INDUSTRIAL

RELATIONS CODE, 2020

INTRODUCTION

On September 28, 2020, three new labour law codes namely, the Industrial Relations Code, 2020, the Occupational Safety,
Health and Working Conditions Code, 2020 and the Code on Social Security, 2020 ("Codes") received the President's assent.
The Industrial Relations Code, 2020 provides a broader framework to protect the rights of workers to make unions, to reduce
the friction between the employers, and workers and to provide regulations for settlement of industrial disputes.
• The Code is prepared after amalgamating, simplifying and repealing following 3 central labour Acts:
• The Trade Unions Act, 1926
• The Industrial Employment (Standing Orders) Act, 1946
• The Industrial Disputes Act, 1947
SCOPE & APPLICABILITY
• The Code is designed to consolidate & amend the laws regarding Trade Unions, conditions of employment in
Industrial establishment or undertaking, and sleek settlement of industrial disputes. The code regulates the
subsequent areas:

• Registration of Trade Union • Constitution of Industrial Tribunal

• Cancellation of Trade Union • Illegal Strikes and Lock-outs
• Alteration of Name of Trade Union • Procedure for Retrenchment and Re-
• Formation of Work Committee employment of Retrenched Worker
• Incorporation of a Registered Trade Union • Compensation to Workers in case of Transfer
• Recognition of Negotiating Union of Establishment
• Preparation of Standing Order • Prohibition of Lay-off
• Register of Standing Order • Closure of an Industrial Establishment
• The Code designated to safeguard the rights of employers and
employees by providing easy labour reforms and to facilitate
ease of Doing Business.
OBJECTIVE • The object of the Code is to realize industrial peace and harmony
as the ultimate pursuit in resolving industrial disputes and to
advance the progress of industry by bringing about the existence
of harmony and cordial relationship between the employers and
workers.
KEY HIGHLIGHTS
• Gratuity for Fixed Term Employee
• Statutory Benefits like ESI, PF, Bonus, Wages for Fixed term Employee
• Definitions modified
• 14 days’ advance notice before strike by Trade Union
• Increased threshold for standing order from 100 to 300 workers
• Introduced Dispute Resolution Tribunal
• Setting up a Re-skilled Fund for Workers
• Hiring and Firing Provisions
• “Industry” means any systematic activity carried on by co-operation
between an employer and for the production, supply or distribution of
goods or services with a view to satisfy human wants or wishes,
KEY whether or not:
• any capital has been invested for the purpose of carrying on such
DEFINITIONS activity
• such activity is carried on with a motive to make any gain or profit, but
does not include:

1. 'INDUSTRY’ • institutions owned or managed by organizations wholly or

substantially engaged in any charitable, social or philanthropic service
• any activity of the appropriate Government relatable to the sovereign
functions of the appropriate Government including all the activities
carried on by the departments of the Central Government dealing with
defense research, atomic energy and space any domestic service.
• any other activity as may be notified by the Central Government.
DEFINITION OF "WORKER"
• Worker means any person except an apprentice employed in any industry to do any manual, unskilled,
skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of
employment be express or implied and includes working journalists, and includes any such person who
has been, dismissed, discharged or retrenched or otherwise terminated in connection with or as a
consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute,
but does not include any such person:
• who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957
• who is employed in the police service or as an officer or other employee of a prison; or
• who is employed mainly in a managerial or administrative capacity
• who is employed in a supervisory capacity drawing wage of exceeding eighteen thousand rupees (INR
18,000) per month or an amount as may be notified by the Central Government from time to time
DEFINITION • This definition has been expanded to include any dispute or
OF difference between an individual worker and employer
connected with, or arising out of any discharge, dismissal,
"INDUSTRIAL retrenchment or termination of such worker within its ambit.

DISPUTE"
DEFINITION • This definition has been expanded to include within its ambit,
the concerted casual leave on a given day by fifty per cent or
OF "STRIKE" more workers employed in an industry.
DEFINITION OF "EMPLOYER"

• The definition of "employer" has been expanded to include:

• in relation to an establishment which is a factory, the occupier of the factory as defined in section
2(n) of the Factories Act, 1948 and, where a person has been named as a manager of the factory
under section 7(1)(f) of such act, the person so named;
• in relation to any other establishment, the person who, or the authority which has ultimate control
over the affairs of the establishment and where the said affairs are entrusted to a manager or
managing director, such manager or managing director;
• contractor; and
• legal representative of a deceased employer.
DEFINITION OF "EMPLOYEE”
• Employee means any person other than an apprentice engaged under Apprentices Act, 1961
employed by an industrial establishment to do any skilled, semi-skilled or unskilled, manual,
operational, supervisory, managerial, administrative, technical or clerical work for hire or reward,
whether the terms of employment be express or implied, and also includes a person declared to be
an employee by the appropriate Government, but does not include any member of the Armed
Forces of the Union.
DEFINITION FOR "FIXED TERM
EMPLOYMENT"
• The IR Code introduces a new provision for "fixed term employment" which means and refers to the
engagement of a worker on the basis of a written contract of employment for a fixed period provided
that:
• his/her hours of work, wages, allowances and other benefits shall not be less than that of a permanent
worker doing the same work or work of similar nature;
• he/she shall be eligible for all statutory benefits available to a permanent worker proportionately
according to the period of service rendered by him/her even if his/her period of employment does not
extend to the qualifying period of employment required in the statute; and
• he/she shall be eligible for gratuity if he/she renders service under the contract for a period of one year.
RETRENCHMENT
• Retrenchment means termination by the employer of the service of a worker for any reason whatsoever, otherwise
than as a punishment inflicted by way of disciplinary action, but does not include :
• voluntary retirement of the worker
• retirement of the worker on reaching the age of superannuation
• termination of the service of the worker as a result of the non-renewal of the contract of employment between the
employer.
• For the retrenchment, the employer must either give three months’ notice or pay the retrenched worker in lieu of the notice
period
• Where any worker is retrenched and the employer proposes to take into his employment any person within one year of such
retrenchment, an opportunity will be given to the retrenched workers who are citizens of India to offer themselves for re-
employment.
LAY-OFF, RETRENCHMENT AND CLOSURE
• Under the ID Act, industrial establishments with more than a hundred workers employed
were required to obtain prior permission from the appropriate Government to lay-
off/retrench workers as well as in cases of closure of an industrial undertaking. The IR Code
has waived off this requirement for industrial establishments such as mines, factories and
plantations employing not less than three hundred workers or such higher number as may be
notified by the Government18. However, it is not necessary to obtain prior permission in cases
wherein such lay-off is due to shortage of power, natural calamity, and in the case of a mine,
such lay-off is due to fire, flood, excess of inflammable gas or explosion19. In the event the
Government does not communicate the order granting or refusing to grant permission to the
employer within a period of sixty days from the date on which such application is made, the
permission applied for shall be deemed to have been granted as applied for on the expiration
of sixty days and the application shall be deemed to have been disposed off
STANDING ORDERS
• The IR Code provides that the provisions with respect to the standing orders shall apply to all industrial establishments
with three hundred workers7. The employers of such establishments are required to prepare standing orders on the
matters listed out in the first schedule to the IR Code ("Schedule"). The matter listed in the Schedule are given
hereinbelow:
• Classification of workers, whether permanent, temporary, apprentices, probationers, badlis or fixed term employment.
• Manner of intimating to workers periods and hours of work, holidays, pay-days and wage rates.
• Shift working.
• Attendance and late coming.
• Conditions of, procedure in applying for, and the authority which may grant leave and holidays.
• Requirement to enter premises by certain gates, and liability to search.
STANDING ORDERS
• Closing and reporting of sections of the industrial establishment, temporary stoppages of work and the rights
and liabilities of the employer and workers arising therefrom.
• Termination of employment, and the notice thereof to be given by employer and workers.
• Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct.
• Means of redress for workers against unfair treatment or wrongful exactions by the employer or his agents or
servants.
• Any other matter which may be specified by the appropriate Government by notification.
• The Central Government is required to make model standing orders relating to conditions of service and other
matters incidental thereto or connected therewith. Where an employer adopts a model standing order of the
Central Government with respect to matters relevant to the employer's industrial establishment or
undertaking, then such model standing order shall be deemed to have been certified and the employer shall
forward the information in this regard to the concerned certifying officer in the manner as may be prescribed.
• Trade Union means any combination, whether temporary or
permanent, formed primarily for the purpose of regulating the
DEFINITION relations between workers and employers or between workers
and workers, or between employers and employers, or for
FOR ”TRADE imposing restrictive conditions on the conduct of any trade or
business, and includes any federation of two or more Trade
UNION" Unions.
REGISTRATION OF TRADE UNION
• Any seven or more members of a trade union by subscribing to their names, apply for registration to
the Authority according to Rules of the Trade Union.
• At least ten percent of the workers or 100 workers, whichever is less, must be the members of the
Trade Union on the date of making an application for registration.
• Registered Trade Union shall continue to have at least ten percent of the workers or one hundred
workers, whichever is less.
• If the name of the Trade Union proposed to be registered is identical with an existing registered
Trade Union, alteration of the name is required as asked by the Registrar of Trade Union.
• Registered Trade Union shall be a body incorporate by the registered name, having a common seal
and perpetual succession with the power to hold property.
RECOGNITION OF NEGOTIATING TRADE
UNION

