Exhaustive Guide to Industrial Dispute Resolution and the Industrial Disputes Act

Introduction to Industrial Dispute Resolution

  • Role of the Government: In the domain of industrial relations, it is a primary responsibility of the government to facilitate the resolution of industrial disputes between employees and employers. This intervention is necessary because a violation of industrial peace has the potential to adversely affect the entirety of the country's economy.

  • Evolution of Legislation:     * Industrial Dispute (Conciliation) Ordinance No 3 of 1931: This marked the first legislative attempt to maintain industrial peace within the country.     * The Industrial Disputes Act (IDA) No 43 of 1950: Introduced later, this act serves as the primary legal framework for industrial law in Sri Lanka. It has undergone various amendments to remain the most effective law for resolving commercial disputes across different industrial sectors.

The Industrial Disputes Act (IDA) Framework

  • Primary Objective: The Act is designed to provide for the Prevention, Investigation, and Settlement of Industrial Disputes.

  • Verbatim Definition of Industrial Dispute: According to the Act, an Industrial dispute refers to:     > "any dispute or difference between an employer and a workman or between employers and workmen or between workmen and workmen connected with the employment or non-employment, or the terms of employment, or with the conditions of labour, or the termination of the services, or the reinstatement in service, of any person, and for the purposes of this definition 'workmen' includes a trade union consisting of workmen."

  • Three Main Components of an Industrial Dispute:     1. The Dispute itself.     2. The Parties involved.     3. The Subject matter of the conflict.

Core Components of an Industrial Dispute

  • The Nature of a Dispute:     * A dispute is identified as a conflict between two parties related to industry, work, or service. Examples include dismissal, suspension of service, violation of terms and conditions of employment, non-payment of due wages, imposition of unnecessary conditions, and strikes.     * Relevant Case Law:         * Benthom v Trinidad Cement Ltd         * Federated Sawmill v james Moore & Sons

  • The Parties Involved (Section 4848 of IDA):     * Disputes may occur:         * Between an employer and a workman.         * Between employers and workmen.         * Between workmen and workmen.     * Specific Legal Status of Parties (Sec. 4848):         * Employer: Any person who employs; also includes any person who employs on behalf of another, and any body of employers.         * Employee/Workman: Any person who on behalf of any other person employs any workman (Agent interaction) or on whose behalf any other person employs any workman.     * Relevant Case Law:         * Colombo Apothecaries v Wijesooriya         * Carson Cumberbatch & Co Ltd v Nandasena (involving Farm & Retail Co, Carson Cumberbatch, D-Farm, and Nandasena).

  • The Subject Matter:     * Concerns topics such as Employment, Non-Employment, Reinstatement, Labour Conditions, and Conditions of Employment.     * Relevant Case Law:         * Colombo Apothecaries v Wijesooriya         * S.B Perera v Standard Charted Bank

Alternative Dispute Resolution (ADR) Mechanisms

  • Definition: ADR refers to a collection of processes and techniques used to resolve conflicts outside of the traditional litigation system. It emphasizes a non-adversarial approach, cooperation, communication, and creative problem-solving.

  • Core Types of ADR:     1. Negotiation: Direct dialogue between parties to discuss interests and concerns. It can be informal or facilitated by professionals like lawyers.     2. Conciliation: Peace-making through the intervention of a third party; often seen as an extension of negotiation.     3. Mediation: A voluntary, confidential process where a neutral third party (mediator) facilitates communication and empowers parties to craft their own agreements.         * Sub-types: Mandatory Mediation, Voluntary Mediation, Commercial Mediation.     4. Arbitration: Submission of a dispute to impartial arbitrators who make a binding decision (similar to a mini-trial).         * Sub-types: Commercial, Investment, Maritime, and Intellectual Property Arbitration.

  • Why ADR is Necessary:     * Complexity: Traditional law and legal procedures are increasingly complex.     * Cost: High costs associated with court action and legal representation.     * Environment: Courts can have an intimidating atmosphere.     * Timeliness: Significant delays in court resolutions.     * Publicity: Court actions are public, whereas ADR is private.     * Relational Impact: The adversarial nature of court can destroy existing relationships.

