Labour Law - The Industrial Relation, 2020

1. What is the Industrial Relations Code?

The Industrial Relations Code, 2020 is a central legislation enacted by the Parliament of India to consolidate, simplify and modernize existing industrial relations laws. It replaces and subsumes provisions of three older laws:

• The Trade Unions Act, 1926

• The Industrial Employment (Standing Orders) Act, 1946

The Industrial Disputes Act, 1947

The Code was part of a broader reform to replace around 29 labour laws with four comprehensive Labour Codes covering wages, social security, safety, and industrial relations.

2. Objectives of the Code

The main aims are:

✅ To streamline and unify complex and outdated industrial relations laws.

✅ To improve ease of doing business while retaining core worker protections.

✅ To promote industrial peace and harmony through clear procedures for dispute resolution and collective bargaining.

✅ To provide a legal framework for modern workplaces, including fixed-term employment and broader definitions of workers.

3. Key Definitions 🧑‍⚖️

Worker & Employee

• The Code defines “worker” broadly to include persons doing manual, technical, operational or clerical work as well as certain other categories like working journalists and sales promotion employees.

• Those in managerial roles or supervisory positions drawing more than a specified wage (currently ₹18,000 per month) are excluded from the worker definition.

• Main Provisions 📊

  a) Trade Unions

  • A trade union must have a minimum membership (e.g., 10% of workers or a specified number) to register.

• The Code introduces the concept of a Negotiating Union or Negotiating Council where trade unions can formally represent workers in collective bargaining.

  b) Standing Orders:     In labor law, Standing Orders are legally mandated rules defining employment conditions, conduct, and disciplinary procedures for workers in industrial establishments, particularly in India under the Industrial Employment (Standing Orders) Act, 1946.

  • Purpose:

   To standardize employment terms, ensure transparency, prevent disputes, and provide a clear framework for management and workforce interaction.

  Applicability (India): Applies to industrial establishments with 100 or more employees, though some states (e.g., Karnataka) set the threshold at 50.

  • These are rules defining terms of employment such as attendance, wages, conduct, leave, and termination.

  • Standing orders are mandatory only in establishments with 300 or more workers, instead of the earlier threshold of 100 workers.

  • This reduces compliance burden for smaller establishments, though unions have expressed concerns.

    c) Strikes and Lockouts

    The Code regulates strikes and lockouts more strictly:

  • Advance notice (e.g., 14 or more days) is required before striking.

  • Strikes are prohibited during conciliation, adjudication, and for a period afterward.

  • Lockout notice requirements for employers are similarly structured.

  • These rules aim to encourage dispute resolution through negotiation and legal mechanisms.

    d) Layoff, Retrenchment & Closure

  • Establishments with 300 or more workers need prior government approval for layoffs, retrenchments or closure.

  • This threshold increase (from 100 earlier) gives firms with fewer workers more flexibility but has been criticized by worker organizations.  

    e) Fixed-Term Employment

  • The Code formally recognizes fixed-term employment, allowing employers to hire workers for defined durations with conditions similar to permanent workers (except notice period and certain termination benefits).

    f) Grievance Redressal and Work Committees

  • Establishments with a certain number of workers must constitute Grievance Redressal Committees for internal dispute resolution.

  • Work Committees may also be formed to promote better communication between workers and employers.

    g) Industrial Tribunals

  • The Code mandates setting up Industrial Tribunals and, in some cases, National Industrial Tribunals to resolve industrial disputes more efficiently than earlier fragmented processes.

    h) Penalties for Violations

  • Violations of provisions related to unfair practices, strikes, or procedural breaches attract substantial penalties — fines potentially much higher than under earlier laws.

    
    

  4. Advantages of the Code

  For Workers

  ✔ Recognition of negotiating unions

  ✔ Faster dispute resolution

  ✔ Grievance redressal committees

  ✔ Re-skilling fund

  ✔ Legal status to fixed-term employees

  For Employers

  ✔ Simplified compliance

  ✔ Flexibility in workforce management

  ✔ Reduced litigation

  ✔ Higher thresholds for government approvals

  
  

  5. Current Status

  • The Code has been passed by Parliament

  • Implementation depends on state rules

  • As of now, it is not fully operational nationwide, pending state-level notifications

  
  

  6. Conclusion:

  Overall, the Industrial Relations Code, 2020 concludes with the intent to create a stable, predictable, and growth-oriented industrial relations environment, though it has also been criticized for tilting the balance in favor of employers and potentially weakening collective bargaining power.