The Industrial Relations Code, 2020

New Labour Codes

 The codes on Wages, 2019
1. Payment of wages Act
2. Minimum Wages Act
3. Payment of Bonus Act
4. Equal Remuneration Act
 The Industrial Relations Code, 2020
i. The Trade Unions Act, 1926
ii. The Industrial Employment (Standing Orders) Act, 1946
iii. The Industrial Disputes Act, 1947
 The occupational safety, Healthy and working Conditions Code 2020 (13 Acts)
 The code on Social Security 2020 (9 Acts)
The purpose and scope of labour laws have evolved over time. Early labour laws were enacted to protect employer’s
interest. It was governed by the laissez-faire doctrine which entails a policy of minimal government intervention in the
economic affairs of individual and society. on the other hand, contemporary labour laws aims to safeguards employees
from employers exploitation.
Objectives of the code
 To safeguard the workers against exploitation.
 To maintain good relationship between employees and employers.
 It enables workers to achieve their demands by means of legitimate weapon of strike
and thus facilitates collective bargaining.
 It prohibits illegal strikes and lockouts.
 It provides relief to the workman in the event of Layoff or retrenchment.
 To simply and make clear the issue surrounding contract labour
 The amalgamation of 29 laws relating to wages, working condition, social security,
safety and healthy.
Features of IR Code 2020
1. The Code governs strikes, trade union registration, and industrial dispute resolution.
2. The definition of a worker under the Code has been broadened to include individuals in supervisory
positions making up to 18,000 rupees per month or an amount as determined from time to time by the
Central Government.
3. To register a trade union, either 10% of an industry’s workers or a minimum of 100 workers must be
present. A trade union will be designated as the negotiating union only if 51% of the workers
support it. In all other cases, the Code requires the formation of a union negotiating council.
4. In addition, workers are now required to provide 60 days’ notice before striking, which was not
previously required.
5. Companies with more than 300 employees must obtain permission from the union or the state
government before terminating employees. The previous law stipulated that there must be 100
employees in an establishment for the provisions to be in effect. It also recommends establishing an
industrial tribunal to settle disputes.
6. To resolve disputes resulting from individual complaints, all establishments with more than 20
employees are required to have one or more grievance redressal committees. Both employers and
employees must have an equal number of representatives on this committee. Notably, the committee
must have a sufficient number of women employees, and the chairman must be selected alternately
from among the employees and the employer.
 The Industrial Relations Code, 2020
 The term Industrial Relations comprises of two terms: Industry and Relations.

 “Industry’ refer to any productive activity in which an individual (or a group of individuals) is
engaged

 By “relations” the relationships that exist within the industry between the employer and workmen
Labour laws (employment laws) are body of laws, administrative ruling and precedents that address
the legal rights and restrictive of working people and their organisation. Labour Laws attempt to
regulate the relationship between an employers or group of employers and their employees.
In India, the Central Govt. has promulgated around 44 labour related statue, 29 of which have been
consolidated into four new labour codes.
It contain XIV Chapters, 104 sections and 3 schedules.
Definition
 Section 2(j) “industry” means any business, trade, undertaking, manufacture or calling
of employers and includes any calling, service, employment, handicraft, or industrial
occupation. (ID Act 1947)
 Section 2 (p) The definition of industry has been amended to exclude the following
categories of workplace:
1. Organisation offering charity, social or philanthropic service; or
2. Organisation that are under the control of the Govt. specially dealing with defence
research, atomic energy and space; or
3. Organisation specifically excluded by the Central Govt. , if any
Cases under Industry
 D.N Banerjee v. P.R Mukherjee AIR 1953 SC 58 (Budge Budge Municipalitity
case)
 State of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610
 University of Delhi v. Ram Nath AIR 1963 SC 1873
 Safdarjung Hospital Delhi v. Kuldip Singh AIR 1970 SC 1406
 Secretary Madras Gymkhana Club Employees Union v. Management of the
Gymkhana Club AIR 1968 SCR 1 742
 Bangalore Water Supply v. A. Rajappa AIR 1978 SC 548 (Triple Test Case)
Definitions of Industrial Dispute
 Previous Act: “industrial dispute” means any dispute or difference between employers
and employers, or between employers and workmen, or between workmen and
workmen, which is connected with the employment or non-employment or the terms of
employment or with the conditions of labour, of any person; (section 2K OF ID Act )
 New Code: "industrial dispute" means any dispute or difference between employers
and employers or between employers and workers or between workers and workers
which is connected with the employment or non-employment or the terms of
employment or with the conditions of labour, of any person and includes any dispute
or difference between an individual worker and an employer connected with, or
arising out of discharge, dismissal, retrenchment or termination of such worker;
(Section 2q of IR Code 2020)
 The worker can appeal this with the governing body (Industrial Tribunal) within 45
days from the date of retrenchment or termination
Individual v. Industrial dispute

 Workmen of Indian Express Newspapers Ltd. vs. Management Indian Express

Newspapers AIR 1970, SC 737
 Workman of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate
 Jadhav J.H. v. Forbes Gobak Ltd. (2005) 1 LLJ 1089 SC
 EMPLOYEE AND EMPLOYER
 Section 2(l) of IP Code 2020:

