Role Of Conciliation In Industrial Disputes

Update: 2024-05-20 13:00 GMT

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Conciliation is one of the amicable methods of the alternative dispute resolution system (ADR) that helps resolve disputes among the parties without the intervention of the court, hence leading to speedy dispute resolution. This process is quite simple and cost-effective for the disputing parties. Here, parties appoint an independent person, i.e. the Conciliator with mutual consent...

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Here, parties appoint an independent person, i.e. the Conciliator with mutual consent to solve their dispute. This independent person does not act in a judicial capacity and does not hold the position of the judge or adjudicating officer while solving such disputes. One of the important tasks of the conciliator is to bring consensus between the disputing parties through persuasion.

In any dispute, be it a family dispute, complex dispute between workers and employers, or a dispute happening on the terms of commercial contracts, one of the hardest things is to bring the disputing parties to the negotiating table. The conciliator does the exact same job of bringing the parties face-to-face to discuss their issue amicably. Even in reality, neither party wants disputes, and even if there is a dispute, they wish to solve it as soon as possible, but they don't have any other recourse than the court of law, which creates unnecessary tension, lengthy procedures, and economic losses for both parties. Hence, conciliation came into the picture, which is quick, speedy, and quite economical for both parties.

Conciliation process

While skimming through the Industrial Disputes Act 1947 (ID Act), it is clear that the State or the Government plays an important role in solving industrial disputes. And the origin of the same can be traced in the Rule 81-A of the Defence of India Rule 1942. It was passed by the British Government to control industrial unrest among the workers during the period of World War II. The Rule provided compulsory adjudication of disputes by tribunals appointed by the government. The Rule was successful for the British Government and hence was converted into the Industrial Dispute Act in 1947. It provided conciliation and adjudication as methods of solving industrial disputes and with further amendments, voluntary arbitration was also introduced in the Industrial Dispute Act.

Primarily, the ID Act covers two types of disputes: individual disputes and collective disputes. Individual disputes cover disputes related to dismissal of an employee, gratuity, bonus, wrongful termination, lay-offs, retrenchment, etc, whereas collective disputes include terms of employment, service conditions, etc.

A dispute happens when either party is not willing to comply with the demands of the other, thereby creating tension and unrest and ultimately leading to a dispute. Once the dispute takes place, bilateral talks happen between parties to resolve it. But if such talks fail, then the dispute is referred to conciliation for resolution.

The process starts with either party submitting the dispute to the Conciliation Office (CO) in writing. The CO may take an existing dispute for conciliation or even a dispute that he thinks is likely to happen in the future. Then, the CO verifies the authenticity of the complaint and allows the employer to submit his statement of justification for such a complaint by an employee. Sometimes parties may choose to file the response with the help of lawyers, which is not allowed under the ID Act because the Act does not want this conciliation proceeding to happen in a legal manner.

Thereafter, the CO sends notices to both parties and tries to understand the merits of the complaint. If the CO finds the merit, he proceeds with the complaint and may ask for relevant documents in order to resolve the dispute. The CO may proceed accordingly to induce the parties to settle the dispute fairly and amicably without escalating the situation. Where the dispute is of a serious nature and direct action may come from employees in the form of a strike, the CO may arrange a set of meetings to stop such actions and try to suggest to both parties a suitable and fair compromise.

Here, the CO does not act as an adjudicating officer, instead tries to encourage and induce parties to reach a fair settlement. The CO may act as an advisor or mediator and may preside over such meetings just to guide their joint discussions, or while doing so, he may try to explain the rationale of both parties to each other so that they can understand each other's viewpoints.

The CO may explain reasonableness, clarify misunderstandings, or provide a suitable compromise to both parties so that they can settle quickly. The CO tries to persuade them to settle by showing them the pros and cons of settlement and adjudication, and how it will hamper their relationship in the long run. The process of conciliation is quite flexible, informal, and speedy in nature; hence, many disputes may quickly get resolved through persuasion. Furthermore, the CO may give adjournments so that parties may rethink their decision and may get some time to cool off after such adjournments.

The parties are not bound to agree to the settlement suggested by the CO, and they may opt for adjudication if they wish. But if parties reach a settlement during the conciliation proceedings, then it becomes a binding settlement on both parties and is equivalent to the award of the Labour Court or Industrial Tribunal under the act.

Lastly, if the settlement happens, then the CO is required to send a Memorandum of Settlement to the Government with the signatures of both parties. If the settlement does not happen, then the CO is required to send a detailed report stating the steps taken to understand the facts, the efforts taken for the settlement, and the reasons for not being able to settle the dispute. Upon such a report by the CO, the Government may refer such a dispute to the Labour Court or Industrial Tribunal after examining such a report.

Even though the conciliation is for the parties to solve their dispute amicably, there is misuse of this process by the employer in many cases. Some of them are enlisted below. Conciliation also faces challenges in many senses, they are also cited below.

Misuse of Conciliation by Employers

Bipartite agreement

Many times, employers and unions sign a bipartite agreement between them and showcase that such an agreement happened during the course of settlement proceedings, thereby making it binding on all parties to the dispute. This leads to internal conflicts between the workers.

Used to ban strikes

Employers use conciliation to ban strikes or to stop ongoing strikes during the pendency of conciliation proceedings. If the strike continues, then it is considered illegal and even employers may refuse to pay wages for such a strike period because of its illegality.

Frequent adjournments by employers

Although adjournments are useful and necessary, employers use them to cause unnecessary delay in conciliation proceedings. Under the ID Act, 14 days of time is given to submit the conciliation proceedings, but adjournments may extend this period to more than 6 months in some cases. That ultimately leads to the mental and economic harassment of workers.

Personal grudge

Employers consider an individual employee approaching CO with a complaint as a personal attack on them and try to teach such a person a lesson. They will make him suffer through personal hardship and economic expenses so that he will drop or withdraw the complaint eventually.

Challenges in Conciliation

Rigid attitudes of parties

Many times, parties have rigid attitudes towards conciliation and are not willing to resolve disputes through conciliation, or they do not believe in the process of conciliation. The reason for such an attitude is their belief that the court will rule in their favour, so why should I resolve here?

Workload on CO

It is even argued that COs have multiple functions to perform beyond conciliation, and this workload diverts them from their core function, i.e. to resolve disputes.

This additional workload includes

To supervise the working of the multi-purpose Labor Welfare Centres
Verify trade union membership
Dispose of different types of complaints
Inspectors under various labour laws
Lack of skills

It is always hard to bring a consensus between the disputing parties, be it an industrial dispute or any other dispute. It is a skill to persuade parties to settle amicably, and many times there is scope for settlement, but because of a lack of skills on the part of the conciliator, disputes go for adjudication, thereby creating unnecessary delay in solving the dispute.

COs lack adequate knowledge of industries

Though it was argued that COs do not have adequate knowledge of industries where they act as conciliators, there was no proven basis for such arguments.

There is no linkage between performance and promotion of the CO

COs are not responsible if the dispute goes for adjudication. They just need to prepare a report with appropriate reasoning, and they are done with their job as a conciliator. If the promotion of the CO is dependent on the number of settlements or the reduction of the reference of dispute to the adjudication, then they will show their utmost effort in resolving industrial disputes.

Conciliation as a hurdle before adjudication

Many times parties consider conciliation as a hurdle and consider CO as a postman who will eventually pass the dispute to the Labour Court or the Industrial Tribunal. One of the reasons for this belief is that the CO does not have the power to implement the settlement that he mediated between the parties. And even COs do not have the power to take strict action against the party who violates the terms of the settlement.