The Industrial

Relations Code 2020

 The Industrial Relations Code 2020

• The Industrial Relations Code, 2020 provides a broader framework to protect

the rights of workers to make unions, reduce the friction between employers,
and workers and provide regulations for the settlement of industrial disputes.
• The Industrial Relations Code, 2020 was enacted by the Central Government
and with respect to the same, most of the State Labour Department has been
publishing its draft rules, which will soon be implemented.
• On Nov. 28, 2019, Mr. Santosh Kumar Gangwar,
Minister of Labour and Employment, introduced
the Industrial Relations Code, 2019, in the Lok
Sabha. On Dec. 23, 2019, it was sent to the
Standing Committee on Labor.
• The Code has been introduced in order to amalgamate,
simplify and subsume the following 3 central labour acts
under one Code:
• i. The Trade Unions Act, 1926
• ii. The Industrial Employment (Standing Orders) Act,
1946
• iii. The Industrial Disputes Act, 1947
• The Code has 104 sections spread in XIV
Chapters and three schedules relating to the
Standing orders, Unfair Labour Practice and
Condition of Service for Change of which
Notice has to be given respectively.
 The 56-page Code contains 14 chapters:
• Preliminary (Chapter I);
• Bi-partite Forums (Chapter II);
• Trade Unions (Chapter III);
• Standing Orders (Chapter IV);
• Notice of change (Chapter V);
• Voluntary reference of disputes to arbitration (Chapter VI);
• Mechanism for resolution of industrial disputes (Chapter VII);
• Strikes and lock-outs (Chapter VIII);
• Lay-off, Retrenchment and Closure (Chapter IX);
•
 The 56-page Code contains 14 chapters:

• Special provisions relating to lay-off, retrenchment and closure in certain

establishments (Chapter X);
• Worker re-skilling fund (Chapter XI);
• Unfair labour practices (Chapter XII);
• Offences and penalties (Chapter XIII); and
• Miscellaneous (Chapter XIV).
 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, Cancellation & Alteration of Name of Trade Union
•  Constitution of Work Committee & Grievance Redressal Committee
•  Incorporation of a Registered Trade Union
•  Recognition of Negotiating Union
•  Preparation of Standing Order
•  Register of Standing Order
 SCOPE & APPLICABILITY
• Constitution of Industrial Tribunal
• Illegal Strikes and Lock-outs
• Procedure for Retrenchment and Re-employment of Retrenched
Worker
• Compensation to Workers in case of Transfer of Establishment
• Prohibition of Lay-off
• Closure of an Industrial Establishment
 The Applicability of the Industrial Relations Code
of 2020

• The Industrial Relations Code is applicable to the organized sector of the

economy in India, which includes industries such as manufacturing, mining,
electricity, and transportation.
• It applies to both private and public sector enterprises, as well as to any other
establishments or organizations that employ a certain number of workers.
• The Code is not applicable to the unorganized sector, which includes small
businesses and informal sector enterprises that do not have a fixed place of
work and do not employ a large number of workers.
 OBJECTIVES
The Code is designated to safeguard the rights of employers and
employees by providing easy labour reforms and facilitating ease of
Doing Business.
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 the industry by bringing about the existence of
harmony and cordial relationship between the employers and
workers.
 KEY DEFINITIONS
Section 2 (p)
[Ref: SC in the case of Bangalore Water Supply Board v. R. Rajappa and Others]

• Industry means any systematic activity carried on by cooperation between an

employer and for the production, supply or distribution of goods or services
to satisfy human wants or wishes, whether or not:
• i. any capital has been invested for the purpose of carrying on such activity
• ii. such activity is carried on with a motive to make any gain or profit, but
does not include:
• institutions owned or managed by organizations wholly or substantially
engaged in any charitable, social or philanthropic service
• iv. 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 defence research, atomic energy and
space any domestic service.
• v. Any other activity as may be notified by the Central
Government.
 Employer
Section 2 (m)