1. Any person (other than an apprentice engaged under the Apprentices Act, 1961)

2. Employee in industrial establishment to do

a. skilled,

b. semi-skilled or unskilled,

c. manual,

d. operational,

e. supervisory,

f. managerial,

g. administrative,

h. technical or clerical work for hire or reward

3. whether the terms of employment be express or implied

4. Appropriate Government can also declare any person to be an employee

5. It does not any member of the Armed Forces of the Union;

Bombay Telephone Canteen Employee’s Association vs. UOI & Anr, Supreme Court, 1997: Canteen employees were dismissed from
service that led to an industrial dispute. Industrial tribunal held that departmental canteen is not an industry and in order to classify an
employee as workman the condition precedent is that he is employed in an industry
 Strike

"strike" (Section 2 zk) : means a cessation of work by a body of persons employed in any industry acting
in combination, or a concerted refusal, or a refusal, under a common understanding, of any number of
persons who are or have been so employed to continue to work or to accept employment and includes the
concerted casual leave on a given day by fifty per cent. or more workers employed in an industry.
 Cessation of work
 A concerted refusal
 A refusal under a common understanding
 It is weapon of employees
Kinds
1. General strike:
2. Stay in strike/tools-down-strike/pens-down-strike:
Sadul Textile Mills Limited Vs. Their Workmen (1958) II L.L.J. 638 Raj. The Supreme Court
ruled that a sit-down strike is not justified by any means even if it does not involve violence since it is
an infringement of the employers’ rights.
3. Go slow
“Bharat Sugar Mills Ltd. vs. Jai Singh (1961) II L.L.J. 644 SC: he Supreme Court ruled that a go-
slow strike is a major form of misconduct on part of employee. It is deliberate delaying of production
by workmen.
Sasa Musa Sugar Works Pvt. Ltd. v/s Shobrati Khan & Ors AIR 1959 SC 923 : Go-Slow strike is
not a strike” within the meaning of the term in the Act, but is serious misconduct which is insidious
in its nature and cannot be countenanced
4. All-out Strike: all workmen take the sick leave on the same day.
5. Hunger Strike
Piparaich Sugar Mills Ltd. v/s Their Workmen AIR 1960 SC 1258 : if it is peaceful and does not
result in cessation of work, it will not constitute strike. But of due to such an act, even those
present for work, could not be given work, it will amount to strike.
Sections related to Strike and
Lockout
Section 62. Prohibition of strikes and lock-outs.
Section 63. Illegal strikes and lock-outs.
Section 64. Prohibition of financial aid to illegal strikes or lock-outs
Section 86: Penalties
Section 93: Protection of Persons
Section 99: Power of appropriate Government to make rules
Second Schedule: Unfair Labour Practice

Prohibition of Strikes (section
No person employed in an industrial establishment shall go on strike, in breach of contract:
1. 62)
without giving to the employer notice of strike within sixty(60) days before striking; or
2. within fourteen(14) days of giving such notice;
3. the expiry of the date of strike specified in any such notice; or
4. during the pendency of any conciliation proceedings before a conciliation officer and seven(7) days after the conclusion of such
proceedings; or
5. during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty(60) days, after the conclusion of
such proceedings;
6. during the pendency of arbitration proceedings before an arbitrator and sixty(60) days after the conclusion of such proceedings.
7. during any period in which a settlement or award is in operation, in respect of any of the matters covered by the settlement or award
 The notice of strike shall not be necessary where there is already in existence a strike,
 The notice of strike shall be given by such number of persons to such person or persons and in such manner as may be
prescribe
 If on any day an employer receives from any person employed by him any such, he shall within five(5) days thereof report to the
appropriate Government or to such authority as that Government may prescribe and to the conciliation officer, the number of such
notices received or given on that day
 Cox and Kings Limited v. Their Employees, 1977 AIR 1666: The Court held that a strike can be considered justified if it is in
connection with a current labour dispute or directed against an unfair labour practice of the employer.
Illegal Strike section 63
 A strike shall be illegal, if it is—
 Commenced or declared in contravention of section 62; or
 Continued in contravention of an order made under sub- section (7) of section 42(Voluntary
Reference of Disputes to Arbitration)
Where a strike in pursuance of an industrial dispute has already commenced and is in existence
at the time of the filing of the application relating to such industrial dispute in the Tribunal or of
the reference of such industrial dispute to an arbitrator or a National Industrial Tribunal, the
continuance of such strike shall not be deemed to be illegal.
Proviso: such strike was not at its commencement in contravention of the provisions of this
Code or the continuance thereof was not prohibited under section 42(7)
 A lock-out declared in consequence of an illegal strike or a strike declared in consequence of an
illegal lock-out shall not be deemed to be illegal.
Prohibition of financial aid to
illegal strikes or lockout Section 64
 No person shall knowingly spend or apply any money in direct
furtherance or support of any illegal strike
 No wages for illegal strike and lockout
Wages During Strike

 Buckingham & Carnatic Co. Ltd. V. Workman AIR 1953 SC 47: Strike is illegal as
it is necessary to provide notice of strike.
 Chandramalai Tea Estate v. Workmen A.I.R. 1960 S.C. 902: the court held that the
strike was unjustified and that the workmen were not even entitled to half of the wages
for the strike period.
 India General Navigation v. Workmen, 1960 AIR 219: the court opined that the
question of justified or unjustified is to be acknowledged in legal strikes only. Only in
the case of legal and justified strike are the workmen entitled to wages.
 Crompton Greaves ltd v. Workmen, AIR 1978 SC 1489: the court held that the strike
should not be considered as unjustified unless the reasons for the strike are entirely
unreasonable
Cont.

