Conciliation and Voluntary Arbitration

Umpire is the person who decides where an even number of arbitrators is equally divided.

Settlement, section 2(zi), is one arrived at in conciliation, or a written agreement outside conciliation signed as prescribed with copies to the authorised officer and the conciliation officer.

Failure report is the report under section 53(4) that no settlement was arrived at. It is the document that starts the ninety days.

Section 43: the conciliation officer

43(1): the appropriate Government may, by notification, appoint such number of persons as it thinks fit to be conciliation officers, charged with the duty of mediating in and promoting the settlement of industrial disputes.

43(2): a conciliation officer may be appointed for a specified area, or for specified industries in a specified area, or for one or more specified industries, and either permanently or for a limited period.

Note the description of the office in sub-section (1), because it fixes what he is: a mediator and a promoter of settlement. He is not a judge and he decides nothing. Everything he can do is directed at getting the parties to agree.

Section 53: the conciliation proceeding

53(1): when he must act, and the two-year long stop

Where any industrial dispute exists or is apprehended, or a notice under section 62 has been given, the conciliation officer shall hold conciliation proceedings in the prescribed manner.

A proviso bars him from holding any such proceedings after two years from the date on which the industrial dispute arose.

Three points.

The duty is mandatory: "shall". He does not choose whether to conciliate.

"Exists or is apprehended" is wide. He may act before the dispute has broken out.

A notice under section 62 triggers it independently. Section 62 is the notice of a strike or lock-out, which belongs to Module III. The moment such a notice is given, conciliation begins, which is how the Code turns the notice period into a negotiating period.

And the two-year bar is a real limitation period, running from the date the dispute arose, not from the date of any decision or refusal.

53(2): what he does

For the purpose of bringing about a settlement he shall, without delay, investigate the dispute and all matters affecting the merits and the right settlement of it, and may do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement.

Read the width of that second limb. He may do all such things as he thinks fit. Combined with the powers in section 49, which give him the powers of a civil court to enforce attendance, compel documents and issue commissions, and the power under section 49(2) to enter the premises occupied by the establishment after reasonable notice, the conciliation officer is a substantial investigator even though he decides nothing.

53(3) and (4): the two reports

If a settlement is arrived at, on the dispute or on any of the matters in dispute, he sends a report to the appropriate Government or its authorised officer, together with a memorandum of the settlement signed by the parties.

If no settlement is arrived at, he sends, as soon as practicable after the close of the investigation, to the concerned parties and to the appropriate Government, a full report setting forth the steps he took to ascertain the facts and to bring about a settlement, a full statement of those facts and circumstances, and the reasons why, in his opinion, a settlement could not be arrived at.

The failure report is a substantial document and that matters. It is not a bare certificate that conciliation failed; it records the facts, the steps and the reasons, and it goes to the parties as well as the Government. It is also the trigger for the ninety days in sub-section (6).

53(5): the time limits

Notwithstanding sub-section (4), the report shall be sent to the concerned parties and the appropriate Government within forty-five days of the commencement of the conciliation proceedings, or within such shorter period as the appropriate Government fixes.

First proviso: where the conciliation officer receives a notice under section 62, he shall send the report within fourteen days of the commencement of the proceedings.

Second proviso: subject to the approval of the conciliation officer, the time may be extended by such period as may be agreed upon in writing by the concerned parties.

The fourteen-day rule is the one to remember and the reason is obvious once seen. A section 62 notice means a strike or lock-out is coming. Forty-five days of conciliation would be useless, because the stoppage would have happened. So where the clock is already running, the report is due in a fortnight.

And note who can extend. Not the officer alone and not the parties alone: the parties must agree in writing and the officer must approve.

53(6): straight to the Tribunal

Any concerned party may make application in the prescribed form to the Tribunal in the matters not settled by the conciliation officer under this section within ninety days from the date on which the report under sub-section (4) is received to the concerned party and the Tribunal shall decide such application in the prescribed manner.

This sub-section is the most important change the Code made to the dispute machinery, and a student who understands why will answer any question on "mechanism to dispute resolution" well.

Under the repealed Industrial Disputes Act 1947, adjudication depended on a REFERENCE by the appropriate Government. A dispute did not reach a Tribunal because a party took it there; it reached a Tribunal because the Government decided to send it. The Government could refuse. It could sit on the file. Its refusal was challengeable only on limited administrative-law grounds, and by the time that challenge was decided the dispute was years old. The reference power was the single greatest bottleneck in Indian industrial adjudication, and it made the Government a gatekeeper in disputes to which it was often, as a public-sector employer, a party.

