Labour Commissions & Their Recommendations

Labour commissions are tripartite bodies that adjudicate labour disputes, conduct investigations into unfair labour practices, and examine labour unions’ qualifications. Labour commissions are composed of representatives of employers, workers, and those who represent the public interest — neutral members. Labour commissions are independent administrative agencies and do not belong to the judiciary.

The labour scenario in the country has witnessed two major turning points since Independence. The first can be identified with the period from Independence up to 1990 while the second can be related to the post-1991 era when the entire gamut of liberalization policies was initiated.

At the time of Independence, the level of industrialization was very low. Also, the over-riding concern of the Labour Acts that existed at that time, was limited to enhancing the skills of the labour working in the factories.

After Independence, while rapid industrialization took place, on the one hand, the welfare approach of the government led to a host of initiatives for labour protection such as the Minimum Wages Act, of 1948, Factories Act, of 1948, and Employees State Insurance Act, of 1952.

By the early 60s, a need was felt to rationalize the existing labour laws to bring about a degree of cohesion and also to examine the ways and means of extending the labour welfare measures beyond the organised sector.

Accordingly, the first National Labour Commission was established in 1969 under the Chairmanship of Dr. Gajendragadkar. The objective was to study and review the living conditions of labour and labour legislations since 1947.

In pursuance of this legacy which involves industrial relations and economy, the Second National Labour Commission was brought into existence after a long gap of 33 years under the chairmanship of Ravindra Verma based on the recommendation of Indian Labour Conference held in September, 1992. The commission submitted its recommendations in June, 2002.

First National Commission on Labour (1969)

The first National Commission on Labour gave somewhat detailed consideration to the working of various methods and machinery for settling industrial disputes in the country and their relative effectiveness in light of the changes in the field of industrial relations and suggested certain basic modifications in the existing statutory arrangements.

Recommendations of First National Commission on Labour

The recommendations of the Commission regarding the methods and machinery for settling industrial disputes are discussed under separate heads below:

1. Collective Bargaining

The basic point at issue before the Commission, which had also aroused considerable controversy for a long period of time, was whether to replace adjudication by collective bargaining or to allow the system of adjudication to continue.

Both points of view were placed before the Commission with equal force. Although it realised that there had been “increasingly greater scope for and reliance on collective bargaining, the Commission did not favour doing away with adjudication. The Commission hoped that its recommendations pertaining to the statutory recognition of representative unions as the sole bargaining agent would facilitate the promotion of collective bargaining in the country. As commonly accepted, the Commission realized that in order to encourage collective bargaining, there is the need to redefine the place of strikes and lock-outs in the scheme of industrial relations as “collective bargaining cannot exist without the right to strike/lock-out”.

2. Voluntary Arbitration

The Commission realised that in the absence of a widespread use of collective bargaining, voluntary arbitration cannot make much headway. However, it felt that “with a general acceptance of recognition of the representative union and improved management attitudes, the ground will be cleared, at least to some extent, for wider acceptance of voluntary arbitration. It will be then that the National Arbitration Promotion Board could be expected to play a more effective role in promoting voluntary arbitration.

3. Conciliation and Adjudication (Industrial Relations Commission)

The National Commission on Labour has suggested certain major changes in the structure and functioning of the existing conciliation and adjudication machinery, the working of which, had been subject to severe criticism from different corners.

Some of the glaring weaknesses of the existing arrangements highlighted by the Commission were — delays and expenditure involved; the ad hoc nature of the machinery; the oft-repeated allegations of political pressures and interference in their working and the discretion vested in the government in the matter of reference of disputes.

The views expressed before the Commission were strongly in favour of reforming the present industrial relations machinery “so as to make it more effective and more acceptable”.

Thus, realising that there is a need for “a formal arrangement which is expeditious in its functioning and which is equipped to build up the necessary expertise”, the Commission recommended the replacement of the existing ad hoc machinery by a permanent Industrial Relations Commission (IRC) at the national and state levels, entirely independent of the administration and combining in itself both the conciliation and adjudication functions.

4. Procedure for Settlement of Industrial Disputes

The National Commission on Labour has also suggested a detailed procedure for the settlement of industrial disputes by the machineries envisaged under its recommendations.

In case the parties fail to reach an agreement by mutual negotiations and agree to refer the dispute to voluntary arbitration (before serving a notice of strike/lock-out), the IRC is to help the parties in choosing an arbitrator mutually acceptable to them.

If negotiations have failed and the notice of strike/lock-out has been served, either party may approach the IRC, for making available the services of a conciliator to help them arrive at a settlement before the expiry of the date of strike or lock-out, as the case may be.

In essential services or industries, if collective bargaining fails and the parties do not agree to voluntary arbitration, the failure of the negotiations is to be reported to the IRC by either of the parties, and a copy is sent to the appropriate government.