 Bank of India v. T.S. Kelawala, 1990 I C.L.R. 748: There are no rules or regulations on a
particular subject, the authorities or the employers will retain power to deduct wages of striking
employees. The deduction of wages does not take away the right to strike and the employees
know repercussions of the same.
 Syndicate Bank and Ors. v. K. Umesh Nayak, 1995 AIR SC 319: The employee of bank
resorted to strike because of deduction of wages, without waiting for resolution by legal
mechanism. In this Case HC, held that strike was legal and justified. Further the SC held that
strike by bank employee was not justified and hence not entitled to wages.
 The Court also held that strikes have to be justified and legal in order to receive wages. The
legality of the same would be checked by the Industrial tribunal and no other authority.
However, legality alone doesn’t guarantee wages. The court observed the fact that the legality of
the strike depends on the provisions of the Industrial Disputes Act and the justifiability of the
strike depends on the conditions of the strike such as urgency of the situation, nature of the issue
or demand, working conditions, or why the dispute was not resolved without resorting to strike.
Strike as Fundamental Right
 Art. 19 (1) (c) of the Indian Constitution: provides all Indian citizens with the right to form unions and covers the
right to protest under its ambit and scope
 The right to strike is not considered a fundamental right under the provision. Rather, it remains merely a statutory and
legal right.
 All India Bank Employees Association v. National Industry Tribunal, AIR 1962 SC 171: Court held that right to
go on strike is not included in the ambit of freedom of speech and expression which is given under Article 19(1)(c) of
the COI.
 Kameshwar Prasad v. State of Bihar, 1962 SCR Supl. (3) 369: Court held that government employees do not have
the legal or moral right to strike. It leads chaos in the society.
 BR Singh v. Union of India, AIR 1990 SC 1 : it was further upheld that the right to strike at its best is a statutory
right and cannot be equated to a fundamental right.
 T.K.Rangarajan v. State of Tamil Nadu, 2003 5 SCALE 537: The SC delivers the strict decision that the
Government employees have no legal, fundamental, or equitable right to go on strike even for the just cause.
Reason: The Government of India modified the Central Civil Services (Conduct) Rules 1955 in August 1957, specifically
prohibiting government employees from striking or protesting (rule 4 A). It said, “No Government servant shall engage in
any protest or resort to any type of strike in connection with any topic relevant to his or her condition of employment.”
Penalties for Strike and Lock-out
section 86
 Section 86(13) Any worker who commences, continues or otherwise acts in furtherance of,
an illegal strike under this Code, shall be punishable with fine from ₹1,000 - ₹10,000/- or
with imprisonment upto one(1) month, or with both. (Specifically for Strike)
 Section 86(14) Any employer who commences, continues or otherwise acts in furtherance of,
an illegal lock-out under this code, shall be punishable with fine from ₹50,000 - ₹1,00,000/-
or with imprisonment upto one(1) month, or with both (Specifically for Lock-out)
Penalties for both Strike and Lock-out
 Section 86(15) Any person who instigates or incites others to take part in, or otherwise acts in
furtherance of, an illegal strike or lock-out under this Code, shall be punishable with fine
from ₹10,000 - ₹50,000/- or with imprisonment upto one(1) month, or with both
 Section 86(16) Any person who knowingly spends or applies any money in direct furtherance
or support of, an illegal strike or lock-out shall be punishable with fine from ₹10,000 -
₹50,000/- or with imprisonment upto one(1) month, or with both
Protection of Persons Section 93

• No person refusing to take part or to continue to take part

• In any illegal strike under this Code shall
• By reason of such refusal or by reason of any action taken by him under this
section
• Be subject to expulsion from any Trade Union or society, or to any fine or penalty, or to
deprivation of any right or benefit to which he or his legal representatives would
otherwise be entitled or
• Be liable to be placed in any respect, either directly or indirectly, under any disability
or at any disadvantage as compared with other members of the Union or society.
Lock-Out section: 2(u)
"lock-out" means the temporary closing of a place of employment, or the suspension
of work, or the refusal by an employer to continue to employ any number of persons
employed by him
 It is weapon of employer.

1. Temporary closing of a place of employment by employer; or

2. Suspension of work by employer, or

3. Refusal to continue to employ any number of persons employed by the employer.

 It is due to industrial dispute and continue during the period of dispute. Therefore,
it is temporary in nature. lockout is a tool in the hands of the management to
force the workmen to further negotiate on their demands which are related to the
terms and conditions of the workers’ employment
Causes of Lock-out

 Disputes or clashes in between workers and the management.

 Unrest, disputes or clashes in between workers and workers.
 Illegal strikes, regular strikes or continuous strikes by workers may lead to lockout of
factory or industry.
 Continuous or accumulated financial losses of factory or industry, may lead to opt
lockout by the management.
 Failure in maintaining proper industrial relations, industrial peace and harmony.
Sections related to Lock-out

Section 62. Prohibition of strikes and lock-outs.