Section 53(6) removes the gate. Any concerned party may apply directly to the Tribunal, in the prescribed form, in the matters not settled, within ninety days from the date the failure report is received by that party. There is no reference, no Government discretion and no gatekeeper.

Three limits are still worth noting. The right arises on the failure report, so conciliation is a precondition. The period is ninety days from receipt of that report by the party applying. And it covers "the matters not settled", so a partial settlement leaves only the unsettled matters for the Tribunal.

Section 60: when proceedings begin and end

60(1): a conciliation proceeding is deemed to have commenced on the date on which the first meeting is held by the conciliation officer in an industrial dispute after the receipt of the notice of strike or lock-out.

60(2): a conciliation proceeding is deemed to have concluded:

• (a) where a settlement is arrived at, when a memorandum of the settlement is signed by the parties;
• (b) where no settlement is arrived at, when failure of conciliation is recorded by the conciliation officer; or
• (c) when a reference is made to a National Industrial Tribunal during the pendency of conciliation proceedings.

60(3): proceedings before an arbitrator, a Tribunal or a National Industrial Tribunal are deemed to have commenced on the date of filing the application or appeal, or on the date of reference for arbitration or adjudication, and to have concluded on the date on which the award becomes enforceable.

These deeming rules are not decoration. The forty-five and fourteen day periods in section 53(5) run from the commencement of the conciliation proceedings, so section 60(1) tells you when the clock starts. And the definition of a strike's legality in Chapter III of Module III depends on whether a conciliation proceeding is pending, so section 60(2) tells you when it stops.

Section 42: voluntary arbitration

Arbitration under the Code is voluntary: it happens because the parties agree, and it sits beside conciliation rather than after it.

42(1): where any industrial dispute exists or is apprehended and the employer and the workers agree to refer it to arbitration, they may, by a written agreement, refer the dispute to arbitration, and the reference shall be to such person or persons as arbitrator or arbitrators as may be specified in the agreement.

42(2): where the agreement provides for reference to an even number of arbitrators, it shall provide for the appointment of another person as umpire, who shall enter upon the reference if the arbitrators are equally divided, and the award of the umpire shall prevail and shall be deemed to be the arbitration award for the purposes of the Code.

42(3): the agreement shall be in such form and signed by the parties in such manner as may be prescribed.

42(4): a copy of the arbitration agreement shall be forwarded to the appropriate Government and the conciliation officer.

42(5): where a dispute has been referred to arbitration and the appropriate Government is satisfied that the persons making the reference represent the majority of each party, it may issue a notification in the prescribed manner; and when such a notification is issued, employers and workers who are not parties to the arbitration agreement but are concerned in the dispute shall be given an opportunity of presenting their case before the arbitrator.

A proviso to sub-section (5) provides how the workers are to be represented before the arbitrator where the dispute is other than the termination of an individual worker by discharge, dismissal, retrenchment or otherwise:

• (a) where there is a negotiating union or negotiating council, by that union or council;
• (b) where there is none, by the Trade Union;
• (c) where there is no Trade Union, by such representatives of the workers chosen in such manner as may be prescribed.

Sub-section (5) is the interesting one and it repays a sentence of explanation. An arbitration agreement binds only those who made it. But an industrial dispute is rarely confined to the signatories: other workers and other employers may be concerned in the same question. So where the Government is satisfied that the persons referring represent the majority of each party, it may notify the reference, and the effect is to open the arbitration to everyone concerned by giving them an opportunity of presenting their case. The award can then settle the dispute rather than a part of it, and section 57(3) makes an enforceable arbitration award binding on the wider class.

Sub-section (2) is the provision students forget. An even number of arbitrators can deadlock, so the agreement must provide an umpire, and where the arbitrators divide equally the umpire's award prevails and is treated as the arbitration award.

Conciliation, arbitration and adjudication compared

A worked example

The facts. At a packaging plant in Wada the union demands a revision of the night-shift allowance. The Grievance Redressal Committee cannot help, because this is a collective demand and not an individual grievance. The employer refuses. On 1 June the union serves a notice of strike under section 62.

What happens first? The conciliation officer's duty under section 53(1) is triggered twice over: an industrial dispute exists, and a notice under section 62 has been given. He shall hold conciliation proceedings.

When do the proceedings commence? Under section 60(1), on the date the first meeting is held by the conciliation officer after receipt of the notice of strike. Say that is 5 June.

By when must he report? Because he received a section 62 notice, the first proviso to section 53(5) applies: within fourteen days of commencement, so by 19 June. Without the notice it would have been forty-five days.

