What Are the Causes of Industrial Disputes?

The new industrial set-up led to the rise of the capitalist economy and split the industrial society into workers and capitalists. Capitalists were known to own resources and means of production, while labour sells services. The two groups do not share any common interests.

One wants higher wages and better working conditions, while the other takes advantage of the fact that workers don’t have much power in negotiations and denies them their rights. Also, the employers want more work done. It is when these conflicting interests clash that Industrial disputes arise and serve as causes of industrial disputes.

Even though many different things can lead to industrial disputes, it is not easy to figure out which ones are the main ones. Work stoppages may look like one thing on the outside, but they may have more profound, fundamental causes that can’t be figured out at first glance.

Industrial relations experts have noticed that the reason why the two sides disagree is the same in all capitalist economies.

Industrial Disputes

There is an industrial dispute whenever there is a disagreement between employees and employers or between employers and workers, or between workers and workers concerning their employment or unemployment or their terms and conditions of employment or work (The Industrial Disputes Act 1947, Section 2K).

Nature of Industrial Disputes

  1. There must be a disagreement or difference in opinion between employers, among employers and labourers, or between labourers.
  2. The subject must have something to do with a person’s-
    • employment or
    • lack of employment,
    • the terms of their job, or
    • the way they work, or
    • it must be about an industrial matter.
  3. There must be a relationship between employer and employee, on a contract basis, and the worker’s hiring.

Causes of Industrial Disputes

Demand for wages and allowances

The main reason for industrial disputes in India is because they want higher wages and benefits. Even though prices have been going up fast, wage growth has not been able to keep up. Due to this, workers had to go on strike to get their wages raised. Most of India’s labour disputes arise from workers wanting to get paid more. The number of disagreements would have been minimal if employers had taken steps to ensure wages and prices changed automatically.

Demand for bonus

The demand for more bonuses is another big reason for industrial disputes in India. The workers want to share in the profits of the industrial units more and more, but employers won’t let them. During the emergency, the Government changed its mind and lowered the bonus rate from 8.33% to 4%. Later, the minimum bonus rate went back up to 8.33 per cent. Between 1961 and 1971, wages and bonuses were the cause of between 46 and 50 per cent of industrial disputes in India. Between 1976 and 1984, wages and bonuses were the cause of between 32 and 40 per cent of industrial disputes in the country.

Personnel and retrenchment

Retrenchment and personnel issues are also a big reason there are industrial disputes in India and serve as one of the causes of industrial disputes. Between 1961 and 1976, they were the cause of almost 29% of all disputes. From 1981 to 1984, about 21 to 22% of all industrial disputes in the country were caused by these reasons.

Demand for Improving Working Conditions

Industrial disputes in India arose since workers wanted better things at work, like time off, fewer hours, better safety measures, canteens, and other things. These demands cause about 2% to 3% of all disagreements.


Lock-outs are also a major cause of industrial disputes in the country. Lock-outs happen when strikes last too long and trade unionists don’t act responsibly.

Settlement of Industrial Disputes

Settlement of industrial disputes is significant as it is not a healthy sign of industrial development in the country. Thus, the government has already taken different steps and set up multiple policies to help settle labour disputes in the country.

The main objectives of these policies are:

  • to prevent and peaceful settle industrial disputes and
  • to encourage better relationships between workers.

In 1947, the Government of India passed the Industrial Disputes Act, which was later revised in 1956. It was done to settle and prevent industrial disputes. Some of the important provisions of the Act includes:


According to this Act, the Government can appoint conciliation officers and constitute conciliation boards to settle disputes between employers and employees.

Work Committees

A working committee should be formed to maintain good relations between employees and employers in all firms employing more than 100 workers.

Court of Enquiry

If conciliation fails to resolve the dispute, the matter must be referred to a court of enquiry for investigation and report.

Labour Courts

Governments established labour courts for resolving disputes about dismissals, suspensions, strikes, lock-outs, etc.


India passed the Industrial Disputes Act in 1947. The Industrial Disputes Act promotes peace and harmony among all industrial establishments. If a dispute arises, it facilitates an orderly and equitable resolution in which all parties are satisfied, and every decision is just and fair. The Industrial Disputes Act of 1947 governs labour disputes most comprehensively. Under the Act, the Central Government and the Industrial Law Board are empowered to supervise, regulate, and monitor the activities of industries. As a result of the Business and Industrial Regulations enacted, employee rights are protected, and problems are resolved consistently.


When do Industrial Disputes arise?

An industrial dispute refers to any dispute between employees and employers, between employers and workers or between workers and workers relating to the terms of employment or any individual's work conditions.

What has the Government done to reduce Industrial Disputes?

To maintain industrial peace and harmony, the Industrial Disputes Act of 1947 empowers the appropriate government to appoint different authorities when necessary to settle industrial disputes.

In the case of industrial disputes, which authorities play a role?

The Act sets up various authorities, including a works committee, a conciliation officer, a conciliation board, a court of inquiry, a labour court, a tribunal, and a national tribunal.

What is the most dominant cause of industrial disputes in India?

Demand for higher wages is the most dominant cause of industrial dispute.

About Author

My name is Aangi Sanghvi. I am a budding lawyer, currently in my 4th year. I will be graduating from Pravin Gandhi College of Law in the year 2024. I have interned at law firms and enjoy researching and content writing. My interests include IPR, Real Estate, and Corporate law. I am a curious person by nature and make a conscious effort to gain as much knowledge as I can. In other aspects, I enjoy travelling and music.