Ensuring harmonious labour-management relations depend on the establishment of procedures for the settlement of labour disputes. The law provides a detailed procedure for the settlement of industrial disputes and spells out unfair labour practices, both on the part of the workers and the employers.
Pakistan upon gaining independence inherited an industrial relations system in the form of the Industrial Dispute Act, 1947. This legislation provided for, amongst other rights, the establishment of a works committee to remove causes of friction between workers and employers in the day-to-day operations of enterprises. This law was repealed by virtue of West Pakistan Industrial Dispute Ordinance, 1958 which was replaced thereafter by the Industrial Disputes Ordinance 1959. In 1969, the Industrial Relations Ordinance 1969 was promulgated, repealing the earlier laws. Currently the Industrial Relations Act 2012 (the "IRA 2012") is in force for 'establishments' in more than one province or in Islamabad, and the provincial Industrial Relations Acts apply to establishments restricted to one province.
The IRA 2012 offers the following modes to settle an industrial dispute:
(a) Bilateral negotiations
(b) Conciliation
(c) Arbitration
(d) Strike/Lockout
(e) Adjudication
(f) Intervention by the Government by reference to the National Industrial Relations Commission ("NIRC") in matters of national importance.
Our discussion will be limited to conciliation and arbitration, and will not take into account of other modes just named for the resolution of industrial disputes.
Conciliation and arbitration
If bilateral negotiations fail, the matter will be dealt with by way of conciliation. Where conciliation efforts are unsuccessful, the conciliator persuades the parties towards arbitration. The arbitration is optional and not compulsory.
Arbitration is sometimes confused with other methods for peacefully resolving labour disputes. Conciliation, mediation and arbitration are sometimes incorrectly used interchangeably. Conciliation is "the act of a third party, bringing together the two parties in dispute, for negotiation and for settlement of the dispute". Mediation is "the process whereby the third party not only brings two parties together but actively participates in the negotiation, generally consulting with each of the parties separately and, by persuasion, affecting a compromise acceptable to both". Arbitration is a "judicial process." In Pakistan, the conciliator also acts as a mediator, as in the ultimate analysis, mediation by a conciliator is essential for the resolution of the dispute.
In these proceedings, the conciliator or mediator does not take any decision or give any award; decision-making remains the jurisdiction of the arbitrator and/or the labour court. The arbitrator is a judge. The parties agree to accept the arbitrator's decision as final and binding. The parties are required to submit evidence, and each is permitted to cross-examine the evidence of the other. The decision of an arbitrator after the hearing is known as an award. There is no appeal against an arbitration decision in the High Court and the decision acquires finality.
Provisions of conciliation and arbitration
The provision for the appointment of conciliators is provided in Sections 36 to 39 of the IRA 2012.
It is to be noted that at the stage of raising an industrial dispute by issuing a notice under Section 35(1) of IRA 2012, the party issuing such notice is not required to send a copy thereof to the conciliator or to any other authority. At that stage, the law presumes that parties to the dispute shall come to terms by mutual bilateral negotiations and any interference by the conciliator is not called for. If an agreement is reached that will be the end of the matter and copies of the agreement duly signed by the parties to the dispute are required to be forwarded to the conciliator and other prescribed authorities. On the failure of bilateral negotiations, the party raising the industrial dispute can issue a notice of conciliation to the other party under Section 35(3). Likewise, it is required by Section 38 to simultaneously serve a copy thereof to the conciliator concerned and to the Labor Court. On receipt of a copy of the notice under Section 38, the conciliator initiates conciliation proceedings. At this stage, the courts i.e. the National Industrial Relations Commission ("NIRC") have no role whatsoever.