On receipt of such a notice, the IRC is required to adjudicate upon the dispute and the award is final and binding on the parties. In case of other services or industries, where negotiations have failed and the parties do not agree to refer the dispute to voluntary arbitration, the IRC, on receipt of the notice of direct action but during the period of notice, may offer its good offices for the settlement of the dispute.

When a strike or lock-out has commenced, the appropriate government may approach the IRC for its termination on the ground of the security of the state, national economy, or public order.

An industrial dispute being dealt with by the State Industrial Relations Commission may be taken over by the National Industrial Relations Commission if it is likely to have an impact in similar industrial undertakings in other states.

5. Labour Courts

The National Commission on Labour also suggested the establishment of standing Labour Courts entrusted with the functions of interpretation and enforcement of all labour laws, awards, and agreements.

These Courts are to deal broadly with disputes relating to matters in the Second Schedule of the Industrial Disputes Act, of 1947. Labour Courts are required to entertain proceedings instituted by the parties asking for the enforcement of their rights and to execute the same accordingly.

Appeals against the decisions of the Labour Court “in certain clearly defined matters” may lie with the High Court.

6. Tripartite Bodies

The Commission commended the role of tripartite bodies in evolving uniform norms in the field of industrial relations in the country.

According to the Commission, these bodies should continue to remain advisory in character, but their recommendations must be treated “as deserving every consideration”. The Commission recommended taking of decisions by the Indian Labour Conference at two stages:

  1. A preliminary but detailed discussion at the first stage and
  2. At the second stage, framing of final recommendations after taking into account the comments received on the conclusions at the preliminary stage.

The Commission further recommended more frequent meetings of the Standing Labour Committee and those of the Indian Labour Conference less frequently, but for a longer duration.

As regards workers’ representatives at the ILC, the Commission favoured restricting representation only to those central organizations which have a membership of at least 10 percent of the unionized labour force in the country.

There should be a review every three years to accord representation to organisations on this basis.

Second National Commission on Labour (2002)

The second National Commission on Labour (2002) has dealt extensively with the question of methods and machineries for the settlement of industrial disputes.

In agreement with the first National Commission (1969), the second Commission also recommended the establishment of independent Labour Relations Commissions at the state, central and national levels, but, unlike the first Commission, it has kept the conciliation function outside the purview of these Commissions.

In its view, the conciliation function should vest in the executive. The Commission has recommended a more active role of Labour Courts, with enlarged functions and increasing use of arbitration and Lok Adalats for settlement of industrial disputes.

Recommendations of Second National Commission on Labour

The National Commission on labour, in the year 2002, submitted its report to the government. The commission devoted an entire chapter to labour administration (Chapter XI). This chapter details the current status of labour administration in the country and has put forth recommendations for toning up the same. A few of the recommendations are listed below:

1. Labour Laws

Recommendations related to labour laws are as follows:

  1. Modification of Certain Definitions: The Second National Commission of Labour (SNCL) made a number of significant recommendations for the reform and simplification of labour laws in the country. It recommended the grouping of laws into five broad categories pertaining to the following:
    1. Industrial relations,
    2. Wages,
    3. Social security,
    4. Safety, and
    5. Welfare and working conditions, etc. The coverage, as well as the definition of the term ‘worker’, should be the same in all the groups of laws, subject to the stipulation that social security benefits must be available to all employees including administrative, managerial, supervisory, and others excluded from the category of workmen and others not treated as workmen or excluded from die category of workmen. However, it is necessary to provide a minimum level of protection to managerial and other (excluded) employees too, against unfair dismissals or removals. This has to be through adjudication by Labour Court or Labour Relations Commission or arbitration. The Commission defined “wages” to include only basic wages and dearness allowance and no other for the purpose of contribution to social security and for calculations of bonus and gratuity. All other payments including other allowances as well as overtime payments, together with wages as defined above, will be called remuneration. [Para. 6.40]. The existing definition of ‘strike’ in the Industrial Disputes Act, of 1947 may stand. ‘Go slow’ and ‘work-to-rule’ are forms of action that must be regarded as misconduct [Para. 6.41]. The term ‘retrenchment’ should be defined precisely to cover only termination of employment arising out of the reduction of surplus workers in an establishment, such surplus having arisen out of one or more of several reasons.
  2. Simplification of Registers and Returns: Labour laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988 should be made applicable to all establishments, and the penalty prescribed under the respective laws should be enhanced to make it at par with the labour laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988.
  3. Place of Maintenance of Registers and Display of Notices: The employer should be required to maintain registers and display notices at the work spot and not elsewhere.
  4. Simplification of Procedures: The procedure for prosecution for non-payment of wages and payment of less than minimum rates of wages should be simplified.
  5. Penalty: To make enforcement effective, there should be commensurately deterrent punishment under all enactments.
  6. Recovery Provisions: Laws like the Payment of Wages Act and the Minimum Wages Act should contain a provision for recovery officers to be appointed by the labour department.
  7. Power to Exempt: Provisions to grant exemptions from various laws, in case of extreme emergency or hardship, should vest with the appropriate government and should be exercised by officers, not below the rank of the Joint Secretary.
  8. Application of Minimum Wages Act: Minimum Wages Act should apply to all establishments and not be confined only to certain scheduled employments.
  9. Trial of Cases under Labour Laws: Criminal cases under labour laws should be tried by labour courts.

