The Industrial
Relations Code 2020
Introduction of Inclusive
Definitions
• One of the key updates in the IR Code 2020 is the redefinition of “workman” to “worker,”
ensuring a more inclusive and modern terminology.
• The term “worker” now excludes managerial positions but includes supervisory roles,
expanding coverage to include:
• Working journalists as per the Working Journalists and Other Newspaper Employees
(Conditions of Service) Act, 1955.
• Sales promotion employees as defined under the Sales Promotion Employees (Conditions
of Service) Act, 1976.
• This change is particularly significant in the era of the gig economy, where journalism and
sales sectors have traditionally suffered from lack of legal protections.
• During the COVID-19 pandemic, many employees in these sectors faced job insecurity and
lack of accountability from employers. By explicitly covering these workers, the Industrial
Relations Code ensures greater protection and formal recognition.
Recognition of Fixed-Term
Employment
• The IR Code 2020 has formally introduced fixed-term employment as a legal
category. This provision:
• Ensures parity between fixed-term and permanent employees in terms of:
• Working hours, wages, and benefits.
• Eligibility for gratuity, provided they have worked for one year under a
contract.
• This reform empowers employers to hire workers on a need-based, fixed-
term basis without restrictions on specific industries.
• This move enhances labor market flexibility, allowing companies to adjust
workforce requirements dynamically while ensuring worker rights remain
protected.
Establishment of a Grievance Redressal Committee
• The Grievance Redressal Committee (GRC), earlier introduced in
the Industrial Disputes Act, has been retained and strengthened under the
Industrial Relations Code.
• Under the IR Code, workers must first approach the GRC for dispute
resolution before filing a case in the Labor Court.
• Exception: In cases of discharge, dismissal, retrenchment, or termination,
workers may directly approach the Industrial Tribunal.
• By mandating conciliation at the initial stage, the Industrial Relations Code
2020 promotes amicable dispute resolution and reduces unnecessary litigation.
• This is a significant step toward faster resolution of industrial disputes in India
and reduces backlog in labor courts.
Strengthening of Trade Union Laws and Collective Bargaining
• The IR Code 2020 preserves the core framework of trade union registration from
the Trade Unions Act, 1926, while introducing new concepts such as:
• Negotiating Trade Union & Negotiating Council Section 14
• A single “Negotiating Trade Union” will represent workers if it has 51% or
more membership.
• If no union has 51% representation, a Negotiating Council will be formed,
consisting of trade unions with at least 20% support.
• This reform streamlines communication and bargaining, ensuring that
management does not have to negotiate with multiple unions.
• By simplifying the collective bargaining process, the IR Code 2020 reduces
conflicts and promotes efficient decision-making in industrial establishments.
Standing Orders and Employment Conditions Section 28
• The Industrial Relations Code 2020 has revised the applicability
of standing orders, which define the terms of employment in an
establishment.
• Previously, any establishment with 100 or more workers was required to
frame standing orders.
• Now, this threshold has been raised to 300 workers, reducing the
compliance burden on smaller enterprises.
• Employers must also consult the trade union/negotiating council before
submitting standing orders for certification.
• While this change benefits businesses, it may also dilute workers’ rights in
smaller establishments.
Resolution of Industrial Disputes in India
• The Industrial Relations Code retains much of the dispute resolution
framework from the Industrial Disputes Act, 1947, but introduces structural
improvements:
• Complex cases (e.g., disputes on standing orders, retrenchment, strikes, and
lockouts) will be handled by a two-member tribunal.
• Other disputes can be resolved by a single-member tribunal, ensuring faster
adjudication.
• The IR Code 2020 also introduces arbitration as a recommended dispute
resolution mechanism.
• This step encourages faster and less adversarial resolution of labor disputes
in India
Right to Strike and Employer Lockouts
• The IR Code 2020 modifies the conditions under which workers can go
on strike:
• Mandatory 60-day notice before going on strike.
• Strikes are prohibited during tribunal proceedings.
• Employers also need to give a 60-day notice before initiating a lockout.
• Additionally, the definition of “strike” now includes “concerted casual
leave by 50% or more workers on a given day.”
• This ensures strikes remain well-regulated while preventing sudden
industrial shutdowns.
Introduction of a Re-skilling Fund
• A notable feature of the IR Code 2020 is the introduction of the Re-
skilling Fund:
• Employers must contribute to a fund used to provide retrenched
workers with 15 days of last drawn wages.
• The purpose, management, and liability of this fund remain unclear.
• While this provision aims to help retrenched workers, further clarity is
needed on its implementation.
Enhanced Penalties for Non-Compliance
• The Industrial Relations Code 2020 introduces stricter penalties for
violations:
• First-time offense: Fine up to ₹10 lakh.
• Repeated offenses: Fine up to ₹20 lakh or imprisonment up to six
months.