If a copy of the notice of conciliation were not delivered to the conciliator, there would be no valid commencement of the conciliation proceedings. It is the date of receipt of the conciliation notice and not the date borne by the said notice, which is material. As soon as the conciliator receives the notice, the conciliation proceedings are deemed to have commenced. The conciliator is required to call meetings between the parties to the industrial dispute with a view to bring about settlement. The parties are to be represented before the conciliator by the nominated and authorized representatives of the parties. The nominees of the parties should be fully authorized to enter into a settlement binding on the parties. The parties will not be allowed to plead that their representatives were only nominees and could not bind the principal employer in terms of a settlement signed by their authorized representative. If the conciliator at any stage of the conciliation proceedings feels that the presence of any particular person from the employer is necessary, he can issue a notice to the employer to appear before him at a specified date, time and place. Such person from the employer is bound to comply with the notice.
In all cases of industrial disputes in relation to an establishment notified as a public utility service or an industry other than public utility service, if the conciliation officer receives a notice of conciliation, he is under an obligation to initiate conciliation proceedings. The conciliator is bound to hold conciliation proceedings only in cases where an industrial dispute has arisen and there is a valid notice of conciliation. If any adjudication in respect of the same subject matter of the dispute is already pending, no valid conciliation notice can be served in respect of such subject matter because this would result in a multiplicity of proceedings, which is not permissible in law. The policy of the law has always been to confine parties to one process and to discourage simultaneous adjudication in two parallel proceedings in respect of the same subject matter.
The function of the conciliator is to conciliate on the dispute between the parties and to narrow down the controversy. With this end in sight he can suggest such modifications and concessions as he feels necessary for amicable settlement of the dispute. During conciliation, a settlement may be arrived at on all demands or on any matter in dispute. To the extent of the settlement of the dispute, a memo is to be prepared, signed by the parties and shall be reported to the government (federal or provincial as the case may be).
The conciliation proceedings are required to be completed within 15 days or the parties by mutual consent may extend the period during which the conciliation proceedings may continue. In case the parties do not come to settlement within 15-day period or agree to extend the period of conciliation proceedings, the conciliator is bound to declare the conciliation proceedings as having failed so as to enable the parties to pursue the industrial dispute and in the prescribed manner to take further steps, i.e., resort to strike or lockout, after serving due notice, as the case may be, or to file the industrial dispute in the NIRC (or labour court for provincial establishment) for adjudication of the demands.
The questions whether or not an industrial dispute exists, or a particular union of workers is competent to adjudicate the dispute on behalf of the employees and other objections, can be determined only by the courts and not by the conciliation officer. Similarly, a Labour Court can adjudicate the question of whether the signatory to the conciliation notice was competent to do so or not. However, a Division Bench of the Lahore High Court1 has held that "before holding any proceedings (the Conciliator) must satisfy himself that the notice is a valid one. If the notice is not valid, it is no notice in the eyes of law and the conciliation officer can ignore it". However, the judgment is based on the law as it then existed which specifically conferred power on the conciliation officer to determine legality or validity of the notice.
Arbitration is provided for in Section 40 of the IRA 2012. The provisions of Subsection (1) of Section 40 relating to the appointment of an arbitrator between the parties to a dispute are attracted only upon failure of the conciliation proceedings. As such, in the absence of the failure of the conciliation proceedings the provisions of the IRA 2012 do not warrant the appointment of the arbitrator. The parties by consent cannot confer jurisdiction upon an arbitrator in the absence of failure of conciliation proceedings. According to section 40(5) and (6) the award given by an arbitrator is final for a period not exceeding two years or as may be fixed by the arbitrator.
Importance of conciliation and arbitration in settlement of disputes
The Industrial Law and Labour Laws provide for different modes for resolution or settlement of disputes. These can be divided into two main categories. One category comprises of resort to proceedings before a Labour Court set up by the law for this purpose. Under this system, the entire proceedings, which are adversarial in nature, are conducted and the decision taken in accordance with the law. A prescribed procedure is required to be followed by the courts or tribunals in the conduct of cases. Decisions are then subject to appeals or revisions. All this takes time - a lot of time. Prolonged litigation is also very expensive, time consuming and usually beyond the reach of the ordinary citizen - the common man. As an alternative to litigation, the law provides for various methods for resolution of disputes, including arbitration and conciliation, which potentially provide more efficient avenues for dispute resolution.
