THE INDUSTRIAL RELATIONS CODE, 2020

Z
September 19’ 20 September 22’ 20
Introduced in Lok Sabha Passed by Lok Sabha
September 23’ 20
Passed by Rajya Sabha
September 29’ 20 September 28’ 20
Published in E-Gazette Assented by Hon President

INTRODUCTION OBJECTIVE
The Industrial Relations Code, 2020 provides a • The Code designated to safeguard the rights of
broader framework to protect the rights of workers to employers and employees by providing easy labour
make unions, to reduce the friction between the reforms and to facilitate ease of Doing Business.
employers, and workers and to provide regulations for • The object of the Code is to realize industrial peace
settlement of industrial disputes. and harmony as the ultimate pursuit in resolving
industrial disputes and to advance the progress of
The Code is prepared after amalgamating, simplifying industry by bringing about the existence of harmony
and repealing following 3 central labour acts: and cordial relationship between the employers and
i. The Trade Unions Act, 1926 workers.
ii. The Industrial Employment (Standing Orders)
Act, 1946 KEY DEFINITIONS
iii. The Industrial Disputes Act, 1947 • Industry means any systematic activity carried on
by co-operation between an employer and for the
SCOPE & APPLICABILITY production, supply or distribution of goods or
The Code is designed to consolidate & amend the laws services with a view to satisfy human wants or
regarding Trade Unions, conditions of employment in wishes, whether or not:
Industrial establishment or undertaking, and sleek I. any capital has been invested for the purpose of
settlement of industrial disputes. The code regulates carrying on such activity
the subsequent areas: II. such activity is carried on with a motive to make
• Registration of Trade Union any gain or profit, but does not include:
• Cancellation of Trade Union
• Alteration of Name of Trade Union III. institutions owned or managed by organizations
• Formation of Work Committee wholly or substantially engaged in any
• Incorporation of a Registered Trade Union charitable, social or philanthropic service
• Recognition of Negotiating Union IV. any activity of the appropriate Government
• Preparation of Standing Order relatable to the sovereign functions of the
• Register of Standing Order appropriate Government including all the
• Constitution of Industrial Tribunal activities carried on by the departments of the
• Illegal Strikes and Lock-outs Central Government dealing with defense
• Procedure for Retrenchment and Re-employment research, atomic energy and space any
of Retrenched Worker domestic service.
• Compensation to Workers in case of Transfer of
V. any other activity as may be notified by the
Establishment
Central Government.
• Prohibition of Lay-off
• Closure of an Industrial Establishment
 • Employer means a person who employs, whether • Retrenchment means termination by the employer of
directly or through any person, or on his behalf or on the service of a worker for any reason whatsoever,
behalf of any person, one or more employee or worker otherwise than as a punishment inflicted by way of
in his establishment and where the establishment is disciplinary action, but does not include:
carried on by any department of the Central I. voluntary retirement of the worker
Government or the State Government, the authority II. retirement of the worker on reaching the age of
specified by the head of the department in this behalf or superannuation
where no authority is so specified, the head of the III. termination of the service of the worker as a result
department, and in relation to an establishment carried of the non-renewal of the contract of employment
on by a local authority, the chief executive of that between the employer.
authority, and includes:
I. in relation to an establishment which is a factory, the • Standing orders means orders relating to matters set-
occupier of the factory, out in the First Schedule.
II. where a person has been named as a manager of
the factory REGISTRATION OF TRADE UNION
III. in relation to any other establishment, the person • Any seven or more members of a trade union by
who, or the authority which has ultimate control over subscribing to their names, apply for registration to the
the affairs or the establishment and where the said Authority according to Rules of the Trade Union.
affairs are entrusted to a manager or managing • At least ten percent of the workers or 100 workers,
director, such manager or managing director; whichever is less, must be the members of the Trade
contractor and legal representative of a deceased Union on the date of making an application for
employer. registration.
• Employee means any person other than an apprentice • Registered Trade Union shall continue to have at least
engaged under Apprentices Act, 1961 employed by an ten percent of the workers or one hundred workers,
industrial establishment to do any skilled, semi-skilled or whichever is less.
unskilled, manual, operational, supervisory, managerial, • If the name of the Trade Union proposed to be
administrative, technical or clerical work for hire or registered is identical with an existing registered Trade
reward, whether the terms of employment be express or Union, alteration of the name is required as asked by
implied, and also includes a person declared to be an the Registrar of Trade Union.
employee by the appropriate Government, but does not • Registered Trade Union shall be a body incorporate by
include any member of the Armed Forces of the Union. the registered name, having a common seal and
• Worker means any person except an apprentice perpetual succession with the power to hold property.
employed in any industry to do any manual, unskilled,
skilled, technical, operational, clerical or supervisory CONSTITUTION OF WORK COMMITTEE
work for hire or reward, whether the terms of Industrial Establishment having or employed 100 or more
employment be express or implied and includes working workers during a period of 12 months, may be required to
journalists, and includes any such person who has been, constitute a Work Committee to promote protective
dismissed, discharged or retrenched or otherwise measures for securing and preserving sensible relations
terminated in connection with or as a consequence of, between the employer and workers.
that dispute, or whose dismissal, discharge or
retrenchment has led to that dispute, but does not
RECOGNITION OF NEGOTIATING TRADE UNION
include any such person:
I. who is subject to the Air Force Act, 1950, or the • For a Registered trade union, there shall be a
Army Act, 1950, or the Navy Act, 1957 negotiating union or council to negotiate with the
employer of the Industrial Establishment.
II. who is employed in the police service or as an
• If only one Trade Union of workers registered in an
officer or other employee of a prison; or
industrial establishment then the employer of such
III. who is employed mainly in a managerial or industrial establishment shall recognize such Trade
administrative capacity Union as the sole negotiating union of the workers.
IV. who is employed in a supervisory capacity drawing • If more than one Trade Union of registered workers in
wage of exceeding eighteen thousand rupees (INR an Industrial Establishment then at least fifty-one
18,000) per month or an amount as may be notified percent or more of workers on the muster roll of that
by the Central Government from time to time. Industrial Establishment will be recognized as the sole
• Trade Union means any combination, whether negotiating union by the employer.
temporary or permanent, formed primarily for the
purpose of regulating the relations between workers and GRIEVANCE REDRESSAL COMMITTEE
employers or between workers and workers, or between Industrial Establishment having 20 or more workers shall
employers and employers, or for imposing restrictive constitute one or more Grievance Redressal Committees
conditions on the conduct of any trade or business, and with the maximum 10 members for resolution of disputes
includes any federation of two or more Trade Unions. arising out of individual grievances.

