Meaning of Industrial Dispute, Causes, Types, Consequences/Effects

11th July 2021 0 By indiafreenotes

According to Section 2(k) of the Industrial Disputes Act, 1947, the term ‘industrial dispute’ means “any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or non- employment or the terms of employment and conditions of employment of any person”.

Causes of Industrial Disputes:

The common causes of industrial disputes are as follows:

Psychological Causes:

(i) Authoritarian leadership (nature of administration).

(ii) Clash of personalities.

(iii) Difficulty in adjusting in given conditions or with each other (employee and employer).

(iv) Strict discipline.

(v) Demand for self-respect and recognition by workers.

Institutional Causes:

(i) Non recognition of trade/labour union by the management.

(ii) Matters of collective bargaining.

(iii) Unfair conditions and practices.

(iv) Pressure on workers to avoid participation in trade unions.

Economic Causes:

(a) Terms and conditions of employment.

(i) More work hours.

(ii) Working in night shifts.

(iii) Disputes on promotions, layoff, retrenchment and dismissal etc.

(b) Working conditions.

(i) Working conditions such as too hot, too cold, dusty, noisy etc.

(ii) Improper plant and work place layout.

(iii) Frequent product design changes etc.

(c) Wages and other benefits.

(i) Inadequate wages.

(ii) Poor fringe benefits.

(iii) No bonus or other incentives etc.

Denial of Legal and other Right of Workers:

(i) Proceeding against labour laws and regulations.

(ii) Violation of already made agreements i.e., between employees and employers.

Types of Industrial Disputes:

Grievance or Right Disputes:

As the name itself suggests, grievance or right disputes arise out of application or interpretation of existing agreements or contracts between the employees and the manage­ment. They relate either to individual worker or a group of workers in the same group.

That’s way in some countries; such disputes are also called ‘individual disputes’. Payment of wages and other fringe benefits, working time, over-time, seniority, promotion, demotion, dismissal, discipline, transfer, etc. are the examples of grievance or right disputes.

If these grievances are not settled as per the procedure laid down for this purpose, these then result in embitterment of the working relationship and a climate for industrial strife and unrest. Such grievances are often settled through laid down standard procedures like the provisions of the collective agreement, employment contract, works rule or law, or customs /usage in this regard. Besides, Labour Courts or Tribunals also adjudicate over grievance or interest disputes.

Generally, industrial disputes are considered as ‘dysfunctional’ and ‘unhealthy’. These are mani­fested in the forms of strikes and lock-outs, loss of production and property, sufferings to workers and consumers and so on. But, sometimes industrial disputes are beneficial as well.

It is the dispute mainly which opens up the minds of employers who then provide better working conditions and emoluments to the workers. At times, disputes bring out the causes to the knowledge of the public where their opinion helps resolve them.

Interest Disputes:

These disputes are also called “economic disputes”. Such types of disputes arise out of terms and conditions of employment either out of the claims made by the employees or offers given by the employers. Such demands or offers are generally made with a view to arrive at a collective agreement. Examples of interest disputes are lay-offs, claims for wages and bonus, job security, fringe benefits, etc.

Consequences/Effects of Industrial Disputes:

Political Causes:

Political causes are no less significant than economic and managerial causes in accounting for industrial disputes.

Chief among them are as under:

(1) Influence of Politics:

In a country like India, influence of politics on trade unions is clearly visible. Political parties have been using their influence on trade unions for their selfish ends. Parties mislead the unions and instigate industrial unrest.

(2) Trade Union Movement:

Ever since trade union movement got recognition, industrial disputes have multiplied. Many a time trade unions take undue advantage of their position and this results into industrial dispute.

(3) Strikes against the Government:

During the struggle for independence labour-class had taken leading part in it. Now this class directs its struggle against the government thereby adding fuel to industrial disputes.


(1) Government’s inclination to support management.

(2) Internal conflicts in Trade Unions.

(3) Resistance to automation.

(4) Influence of Communist thinking on labourers.

(5) Effect of non-acceptance of Human Relations.