• Employer means a person who employs, whether directly or through any

person, or on his behalf or on behalf of any person, one or more employees or
workers in his establishment and where the establishment is carried on by any
department of the Central Government or the State Government, the authority
specified by the head of the department in this behalf or where no authority is
so specified, the head of the department, and in relation to an establishment
carried on by a local authority, the chief executive of that authority, and
includes:
• i. in relation to an establishment which is a factory, the occupier of the factory,
• ii. where a person has been named as a manager of the factory
• iii. in relation to any other establishment, the person who, or the authority
which has ultimate control over the affairs or 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.
 Employee
Section 2 (o)

• Employee means any person other than an apprentice engaged under the
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.
• The definition of worker has been broadened and now includes working
journalists as defined in Section 2(f) of the Working Journalists and Other
Newspaper Employees (Conditions of Service) and Miscellaneous Provisions
Act of 1955 and employees of Sales promotion as defined in Section 2(d) of
the Sales Promotion Employees (Terms of Service) Act 1976. Persons
employed in a supervisory capacity earning less than Rs. 18,000 per month
(or any amount notified by the Central Government) is included in the
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:
• i. who is subject to the Air Force Act, 1950, Army Act, 1950, or Navy Act, 1957
• ii. who is employed in the police service, as an officer or other employee of a prison;
or
• iii. who is employed mainly in a managerial or administrative capacity
• iv. who is employed in a supervisory capacity drawing a wage exceeding eighteen
thousand rupees (INR 18,000) per month or an amount as may be notified by the
Central Government from time to time.
 Benefits of permanent employees for
fixed-term employees

• Fixed-term employment will have a legal basis, unlike the current system,
which depends on notifications from different state governments.
• It gives employers more freedom to hire people based on supply and demand.
• Fixed-term employees can get benefits on a pro-rata basis if they have
worked for their company for a full year as stated in their contracts. They
have the same working conditions, pay, allowances, and other benefits as
permanent employees.
 KEY CHANGES

• The 2020 Industrial Relations Code has raised this

threshold to 300 Employees and has given the
“appropriate government” the power to exempt any
industrial establishment or class thereof from all or some
of the provisions of the Code.
• Definition of “Appropriate Government” has been modified including the
establishments of the contractors thus, Contractor appropriate government
shall be of the establishment where the contract Labour has been deployed.
• Definition of Industrial Dispute has been modified to include the dispute
arising out of discharge, dismissal ,retrenchment or termination of such
worker.
• Metro railway has been included in the definition of railways.
 Grievance Addressal Committee

• Under the Code, a Grievance Redressal Committee (GRC) can have up to 10 members
instead of the maximum of 6 members required by the law that is already in place.
• The GRC also needs to have a good number of women working for it.
• The time limit for bringing complaints to the GRC has been set at one year. Also, if a
grievance isn't resolved by the GRC or a worker is unhappy with the GRC's decision, the
process no longer stays within the industrial establishment because the worker can redirect to
conciliation procedures.
• Since a fine of up to INR 100,000 can be given for not following a GRC, employers will
need to pay close attention to this.
 Trade Union: negotiating union & negotiating
council
• The Industrial Relations Code 2020 provides a new concept for negotiating
trade unions or negotiating councils in an industrial company. According to
the stated provision:

1.In the case of a single union in an industrial company, the employer

recognizes that union as the sole bargaining union of the workers.
2.If there are several unions, the union is recognized by the employer as a
bargaining union with 51% of the employees in the industrial company’s
model directory.
3. In the case of several trade unions, none of which fulfil
the above-mentioned 51% membership criteria, the
employer forms a negotiating council made up of
representatives of these registered trade unions, who are
supported by at least 20% of the total workforce of the
industrial company (1 representative for every 20 %).
4. Industrial Relations Code 2020 also provides that if the central / state
government believes that there is a need for a union or confederation to be
recognized as a central / state union, that government may recognize the trade
unions alike.
5. To provide for appeal against non-registration or cancellation of registration
of Trade Union before the Industrial Tribunal;
 KEY CHANGES