Section 63. Illegal strikes and lock-outs.
Section 64. Prohibition of financial aid to illegal strikes or lock-outs
Section 86: Penalties
Section 93: Protection of Persons

Second Schedule: Unfair Labour Practice

NOTE: Sub section 2 of 62, 63, 64 deals with lock-out which is similar to sub section 1
which deals with strike.
Protection of Persons

 No person refusing to take part or to continue to take part in any

 illegal lock-out under this Code shall,
1. by reason of such refusal or
2. by reason of any action taken by him under this section
 Be subject to expulsion from any Trade Union or society, or
 To any fine or penalty, or
 To deprivation of any right or benefit to which he or his legal
representatives would otherwise be entitled, or
 Be liable to be placed in any respect, either directly or indirectly,
under any disability or at any disadvantage as compared with
other members of the Union or society
Case Laws for Lock Out

Indian General Navigation & Rly. Co. Ltd. vs. Workmen, AIR 1960
SC 219
Lakshmi Devi Sugar Mills Ltd. v. Ram Sarup, 1957 AIR 82
Management of Kairbetta vs Rajamanickam And Others on 24
March, 1960
Lay Off Section 2(t)
 It means putting aside workman temporarily.
 An employer, who is willing to employ, fails or refuse or is unable to provide
employment for reason beyond his control.
 Any such failure to employ a workman may be on account of:-
 Shortage of coal, power or raw material, or
 The accumulation of stock, or
 The natural breakdown of machinery
 Natural calamity, or
 Any other connected reason
 A workman who is so deprived of employment must be such whose name is borne on
the muster rolls of his industrial establishment
 The workman must not have been retrenched.
 The employer-employee relationship does not come to an end but is merely
suspended during the period of emergency.
Section Related to Lay-Off (Section
65 to 69)
 Section 67 to 69 (both inclusive) shall not
apply to industrial establishments to which Chapter X applies; or in which less
than fifty(50) workers on an average per working day have been employed in the
preceding calendar month; or which are of a seasonal character or in which work is
performed intermittently.
 Whether an industrial establishment is of a seasonal character or Whether work is performed
therein only intermittently, The decision of the appropriate Government thereon shall be
final.
 Industrial establishment shall mean a
1. Factory as defined in section 2(m) of the Factories Act, 1948; or
2. Mine as defined in section 2(2)(j) of the Mines Act, 1952; or
3. Plantation as defined in section 2(f) of the Plantations Labour Act, 1951.
Director Fisheries Terminal Division v. Bhaikubhai Meghajibhai Chavda 2010 1 LLJ 3 SC:
reinstatement of respondent workman on daily wages with 20% back wages.
Fails to prove 240 days for continuous service – no wages
Definition of Continuous Service
(Section 66)
 Continuous service in relation to a worker, means
 The uninterrupted service of such worker, including his service which may be interrupted on account of
sickness or authorized leave or an accident or a strike which is not illegal or a lock-out or a cessation of
work which is not due to any fault on the part of the worker.
 Where a worker is not in continuous service for a period of one(1) year or six(6) months, he shall be deemed
to be in continuous service under an employer—
 (a) for a period of one(1) year, if the woraker during a period of twelve(12) months preceding the date, has
actually worked under the employer for not less than
 1. 190 days in the case of a worker employed below ground in a mine; and
 2. 240 days, in any other case
The Management of American Express International Banking Corporation v. the Management of American
Express International Banking Corporation 1985: Sundays and Paid Holiday include in Continuous Service.
Chaggan Lal v. Panchayat Samiti 1990: Sunday and other paid holiday include in continuous service.
Surendranagar Panchayat v. Jethabhai 2006: Daily wage worker terminate from service. Which is illegal as it was
without notice. SC claim that it is burden on worker to lead evidence to show that he worked for 240 days in a year
preceding the termination of service.
 if the worker during a period of six(6) months preceding the date has actually worked under the
employer for not less than—
1. 95 days in the case of worker employed below ground in a mine; and
(ii) 120 days, in any other case
Explanation 2: Calculation of no. of days on which a worker has actually worked under
employer which include in continuous period
1. he has been laid-off under an agreement or as permitted or
2. Paid leaves
3. Absent due to disablement
4. Maternity benefit for women
Rights of workers laid-off for
compensation, etc. (Section 67)

Whenever a worker Other than a badli worker or Casual worker, whose name is on muster roll of
Industrial establishment
And completed 1 year of continuous service under an employer is laid-off whether (continuously or
intermittently) he shall be paid by the employer for all days(except weekly holidays) during which he
is so laid-off,
 Compensation shall be equal to Fifty(50%) of the total of the basic wages and dearness
allowance that would have been payable to him.
 Provided that if during any period of twelve(12) months, a worker is so laid-off for more than
forty-five(45) days, no such compensation shall be payable in respect of any period of the lay-
off after the expiry of the first forty-five(45) days, if there is an agreement to that effect
between the worker and the employer. In such case, it shall be lawful for the employer to
retrench the worker in accordance with the provisions contained in section 70 at any time after
the expiry of the first forty-five(45) days of the lay-off and
 when he does so, any compensation paid to the worker for having been laid-off during the
preceding twelve(12) months may be set off against the compensation payable for
retrenchment.
Duty of an employer to maintain
muster rolls of workers (Section
68)Notwithstanding that workers in any industrial establishment

have been laid-off
 It shall be the duty of every employer to maintain
 A muster roll, and to provide for the making of entries therein
 By workers who may present themselves for work
 At the establishment
 At the appointed time
 During normal working hours
Workers not entitled for compensation in
certain cases (Section 69)

