Chapter VI · Industrial Relations Code

Voluntary Reference of Disputes to Arbitration

This chapter lets an employer and its workers send an existing or expected industrial dispute to an arbitrator they choose themselves, by written agreement. It sets out how the agreement is made, who gets heard, when the government can stop an ongoing strike or lock-out, and makes clear that the general Arbitration and Conciliation Act, 1996 does not govern these arbitrations.

1 section ~2 min read Official text, PDF p. 21

HR managersIndustrial relations managersTrade union office-bearersBusiness owners

Key points

1Arbitration under the Code is voluntary: it happens only when the employer and the workers both agree in writing, and they name the arbitrator or arbitrators in that agreement. §42
2If the agreement provides for an even number of arbitrators, it must also provide for appointing an umpire, who steps in if the arbitrators are equally divided; the umpire's award then prevails and counts as the arbitration award. §42
3The agreement must be in the form, and signed in the manner, prescribed by rules, and a copy must be forwarded to the appropriate Government and the conciliation officer. §42
4If the government is satisfied that the parties making the reference represent the majority on each side, it may issue a notification, and employers and workers concerned in the dispute who did not sign the agreement must then get a chance to present their case. §42
5Once that notification is issued, the government may, by order, prohibit the continuance of any strike or lock-out connected with the dispute that was in existence on the date of the reference. §42
6The arbitrator investigates the dispute and submits a signed award to the appropriate Government, and the Arbitration and Conciliation Act, 1996 does not apply to the process. §42

Earlier law:Industrial Disputes Act, 1947

Voluntary reference of disputes to arbitration

In plain words

An employer and workers can refer an industrial dispute to arbitrators they choose by written agreement; the section covers the umpire for an even-numbered panel, sending the agreement to the government and conciliation officer, hearing non-signing parties after a government notification, worker representation, the signed award, stopping strikes or lock-outs, and keeps the Arbitration and Conciliation Act, 1996 out.

(1)

Where any industrial dispute exists or is apprehended and the employer and the workers agree to refer the dispute to arbitration, they may, by a written agreement, refer the dispute to arbitration, and the reference shall be to such person or persons as an arbitrator or arbitrators as may be specified in the arbitration agreement.

(2)

Where an arbitration agreement provides for a reference of the dispute to an even number of arbitrators, the agreement shall provide for the appointment of another person as umpire who shall enter upon the reference, if the arbitrators are equally divided in their opinion, and the award of the umpire shall prevail and shall be deemed to be the arbitration award for the purposes of this Code.

(3)

An arbitration agreement referred to in sub-section (1) shall be in such form and shall be signed by the parties thereto in such manner as may be prescribed.

(4)

A copy of the arbitration agreement shall be forwarded to the appropriate Government and the conciliation officer.

(5)

Where an industrial dispute has been referred to arbitration and the appropriate Government is satisfied that the persons making the reference represent the majority of each party, the appropriate Government may issue a notification in such manner as may be prescribed; and when any such notification is issued, the 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 or arbitrators:

Proviso

Provided that—

(i)

where such industrial dispute is the industrial dispute other than the termination of individual worker by way of discharge, dismissal, retrenchment or otherwise, the workers shall be represented before the arbitrator,—

(a)

where there is negotiating union or negotiating council, by the negotiating union or negotiating council, as the case may be; or

(b)

where there is no negotiating union or negotiating council, by the Trade Union; or

(c)

where there is no Trade Union, by such representatives of the workers chosen in such manner as may be prescribed;

(ii)

where such industrial dispute relates to termination of individual worker by way of discharge, dismissal, retrenchment or otherwise, the concerned workers shall be represented in person or through a representative authorised by him.

(6)

The arbitrator or arbitrators shall investigate the dispute and submit to the appropriate Government the arbitration award signed by the arbitrator or all the arbitrators, as the case may be.

(7)

Where an industrial dispute has been referred to arbitration and a notification has been issued under sub-section (5), the appropriate Government may, by order, prohibit the continuance of any strike or lock-out in connection with such dispute which may be in existence on the date of the reference.

(8)

Nothing in the Arbitration and Conciliation Act, 1996, shall apply to arbitrations under this section.

Source: The Industrial Relations Code, 2020, official gazette copy, page 21

In plain words

For employers

When drafting an arbitration agreement with an even number of arbitrators, the agreement must provide for appointing an umpire (naming the person up front avoids a later fight); use the form prescribed by rules, and forward copies to the appropriate Government and the conciliation officer.

Did you know?

Employers and workers who never signed the arbitration agreement can still be heard by the arbitrator, once the government issues a notification because the signing parties represent the majority on each side.

Did you know?

In any dispute other than one about an individual worker's termination, workers are represented by the negotiating union or council if there is one, otherwise by the trade union, and only where there is no trade union by representatives chosen in the manner prescribed by rules; a worker disputing their own discharge, dismissal, retrenchment or other termination can appear in person or through a representative they authorise.

Did you know?

The award is not just handed to the two sides: it must be submitted to the appropriate Government, signed by the arbitrator or by all the arbitrators.

Did you know?

The Arbitration and Conciliation Act, 1996, which governs most commercial arbitration in India, is expressly kept out of labour arbitrations under this section.

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