The Industrial Relations Code

The Industrial Relations Code 2020 (“IR Code”) merges the Trade Unions Act, 1926 (“Trade Unions Act”), the Industrial Employment (Standing Orders) Act, 1946 (“IESO Act”) and the Industrial Disputes Act, 1947 (“ID Act”). An overview of key elements of the IR Code includes:

• Worker - The definition is similar to that of a workman under the ID Act and includes employees other than those in managerial, administrative or supervisory roles earning wages more than INR 18,000 per month (increased from INR 10,000 per month) and apprentices. New inclusions are sales promotion employees and working journalists.
• Employee - This is a new and broader term covering all types of work (skilled to managerial), excluding only Armed Forces personnel.
• Employer - There is an expanded definition of an “employer”, which now uses the term ‘establishment' in place of ‘industry'. The definition includes traditional employers, contractors, occupiers and managers, persons/authorities having final decision-making power and legal representatives of employers.
• Fixed term employment - Fixed term employment is a new introduction across all sectors, which is the engagement of a worker through a written contract for a fixed period. A fixed term worker will have parity as a permanent worker engaged in the same/ similar work in terms of work hours, wages, allowances and other benefits. A fixed term worker is eligible for all statutory benefits available to a permanent worker proportionately according to the period of service rendered by him, even if the employment period does not extend to the qualifying period of employment required in the statute, including payment of gratuity if he renders service for a period of one year. However, retrenchment provisions will not apply when a worker's fixed term contract is not renewed on expiry of the fixed term.
• Works Committee, Grievance Redressal Committee - The thresholds for formation of a Works Committee and Grievance Redressal Committee remain broadly the same as under the ID Act, viz, 100 workmen and 20 workmen respectively. However, it is now mandatory to establish a Grievance Redressal Committee in the manner prescribed by the IR Code.
• Trade Union - Threshold of 7 workmen for registering a trade union remains the same as under the Trade Unions Act. If there is more than one registered trade union of workers functioning in an establishment, the trade union having more than 51% of the workers as members would be recognised as the sole negotiating union. In case no trade union is eligible as the sole negotiating union, a negotiating council will be formed consisting of representatives of unions that have at least 20% of the workers as members.
• Standing Orders - This is a key change, with the provisions now applicable to establishments with 300 or more workers (as compared to 100 workmen under the IESO Act). This requires all industrial establishments (including commercial establishments) with 300 workers or more to prepare standing orders on the matters listed in Schedule 1 of the IR Code, relating to (i) classification of workers, (ii) manner of informing workers about work hours, holidays, paydays, and wage rates, (iii) termination of employment, and (iv) grievance redressal mechanisms.
• Notice of change of service conditions - This remains at 21 days as under the ID Act for matters listed in Schedule 3 to the IR Code.
• Lay-off, retrenchment and closure - The concerned provisions are broadly similar in application as seen under the ID Act. A key change is in relation to factories, mines, plantations with 300 or more workers (an increase from the 100 workmen threshold under the ID Act) where prior permission of the applicable Government will be required by an establishment with 300 workers before closure, lay-off or retrenchment. An electronic application for permission is now allowed. The Central Government may increase this threshold through notification.
• Unfair labour practice - This is defined in Schedule 2 to the IR Code. Any dispute relating to discharge, dismissal, retrenchment or otherwise termination of the services of an individual worker will be an industrial dispute. This will need a systematic resolution process, involving the establishment's Grievance Redressal Committee as an initial step, followed by conciliation. The worker may then apply to the Industrial Tribunal for adjudication of the dispute 45 days after the application for the conciliation of the dispute was made.
• Strikes - There is an expanded definition of a strike, to include any concerted casual leave by 50% or more workers on the same day will be held to be a strike. Blanket prohibitions are included in relation to strikes, which applies to all industrial establishments and not just public utilities.
• Dispute resolution mechanism - The dispute resolution mechanism has been streamlined.
• Penalties - These have been substantially increased, where all penalties are now greater than INR 10,000. By way of example, under the IR Code, the penalty for contravening conditions precedent to retrenchment of workers is a fine of up to INR 2 lakhs, whereas under the ID Act, the penalty was INR 100. Compounding is possible, subject to conditions. 
• Exemption - The appropriate government may exempt any new industrial establishment or class of establishments from the provisions of the IR Code in public interest

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.