 No compensation shall be paid to a worker who has been laid-off

1. if he refuses to accept any alternative employment in the same establishment or in
any other establishment within eight(8) km, and such alternative employment does
not call for any special skill or previous experience and can be done by the worker,
provided that the wages which would normally have been paid to the worker are
offered for the alternative employment also
Nutan Mills Ltd. V. Employee State Insurance Corporation 1956: SC held that in
alternative service in which worker entitle to serve another master and if he did not present
himself for work during the period of layoff, then he is not entitle to get compensation.
2. if he does not present himself for work at the establishment at the appointed time
during normal working hours at least once a day;
3. if such laying-off is due to a strike or slowing-down of production on the part of
workers in another part of the establishment.
Special Provision for Lay-off

 Section 77: In which not less than 300 workers, or such higher
number of workers as may be notified by the appropriate
Government. (Same as section 65)
 Section 78: Prohibition of Lay-off
 Section 81: Duty to maintain Muster Roll
Section 78 Prohibition of Lay-off –
Prior Permission
1. No worker (other than a badli worker or a casual worker)
 whose name is on the muster rolls of an industrial establishment
 Shall be laid-off by his employer
 Except with the prior permission of the appropriate Government,
 Obtained on an application with reasons(electronically
or otherwise) made in this behalf
 A copy of such application shall also be served simultaneously on the workers concerned
in such manner as may be prescribed
 Unless 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 explosion
 In case of a mine, the employer, shall, within 30 days from the date of commencement of such
lay-off, apply, to the appropriate Government for permission to continue the lay-off
Section 78 Prohibition of Lay-off – Enquiry

 After receiving an application the appropriate Government,

 after making such enquiry as it thinks fit and
 After giving a reasonable opportunity of being heard to the employer, the workers
concerned and the persons interested
 Having regard to the genuineness and adequacy of the reasons for such lay-off, the
interests of the workers and all other relevant factors
 By order and with reasons, grant or refuse to grant such permission
 A copy of such order shall be communicated to the employer and the workers.
Section 78 Prohibition of Lay-off
– Deemed to be Granted
 Where the appropriate Government does not communicate the order granting or refusing to
grant permission to the employer
 Within 60 days
 The permission applied for shall be deemed to
have been granted on the expiration of 60 days and
 The application shall be deemed to have been disposed of accordingly by
the appropriate Government
An order of the appropriate Government shall be final and binding on all the parties
concerned and shall remain in force for 1 year from the date of such order
Section 78 Prohibition of Lay-off – Review
of Order

 The appropriate Government may, on its own motion or on the application made by the
employer or any worker,
 Review its order granting or refusing to grant permission
 Or refer or cause it to be referred, to a Tribunal for adjudication
 Provided that when a reference has been made to a Tribunal, it shall pass an award within 30 days
from such reference
Section 78 Prohibition of Lay-off – Benefits
 Where no application for permission is made, or permission has been refused,
 Such lay-off shall be deemed to be illegal from the date on which the workers had been laid-
off and
 The workers shall be entitled to all the benefits under any law for the time being in force
as if they had not been laid-off.
Case Laws for Lay off

 The Associated Cement Companies Limited, Chaibassa

Cement Works, Jhinkpani v. Their Workmen, AIR 1960 SC 56:
The right of workmen to lay-off compensation is based on
grounds of humane public policy and the statute which gives such
right should be liberally interpreted.
 Workmen of M/S Firestone Tyre and Rubber Co. of India Vs.
Firestone Tyre and Rubber Company 1976 AIR 1775:
Retrenchment

Section 2 (zh)
It means the termination by the employer of the service of a workman
 The termination may be for any reason whatsoever
 But the termination should not be as a measure of punishment by the way o
disciplinary action
 The following are not retrenchment:
 (i)voluntary retirement of the worker; or
 (ii) retirement of the worker on reaching the age of superannuation; or
 (iii) termination of the service of the worker as a result of the non-renewal
 of the contract of employment between the employer and the worker concerned
 on its expiry or of such contract being terminated under a stipulation in that
 behalf contained therein; or
 (iv) termination of service of the worker as a result of completion of
 tenure of fixed term employment; or
 (v) termination of the service of a worker on the ground of continued
 ill-health;
Cont.

In the case of retrenchment, the employment of the workman is immediately terminated, there is
no further relation between the employer and the workmen. Retrenchment means terminating an
employee due to the surplus of labor or incapacity of employees to match the performance
standards of the company.
Case Laws:
The Supreme Court in Byram Pestonji Gariwala v. Union Bank of India and others had restricted
the definition of ‘Retrenchment’ under S.2(oo)(bb) to occur only when there is a ‘discharge of
excess labor’ by the employer.
Later the Supreme Court in State Bank of India v. N. Sundara Money, Punjab Land Development
and Reclamation Corporation Ltd., Chandigarh v. Presiding Officer, Labour Court,
Chandigarh and subsequent decisions rejected the narrow interpretation adopted by the Court in
the earlier decision and held that any retrenchment, as defined in Section 2(oo), means termination
by the employer of the service of a workman for any reason whatsoever otherwise than as a
punishment inflicted by way of disciplinary action as wider interpretation.
Sections Related to Retrenchment