He investigates. Under section 53(2) he may do all such things as he thinks fit to induce a fair and amicable settlement; under section 49(2) he may, after reasonable notice, enter the premises; and under section 49(3) he has the powers of a civil court to enforce attendance, compel documents and issue commissions.

Route one: the parties settle. He sends a report to the appropriate Government together with a memorandum of the settlement signed by the parties, section 53(3). The proceeding is deemed concluded on the date that memorandum is signed, section 60(2)(a). The settlement is a settlement within section 2(zi) because it was arrived at in conciliation, and its binding effect and duration are governed by sections 57 and 58.

Route two: they do not settle. He sends a full report to the parties and the Government setting out the steps taken, the facts and the reasons why no settlement was reached, section 53(4). The proceeding is deemed concluded when he records the failure, section 60(2)(b). The union receives the report on 20 June.

What can the union do now, and this is the part that used to be impossible? Under section 53(6) it may apply directly to the Tribunal, in the prescribed form, in the matters not settled, within ninety days of 20 June, that is by about 18 September. It does not need a reference by the appropriate Government, and the Government cannot prevent it.

Route three: the parties prefer to choose their own decider. At any point while the dispute exists or is apprehended they may, by written agreement in the prescribed form and signed in the prescribed manner, refer it to arbitration under section 42(1) and (3), and must forward a copy to the appropriate Government and the conciliation officer, section 42(4).

They name two arbitrators. Section 42(2) requires the agreement to provide for an umpire, who enters the reference if the two are equally divided, and whose award then prevails and is deemed to be the arbitration award.

A second union at the plant, which did not sign, objects that it will be bound by an award it had no part in. If the appropriate Government is satisfied that those who made the reference represent the majority of each party, it may notify the reference under section 42(5), and the effect is that employers and workers not parties to the agreement but concerned in the dispute must be given an opportunity of presenting their case. The dispute being a collective one rather than the termination of an individual worker, the proviso applies and the workers are represented by the negotiating union or council, or failing that by the Trade Union, or failing that by representatives chosen as prescribed.

Finally, a limitation point. Suppose the union does nothing for three years and then asks the conciliation officer to act. The proviso to section 53(1) forbids him from holding conciliation proceedings after two years from the date on which the dispute arose.

What this does NOT mean

It does not mean the conciliation officer decides the dispute. Section 43(1) charges him with mediating in and promoting settlement. He investigates and persuades; he does not adjudicate.

It does not mean conciliation is optional for him. Section 53(1) says he shall hold proceedings.

It does not mean a Government reference is needed to reach the Tribunal. Section 53(6) lets a concerned party apply directly. That is the change from the repealed Act.

It does not mean the ninety days run from the failure of conciliation. They run from the date the section 53(4) report is received by the concerned party.

It does not mean the report is always due in forty-five days. Where a section 62 notice was received it is fourteen.

It does not mean arbitration under section 42 can be imposed. It requires a written agreement between the employer and the workers. What section 42(5) allows the Government to do is open a consented arbitration to others concerned, not to create one.

It does not mean an even number of arbitrators is forbidden. It is allowed, provided the agreement appoints an umpire.

Limits, criticism and amendments

Section 53(6) is a real reform and it is the strongest thing in this chapter, but it has a gap: it gives the right to apply on a failure report, so a conciliation officer who never reports leaves the party without the trigger. The forty-five and fourteen day limits in section 53(5) are the answer, but the section attaches no consequence to their breach.

The two-year bar in the proviso to section 53(1) is short for a workforce that may take time to organise, and it runs from the date the dispute arose rather than from any decision.

Voluntary arbitration remains little used in India, and the reason is structural rather than legal: it requires the two sides to agree on a neutral at the very moment they are furthest apart. Section 42 is well drafted and, in practice, rarely invoked.

And the conciliation officer's independence rests on his appointment by the appropriate Government, which in a public-sector dispute is also the employer. The Code does not address that, though the removal of the reference requirement in section 53(6) reduces the consequences of it considerably.

