Law and You > Labour Laws > The Industrial Relations Code, 2020 > Introduction to Industrial Relations Code, 2020
The Ministry of Labour and Employment aimed to simplify then existing 29 labour laws by introducing 4 new codes, namely, the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 and published these Codes in the Official Gazette for general information. The four Labour Codes envisage strengthening the protection available to workers, including unorganized workers in terms of statutory minimum wage, social security and healthcare of workers. As a step towards implementation of the four Labour Codes, the Central and a number of State Governments have pre-published the draft Rules, inviting comments of all stakeholders.
The Industrial Relations Code, IRC 2020 has replaced 3 Acts namely: the Trade Unions Act, 1926; the Industrial Employment (Standing Orders) Act, 1946; and the Industrial Disputes Act, 1947. The code streamlines the laws related to trade unions, employment conditions for industries, and a comprehensive handling of industrial disputes. There is also a higher emphasis on building a strong employer-employee relationship, creating better working conditions, collective bargaining, and re-skilling employees.
The Code received the assent of the President on the 28th September, 2020. The Central Government will announce the date that the Code will go into effect and be operational in the Official Gazette. A single date may be set to make the entire Code operative, or various dates may be earmarked for implementing multiple provisions. State Labour Departments have started issuing draft rules concerning the Industrial Relations Code, 2020, passed by the Central Government and will shortly be put into effect. 26 states and Union Territories have so far released proposed regulations on the subject.
The Scope of Code:
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
- 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
Applicability of the Code:
The Code extends to the whole of India. 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 of the Code:
Following are the objectives of the Code:
- To consolidate and amend the laws relating to Trade Unions, conditions of employment in industrial establishment or undertaking
- To investigate and to obtain speedy settlement of industrial disputes and for matters connected therewith or incidental thereto
Salient Features of the Code:
Some important features of the Code are as follows:
- The Industrial Code, 2020 consolidates three Acts namely, the Trade Union Act, 1926; the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947.
- Regardless of whether an activity is pursued with a profit motive or involves capital investment, the Code defines “industry” as any systemic activity between an employer and employees for the production, supply, or distribution of goods or services with the goal of satisfying human wants or wishes that are not merely spiritual or religious. Organizations that provide charitable, social, or philanthropic services as well as sovereign government functions and domestic service are expressly excluded from the term. Additionally, the Central Government has the authority to exclude any other activity from falling under the definition of “industry.”
- Earlier, the Industrial Disputes Act has a threshold of applicability on establishments having 100 or more employees. But the Code has raised this threshold limit to 300 and also given the power to the appropriate govt. to excuse any industrial establishment or class thereof from all or some of the provisions of the code.
- The definition of the workman has been improved under the Code to include the persons in supervisory capacity getting wages up to 18K per month. Working journalist, sales promotion employees, have been included in the definition of worker. Individual worker who has been dismissed, discharged or retrenched or otherwise terminated, and in relation to whom industrial dispute is pending, shall also be considered as worker for the purpose of chapter III relating to trade union.
- The Code provides that when there is more than one union in an establishment, the status of a bargaining union will be granted to the one having 51% of the employees as members. The Code has decreased this threshold limit from 75% that was determined in the amendment bill of 2019.
- If just in case, there is not a single union that meets the threshold limit as mentioned above, then the Bargaining Council can be established of representatives of the various unions having at least 20% of employees as members. Moreover, the registered trade unions may be recognized by the Centre or State Govt. as Centre or State unions as per requirement.
- Any form of employment with a written contract for a specific duration is considered fixed term employment. 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.
- The definition of strike includes the casual leave taken by 50% of staff or more employed in the establishment on a given day. The Code says that workers at all industrial establishments must give 60 days’ notice before going on strike, and they can’t go on strike until 14 days after giving notice. Thus, trade unions are required to serve 14 days’ notice before going on strike. However, this notification is valid for a period of 60 days. Similarly, no employer can lockout any of its employees without giving prior notice of 14 days, and the same will remain in force for a period of 60 days. Employers must report to the relevant government and arbitration officer within five days of receiving/announcing a strike/lockout.
- Besides this, the Code prohibits strikes and lockouts in the following situations:-
- During and upto 7 days after the arbitration.
- During and upto 60 days after or before court proceedings.
- During the period when the arbitration award is in force.
- To support the retrenched employees, the industrial relations code has allocated funds for employees to upskill themselves. The employer will make the contribution equal to the 15 days of salary last drawn by the employee being retrenched. Such fund must be directly credited to the bank account of an employee within 45 days of the employee’s dismissal.
- According to the Code, the provisions of lay-off and retrenchment will not be applicable to the establishments having a workforce of less than 50 workers on an average per working day or to seasonal establishments. Additionally, the establishments with less than 300 workers can be laid-off, retrenched, and closed without government approval.
- The Code provides that the provisions concerning standing orders will be applicable to the establishments that have a workforce of 300 or more on any day in the past 12 months. According to this, an employer will be required to prepare a draft of standing orders by following the Govt. model on standing orders within 6 months from the date the Code come into force. Importantly, such draft must be prepared in consultation with recognized bargaining unions and the same must be certified by the certifying officer.
- Any employer with 20 or more employees has to have one or more grievance handling committees. The IRC has incorporated new regulations that the previous regulation did not address. The panel cannot be more than 10 people, and should have equal and fair representation from employers, employees, and women employees.
- An investigation or inquiry into a worker’s wrongdoing that leads to his suspension from work must be finished within 90 days.
- The Govt. can put back the enforcement of awards passed by the tribunals on certain grounds including threatening the national economy and for the sake of social justice.
Scheme of the Code:
The code has 13 Chapters, 104 Clauses and 3 Schedules.
| Chapter | Name of Chapter | Clauses |
| I | Preliminary | 1 and 2 |
| II | Bi-Partite Forums | 3 and 4 |
| III | Trade Unions | 5 to 27 |
| IV | Standing Orders | 28 to 39 |
| V | Notice of Change | 40 and 41 |
| VI | Voluntary Reference of Disputes to Arbitration | 42 |
| VII | Mechanism for Resolution of Industrial Disputes | 43 to 61 |
| VIII | Strikes and Lock-Outs | 62 to 64 |
| IX | Lay-Off, Retrenchment and Closure | 65 to 76 |
| X | Special Provisions Relating to Lay-Off, Retrenchment and Closure in Certain Establishments Sections | 77 to 82 |
| XI | Worker Re-Skilling Fund | 83 and 84 |
| XII | Offences and Penalties | 85 to 89 |
| XIII | Miscellaneous | 90 to 104 |
Schedule I deals with the Matters to be provided in Standing Orders under this Code. Schedule II deals with the unfair labour practices on the part of employers and trade unions of employers and on the part of workers and trade unions of workers. Schedule III deals with conditions of service for change of which notice is to be given.
Conclusion:
An industry can grow only when there is peace and harmony in the industrial environment. The Industrial Relations Code is a significant piece of legislation in India that aims to regulate the relationship between employers and workers in the organized sector of the economy. It covers a wide range of issues, including collective bargaining, the formation and recognition of trade unions, and the settlement of disputes. The provisions of the Code are expected to have a significant impact on the rights and responsibilities of employers and workers, and on the overall functioning of the organized sector of the economy. It is important for all stakeholders to be aware of the provisions of the Code and to comply with them in order to foster a healthy and productive industrial relations environment.