Data Source: Labour Ministry & leading publications

STANDING ORDERS • Where any worker is retrenched and the employer
Industrial Establishment having or employed 300 or more proposes to take into his employment any person
workers on any day of during the period of 12 months, must within one year of such retrenchment, an opportunity
prepare the standing orders on the following matters: will be given to the retrenched workers who are
• Classification of workers citizens of India to offer themselves for re-employment.
• Manner of intimating to workers for hours of work
holidays, pay-days and wage rates LAY-OFF
• Shift Working Lay-off is the inability of an employer from giving
• Attendance employment to a worker due to multiple factors such as
• Conditions and procedure of leave and holidays shortage of coal, power, or breakdown of machinery.
• Requirement to enter premises by certain gates, and Non-seasonal industrial establishment (i.e. mines,
liability to search. factories, and plantations) with 50 to 300 workers is
required to:
STRIKES AND LOCK-OUTS • pay 50% of basic wages and dearness allowance to a
worker who has been laid off
Every person employed in an Industrial Establishment is
• give one month’s notice or wages for the notice period
prohibited for strikes and lock-out, in breach of contract:
to the retrenched worker.
• without giving 60 days advance notice of strikes and
• non-seasonal industrial establishments with at least
lock-out to the employer
300 workers is required to take prior approval from
• within fourteen days of giving such notice; or central or state government before lay-off,
• before the expiry of the date of strikes and lock-out retrenchment or closure
specified in any such notice; or • prior approval before lay-off, retrenchment or closure is
• during the pendency of any conciliation proceedings required by the non-seasonal Industrial Establishments
before a conciliation officer and seven days after the with at least 300 workers, from central or state
conclusion of such proceedings; or government.
• during the pendency of arbitration proceedings before an
arbitrator & 60 days after conclusion of such proceedings CLOSURE
• Employer intending closure of an Industrial
CHANGE IN THE CONDITIONS OF SERVICE
Establishment is required to serve 60 days advance
The employer is required to send a notice of change in the notice to the Government.
conditions of service in the following matters, to the workers • Provision for compensation in case of Closure to those
being affected: workers who are in a continuous period of service not
• wages, compensatory and other allowances less than one year.
• contribution paid, or payable, by the employer to any
provident fund or pension fund or for the benefit of EXEMPTIONS
workers under any law for the time being in force The Code provides that the central or state government
• hours of work and rest intervals may exempt any new establishment or a class of new
• leave with wages and holidays establishment from all or any provisions of the Code in the
• starting, alteration, or ending of shift operating otherwise public interest.
than in accordance with standing orders
• classification by grades KEY HIGHLIGHTS
• withdrawal of any customary concession or privilege or
modification in usage • Gratuity for Fixed Term Employee
• introduction of recent provisions for discipline, or
alteration of existing rules, except in so far as they are
• Statutory Benefits like ESI, PF, Bonus, Wages
provided in standing orders for Fixed term Employee
• rationalization, standardization, or improvement of plant • Definitions modified
or technique that is likely to lead to retrenchment of
workers any increase or reduction in the no of persons • 14 days’ advance notice before strike by Trade
employed or to be employed in any occupation or Union
process or department or shift, not occasioned by
circumstances over which the employer has no control. • Increased threshold for standing order from
100 to 300 workers
RETRENCHMENT
• Provides procedures for the retrenchment of workers • Introduced Dispute Resolution Tribunal
and the re-employment of the retrenched worker. • Setting up a Re-skilled Fund for Workers
• For the retrenchment, the employer must either give
three months’ notice or pay the retrenched worker in lieu • Hiring and Firing Provisions
of the notice period