Quick revision

• Section 43: the appropriate Government appoints conciliation officers by notification, charged with mediating in and promoting the settlement of industrial disputes; for an area, for industries, permanently or for a limited period.
• Section 53(1): he shall conciliate where a dispute exists or is apprehended or a section 62 notice is given. Proviso: not after two years from the date the dispute arose.
• 53(2): investigate without delay and do all such things as he thinks fit to induce a fair and amicable settlement.
• 53(3): settlement, report plus a memorandum signed by the parties. 53(4): failure, a full report of steps, facts and reasons, to the parties and the Government.
• 53(5): report within forty-five days of commencement; fourteen days where a section 62 notice was received; extension only by written agreement of the parties with the officer's approval.
• 53(6): any concerned party may apply directly to the Tribunal in the matters not settled, within ninety days of receiving the failure report. No Government reference, unlike the repealed Act.
• Section 60(1): conciliation commences on the first meeting after receipt of the strike or lock-out notice. 60(2): concludes on the signing of the memorandum, on the recording of failure, or on a reference to a National Industrial Tribunal. 60(3): arbitration and adjudication commence on filing or reference and conclude when the award becomes enforceable.
• Section 42: voluntary arbitration by written agreement where a dispute exists or is apprehended; an even number of arbitrators requires an umpire, whose award prevails; the agreement is in the prescribed form and a copy goes to the Government and the conciliation officer; where those referring represent the majority of each party the Government may notify, and others concerned must then be given an opportunity of presenting their case, the workers being represented by the negotiating union or council, or the Trade Union, or prescribed representatives.

Test yourself

1. Describe the conciliation machinery under the Code. Section 43 empowers the appropriate Government to appoint conciliation officers by notification, charged with the duty of mediating in and promoting the settlement of industrial disputes, for a specified area or specified industries and permanently or for a limited period. Under section 53(1) the officer shall hold conciliation proceedings where an industrial dispute exists or is apprehended or a notice under section 62 has been given, but not after two years from the date the dispute arose. Under section 53(2) he must without delay investigate the dispute and all matters affecting its merits and right settlement, and may do all such things as he thinks fit to induce a fair and amicable settlement. If a settlement is reached he reports it with a memorandum signed by the parties, section 53(3); if not, he sends the parties and the Government a full report of the steps taken, the facts and the reasons no settlement was reached, section 53(4), within forty-five days of commencement or fourteen days where a section 62 notice was received, section 53(5).

2. How does a dispute now reach the Tribunal, and how is that different from the repealed Act? Under section 53(6) any concerned party may apply in the prescribed form directly to the Tribunal, in the matters not settled by the conciliation officer, within ninety days from the date the failure report under section 53(4) is received by that party. Under the Industrial Disputes Act 1947 adjudication depended on a reference by the appropriate Government, which could refuse or delay, making the Government a gatekeeper in disputes to which it was often itself a party. The Code removes the reference requirement entirely.

3. Why is the reporting period fourteen days in some cases and forty-five in others? Because of what has already happened. The general period under section 53(5) is forty-five days from the commencement of the conciliation proceedings. But where the conciliation officer has received a notice under section 62, a strike or lock-out is imminent, and forty-five days of conciliation would be pointless because the stoppage would occur first. The first proviso therefore requires the report within fourteen days, which turns the statutory notice period into a period of active conciliation.

4. Explain voluntary arbitration under section 42. Where an industrial dispute exists or is apprehended and the employer and the workers agree to refer it to arbitration, they may do so by a written agreement in the prescribed form, signed in the prescribed manner, naming the arbitrator or arbitrators, and a copy must be forwarded to the appropriate Government and the conciliation officer. Where the agreement provides for an even number of arbitrators it must also provide for an umpire, who enters the reference if the arbitrators are equally divided and whose award prevails and is deemed to be the arbitration award. Where the appropriate Government is satisfied that those making the reference represent the majority of each party it may issue a notification, whereupon employers and workers who are not parties to the agreement but are concerned in the dispute must be given an opportunity of presenting their case, the workers being represented by the negotiating union or council, or where there is none by the Trade Union, or where there is none by representatives chosen as prescribed.

5. When does a conciliation proceeding commence and conclude? Under section 60(1) it is deemed to have commenced on the date on which the first meeting is held by the conciliation officer in the dispute after the receipt of the notice of strike or lock-out. Under section 60(2) it is deemed to have concluded where a settlement is arrived at, when the memorandum of settlement is signed by the parties; where no settlement is arrived at, when failure of conciliation is recorded by the officer; or when a reference is made to a National Industrial Tribunal during its pendency. These matter because the time limits in section 53(5) run from commencement, and because the legality of a strike turns on whether a conciliation proceeding is pending.

6. What powers does a conciliation officer have, given that he decides nothing? Under section 53(2) he may do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement, and must investigate the dispute and all matters affecting its merits without delay. Under section 49(1) he follows such procedure as he deems fit, subject to the Code and the rules. Under section 49(2) he may, after giving reasonable notice, enter the premises occupied by the establishment to which the dispute relates, for the purpose of inquiry into an existing or apprehended dispute. And under section 49(3) he has the same powers as a civil court under the Code of Civil Procedure 1908 in respect of enforcing attendance and examining on oath, compelling the production of documents and material objects, issuing commissions for the examination of witnesses, and such other matters as may be prescribed.