 Section 70
 Section 71
 Section 72
 Section 77
 Section 79
Conditions precedent to retrenchment of
workers Section 70

 No worker employed in any industry who has been in

 continuous service for
 Not less than 1 year under an employer shall be retrenched by that employer until:
1. The worker has been given 1 month's notice in writing indicating the reasons for
retrenchment and the period of notice has expired, or the worker has been paid in
lieu of such notice, wages for the period of the notice.
2. The worker has been paid, at the time of retrenchment, compensation equivalent to
15 days average pay, or of such days as notified, for every completed year of
continuous service or in excess of 6 months; and
3. Notice is served on the appropriate Government
Procedure for Retrenchment
Section 71
 Where any worker in an industrial establishment
 Who is a citizen of India, is to be retrenched and
 He belongs to a particular category of workers in that establishment, then
 In the absence of any agreement between employer and the worker in this behalf,
The employer shall ordinarily retrench the worker who was the last person to be
employed in that category, unless for reasons to be recorded the employer retrenches
any other worker. (Last in First Go)
Re-employment of retrenched
worker
Section

72
Where any worker is retrenched and
 The employer proposes to take into his employment any person
 within 1 year of such retrenchment,
 He shall, give an opportunity to the retrenched workers
 Who are citizens of India
 To offer themselves for re-employment and
 Such retrenched workers who offer themselves for re-employment
 shall have preference over other persons.
Case Law for Retrenchment

 Municipal Corporation of Greater Bombay v. Labour Appellate Tribunal of India,

AIR 1957 Bom 188: Termination of service due to misconduct by way of a
disciplinary proceeding is no retrenchment and therefore no compensation is to be
paid by the employer. .
 Managing Director, Karnataka Handloom Development Corporation Limited v.
Sri Mahadeva Laxman Raval, Supreme Court, Appeal (Civil) 3251 of 2005
 Syed Azam Hussaini v. Andhra Bank Ltd. 1995 SCC (L&S) 573
 Borhan Kumar vs Assistant Personnel Officer, AIR 1971 Pat 174 First
Come(Joined) Last Go(Retrenched)
 Delta Wires Pvt. Ltd. vs General Labour Union, Bombay High Court, (1995)IILLJ
287 Bom
 Manju Saxena v. Union of India, AIR 2019 SC 264
Conditions precedent - (300 or
above workers) Section 79
 No worker employed in any industrial establishment
 who has been in continuous service for not less than 1 year
 under an employer
 shall be retrenched by that employer until:
 1. The worker has been given 3 month’s notice in writing indicating the reasons for
retrenchment and the period of notice has expired, or the worker has been paid in
lieu of such notice, wages for the period of the notice; and
 2. The prior permission of the appropriate Government has been obtained on an
application(electronically or otherwise) made in this behalf.
Conditions precedent (300 or above
workers) Section 79
 An application shall state clearly the reasons for the intended retrenchment and a copy of
such application shall also be served simultaneously on the workers concerned.
 The appropriate Government:
1. After making such enquiry as it thinks fit and
2. After giving a reasonable opportunity of being heard to the employer, the workers
concerned and the persons interested,
3. Having regard to the genuineness and adequacy of the reasons, interests of the
workers and other relevant factors
4. By order and for reasons to be recorded in writing, grant or
5. refuse to grant such permission
6. A copy of such order shall be communicated to the employer and worker
Conditions precedent - Permission
Deemed Granted Section 79
Where the appropriate Government does not communicate the order granting or
refusing to grant permission to the employer
 Within 60 days
 The permission shall be deemed to have been granted on the expiration of 60
days and
 The application shall be deemed to have been disposed of accordingly by
the appropriate Government
 An order of the appropriate Government shall be final and binding on all the
parties concerned and shall remain in force for 1 year from the date of such
order.
Conditions precedent (300 or above
workers) Section 79
 The appropriate Government may,
 either on its own motion or on the application
 refer or cause it to be referred to a Tribunal for adjudication:
 The Tribunal shall pass an award within 30 days
 Where no application for permission made, or where the permission has been refused,
such retrenchment shall be deemed to be illegal and
 The worker shall be entitled to all the benefits under any law for the time being in force as if no
notice had been given to him.
 Where permission for retrenchment has been granted or deemed to be granted
 Every worker shall be entitled to receive,
 At the time of retrenchment
 Compensation which shall be equivalent to 15 days average pay, for every completed
year of continuous service or any part thereof, in excess of 6 months.
Worker re-skilling fund Section 83

 The appropriate Government shall set up a fund to be called the worker re-
skilling fund.
 The fund shall consist of:
 1. The contribution of the employer : an amount equal to 15 days wages last drawn
by the worker or such other number of days as may be notified
 2. The contribution from such other sources as may be prescribed by the appropriate
Government.
 The fund shall be utilised by crediting 15 days wages last drawn by the worker to
his account who is retrenched, within 45 days of such retrenchment
Closure

 Originally ID Act does not have provisions for Closure.