Arbitration versus judicial disputes
i) Cost effective and less time consuming
Basic advantages of the conciliation or arbitration process are the informality and flexibility of the proceedings, in which the parties themselves get involved, as opposed to the judicial process where the parties are generally not involved in the proceedings which remain in the control of the court and lawyers. Further, from the cost and speed perspective, a common worker or a trade union of workers can sustain the informal process.
ii) Reduction in load on courts
It reduces considerably the caseload of the courts and, as a consequence, the quality of justice dispensed by the courts also improves as courts then have a lower pendency of cases and relatively more time for cases they can handle.
iii) Feeling of imposition is not present
In these proceedings, the conciliator or mediator does not take any decision or give any award; decision-making remains the jurisdiction of the parties and based on the consent of the parties, therefore, the feeling of imposition of judgment, which is consequential to litigation, does not occur.
Problems and pitfalls
In order to bring about a movement towards the alternative dispute resolution procedures set out in this article, awareness programmes may have to be organized in various parts of Pakistan. This can be done through seminars, lectures, and articles in newspapers and debates and discussions on the electronic media. In addition, capacity building of conciliators and arbitrators is also the need of the hour.
Structured training programs can be introduced for lawyers and judges. Awareness programs will create the right kind of climate for introducing conciliation and arbitration methods under statutory cover.
Analysis of conciliation and arbitration
As discussed, conciliation is the second stage in the process for amicable resolution of disputes between the employer and the union. The first stage is bilateral negotiation, conciliation assumes importance inasmuch as it is an endeavour by a third party, invariably an official of the Government in the Ministry of Labour who intervenes, in at helping the employer and the union, in most cases, the collective bargaining agent, to amicably resolve their disputes. A Memorandum of Settlement or understanding concluded in the conciliation through the efforts of the conciliator has binding effects on all the workers of the organization. If a majority of workers accept the settlement, it is binding. Individual workers do not come in the picture as settlements are invariably concluded between the employer and the C.B.A. If the settlement so arrived at in the conciliation proceedings is accepted by the vast majority of the workmen, who have executed the instrument with their eyes open, it is presumed to be fair and not liable to be ignored merely because some workers are not prepared to accept the agreement. In fact, it is not necessary that each individual workman should know the implications of the settlement. Industrial jurisprudence is based on the spirit of collective bargaining and in the matter of collective bargaining, during the course of conciliation, the individual workmen do not enter the picture at all.
Invariably, as is the case in the labour laws of most developed nations, if no understanding can be reached at the negotiation or conciliation stages, the matter is offered for arbitration. In light of the volume of work in the NIRC, the labour courts, the Labour Appellate Tribunals and even the High Courts, all of which form the overall hierarchy of the labor judiciary, there is now an increasing need to develop workable methods of alternative dispute resolution. In this connection, the role of arbitration in almost every country and every field is being increasingly encouraged. Arbitration proceedings are not governed by the Civil Procedure Code ("CPC") or the Qanune Shahadat Order, 1984 ("Evidence Act") etc, but are widely flexible. Arbitration, as the nomenclature suggests, does not mean any arbitrary act on the part of the arbitrator. The arbitrator is bound by the general principles of the labour laws, the rules of natural justice and to a certain extent, also by the broad and general principles of the CPC and/or the Evidence Act, although rigid notions of these laws are not applicable. An arbitrator can be any person mutually acceptable to both the parties. In some Labour Laws, a panel of arbitrators is available and both the parties may choose an arbitrator. The jurisdiction of an industrial arbitrator is different from that of a commercial arbitrator. The jurisdiction of an industrial arbitrator stems from statute, whereas the jurisdiction of a commercial arbitrator is based upon the agreement or consent of the parties. Such a commercial arbitrator may even have some of the "trappings of a court" but lacks the essential judicial powers otherwise vested by the law. The award of a commercial arbitrator is of a quasi judicial nature.