Managerial Causes:

Success of an organisation depends largely on its managerial capacity. Growth of the organisation is based on the policies of the management. If the management pursues appropriate policies, development of the industrial unit will be automatic. But many a time, due to wrong policies of the management, disputes get accentuated.

Managerial causes of industrial dispute are as under:

(1) Violation of Agreements:

Employers and workers do enter into agreements on various issues. On many occasions, the employers do not enforce these agreements nor do they strictly adhere to them. It also accounts for dispute between the two parties.

(2) Non Recognition of Unions:

Employers’ attitude towards trade unions has been antagonistic from the very beginning. They do not want that labourers should organise themselves. Hence, to prevent the workers from uniting, they refuse to recognise their unions. It leads to conflict between the employers and the workers. In order to create rift among the workers they deliberately recognise the rival union.

(3) ill-Treatment by Managers and Supervisors:

Managers and supervisors consider themselves to be superior. It is under the influence of this superiority complex that they ill-treat the workers. The same is vehemently opposed by the trade unions.

(4) Wrongful Retrenchment, Demotion and Termination:

Sometimes on account of fall in production labourers are retrenched. Those workers who take active part in trade union activities are demoted. Sometimes employers terminate the services of the workers without assigning any reason. All these provocative acts of the employers are not only strongly opposed by the trade unions but also serve as good cause for industrial disputes.

(5) Defective Recruitment Procedure and Employees Development Policies:

Defective Recruitment system also gives rise to industrial disputes. Many a time, workers are recruited by the middlemen who get bribe from them. They take undue advantage of the helplessness of the workers. Defective development policies like favoritisms in promotion, unnecessary and biased transfer, casual approach towards training facilities, on the part of employers also contribute to industrial disputes.

(6) Selfish Leadership:

Lack of right and effective leadership weakens the trade unions and the employer class takes advantage of it. In order to serve their selfish ends, these leaders enter into unholy alliance with the employers against the interests of the workers. Often this also becomes cause of dispute.

(7) Violation of Accepted Code of Conduct:

Code of conduct refers to the terms accepted by both the parties and both the parties are required to abide by it. Employers agree to all the codes on paper but fail to carry them out in practice. As a result, workers oppose it.

(8) Collective Bargaining and Workers’ Participation in Management:

In the modern industrial world, labour class is seized with new awakening and is influenced by new concept of management. Trade unions, therefore, insist on workers’ participation in management. By collective management they try to protect their interests to the maximum. The employers oppose it. The inevitable result is industrial dispute.

Economic Causes:

Most of the Industrial Disputes are due to economic causes. Directly or indirectly economic causes are at the back of industrial disputes.

Main economic causes are as under:

(1) Dearness Allowance:

Increasing cost of living is another factor responsible for industrial disputes. In order to neutralise it, workers demand additional remuneration in the form of dearness allowance. Rising prices are at the root of demand for dearness allowance and non-acceptance of this demand leads to industrial dispute.

(2) Low Wages:

In industries wages are low. As a result, it becomes awfully difficult for the labourers to meet their minimum necessaries. Labourers demand that wages should commensurate with the amount of work. Such a demand leads to industrial disputes. Demand for higher wage-rate is the most dominant cause leading to industrial disputes.

(3) Industrial Profits:

Workers are an important part of production. Profits of the employers multiply because of the untiring labour of the workers. That they should not be treated as a part of machine is the persistent demand of the workers, rather they be considered as partner in production. On the basis of this concept, they demand share out of the increasing profit. When this profit-sharing demand is rejected by the employers, industrial dispute crops up.

(4) Working Conditions:

In India working conditions of the workers are not satisfactory. Obsolescence of machines, lack of safety provisions, inadequate light arrangement, less moving space, lack of other necessary facilities, are the normal features of industrial units. Demand for better working conditions on the part of the workers also contributes to industrial disputes.

(5) Bonus:

Demand for bonus is also a cause of industrial dispute. Workers consider bonus as deferred wage. Demand for payment of bonus constitutes cause of industrial dispute.

(6) Working Hours:

Hours of work is another matter of controversy between employers and workers. Despite legislation to this effect, it is always the intention of the employers to keep the workers engaged for long hours at low wages. It is opposed tooth and nail by the workers. Result is industrial dispute.