Study Notes

Code on Industrial Relations

2020
Industrial Relations and Labour Laws

Content Table
1. Brief history of Code on Industrial Relations
2. General Terms Used in Code
 Appropriate Government
 Appellate Authority
 Arbitrator
 Average pay
 Award
 Controlled industry
 Fixed-term employment
 Industrial Dispute
 wages
 Lay-Off, Retrenchment, Lock-outs, Strikes and Closure
3. BI- Partite Forums
 Works Committee
 Grievance Redressal Mechanism
4. Provisions related to Standing Order
5. Mechanism for resolutions of Industrial Disputes
 Conciliation Officer
 Industrial Tribunal
 National Tribunal
6. Provisions related to Strikes and Lock-outs
7. Special provisions relating to lay-off, retrenchment and closure in certain
establishments
8. Worker re-skilling fund
9. offences and penalties
10. Schedule and its matter

2
Industrial Relations and Labour Laws

Brief History of Code on Industrial Relations

As "Labour" is the subject of the "Concurrent List" in the Indian Constitution, that is why there
were more than 44 central laws and more than 200 state laws. Due to this many types of
problems arose and there were obstacles in business, due to all these problems, the
government decided to create 4 different codes by consolidating all the laws, one of which is the
Code on Industrial Relations.

The Code was formulated according to the Report and Recommendations of the
Second National Commission on Labour.

Industrial Relations Code, 2020 consolidates and amends the laws relating to Trade Unions,
conditions of employment in industrial establishment or undertaking, investigation and
settlement of industrial disputes.

The code combines and simplifies 3 Central Labour Laws.

Trade union act

1926

•Industrial
Employment
(Standing Orders) Industrial Dispute
Act, 1946 act 1947

Code on
Industrial
Relations

Note: first of all, this code is yet to enforce.

Second, in this code, various Definitions are picked from the above three Acts.

Third, as this code is not enforced yet, no need to worry about sections and all.

3
Industrial Relations and Labour Laws

General terms used in Code on Industrial Relations

Appropriate Government: Its definition is similar to the Industrial Disputes Act of 1947.

Appellate Authority: “Appellate Authority” means “a person or group of people appointed by the
appropriate Government to perform specific duties within a particular area. The Government
specifies these duties through an official announcement in the Official Gazette.

Arbitrator: “Arbitrator” means “An umpire”.

Average pay: Its definition is similar to the Industrial Disputes Act of 1947

Award: “Award” means “A decision made by an Industrial Tribunal or National Industrial

Tribunal that settles a dispute or a related issue. It can be either an interim or final decision. An
award also includes a decision made by an arbitrator”.

Controlled Industry: Its definition is similar to the Industrial Disputes Act of 1947.

Fixed-term employment: "Fixed-term employment" is when a worker is hired for a specific

period of time under a written contract.

 The worker must receive the same wages, benefits, and allowances as a permanent
worker doing the same job or similar work.
 Even though they are on a fixed-term contract, the worker is entitled to statutory benefits
based on the length of their service.
 If the worker completes one year of service, they are eligible for gratuity.
Industrial Dispute: Its definition is similar to the Industrial Disputes Act 1947.

Lay-off: “Lay-off” means "Lay-off" when an employer is unable to provide work to a worker due
to reasons such as lack of raw materials, machinery breakdown, or natural calamities.

 If a worker arrives at the workplace during normal working hours and is not given work
within two hours, it is considered a lay-off for that day.
 If the worker is asked to present himself during the second half of the shift and is given
work, it is considered a lay-off for only half of the day.
 If the worker is not given any work even after presenting himself, he is not considered to
have been laid off for the second half of the shift and is entitled to full basic wages and
dearness allowance for that part of the day.

Lock-outs: Its definition is similar to the Industrial Disputes Act 1947.

Office bearer: Its definition is similar to the Trade Union Act 1926.

Registrar: Its definition is similar to the Trade Union Act 1926.

4
Industrial Relations and Labour Laws

Retrenchment: "Retrenchment" means the termination of a worker's service by the employer

for any reason, except as punishment through disciplinary action. However, it does not include
voluntary retirement or retirement on reaching the age of superannuation, termination due to the
non-renewal of a contract, completion of fixed-term employment, or termination due to
continued ill health.

Settlement: "Settlement" means an agreement between an employer and a worker during a

conciliation proceeding or outside of it. This agreement must be in writing and signed by both
parties. It must also be sent to a government officer authorized for this purpose and to the
conciliation officer.

Trade Union: “Trade Union and all related provisions to it” same as the “Trade Union Act 1926.”

Unfair labour practice: "Unfair labour practice" means any of the practices specified in the
Second Schedule.

