Industrial relation code 2020


The Government notified the ‘The Industrial Relations Code 2020’ on 29th September 2020. This code consolidates the three major central laws on industrial relations i) Trade Union Act, 1926 ii) Industrial Dispute Act, 1947 iii) Industrial Employment (Standing Orders ) Act, 1946 into one code. This code has brought many significant changes in the laws regulating industrial relations. And some features are retained from the old laws. In this blog, we will discuss some key changes made by this code and its implications.

Key Features and implications of the ‘Industrial Relations Code 2020’

  • Appropriate government

The code defines the term ‘Appropriate Government’ as the central government will act as the appropriate government for any PSUs (central public sector undertakings). Even if the holding of the government falls below 50% in the PSUs the central government will continue to be the appropriate government.

Now it is not clear why the central government will continue to be an appropriate government when it does not hold a controlling stake in the PSUs.


  • Worker & Employees

Worker- The code defines the term workers as a person employed in an industry to do any manual, skilled, unskilled, technical, operational, clerical, or supervisory work for hire or reward. This also includes working journalists, sales promotion employees. But the definition excludes the persons employed in a managerial, administrative, or supervisory capacity with wages exceeding 18000/-.

Employee- The definition of an employee includes the persons employed in a managerial, administrative, or supervisory capacity in addition to the persons doing manual, skilled, unskilled, technical, operational, clerical work in an industrial establishment.

Now it creates confusion about the right of the person working in a supervisory, managerial, or administrative capacity as he is within the scope of the definition of the employee but outside the scope of the worker.  For example- under this code, the term industrial dispute only refers to the ‘Worker’. It means only the worker has the right to access the mechanism for the resolution of industrial disputes. But section 91 of the same, enables the employee to complain before the concerned authority if the employer alters the conditions during the pendency of an industrial dispute.


  • Employer-

This code includes the occupier of a factory and contractor under the definition of employer. And the code does not define the term contractor. This will make it difficult for the workers employed through the contractor to claim against the principal employer.


  • Enhanced the limits of the threshold for the application of Standing orders: Section 30 of the imposes an obligation on the employer to frame a standing order in regard to conditions of work where 300 or more than 300 workers are employed. Earlier the threshold limit was 100 or more. This brings uniformity in the conditions of work in an establishment. But the implications are that it is not obligatory for the employers to make standing orders in case of fewer than 300 workers. They are free to regulate the conditions of work by individual contract. And, the code also empowers the center and state government to exempt any employer to make a standing order.


  • Increase the threshold for obtaining prior government approval in case of retrenchment, closure, or lay-off-

In the case of lay-off, retrenchment, or closure the code increased the threshold limit for prior permission of government from 100 to 300 workers. This enhancement will lead to arbitrary lay-off, retrenchment, and closure. And, it empowers the government to alter the limits of the threshold.

Moreover, the code does not increase the compensation to the workers in case of retrenchment. It still provides the compensation of fifteen days on average pay for every completed year of service.


  • Provisions for fixed-term employment

Section 2(o) of the code introduces fixed-term employment. It means to hire a worker for a certain period of time on the basis of a written contract of employment. However, the working hours, wages, allowances will be the same as a permanent worker. Moreover, he entitles to all the statutory benefits and gratuity if he renders his services for the period of one year. But, the worker is not entitled to the compensation of retrenchment because the definition of retrenchment excludes the worker for a fixed term of employment.

On the one hand, this will provide flexibility in hiring workers for a fixed period of time. It decreases the role of the middleman as it is direct contact between employer and worker. The workers also entitle to all the benefits available to the permanent worker. On the other hand, it will affect the rights of the workers as the power to renew the contract completely lies within the hands of the employer. The job insecurity will affect the power of workers to raise the issues regarding the unfair practices of work. The code does not deal with the concept that what type of work could be assigned to the worker employed for a fixed tenure.


  • Restrictions on strikes and lock-outs

Before going on strike or lock-out the workers requires to give a notice of 14 days that has to be shared with the conciliation officer. This notice is valid for a maximum period of 60 days. The conciliation proceedings will immediately start from receiving the notice from the conciliation officer. The strikes and lock-outs are prohibited during the proceedings. If the conciliation proceedings will not result fruitful and the application is presented before the tribunal by either party, the period of prohibition on strikes will be further extended. This extension can also extend the validity of notice beyond 60 days. The code also prohibits the strikes and lock-outs (i) during and up to seven days after a conciliation proceeding, and (ii) during and up to sixty days after proceedings before a tribunal.


  • POWER OF The Government to Modify or Reject the Awards of Tribunal

The Industrial Relation Bill 2020 empowers the appropriate government to modify or reject the awards of Industrial Tribunal or National Industrial Tribunal when 1) In appeal the appropriate government is a party 2) the award has been passed by the National Tribunal. This will violate the principle of separation of powers as it empowers the executive to interfere with the decisions of the judiciary. Further, it will create a conflict of interest as the government has the power to reject or rectify the award of the tribunal.


  • Power of Government to Exempt Certain Industries from the Provisions of this Code


Section 96 of the Act empowers the appropriate government to exempt any new industrial establishment or class of new industrial establishment from the provisions of this act in the interest of justice. Section 36-B of the ‘Industrial Dispute Act’ empowered the government to exempt the industries run by the government if the resolution mechanism is available in the establishment itself. But the ‘Industrial Relation Code’ empowers the government to exempt even start-ups.  This will deprive the labours of the rights guaranteed or provided under this code like the right to association, the right to access justice, and bargaining rights.

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