• The IR Code provides for a single negotiating union/council in an industrial establishment having a
registered trade union for negotiating on such matters as may be prescribed. Where only one trade
union of workers registered is functioning, then, the employer of such establishment shall, subject to
such criteria as may be prescribed, recognise such trade union as the sole negotiating union of the
workers. If more than one trade union is functioning, then, the union having fifty-one per cent or more
workers shall be recognised as the sole negotiating union of the workers. Further, if more than one
trade union of workers are functioning in an industrial establishment, and no such trade union has fifty-
one per cent or more of workers, then, a negotiating council having not less than twenty per cent of the
total workers of that industrial establishment shall be constituted by the employer.
• The IR Code provides that every establishment employing
twenty or more workers is to have one or more grievance
redressal committees for resolution of disputes and such
committee is to consist of equal number of members
representing the employer and the workers chosen in a
GRIEVANCE manner as may be prescribed. Further, the total number of
members in such committee shall not exceed ten and there
REDRESSAL shall be equal representation of women workers in the
committee and such representation shall not be less than
COMMITTEE the proportion of women workers to the total workers in an
establishment. The erstwhile law provided for grievance
settlement authorities to bet set up in establishments
employing a minimum of fifty workers. Further, it did not
provide for equal representation of women as specified
under the IR Code.
CONSTITUTIO • Industrial Establishment having or employed 100 or more
workers during a period of 12 months, may be required to
N OF WORK constitute a Work Committee to promote protective
measures for securing and preserving sensible relations
COMMITTEE between the employer and workers.
• No worker can go on a strike without giving notice to the
employer within a period of sixty days before striking;
• or within fourteen days of giving such notice;

PROHIBITION • or before the expiry of the date of strike specified in such notice;
• or during the pendency of conciliation proceedings; or seven
ON STRIKES days after the conclusion of conciliation proceedings; or during
the pendency of arbitration proceedings; or sixty days after the
AND LOCK- conclusion of arbitration proceedings; or during any period in
which a settlement or award is in operation in respect of any
OUTS matters covered by the settlement or award.
• Similarly, no employer of an industrial establishment shall lock-
out any of his/her workers unless the conditions mentioned
above are met. While the ID Act contained similar provisions in
relation to prior notice of strike and lock-out, however, such
provisions were only applicable to public utility services.
• The IR Code provides for the constitution of one or more
industrial tribunals and a National Industrial Tribunal to
decide industrial disputes. The industrial tribunals shall be set
up in place of  the existing multiple adjudicating bodies under
the ID Act such as the court of inquiry, board of conciliation,
labour courts. Every industrial tribunal shall consist of two
CONSTITUTIO members to be appointed by the appropriate Government
out of whom one shall be a judicial member and the other, an
N OF administrative member in place of only one judicial member
presently. Further, the Central Government may by
INDUSTRIAL notification, constitute one or more National Industrial
Tribunals14  for the adjudication of industrial disputes which,
TRIBUNALS in the opinion of the Central Government, involve questions
of national importance or are of such a nature that industrial
establishments situated in more than one State are likely to
be interested in, or affected by, such disputes 15. The National
Industrial Tribunal shall also consist of two members to be
appointed by the Central Government.
CHANGE IN THE CONDITIONS OF
SERVICE
• The employer is required to send a notice of change in the conditions of service in the following matters, to the
workers being affected:
• wages, compensatory and other allowances
• contribution paid, or payable, by the employer to any provident fund or pension fund or for the benefit of workers
under any law for the time being in force
• hours of work and rest intervals
• leave with wages and holidays
• starting, alteration, or ending of shift operating otherwise than in accordance with standing orders
• classification by grades
• withdrawal of any customary concession or privilege or modification in usage introduction of recent provisions for
discipline, or alteration of existing rules, except in so far as they are provided in standing orders
• rationalization, standardization, or improvement of plant or technique that is likely to lead to retrenchment of
workers any increase or reduction in the no of persons employed or to be employed in any occupation or process or
department or shift, not occasioned by circumstances over which the employer has no control.
WORKER RE-SKILLING FUND
• The IR Code introduces provisions for re-skilling of workers for the first time for those workers who have been
laid-off so that they are able to secure employment again. The IR Code states that the fund shall consist of the
following:
• The contribution of the employer of an industrial establishment of an amount equal to fifteen days wages last
drawn by the worker immediately before the retrenchment, or such other number of days as may be notified
by the Central Government, for every retrenched worker in the case of retrenchment only; and
• The contribution from such other sources as may be prescribed by the appropriate Government.
• The fund shall be utilised by crediting fifteen days wages last drawn by the retrenched worker to his account,
within forty-five days of retrenchment in the manner as may be prescribed.
• The IR Code appears to be a step in the right direction in terms of providing a more simplified mechanism for
dispute resolution. The introduction of a negotiating union/council shall also assist in reaching amicable
settlements between employers and workers more rapidly. By increasing the threshold for industries requiring
prior permissions under the IR Code, more businesses will have freedom in relation to retrenchment of workers
and closure of establishments. However, what remains to be seen is the effect of the IR Code on the workers'
right to strike. 
COMPARATIVE ANALYSIS EARLIER VS NEW
PROVISIONS