Comparative Statistics of the Sri Lankan Judiciary (20182018-20202020)

  • Cases Pending as of December 3131, 20202020:     * Supreme Court:         * 20182018: 4,3314,331         * 20192019: 4,2944,294         * 20202020: 4,6104,610     * Court of Appeal:         * 20182018: 4,0514,051         * 20192019: 4,0654,065         * 20202020: 4,2544,254     * Civil Appeal High Court:         * 20182018: 6,2616,261         * 20192019: 7,2957,295         * 20202020: 7,4017,401     * Commercial High Court:         * 20182018: 6,3106,310         * 20192019: 6,7726,772         * 20202020: 7,1677,167     * High Court:         * 20182018: 18,38318,383         * 20192019: 26,03326,033         * 20202020: 28,52228,522     * Special High Court Bar 11 & 22: 22 cases pending across the bars by 20202020.     * District Court:         * 20182018: 215,855215,855         * 20192019: 231,668231,668         * 20202020: 245,080245,080     * Magistrate Court:         * 20182018: 519,206519,206         * 20192019: 477,654477,654         * 20202020: 622,449622,449     * Total Pending Cases (20202020): 920,660920,660

Methodology of Conciliation and Mediation

  • Conciliation nuances:     * Defined as making peace through a third-party intervention.     * Differs from negotiation because negotiation involves no third party (only face-to-face talks).     * Differs from arbitration because the conciliator does not impose a binding judgment; parties arrive at a friendly settlement voluntarily.

  • Distinction from Mediation:     * Classically, mediation involves the third party acting as a medium to keep parties apart initially to prevent violent conflict.     * Modern legal interpretation: Most authors and practitioners now use "Conciliation" and "Mediation" interchangeably as the distinctions have faded.

  • Advantages of Conciliation:     * Speedy settlements.     * Less time-consuming compared to courts.     * Higher acceptance of terms because agreement is voluntary.     * No "winning" or "losing" party; it is a collaborative outcome.

Arbitration: Theory and Practice

  • ILO Definition: A procedure where a third party (individual, board, or court), not acting as a court of law, is empowered to take a decision.

  • Advantages:     * Faster than court proceedings.     * Cheaper for parties.     * Arbitrators possess specialized industrial relations knowledge.     * Procedural flexibility: The Evidence Ordinance and Civil Procedure Code do not strictly apply, allowing for a practical view and equitable solutions.

  • Types of Arbitration under the IDA:     * Voluntary Arbitration [s.3(1)(d)3(1)(d)]:         * Triggered at the request and free will of the parties.         * The Commissioner of Labor refers the dispute only with party consent.         * Parties can nominate an arbitrator jointly, or the Commissioner can nominate one.         * A body of arbitrators can be formed (11 from the employer, 11 from the employee, and 11 Chairman nominated by both). If they fail to nominate a Chairman, the Commissioner does so.         * The arbitrator may consider any matter shown to be in dispute prior to reference, per Section 1616.     * Compulsory Arbitration [s.4(1)4(1)]:         * Parties are compelled to go to arbitration regardless of consent.         * Justified by public interest and the necessity of industrial peace for the national economy.         * The Minister of Labor has the power to refer disputes to an arbitrator, Labor Tribunal (LT), or Industrial Court.         * Section 4(1)4(1) concerns minor disputes; Section 4(2)4(2) allows referral to an industrial court.

Procedural and Legal Nuances of Arbitration

  • The Minister's Discretion: Referral is an administrative act involving sole discretion. The Minister must exercise this power in good faith. Writs cannot generally be used to compel the Minister to issue a referral order.

  • Commissioner's Referral Authority (Sec 2(1)2(1)): If the Commissioner is satisfied that a dispute exists or is apprehended, they must promote a settlement. The term "Commissioner" includes labor officers (Sec 2(2)2(2)).

  • Difference in Referral Status:     * Voluntary Arbitration: The Commissioner can act if a dispute exists OR is apprehended.     * Compulsory Arbitration: The Minister can only refer a dispute if it actually exists.

  • Duty of Inquiry (Sec 1717):     * The arbitrator makes inquiries and renders a "just and equitable award."     * Case Note: All Ceylon Shop and Hotel Workers Union vs Galleface Hotel held that the Industrial Court's duty to hear evidence is wider than that of a standard arbitrator.

Comparative Analysis of Minister and Commissioner Powers

  • The Minister's power is objectively greater than the Commissioner's.

  • The Minister refers to Compulsory Arbitration; the Commissioner participates in Voluntary Arbitration.

  • The Minister cannot appoint individual arbitrators (the Commissioner has this authority).

  • The Minister can transfer a dispute to compulsory arbitration even if parties are unwilling and even if the dispute is prescribed.

  • The Commissioner can act on apprehended disputes; the Minister acts on existing disputes between two parties.

Judicial Precedent: Wimalasena vs Nawarathne & two others

  • Primary Question: Can the Minister refer an industrial dispute for arbitration under Sec 4(1)4(1) while an inquiry into the same dispute is already pending in the Labor Tribunal (LT)?

  • Ruling: The court held that the Minister does have the power to refer the dispute for settlement by an arbitrator under Sec 4(1)4(1) of the IDA, even if an inquiry is pending in the LT. This is considered a lawful exercise of statutory power.