• To provide for applicability of threshold of three

hundred or more workers for an industrial
establishment to obtain certification of standing
orders, if the standing order differ from the model
standing order made by the Central Government;
• To provide that if the employer prepares and adopts model
standing order of the Central Government with respect to the
matters relevant to the employer’s industrial establishment, then
the model standing order would be deemed to be certified.
Otherwise, the industrial establishment may seek certification of
only those clauses which are different from the model standing
orders.
• To set up Industrial Tribunal consisting of a Judicial Member and
an Administrative Member, in place of only Judicial Member who
presently presides the Tribunal.
• For certain specified cases, the matters will be decided by the two-
member Tribunal and the remaining shall be decided by single
member Tribunal as may be provided for in the rules;
 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.
• Mandates, employer to take prior approval from the
appropriate government in the event of lay-offs,
retrenchment or closure, any mines, factories, plantations
that are: (i) non-seasonal in nature, (ii) having three
hundred or more workmen.
• Introduced stringent penalty provisions such as contravention of provisions
under lay-off, retrenchment, closure by the establishment attracts a fine of Rs.
1 Lakh to 10 Lakhs for the first offense, and in the case of subsequent
repeated offense the fine shall be of Rs. 5 Lakhs to 20 Lakhs and/or
imprisonment up to 6 months.
 Bi-Partite Forums
Works Committee
• The appropriate Government may order to constitute a Works Committee by
the employer having an industrial establishment comprising 100 or more
workers are employed or have been employed on any day in the preceding 12
months. The Committee should have an equal number of representatives of
the employer and workers engaged in such establishment.
• The Government casts the duty upon such Works Committee of promoting
measures to secure, preserve the harmonious and good relationship between
the employer and workers.
 Grievance Redressal Committee
Industrial Establishments having 20 or more workers shall have 1 or more Grievance
Redressal Committees to resolve the disputes arising out of individual grievances.
The Committee should have adequate women workers representation and total
members shall not exceed ten.
It should have an equal number of representatives of the employer and workers
engaged in such an establishment.
The chairperson of the Grievance Redressal Committee shall be selected from among
persons representing the employer and the workers alternatively on a rotational
basis every year.
• An application in respect of any individual grievance/dispute may be filed
before the Committee by any aggrieved worker within 1 year from the date
on which the cause of action of such dispute arises.
• The Committee may complete its proceedings within 30 days of receipt of
the application.
• The worker who is aggrieved by the decision of the Committee or whose
grievance is not resolved in the said Committee within the period of 30 days,
may, within a period of 60 days from the date of the decision of the
Committee or from the date on which the 30 days period expires, file an
application for the conciliation of such grievance to the conciliation officer
through the Trade Union, of which he is a member.
Trade Unions
Any trade union having 7 or more members may register it under the Code electronically
or otherwise. At the time of making an application for registration, the trade union
should have at least 10% of the workers or 100 workers, whichever is less, as its
members are engaged or employed in the industry or industrial establishment with which
the union is connected.
• The Code introduces the concept of recognizing a registered trade union in an
industrial establishment as the negotiating union or council to negotiate with the
employer on matters the appropriate Government may prescribe.
Notice of Change
The employer cannot make changes to the conditions of service
applicable to any worker in respect of matters specified in the
Third Schedule:
• without giving reasonable notice to the workers about the
proposed changes; or
• within 21 days of giving such notice.
The employer need not give any notice for effecting any changes:
• where the change is effected in pursuance of any settlement or award;
• where the workers likely to be affected by the change are persons to whom the Fundamental
and Supplementary Rules, Civil Services (Classification, Control, and Appeal) Rules, Civil
Services (Temporary Service) Rules, Revised Leave Rules, Civil Services Regulations,
Civilians in Defense Services (Classification, Control, and Appeal) Rules or the Indian
Railway Establishment Code or any other rules or regulations that may be notified in this
behalf by the appropriate Government in the Official Gazette, apply;
• in case of an emergent situation which requires a change of shift or shifts working, otherwise
than in accordance with standing orders, in consultation with Grievance Redressal
Committee;
• if such change is effected in accordance with the orders of the appropriate Government or in
pursuance of any settlement or award.