CHAPTER VI: VOLUNTARY REFERENCE OF DISPUTES TO ARBITRATION
Section 42: Voluntary reference of disputes to arbitration
This chapter provides a non-judicial, co-operative path for resolving disputes where both the employer and workers agree to let a private third party make a binding decision.
Sub-Section (1): Agreement to Arbitrate
- Legal Text: “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.”
- Simple English: When a dispute starts (or is likely to start), the employer and the workers can mutually decide, in writing, to ask one or more specific people (an arbitrator) to resolve the issue instead of going to a formal court or Tribunal.
- Example: A dispute arises over the calculation of festival bonuses. Management and the Union jointly sign an agreement to have a mutually respected Professor of Industrial Law act as their sole arbitrator to decide the correct formula.
Sub-Section (2): Handling Even Arbitrator Numbers (Umpire)
- Legal Text: “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…”
- Simple English: If the agreement names two (or four) arbitrators, the agreement must also name an extra person (the umpire). If the original arbitrators cannot agree and tie their vote, the umpire steps in, listens to the case, and their decision becomes the final, legally binding award.
- Example: The agreement names two arbitrators. They listen to the case but split 1-1. The pre-named umpire is then brought in to review the evidence and cast the deciding vote.
Sub-Section (3): Form and Signature of Agreement
- Legal Text: “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.”
- Simple English: The formal arbitration agreement must follow a specific, prescribed format and be signed by the employer and the workers (or their representatives) according to the rules.
- Example: The government rules require the agreement to be on Form F, which must be jointly signed by the factory owner and the Secretary of the recognized union.
Sub-Section (4): Notifying the Government
- Legal Text: “A copy of the arbitration agreement shall be forwarded to the appropriate Government and the conciliation officer.”
- Simple English: After the agreement is signed, a copy must be sent to the government authority (the appropriate Government) and the Conciliation Officer for their records.
- Example: Once the owner and the union sign the agreement to appoint Professor X as arbitrator, the HR department emails copies to both the State Labour Department and the local Conciliation Officer.
Sub-Section (5): Expanding the Scope of Arbitration (Majority Rule)
- Legal Text: “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… 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…”
- Simple English: If the government believes the people who signed the agreement truly represent the majority of all employers and workers involved in the dispute, it can make the arbitration process mandatory for everyone. This means even people who didn’t sign the original agreement must follow the process and have a chance to present their arguments to the arbitrator.
- Example: A small union representing $10\%$ of workers signs an arbitration agreement. The government does not issue the notification because they don’t represent the majority. Later, the main Negotiating Union, representing $60\%$ of workers, signs a similar agreement. The government then issues the notification, making the arbitration binding on all workers and all employers involved in the dispute.
- Proviso (i) (Representation for Group Disputes): When the dispute involves a group of workers (not just one person’s firing), the workers are represented by:
- Clause (a): The official negotiating union/council, if one exists.
- Clause (b): The Trade Union, if no negotiating body exists.
- Clause (c): Chosen worker representatives, if there is no Trade Union.
- Example: In a major arbitration over health benefits, the workers’ side is automatically led and represented by the officially recognized Negotiating Union.
- Proviso (ii) (Representation for Individual Disputes): When the dispute is about a single worker’s termination (discharge, dismissal, or retrenchment), the worker can represent themselves or choose their own authorized representative.
- Example: A dismissed worker, Ms. Priya, goes to arbitration. She decides she doesn’t want the union to speak for her and chooses to be represented by her brother, who is a labour law specialist.
Sub-Section (6): The Arbitration Award
- Legal Text: “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.”
- Simple English: The arbitrator must examine all the facts, come to a final decision (the award), and send the signed, official decision to the government.
- Example: After reviewing all evidence regarding the bonus calculation, the arbitrator submits a signed document to the government stating, “The company owes all workers an additional Rs. 5,000,” which is the arbitration award.
Sub-Section (7): Stopping Strikes/Lock-outs
- Legal Text: “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.”
- Simple English: If the government has made the arbitration binding on everyone (via the notification in 5), it can legally order any ongoing strikes or lock-outs related to that dispute to stop immediately.
- Example: A strike is already ongoing over the bonus issue. Once the government confirms the arbitration is binding on all parties and issues the notification, it can then issue a second order forcing the workers to return to work while the arbitrator makes a decision.
Sub-Section (8): Exclusion of the General Arbitration Act
- Legal Text: “Nothing in the Arbitration and Conciliation Act, 1996, shall apply to arbitrations under this section.”
- Simple English: The general law that governs commercial and civil arbitration (the 1996 Act) does not apply to these industrial disputes. They are exclusively governed by the rules set out in this Code.
- Example: A party cannot use a procedural rule from the Arbitration and Conciliation Act, 1996, to challenge the Industrial Arbitration Award; they must only use the rules defined in the Industrial Relations Code.
