Industrial Disputes Act 1947 explained: this guide covers what Industrial Disputes Act 1947 means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The Industrial Disputes Act 1947 (IDA) provides for investigation and settlement of industrial disputes, prevention of illegal strikes and lockouts, and regulation of retrenchment, layoff and closure. It is one of the most important labour laws in India.
Definitions
| Term | Definition |
|---|---|
| Industrial Dispute | Dispute or difference between employers and employees regarding employment, terms of employment, or conditions of labour |
| Workman | Person employed in industry for skilled/unskilled manual, supervisory, technical, or clerical work (not management/administration) |
| Retrenchment | Termination of service of workman for any reason other than disciplinary action or voluntary retirement or superannuation |
| Layoff | Failure/refusal/inability of employer to give employment to workman due to shortage of coal/power/raw material, breakdown or natural calamity |
| Closure | Permanent closing down of a place of employment or part thereof |
Retrenchment Rules: Chapter VA (Establishments below 100 workers)
Before retrenching any workman, employer must:
- Give 1 month's notice or pay wages in lieu of notice
- Pay retrenchment compensation: 15 days average pay for every completed year of service
- Follow "last in, first out" (LIFO) principle — longest-serving workmen retrenched last
- Give preference to retrenched workmen for re-employment (Section 25H)
Chapter VB: Establishments with 100 or More Workmen
Establishments with 100 or more workmen must obtain prior permission of the appropriate government before:
- Retrenching any workman (Section 25N)
- Closing down the undertaking (Section 25O)
- Laying off workmen (Section 25M)
The government must grant or refuse permission within 60 days. If no order is made within 60 days, permission is deemed to be granted. State governments may modify the threshold (some have raised it to 300 or 500 workmen).
Layoff Compensation
A laid-off workman with 1+ year service is entitled to layoff compensation of 50% of basic wages plus dearness allowance for all days of layoff. Exception: no compensation for layoff due to natural calamity or power cut. Maximum layoff duration without government permission: 45 days. Thereafter, permission required or workmen must be retrenched.
Closure: Compensation
On closure of establishment:
- 60 days notice to appropriate government
- Compensation to workmen: 15 days wages for every year of service (same as retrenchment)
- For Chapter VB establishments: prior permission required
Strike and Lockout
Strike: Cessation of work by workmen or refusal to continue work in combination, or concerted action to cause slowdown. Lockout: Temporary closure of workplace by employer or suspension of work, or refusal to employ workers in combination.
| Provision | Public Utility Services | Other Industries |
|---|---|---|
| Notice required before strike | 14 days notice | Only if conciliation pending |
| Strike illegal if | Without 14 days notice, during conciliation, award period | During conciliation, adjudication, or award period |
| Lockout illegal if | Without 14 days notice | During conciliation, adjudication, or award period |
Dispute Resolution Machinery
| Authority | Jurisdiction |
|---|---|
| Works Committee | Internal bipartite committee (100+ workmen); resolves day-to-day grievances |
| Conciliation Officer | Government-appointed mediator; 14-day conciliation period |
| Labour Court | Disputes relating to discharge, dismissal, retrenchment; state level |
| Industrial Tribunal | Broader disputes; state level; binding awards |
| National Industrial Tribunal | Disputes of national importance; Central Government refers |
Industrial Relations Code 2020
The Industrial Relations Code 2020 subsumes the IDA 1947, Trade Unions Act 1926, and Industrial Employment (Standing Orders) Act 1946. Key changes:
- Chapter VB threshold raised to 300 workmen (from 100)
- Fixed-term employment formalized
- Negotiating union / negotiating council concept introduced
- Two-party arbitration for recognition disputes