A Business Encyclopedia

Dispute Resolution

Definition: Dispute Resolution refers to a technique of settling the conflicts or claims between two parties, i.e. employer and employees. The technique aims at achieving fairness for both the groups and arriving at an agreement between by consensus, often initiated by a third party. These disputes are caused by wage demands, unfair labour practices, political interferences, union rivalry, etc.

There are seven methods of resolving industrial disputes which can be adopted as per the different situational requirements.

Methods of Dispute Resolution

dispute resolution methods

  1. Collective Bargaining: A process in which the representatives of employees or say labour unions and employers meet and discuss various matters relating to wage and benefits to arrive at a mutual agreement.
  2. Code of Discipline: In this method, the duties and responsibilities of both the parties are defined. When these norms are strictly followed, the probability of disputes can be reduced. The Ministry of Labour of India has released a code of conduct for industries.
  3. Grievance Procedure: Grievance takes place when there is a violation of the provision of law or breach of terms and conditions of employment by the management. The redressal can be sought by the aggrieved employee through defined grievance procedure.
  4. Arbitration: A process wherein, an independent party intervenes and studies the bargaining situation, hears both the parties and collects necessary data. After that, the recommendations are made by the arbitrator which are binding on the warring groups.
  5. Conciliation: Under this process, the representatives of both management and labour union are brought together before the conciliator to persuade them to reach a consensus. The conciliator may be an individual or a group of people. The conciliator cannot enforce his decision on the parties concerned.
  6. Adjudication: When the dispute is not settled through conciliation, recourse to adjudication is taken, only on the recommendation of the conciliation officer. The process is an obligatory resolution of the industrial dispute by labour court or tribunal, wherein the verdict of the labour court is binding on the groups.
  7. Consultative Machinery: To settle industrial conflicts, bipartite or tripartite bodies are set by the government at the plant, industry, state and national levels, with a view to bringing parties together for mutual discussion and settlement of disputes.

The consequences of industrial disputes have an adverse effect on all stakeholders like employees, society, management, government, investors and so on. The company’s management has to bear the loss of production, revenue and profit as well. Even employees have to face hardships due to lockouts and strikes, which may result in loss of wages and even jobs. So, the industrial disputes should be resolved as soon as possible.


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