 The provision was added due to the SC Judgement in Hariprasad Shiv Shankar
Shukla v. A.D.Diwelkar, AIR 1957 SC 121 which stated, the Supreme Court excluded
closure from the scope of retrenchment.
 S.2(cc) was added in the 1982 amendment in ID Act 1947
 Section 2 (h) of the IRC, 2020 ”Closure" means the permanent closing down of a
place of employment or part thereof”
Sections related Closure

 Section 74
 Section 75
 Section 80
 Section 86
Sixty(60) days notice to be given of intention to close
down any undertaking
Section74

 An employer who intends to close down an undertaking Shall serve, at least 60 days before closure
is to become effective, a notice, Stating clearly the reasons for the intended closure of the
undertaking.
 Nothing in this section shall apply to—
 An industrial establishment in which less than 50 workers are employed or were employed on any day in
the preceding 12 months;
 An industrial establishment set up for the construction of buildings, bridges, roads, canals, dams or
for other construction work or project. r/w 75(4)
 Section 75(4): Any undertaking set up for the construction of buildings, bridges, roads, canals,
dams or other construction work is closed down on account of the completion of the work within
2 years from set up, no worker employed therein shall be entitled to any compensation.
 But if the construction work is not completed within 2 years, he shall be entitled to notice and
compensation for every completed year of continuous service or any part thereof in excess of six
months.
Compensation to workers in case
of closing down of undertakings
Section75
Where an establishment is closed down
 For any reason whatsoever,
 Every worker who has been in continuous service for not less than 1 year immediately before such
closure
 Shall, be entitled to notice and compensation, similar to worker had been retrenched under section 70
 Provided that where the undertaking is closed down on account of unavoidable circumstances
beyond the control of the employer, the compensation to be paid, shall not exceed his average
pay for 3 months.
 The following shall not be deemed unavoidable circumstances beyond the control of the
employer:
 Financial difficulties (including financial losses); or
 Accumulation of un-disposed stocks; or
 The expiry of the period of the lease or license granted to it; or
 In case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in
which operations are carried on
Compensation to workers in case
of closing down of undertakings
Section

75
Explanation 4 of 75 (1) r/w 75(2): Where an undertaking engaged in mining operations
is closed down by reason merely of exhaustion of the minerals, No worker shall be
entitled to any notice or compensation if
1. Employer provides the worker, within 20 km, with alternative employment at the
same remuneration, and on the same terms and conditions of service;
2.The service of the worker has not been interrupted by such alternative
employment; and
3. Employer is, legally liable to pay to the worker, in the event of his retrenchment,
compensation on the basis that his service has been continuous and has not been
interrupted by such alternative employment.
Compensation to workers in case
of closing down of undertakings
Section

75
The expressions "minerals" and "mining operations" shall have the meanings
respectively assigned to them in section 3(aa) and 3(d) of the Mines and Minerals
(Regulation and Development) Act, 1957.
 (aa) “minerals” includes all minerals except mineral oils;
 (d) “mining operations” means any operations undertaken for the purpose of winning
any mineral;
Compensation to workers in case
of closing down of undertakings
Section

75
Managing Director, Karnataka Forest Development Corporation Ltd.
V.
Workmen of Karnataka Pulpawood Ltd, Supreme Court, 2007

In the event of undertaking being closed down, the only right which assures in favour of
the workmen is to obtain compensation as provided.
Procedure – Prior Permission
Section 80

 An employer who intends to close down an undertaking of an industrial establishment

shall, electronically or otherwise, apply, for prior permission at least 90 days before
the date closure is to become effective, to the appropriate Government, stating clearly
the reasons for the intended closure of the undertaking and
 A copy of such application shall also be served simultaneously on the
representatives of the workers
 Nothing in this sub-section shall apply to an undertaking set up for the construction
of buildings, bridges, roads, canals, dams or for other construction work.
Procedure for closing down an
industrial establishment Section 80
 Where an application for permission has been made,
 The appropriate Government, after making such enquiry and
 After giving a reasonable opportunity of being heard to the employer, the workers
and the persons interested
 Having regard to the
 Genuineness and adequacy of the reasons stated by the employer,
 The interests of the general public and
 All other relevant factors,
 By order and for reasons to be recorded in writing, grant or refuse such permission
and
 A copy of such order shall be communicated to the employer and the workers.
Procedure – Deemed to be
Granted
Section

80(8)
Where an application has been made and
 The appropriate Government does not communicate
the order granting or refusing to grant permission
 To the employer within 60 days from the date of application
 The permission applied for shall be deemed to have been granted
 on the expiration of 60 days and
 The application shall be deemed to have been
disposed of accordingly by the appropriate Government.
Procedure for closing down an
industrial establishment Section 80
 An order of the appropriate Government granting or refusing to grant permission shall, be
final and binding on all the parties and
 Shall remain in force for 1 year from the date of such order.
 The appropriate Government may,
 Either on its own motion or on the application made by the employer or any worker,
 Review its order granting or refusing to grant permission or
 Refer the matter to a Tribunal for adjudication:
 The Tribunal shall pass an award within 30 days of such reference.
Procedure for closing down an industrial
establishment section 80

 Where no application for permission is made, or

 Where the permission for closure has been refused,
 The closure of the undertaking shall be deemed to be illegal and
 The workers shall be entitled to all the benefits under any law for
the time being in force as if the undertaking had not been closed
down.
 Where permission for closure is deemed to be granted
 Every worker
 Shall be entitled to receive compensation which shall be equivalent
to 15 days average pay, for every completed year of continuous service
or any part thereof in excess of six months.
Penalties Section 86