Wages: "Wages" means the money that an employer pays to an employee for the work they do.
This includes basic pay, dearness allowance, and retaining allowance. However, wages don't
include things like bonuses, pensions, or other benefits. Also, the value of things like
accommodation, water, electricity, and medical services the employer provides to the employee
are not considered as part of wages. If the total value of these things exceeds a certain
percentage of the wages, then the excess value will be added to the wages. If an employee
receives any non-monetary benefits that are less than 15% of their total wages, these benefits
will be considered part of their wages.

Bi-PARTITE forums
Works committee

The constitution of work committee is mentioned under Section 3 of the Act. It consists of the
representatives of both the disputing parties. It aims to settle disputes and create an amicable
environment for the workers. Where 100 or more workers are currently engaged or have
been employed on any given working day over the previous 12 months, the competent
government may, by general or special order, require the employer to form a works committee
under the authorized procedures. The representatives of the establishment’s employers
and employees will make up the works committee.

Grievance Redressal mechanism

Every industrial establishment employing twenty or more workmen shall have one or more
Grievance Redressal Committees for the resolution of disputes arising out of individual
grievances.

The Grievance Redressal Committee shall consist of an equal number of members from the
employer and the workmen.

5
Industrial Relations and Labour Laws

The chairperson of the Grievance Redressal Committee shall be selected from the employer
and from among the workmen alternatively on a rotation basis every year.

The total number of members of the Grievance Redressal Committee shall not exceed more
than ten.

Provisions related to “Standing Order”

All provisions related to “standing order” apply to any industrial establishment that has or had
300 or more workers employed at any time during the past 12 months.

All the certifying officers and appellate authority will have the power of “Civil court”.

If an employer or trade union or any workers' representative body is not happy with the order of
the certifying officer, they can appeal to an appellate authority appointed by the government
within 60 days of receiving the order. The authority will handle the appeal according to the
rules.

The mechanism for the resolution of industrial disputes

Conciliation officer: Appointed by “Appropriate Government”

Industrial Tribunal: establish by Appropriate government.

 Every Industrial Tribunal shall consist of two members to be appointed by the

appropriate Government out of whom one shall be a Judicial Member and the other, an
Administrative Member.
 The rules for the qualifications, recruitment, term of office, salaries, allowances,
resignation, removal, and other conditions of service of the Judicial Member and
Administrative Member of the Tribunal will be made under the Finance Act, 2017.
However, a person who has held a position below the rank of Joint Secretary to the
Government of India or an equivalent rank in the Central or State Government cannot be
appointed as an Administrative Member of the Tribunal.
National industrial tribunal: established by Central Government.

 It can be 1 or more, as required.

 It will have 2 members, one will be a judicial member, and the second member will be
related to administration.
 Judicial member should be a judge of the High Court or was.
 Administrative member should be in the rank of Secretary of the government of
India or equivalent.
Disqualifications for members of the Tribunal and National Industrial Tribunal

 If attained the age of 65.

 If he is not an independent person.

6
Industrial Relations and Labour Laws

Notes

An award made under this Code shall become enforceable on the expiry of
thirty days from the date of its communication.

A settlement arrived at by agreement between the employer and worker

otherwise than in the course of conciliation proceeding shall be binding
on the parties to the agreement.

If parties to a dispute reach a settlement agreement, it becomes binding

either on the date agreed upon or when signed by all parties. The
settlement is binding for a period agreed upon, and if not agreed, for six
months. After that, it continues to be binding unless one party gives
written notice to terminate it. An award remains in effect for one year from
the date it becomes enforceable, as per section 55.

Provisions related to Strikes and Lock-outs

No employee in an industrial establishment can go on strike in breach of
contract.

 A notice of strike must be given to the employer within sixty days before striking.
 The employee cannot go on strike within fourteen days of giving the notice of strike.
 The employee cannot go on strike before the expiry of the strike date specified in the
notice.
 During the conciliation proceedings before a conciliation officer, the employee cannot go
on strike, and seven days after the proceedings.
 During the proceedings before a Tribunal or a National Industrial Tribunal, the employee
cannot go on strike, and sixty days after the conclusion of such proceedings.
 During the pendency of arbitration proceedings before an arbitrator and sixty days after
the conclusion of such proceedings, where a notification has been issued under sub-
section (5) of section 42.
 The employee cannot go on strike during any period in which a settlement or award is
in operation concerning the matters covered by the settlement or award.
No employer of an industrial establishment can lock out any worker in breach of
contract.

 The employer must give notice of lock-out within sixty days before locking out.

7
Industrial Relations and Labour Laws

 The employer cannot lock out the workers within fourteen days of giving the notice.
 The employer cannot lock out the workers before the expiry of the date of lock-out
specified in the notice.
 During the conciliation proceedings before a conciliation officer, the employer cannot
lock out the workers, and seven days after the proceedings.
 During the proceedings before a Tribunal or a National Industrial Tribunal, the employer
cannot lock out the workers, and sixty days after the conclusion of such
proceedings.
 During the pendency of arbitration proceedings before an arbitrator and sixty days after
the conclusion of such proceedings.
 The employer cannot lock out the workers during any period in which a settlement or
award is in operation concerning the matters covered by the settlement or award.