Data Source: Labour Ministry & leading publications

 COMPARATIVE CHART - EARLIER VS NEW PROVISIONS
# EARLIER PROVISIONS NEW PROVISIONS
i. New Definition of Employee, fixed term
Definitions
employment introduced
i. Employee. Fixed-term employment was not defined
ii. Definition of Strike has been amended to mass
in any of the Act
1 casual leave by 50% or more workers on a given
ii. Changes in definitions of Strike, wages, Industrial
day, while the definition of Wages kept aligned with
Dispute, Lay off
other Labour code
iii. Workman was defined in the Industrial Dispute Act
iii. Workman now renamed as the worker

Sec-9.C of the Industrial Dispute Act, the workman

Grievance Redressal Committee is mandate under
2 need not raise its grievance to the committee before
Industrial Relations Code, 2020
moving to a conciliation officer

3 No provision for “Negotiating Union” Recognition of “Negotiating Union” is mandatory

i. The code defines an Industrial Establishment as

Standing Orders defined under the Payment of Wages Act, 1936
i. Only the Industrial Establishments defined under ii. Therefore, unless specifically notified under the
the Industrial Establishment Standing Order Act Payment of Wages Act, the provisions of the code
4
required to formulate standing orders do not apply to an industrial establishment, except
ii. Threshold for applicability of standing order was on railways, establishment of a contractor of an
having100 or more workers industrial establishment and factories
iii. Threshold increased up to 300 workers
No time limit mentioned for completing the disciplinary Investigation and inquiry have to be completed within
5
proceedings against the worker 90 days from the date of suspension of a worker

The mechanism for the resolution of industrial disputes

introduced under the Industrial Relations Code
Resolution of Industrial dispute use to be done by only
6 Now the Industrial tribunal will consist of two members
one member Tribunal under Industrial Dispute Act
out of whom one shall be a judicial member and the
other will be an administrative member

Prior Notice condition was only applicable to public 14 days prior notice before strike mandated for all
7
utility service industries industrial establishments

Chapter XI introduced around worker re-skilling fund.

According to the provision, the employer will be
8 No concept for worker re-skilling fund
required to deposit an amount equal to fifteen days last
drawn wages of every retrenched worker

No provision existed for Fixed-term Employment. Fixed-term Employment Introduced, which refers to
9 Employers often enter into a contract with employees workers employed for a fixed duration based on a
for the short term, but the same was not regulated contract signed between the worker and employer

Penalties are more stringent now.

Penalties: For failure to certify standing orders or the
• Up to INR 2,00,000.
modifications to the same and comply with the finally
• In case of non-certification of standing orders, an
certified standing orders, fine which may extend to five
additional fine of INR 2,000 per day during which the
10 thousand rupees, and in the case of a continuing
contravention continues.
offence with a further fine which may extend to INR 200
• In subsequent contravention of the finally certified
for every day after the first during which the offence
standing orders, fine up to INR 4,00,000 and
continues.
imprisonment for a term up to 3 months, or both

MONIKA TAPARIA
• LLB, LLM, 5+ years experience;
• Expert in Establishment, Industrial, EHS, Trade Mark & IPR Laws
• Sr Regulatory Compliance Associate
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