The task before a mediator or conciliator is well illustrated by Edger L. Warren of the University of California (Los Angeles) in his Article on "Mediation and Fact Finding", Chapter 22 (reproduced at page 251 of Labour Laws and Practice by Kothari). He says:
"Perhaps the most potent factor determining the pressure which may be exerted in the mediation is the comparative economic strength of the two parties. If, the Union is particularly weak because there is slight pressure on the employer to make concessions. Under these circumstances the mediator's only recourse for settlement may be to convince the Union that it will not be able to carry on a successful strike. Similarly in the tight labour market and where a loss of production is costly to the employer a small show of strength by the Union may result in major gains. If, however the strength of the two parties is in approximate balance, the mediator may be able to channel pressures for most effective results. Thus the mediator may get the employer's customers to insist on the importance of an early settlement so that they will not be deprived of their supplies. In the case of a Union where a substantial degree of public interest is involved the mediator may point out that the postponement of the strike is the only way to avoid a government injunction ...... A good deal of the mediator's effectiveness in dealing with economic pressures will be based on his ability to make a realistic appraisal of possible future trends and the comparative economic positions of the parties".
The law does not intend to confer on the arbitrator uncontrolled judicial power to make an award. He has to give reasons so as to render it capable of judicial scrutiny. An arbitrator has to decide a proposal. An award not based on any reason is liable to be quashed. It is now well-settled by the superior courts that an arbitrator's decision is amiable to judicial scrutiny in the writ. In the subcontinent, an award of an Arbitrator is amiable to judicial review by the High Court. However, there is fundamental distinction between industrial arbitration and commercial arbitration. Industrial arbitration is based on different principles and norms and the scope of the arbitration is also not like civil arbitration.
Conciliation and arbitration no doubt are the two most important pillars of mutual resolution of disputes and differences between the employer and the union and these two pillars have now invariably found recognition in most labour legislation, and are otherwise also recognized by International Labour Organization.
In the circumstances of global competition, it may not be possible for some enterprises to continue and meet the economic consequences of competition. In such cases, one cannot compel non-viable undertakings to continue to bear the financial burdens needed to keep the concern going. In the area of determination of industrial disputes, adjudication is still the prevailing method of dispute resolution and one can only hope that collective bargaining and inbuilt arbitration will result in the bulk of the disputes between the parties being settled expeditiously. A system of an independent judiciary under the circumstances is the need of the hour. The basic role of the Courts is not to be capitalistic or humanitarian or social, but to dispense justice according to the law and to be subject to certain limitations from time to time.
The purpose of industrial law and the object of industrial justice is to establish a balance between the interests of the workers and those of the owners of industry, so that harmony of relations may be achieved. It is not easy, perhaps not even possible, to strike a perfect balance because limitations with respect to the interests of either party are imposed by existing socioeconomic conditions. The decisive factor for the decisions, in the existing state of affairs, would ultimately have to be the attitudes of and resulting policies designed by those who administer industrial justice. In these circumstances, the Legislature has considered it best not to confer industrial jurisdiction on the ordinary Courts and has created special Industrial Courts for this purpose. One of the reasons behind this move appears to be that the Industrial Courts are expected to be experienced in and appreciative of the special socioeconomic factors at play in labour and industrial disputes, while ordinary Courts are trained to administer purely legal justice with commendable emphasis on rationality and logic which is, however, not the same thing as the formation of and adherence to a well-designed policy within the law. The jurisdiction to hear appeals from the awards of the Labour Courts has recently been conferred on the High Court; but the nature of the jurisdiction of such appellate Courts and their outlook should be the same as those of the special Courts from which the appeals are preferred, unless in respect of their outlook an error can be found which should be an error of law, fact or a legally recognizable policy, and not merely disunity in the implicit attitudes of mind. The Presiding Officer of the Labour Courts in the Province have been in some cases ex-Judges of the High Court perhaps because the right experts are not easily available and because the training in the administration of purely legal justice guarantees logicality, legality and the capacity to accurately grasp facts as well as the trends of thought. The discovery and development of policies must nevertheless remain the responsibility of the special Courts.
(The writer is an Advocate of Supreme Court of Pakistan)
1. Mohammad Din & Sons' case [PLD 1988 Lahore 1012]