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Overview: Code on Industrial Relations, 2020

As part of the legislative reforms related to labour law and welfare, the government passed the Code on Industrial Relations, 2020 (“Code”) which has replaced 3 Central Labour Laws: The Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946. The Code aims to provide a strong framework to protect the rights of workers, and improve employer-employee relations. It seeks to regulate strikes, lockouts, and the functioning of trade unions.


According to the Code, 7 or more members of a Trade Union can apply for registration, but the registration will be approved if at least 10% of the total workers or one hundred workers (whichever is less) are connected to the Trade Union. The Code provides for a negotiation union in an industrial establishment which has registered trade unions. If there is a single trade union, it shall be deemed to be the sole negotiation union. However, if there are multiple trade unions, the trade union with the support of 51% of workers will be recognized as the sole negotiation union. In the event that no trade union is eligible as sole negotiating union, a negotiating council will be formed consisting of representatives of unions that have at least 20% of the workers as members. Under the Code, the definition of ‘worker’ has been amended to include persons in supervisory capacity getting wages up to eighteen thousand rupees per month. Further, the definition of ‘strikes’ has been modified to include “the concerted casual leave on a given day by fifty per cent or more workers”.


An employee cannot go on strike unless he gives notice for a strike within six weeks before striking, and within 14 days of giving such notice. The restrictions on strikes and lockouts have been made applicable to all industrial establishments, as opposed to only applying to employees engaged in public utility service under the previous Act. The Code prohibits strikes and lock-outs during and up to seven days after a conciliation proceeding, during and up to sixty days after proceedings before a tribunal or an arbitrator and during any period in which a settlement or an award is in operation. Establishments with less than 300 workmen do not have to comply with the provisions relating to standing orders and can lay-off, retrench or close without government approval. A new provision has been made wherein an industrial dispute can be voluntarily referred to arbitration by the employer as well as the workers. This must be done through a written agreement between the employer and workers and the arbitrator must submit the award to the government upon declaration. Under the Code, the central government is empowered to appoint National Industrial Tribunals to decide matters of national importance or those which impact establishments in multiple states. Conciliation or mediation officers can also be appointed by states/the central government. In the event that no settlement has been arrived at, the parties can then refer the matter to an Industrial Tribunal that is provided for in the Code. The Tribunal is composed of one judicial member and one administrative member. The central government can defer the enforcement of awards passed by the Tribunals in certain circumstances such as grounds of affecting national economy or social justice. The Code also mandates that establishments of more than 20 employees have a grievance redressal committee, consisting of equal number of members representing the employers and workers and the chairperson, who shall be selected alternatively from the employees and workers on rotational basis every year.


The Code introduces the concept of ‘fixed term employment’, ensuring employees get benefits similar to that of a permanent employee and employers from any sector have the flexibility to employ workers on a fixed term basis as per requirement. The Schedules to the Code list down the prohibited unfair labour practices, as well as standing orders that establishments must prepare if they employ more than 300 workers. The Code also provides for setting up of a ‘re-skilling fund’ for those employees retrenched from the industrial establishment by the employer. The Code has thus provided a comprehensive mechanism to protect the rights of employees while aiming to balance the interests of the establishments.


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