2. Dispute Resolution

Recommendations related to dispute resolution are as follows:

  1. Rights Disputes: In rights disputes over dismissal, denial of regularisation, promotion, etc., conciliation should be optional. The party should have the right to approach labour courts and the Labour Relations Commission straightaway. However, conciliation should be compulsory in case of industrial disputes related to interests — disputes involving wages, allowances, fringe benefits, etc. Conciliation proceedings should also be compulsory in the case of strikes and lockouts over any issue.
  2. Arbitration: Industrial disputes not settled in conciliation should go for either voluntary arbitration or mediation by arbitrators maintained by the Labour Relations Commission or adjudication. In the case of essential services, the dispute should go for compulsory arbitration. In other cases, it should go for adjudication. Arbitrators should be chosen from eminent persons in the industry, conciliators, trade unionists, and labour judiciary.
  3. Implementation of Awards: All employing ministries should be advised to implement awards or sanction prosecution within one month of the matter being referred to them, failing which it should be deemed that the sanction has been given.

3. Qualification of Presiding Officers

Recommendations related to the qualification of presiding officers are as follows:

  1. Qualifications for appointment of presiding officers shall be relaxed to enable experienced conciliation officers not below the rank of Deputy Labour Commissioner and Regional Labour Commissioner, with L.L.B. degrees and at least 10 years experience in the labour department, to be considered for appointment as presiding officers. This will help the Ministry to appoint presiding officers for all the tribunals and labour courts, and thereby to expedite the disposal of cases pending with the tribunals.
  2. Labour courts should be given powers to issue decrees or initiate contempt proceedings for non-implementation or non-compliance of awards.

4. Industrial/Labour Relations Commission (LRCs)

A Central Labour Relations Commission should be set up for central sphere establishments, and State Labour Relations Commission should be set up for establishments in the state sphere. Above the Central and State Labour Relations Commissions (LRCs), there will be the National Labour Relations Commission to hear appeals against the decisions of the two other commissions. The National, Central, and State LRCs will be autonomous and independent. These commissions will function as appellate tribunals over the labour courts. They will be charged with the responsibility of superintendence of the work of labour courts.

5. Voluntary Resolution of Disputes

Recommendations related to the qualification of presiding officers are as follows:

  1. Voluntary resolution of disputes should be encouraged over the legalistic approach of settlement of disputes through adjudication.
  2. There should be a legislative framework for voluntary dispute settlement. A basic prerequisite is to place a system of recognition of negotiating agency on the statute.
  3. The responsibility of conducting verification of trade union membership for the recognition of trade unions should be vested in the Central Labour Relations Commission and the State Labour Relations Commission.
  4. The works committee required to be constituted under Section 3 of the Industrial Disputes Act should be substituted by an Industrial Relations Committee to promote in-house dispute settlement.

6. Indian Labour Conference (ILC)

Recommendations related to the qualification of presiding officers are as follows:

  1. The Indian Labour Conference should be an effective forum of review, consultation, and formulation or evolution of perspectives and policies. It must be made as representative as possible.
  2. Some means must be found to include representatives from the unorganised sector and from central organisations that are not affiliated to central trade union federations. The ILC can be used as a sounding board for proposals of legislations.
  3. Suggested functions of the Indian Labour Conference would include review of labour situation, consideration of conventions and recommendations of the ILO for adoption, a sounding board for legislative proposals, etc.
  4. The Standing Labour Committee should prepare the agenda for ILC. There should be a Director General of the ILC having specific functions. The ILC should set up tripartite standing committees to consider and review problems, legislations, and implementation into main areas.

7. Other Recommendations

There are many other recommendations relating to areas such as safety and occupational health, unorganised sector, infrastructure and competence, and cadre-building of central and state labour departments. A grasp of these are:

  1. Labour administration should encourage better human resource management practices.
  2. The Works Committee required to be constituted under Section 3 of the Industrial Disputes Act should be substituted by an Industrial Relations Committee to promote in-house disputes settlement.
  3. Tripartite National and State level Councils of Employment should be set up to monitor and plan matters related to employment.
  4. The amendments in the Factories Act should be implemented properly and, if necessary, the responsibilities of non-technical provisions can be transferred to the Labour Inspectorate so that the Factory Inspectorate can concentrate on aspects of health and safety.
  5. A competent institution, perhaps on the lines of the Occupational Safety and Health Commission of the U.S.A, should be nominated to formulate, implement, and periodically review a coherent national policy for the establishment and promotion of Occupational Safety Health (OSH) management system in organisations.
  6. A disaster management plan must be formulated at every unit and industrial estate, and at the city, district, state, and national levels.

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