LAY-OFF, RETRENCHMENT AND CLOSURE

Provisions are applicable where more than 50 workers are employed during a calendar year of
12 months.

Rights of workers laid off for Compensation

If a worker, who has completed at least one year of continuous service under an employer, is
laid-off (except badli and casual workers), he shall be paid by the employer for all days during
which he is laid-off.

 The compensation shall be equal to fifty percent of the total basic wages and dearness
allowance that would have been
payable if the worker had not been
laid-off. “A badli worker is a temporary worker
who replaces a regular worker who is
 Compensation shall not be payable
absent due to leave or for
for any period of the lay-off after
forty-five days if there is an temporary/intermittent work in an
agreement between the worker and industrial establishment.”
the employer.

 The employer may retrench the

worker after the expiry of the first
forty-five days of lay-off.

 Any compensation paid to the worker for being laid off in the preceding twelve months
may be set off against the compensation payable for retrenchment.

No compensation shall be paid to a laid-off worker if

8
Industrial Relations and Labour Laws

 he refuses alternative employment within the same establishment or any other

establishment belonging to the same employer within an eight-kilometre radius.
 The alternative employment should not require special skills or previous experience and
should offer the same wages.
 No compensation shall be paid if the worker does not present himself for work at the
establishment during normal working hours at least once a day.
 No compensation shall be paid if the lay-off is due to a strike or slowing-down of
production by workers in another part of the establishment.

Provisions related to Closure

 An employer planning to close down an undertaking must give notice at least sixty days
before the intended closure to the appropriate Government.
 This section does not apply to industrial establishments with less than fifty workers
or those set up for construction work, including buildings, bridges, roads, canals, and
dams.

Compensation to workers in case of closing down of undertakings.

 If an establishment is closed down, workers who have served continuously for at least
one year before the closure shall be entitled to notice and compensation as if they had
been retrenched.
 If the closure is due to unavoidable circumstances beyond the employer's control,
compensation shall not exceed the worker's average pay for three months.

Special provisions relating to lay-off, retrenchment and closure in

certain establishments
• This chapter applies to industrial establishments with at least three hundred workers
employed on an average per working day in the preceding twelve months.
• This provision excludes establishments of a seasonal character or those where work is
performed only intermittently.

Worker re-skilling fund

The government will create a worker re-skilling fund through employer contributions. The fund
will include 15 days of wages for every retrenched worker and other prescribed contributions.
The fund will be used to credit the retrenched worker's account within 45 days of
retrenchment.

9
Industrial Relations and Labour Laws

offences and penalties

Power of officers of appropriate Government to impose penalties in certain cases

 The government can appoint an officer to conduct an inquiry and impose penalties under
certain sections of the law. The officer can summon witnesses and documents, and if
they find an offence has been committed, they can impose a penalty. If the penalty is not
paid within 90 days, the person can be fined between Rs. 50,000 to Rs. 2 lakhs.
 Any person who commits any unfair labour practice as specified in the Second
Schedule shall be punishable with a fine which shall not be less than ten thousand
rupees, but which may extend to two lakh rupees.
 If someone is convicted of an unfair labour practice and commits the same offence
again, they can be fined a minimum of fifty thousand rupees (Indian currency) or
imprisoned for up to three months, or both.
 If someone intentionally makes a false entry or leaves out information in a required
statement or copy of rules sent to the Registrar, they can be fined at least Rs. 2,000 but
up to Rs. 20,000.
 If someone gives a false copy of the rules of a registered Trade Union to a member or
someone intending to become a member, or gives a copy of the rules of an unregistered
Trade Union pretending that they are the rules of a registered Trade Union, they can be
fined between five and twenty thousand rupees.
 If an employer does not submit draft standing orders as required or changes them
without following the rules, they can be punished with a fine of at least 50,000 rupees but
up to 2 lakh rupees. If it is a continuing offence, they can also be fined an extra 2,000
rupees per day.
 Employer breaking certified standing orders under the Code will be fined at least Rs.
1 lakh, but up to Rs. 2 lakhs.
 If someone breaks a settlement or award that they are legally bound to follow under
this Code, they can be fined at least 20,000 rupees, up to a maximum of 2 lakh
rupees, and/or face imprisonment for up to 3 months.

10
Industrial Relations and Labour Laws

Schedule and matter

First schedule
 Classification of workers
 Manner of intimating to workers periods and hours of work, holidays, pay-days and wage
rates.
 Termination of employment
 Suspension or dismissal for misconduct

Second schedule
 Unfair labour practice

Third schedule
 Wages, including the period and mode of payment.
 Compensatory and other allowances
 Classification by grades
 Rationalization, standardization or improvement of plant or technique which is likely to
lead to retrenchment of workers.
 Hours of work and rest intervals.

11