 Section 86 (1): An employer who contravenes

section 80 (Procedure-Prior Permission) shall be punishable
with fine upto ₹1,00,000/- to ₹10,00,000/-
 Section 86(2): An employer who after conviction under section 80
(Procedure- Prior Permission) again commits the same offence
under section 80, he shall for the second or subsequent offence be
punishable with fine not less than ₹5,00,000/- to ₹20,00,000/- or with
imprisonment upto 6 months, or with both.
 Section 86(3): An employer who contravenes section 75 (Compensation
on Closure) shall be punishable with fine upto ₹50,000/- to ₹2,00,000/-
 Section 86(4): An employer who after conviction under section 75
(Compensation on Closure) again commits the same offence under
section 75, then, he shall for the second or subsequent offence be
punishable with fine up to ₹1,00,000/- to ₹5,00,000/- or with
imprisonment up to 6 months, or with both.
Section 25 (o) of ID Act 1947

 Validity challenged in Excel Wear v. Union of India, Writ Petition SC 1978

 Excel Wear, served a notice on the State Govt. of Maharashtra, for previous approval of the intended
closure of the undertaking in accordance with Section 25O(1) of the Act.

 The State Government refused to accord the approval for the reasons of “public interest” and
communicated their decision “to not to close down the said undertaking”.

 Company is alleging that a right to close down the business is an integral part of the right to carry on
the business under Article 19(1)(g) of the Constitution of India. Govt. urged that the restrictions
imposed by the impugned law are quite reasonable and justified

 Section 25-O of the Act as a whole relates to the awarding of punishment for infraction of the provisions
of Section 25-O are unconstitutionally and invalid for violation of Article 19(1)(g) of the Constitution.
Case Law for Closure

1. Hindalco Industries Ltd vs. Union of India And Others, 1994

SCC (2) 594
It was held that even though the closure of an undertaking was
not a planned and voluntary closure by the company Section 25-O
of the Industrial Disputes Act, 1947 (Compensation To Workmen)
would be applicable
2. Kalinga Tubes Ltd. vs. Their Workmen, AIR 1969 SC 90
It was held that the Company could not justify the reason of the
closure of the undertaking was due to unavoidable circumstances
beyond the control of the Company therein and the compensation
would be payable as if the undertaking was closed down "for any reason
whatsoever" within Section 25FFF(1) of the ID Act.
BI-PARTITE FORUM

 Section 3 Works Committee

1. Any industrial establishment in which one hundred or more
workers are employed or have been employed on any day in the
preceding 12 months
2. Appropriate Govt. order (general or special) to employer to constitute
WC
3. In WC, the representation of worker and employer shall be equal.
4. The representation of worker shall be chosen with the consultation of
TU.
5. Purpose of WC
• Promote good relation
• To comment upon matter of their common interest
• Consider material difference of opinion
Grievance Redressal Committee
Section 4
 Every Industrial establishment employing 20 or more worker shall
have 1 or more GRC
 GRC must consist of equal no. of representative of worker and
employer
 The chairperson of GRC shall be selected from among person
representation employer and worker on rotational basis every year.
 Total GRC member = 10 Max.
 Total no. of GRC shall include adequate no. or women representative
which is in proportion of women worker to the total worker.
Procedure Section 4
 Any aggrieved person may file an application to GRC within 1 years from the date on
which COA arise
 GRC complete its proceeding within 30 days from receipt of the application by
aggrieved person
 Decision of GRC based on majority view of committee. More than 50% workers have
not agreed with the decision of the GRC, shall deemed as no decision
 Appeal to Conciliation Officer through TU within 60 days from the date of the decision
of GRC
 aggrieved person make an direct application to Tribunal after the expiry of 45 days
from the date he made application to the CO.
 Sub section 9 R/w 11 Individual Dispute deemed to industrial dispute
 The worker make an application directly to the Tribunal before the expiry of 20 years
from the date of dismissal, discharge, retrenchment.
Section 42
Voluntary reference of dispute to
arbitration
 Any industrial dispute exist or apprehend to exist, the employer and worker agree to refer to arbitration.
 Then they can form Arbitration agreement (written) which contain name of person or persons as an arbitrator
 If the arbitrator or arbitrators are even in numbers or are equally divided in their opinion, then Arbitrator act as
umpire.
 Arbitration agreement must be signed by both the parties and the copy of AA must be forwarded to Conciliation officer
and Appropriate govt.
 Arbitrator invest the dispute and submit the award to the App. Govt. which must be signed by arbitrator
Section 42(5)
 Where an industrial dispute has been referred to arbitration and
 The appropriate Government is satisfied that the persons making the reference represent the majority of each party,
 The appropriate Government may issue a notification in such manner as may be prescribed,
 The employers and workers who are not parties to the arbitration agreement but are concerned in the dispute, shall be
given an opportunity of presenting their case before the arbitrator or arbitrators
 Where an industrial dispute has been referred to arbitration and a notification has been issued, the appropriate
Government may, by order, prohibit the continuance of any strike or lock-out in connection with such dispute which
may be in existence on the date of the reference
Cont.

 Rajesh Korat v. Management Innoviti Embedded, 7 IJAL (2018)

120
The Karnataka High Court held that the Industrial Disputes Act
is a self-contained code, and
To that extent the Arbitration and Conciliation Act,1996 does not
have any application to matters governed by the Industrial Disputes Act