• Labour being a concurrent subject, the center as well as the states can make laws. This led to 40+ labour
laws being brought out in India creating confusion and overlapping. In lieu of this the government
decided to clearly define these 40 laws in to 4 codes. The objective behind this was to reduce the
complexity in the process, increase ease of compliance and would lead to accountability and
transparency which would be beneficial for both workers as well as employers.
• The recent passing of the Industrial Relations Code 2020, combined the previous acts of Trade Union
Act, 1926, Industrial Employment Act, 1946 and Industrial disputes act 1947.
Some of the main changes brought about by Industrial Relations Code, 2020 have been:
 
The definition of worker has been expanded to include working journalists as defined in Section-2(f) of the Working Journalists
and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 and sales promotion
employees as defined Section-2(d) of the Sales Promotion Employees (Conditions of Service) Act, 1976. Individuals employed
in a supervisory capacity drawing less than Rs. 18,000 per month (or any amount as notified by the Central Government) are
brought under the definition of ‘worker’.

In the previous act no provision existed for Fixed-term Employment. Employers often entered into a contract with employees
for the short term, but the same was not regulated, However as per the recent amendment. Fixed term employment is given
statutory basis as opposed to the current scheme wherein it was introduced vide notifications by multiple State Governments.
It allows employers greater flexibility in hiring in consonance with supply and demand. Fixed-term employees are eligible to
receive gratuity on a pro rata basis if they render service for a period of one year under their respective contract of
employment. They are given parity with permanent employees with respect to working conditions, wages, allowances, and
other benefits.

The threshold for applicability of the Industrial Disputes (Standing Orders) Act, 1946 under the 2019 Industrial Relations Bill
had been set at establishments employing 100 or more employees. However, the Industrial Relations Code, 2020 has raised
this threshold to 300 and has granted the ‘appropriate Government’ power to exempt any industrial establishment or class
thereof from all or any of the provisions under the Code.
With regards to the law on trade unions, the Code mandates that where there is more than one trade union in an
establishment, the status of sole negotiating union will be given to the one that has 51% of the employees as its members. This
threshold is marked decrease from the 75% threshold that was set in the 2019 Bill.

There is also a provision made for the establishment for the constitution of a negotiating council where there is no single union
that meets the 51% threshold as mentioned above. In such cases, the council is constituted of representatives from the various
unions provided they have at least 20% of employees as its members

With regards to layoffs and retrenchment, Section-65 applies to industrial establishments that do not come under Chapter-X of
the Code which is essentially Chapter-VB of the Industrial Disputes Act, 1947. It applies to industrial establishments in which
more than fifty workers have been employed on average per working day in the preceding calendar year.

Section-77 under Chapter-X applies to industrial establishments in which not less than 300 workers or such higher number of
workers as may be specified by the appropriate Government, were employed on average per working day in the preceding 12
months. Thus, establishments falling under this provision are required to obtain prior permission of the Government for lay-off,
retrenchment and closure.
The Code imposes a blanket prohibition on strikes and lock-outs in all industrial establishments without
notice and thus no unit can go on strike in breach of contract without giving notice 60 days before the
strike or within 14 days of giving such a notice, or before the expiry of any date given in the notice for
the strike. Strikes are also prohibited during the pendency of conciliation proceedings as well as within 7
days of the conclusion of such proceedings. Similarly, strikes during the pendency of proceedings before
an industrial tribunal or 60 days after their conclusion are prohibited. The Industrial Disputes Act, 1947
contained similar provisions, however they were applicable only to public utility services.
THANK YOU
BY ADITYA KESAR