WHAT  HAS CHANGED IN INDUSTRIAL RELATIONS CODE, 2020 ?

India’s labour law framework historically consisted of a large number of Central and State enactments enacted over different periods to address specific issues faced by labour and industry. Over time, this led to multiplicity of laws, overlapping definitions, procedural complexity, and compliance challenges.

The need for consolidation was felt both from the perspective of simplification and structural reform. A major push came from Second National Commission on Labour (2002), which  recommended for consolidation of labour laws in comprehensive codes.  

The Parliament finally  passed the four consolidated  Codes  namely –  The Code on Wages, 2019 (29 of 2019), Industrial Relations Code, 2020 (35 of 2020) and  The Code on Social Security, 2020 (36 of 2020). These codes were notified w  w.e.f. from 21.11.2025.

 Industrial Relations Code consolidates three  labour laws- (i) The Trade Union Act, 1926 (ii) The Industrial (Employment Standing) Orders Act, 1946 (iii) Industrial Disputes Act, 1947. The Industrial Relations Code not only consolidates the three aforesaid laws but also introduces several  reforms.

INTRODUCTION OF INDUSTRIAL TRIBUNAL & NATIONAL INDUSTRIAL TRIBUNAL

Adjudicatory authorities in earlier regime were Labour Courts, Industrial Tribunal and National Tribunal. Now, under Industrial Relations Code classification of Labour Court and Industrial Tribunal has been done away with and replaced with Industrial Tribunal consisting of two members – judicial member and administrative member.  Issues related with the applications and interpretation of standing orders;  discharge or dismissal of workmen; illegality of strike or lockout; retrenchment of workmen and closure; and trade union disputes have to be determined by benches consisting of Judicial member and administrative member.  Other industrial disputes have to be determined by either judicial member or administrative member sitting singly. There is also provision of National Industrial Tribunal for determining questions of national importance or questions of such a nature that industrial establishments situated in more than one state are likely to be interested.

CHANGE IN MODE OF REFERENCE

In earlier regime under Industrial Disputes Act, 1947 most of industrial disputes firstly went to conciliation officer and in case of failure were referred by appropriate government to the Labour Courts or Industrial Tribunals, as the case may be. Only in limited  cases of  dismissal, discharge or termination, the workers have been given right to approach the Labour Court directly.  Procedure of reference by appropriate government has been done away with to a great extent under the Industrial Relation Code. Now in case of failure of conciliation proceedings, an aggrieved party can directly approach the Industrial Tribunal. Thus, delay caused due to time taken in reference by the Appropriate Government to the Tribunal  will now be effectively reduced.

DOING AWAY WITH COURT OF INQUIRY AND BOARD OF CONCILIATION

The machinery of Court of Inquiry and Board of Conciliation was originally introduced under the Trade Disputes Act, 1929 as part of the early statutory framework for investigation and settlement of industrial disputes. These institutions were subsequently retained under the Industrial Disputes Act, 1947.

However, in practice, both mechanisms were rarely invoked. The dispute resolution process increasingly revolved around Conciliation Officers, Labour Courts, Industrial Tribunals, and voluntary adjudication. Owing to their limited functional utility, these bodies have been dispensed with under the Industrial Relations Code.

EXPANSION OF SCOPE OF ‘INDUSTRY”

The scope of definition of “industry” has been expanded and clarified. Now Industry includes all systematic activity carried on by co-operation between an employer or worker for production, supply, or distribution of goods and services with a view to satisfy human wants or wishes. The definition reflects broad interpretation of “industry” in Bangalore Water Supply and Sewerage Board v. A. Rajappa (AIR 1978 SC 548.    It is immaterial whether any capital has been invested for purpose of carrying on such activity or such activity is carried on with a motive to make any gain or profit. Institutions engaged in charitable, social and philanthropic service; sovereign functions of government and domestic service have been excluded.

EXPANSION OF SCOPE OF “WORKER”

The definition of “workman” has been replaced with gender neutral term  “worker”. The scope of definition of “worker”  has also  been expanded. Workers now explicitly includes working journalists and sale promotion employees.

REGULATION OF STRIKE AND LOCKOUT

Regulation of strike and lock out has been made applicable to all industrial establishment. In the earlier regime under Industrial Disputes Act, 1947  these provisions were only applicable to public utility services. Thus, right to strike of workers as well right of lock out by employers have been further curtailed.

RELAXATION IN PRIOR PERMISSION OF APPROPRIATE GOVERNMENT IN CASES OF LAY-OFF, RETRENCHMENT AND CLOSURE

In earlier regime, prior permission in case of lay-off, retrenchment and closure were required if industrial establishment was employing 100 or more workers. Now this limit has been relaxed up to 300 or more workers.

INTROUDUCTION OF FIXED TERM EMPLOYMENT

The concept of fixed term employment has also been introduced. Hours of work, wages, allowances of such workers cannot be less than that of permanent worker. Such worker has been made eligible for all statutory benefits. Such worker has also been made eligible for gratuity also if he renders service for one year.

RECOGNITION OF NEGOTIATING UNION OR NEGOTIATING COUNCIL

Under the earlier framework of the Industrial Disputes Act, 1947, there was no statutory provision at the Central level for recognition of a trade union for the purpose of collective bargaining, although some states had provisions for recognition of trade union. This often led to inter-union rivalry and disputes regarding the representative character of a union, thereby raising questions about the binding nature and legitimacy of settlements arrived at between an employer and a particular union. The Industrial Relations Code provides for procedure for recognition of trade union for purposes of collective bargaining. If more than one union is in existence, the Code provides for recognition of trade union for negotiation with employers as negotiating union if such union is having on its muster roll fifty one percent of workers.  In case no trade union has fifty one percent representation, a negotiation council has to be created by the employer having trade unions representing more than twenty percent of workers.

RELAXATION IN APPLICABLITY OF STANDING ORDERS

In earlier regime, standing orders were applicable in industrial establishments having 100 or more workers. This limit has been relaxed and now standing orders have been made applicable in establishments where 300 or more  workers are employed.

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