Suppose that the union or workers demand wage increase. The employer is expected to discuss with the workers/ union and arrive at a solution. In this discussion, there will be two parties involved, ie, the employer (person representing the employer) and the workmen (person representing the workmen or union) and a settlement is reached between them, or bilaterally. This is called bi partie settlement. The settlement (which is a settlement as per section 18(1) of the ID Act) is binding on the parties to the settlement only. That is the terms discussed, wage increase, etc will be binding on the employer (to enforce) and on the workers who are being represented.
When a solution is not arrived at in a discussion between the employer and the employees, normally, an officer of the Labour department will be invited and his assistance will be sought. He will act as a conciliation officer and he does a conciliation over the demands put forward by the workers and mediate to arrive at a settlement. In this process the employer can discuss his points with the conciliation officer and he will also hear the stand of the workers. Finally a settlement will be reached. That settlement is called a tri partite settlement, a settlement among employer, workers and the conciliation officer.
A settlement made in the presence of the conciliation officer (as per section 12(3) of the ID Act) will be binding on all the parties, the employer and the workers who are parties to the discussion and those who may join the company in future and those who are already in the company but did not raise any industrial dispute.