rules say a fixed-term worker whose contract ends on expiry or is not renewed gets no notice or pay in lieu of notice. The Code’s definition of retrenchment leaves out the end of a fixed term.

4.4 Do temporary workers need a notice?

No. The 2018 rules say no notice of termination is needed for a temporary workman. This covers monthly rated, weekly rated and piece rated workers, probationers and badli workmen.

In July 2026, a strike at the Pakal Dul Hydroelectric Project ended through conciliation. The project is in Kishtwar, Jammu and Kashmir. PIB reported the settlement on 5 August 2026.

5.1 Who was involved?

• The settlement benefited 210 workers at the project. They were engaged by L&T Construction through sub-contractors.
• The Kissan Mazdoor Union, Nagseni, called the strike.

5.2 How did it end?

The Regional Labour Commissioner (Central), Jammu, led the conciliation. The sides reached a settlement on 13 July 2026. That ended the strike.

On 30 July 2026, the workers received terminal benefits of Rs 1,12,70,560. The amount includes retrenchment compensation, bonus, leave encashment, notice pay and other admissible terminal benefits.

5.3 What does it show?

This is step 2 of the ladder in real life. PIB says the dispute was resolved through the conciliation efforts of the Regional Labour Commissioner. PIB says the management was sensitized about its statutory obligations.

On 20 August 2026, a nine-judge Constitution Bench led by CJI Surya Kant ruled on the meaning of “industry”. The judges wrote separate opinions. So the result needs careful reading.

6.1 What was the question?

The reference arose from a 2002 appeal. In 2005, a five-judge Bench in State of Uttar Pradesh v. Jai Bir Singh sent the 1978 case to a larger Bench.

The nine judges looked at three issues:

• whether the triple test was laid down correctly;
• whether social welfare work by government departments can be industrial activity;
• which sovereign functions fall outside the 1947 Act.

6.2 How did the judges split?

• A 6:3 majority held that the reference was maintainable. That means the larger Bench could hear it.
• CJI Surya Kant and Justices Sharma, Aradhe and Pancholi reformulated the triple test. LiveLaw says it adds a “dominant commercial motive” aspect.
• Justice Narasimha held the reference maintainable but saw no need to reopen the test, as the 1947 Act is repealed.
• Justice Bagchi held it maintainable but affirmed the Bangalore Water Supply test as correct.
• Justices Nagarathna, Datta and Bhuyan held that the reference was not maintainable.

LiveLaw notes that five judges had views different from the four-judge reformulation.

6.3 What happens to pending cases?

The Bench agreed on one point. All cases pending under the 1947 Act are decided on the 1978 triple test. The four-judge reformulation is prospective. It does not reopen disputes that have reached finality.

6.4 What does it mean for the new Code?

The CJI’s opinion is confined to the 1947 Act. It “shall not be regarded as a source or aid for the interpretation of the Industrial Relations Code”. Justice Narasimha said the Code “must be interpreted on its own text and in its own context alone”.

The Hindu reports that the majority opinion clarified that the 1978 interpretation would not affect or influence “industry” in section 2(p) of the Code. The Supreme Court Observer says the Bench left the Code’s definition open for separate consideration.

UPSC has tested this topic in the Prelims and the Mains. The questions below are quoted as printed.

7.1 What have exams asked?

UPSC Mains 2024, GS Paper III, Q11.
Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?
This is a 15-mark question. Read the related article on labour rights.

UPSC CSP 2022, Q71.
In India, which one of the following compiles information on industrial disputes, closures, retrenchments and lay-offs in factories employing workers?
(a) Central Statistics Office
(b) Department for Promotion of Industry and Internal Trade
(c) Labour Bureau
(d) National Technical Manpower Information System
Official key: (c). View this question.

UPSC CSP 2019, Q60.
Consider the following statements:
As per the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018
1. if rules for fixed-term employment are implemented, it becomes easier for the firms/companies to lay off workers
2. no notice of termination of employment shall be necessary in the case of temporary workman
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
UPSC answer key: (c). View this question.

7.2 What are the common traps?

The Labour Bureau compiles data on industrial disputes, closures, retrenchments and lay-offs. The trap option is the Central Statistics Office.

Keep these numbers straight:

• Conciliation report: 45 days. With a strike notice: 14 days.
• Strike notice: given within 60 days before striking, then a 14-day wait.
• Union recognition: 51 per cent, not 41.
• Re-skilling fund: 15 days’ wages, credited within 45 days.
• Apply to the Tribunal: within 90 days of the failure report.
• The Code replaced three Acts: 1947, 1926 and 1946.

For fixed-term jobs, the final notification is G.S.R. 235(E) of 16 March 2018. The earlier intent notification, G.S.R. 17(E) of 8 January 2018, was only a draft. The final rules end fixed-term jobs without notice.

7.3 Quick recap

• Which law governs industrial disputes now? The Industrial Relations Code, 2020, in force since 21 November 2025.
• Which places need a Grievance Redressal Committee? Those with 20 or more workers.
• How long does a Conciliation Officer get to report? 45 days.
• Which 1978 case gave “industry” its wide meaning? The Bangalore Water Supply case.
• Who compiles data on industrial disputes? The Labour Bureau.