Indutrial Relations code, 2020

Industrial Relations Code, 2020
By Simran Bhardwaj
The three new codes on labour law which were successfully passed by Parliament
need to be understood by every organisation because it concerns them and their daily
operations.
Law is a system of rules and regulations enforced through Government and social
institutions to create a tranquil environment and harmony in the society.
These Laws are crowded with technical terms. It would be difficult for a lay man to
understand the technical terms whenever a new law is introduced, or some changes
are made to the existing ones.
In this article, we will decipher the Industrial Relations Code in a way that will not
overwhelm the reader with massive information.
Industrial Relations Code is a coalescence of three former laws — the Trade Unions
Act,1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial
Disputes Act, 1947.
The objectives of the above-mentioned acts have been preserved in the Industrial
Relations Code, where they are compiled for ease of compliance into a single
document. Some changes have also found their way into the inclusion of the code. It
has been done to encourage ease of doing business, reduce compliance burdens, and
modernise the legal framework concerning the regulation of industrial relations in
India.
An abridged version of the essential changes of the Industrial Relations Code, 2020-
• The definition of ‘worker has been expanded. It now includes every employee,
skilled or unskilled, manual, technical, operational and clerical capacity, supervisory
staff drawing up to Rs.18,000 salary per month.

• ‘Fixed Term Employment’ grants Employers the flexibility to hire workers based on
requirements through a written contract. All the employees including fixed-term
employees, need to be treated equally in terms of hours of work, wages, allowances
and other benefits, including statutory benefits such as gratuity.

• In the 2019 Industrial Relations Bill the threshold for the applicability of the
Industrial Disputes (Standing orders) Act,1946 was set at 100 employees or more, but
now the new Industrial rElations Code, 2020 has raised the threshold to 300. The
Code has also granted the power to the ‘appropriate Government’ to exempt any
industrial establishment or class thereof from all or any of the provisions under the
Code.

• In establishments where there is more than one trade union, the sole
negotiating union status will be permitted to the one that has 51% of the
employees as its members. It has been reduced from the 75% requirement in
the 2019 Bill. In establishments where no union qualifies, the employers have
the responsibility to constitute a ‘negotiating council’ consisting of
representatives of the various unions with only those with at least 20% of the
employees as its members.
• The provision where the establishments must obtain the prior permission of the
government for lay-off, retrenchment and closure is made applicable to only
establishments that had employed 300 or more workers on an average per
working day in the preceding 12 months. The code also provides the
government with the freedom to raise this threshold by notification. A lay-off
will be considered illegal if it is performed without permission or is done
despite the refusal of permission, but it will not be so if the employee had been
offered alternative employment that does not require any special skill or undue
hardship.
• The code also authorises notice period, or payment instead of the notice period,
and prior government permission before retrenchment of anyone who has
provided their continual services to the establishment for a year or more. Same
prior permission is also required for the closure unit, where the application
needs to be filled 90 days before the intended closure.
• The code strictly prohibits strikes and lock-outs in all industrial establishments
without giving notice. No unit is allowed to go on a strike in breach of contract
without giving notice 60 days before the strike, or within 14 days of giving
such a notice, or before the expiry of any ate mentioned in the notice for the
strike. Code further mentions that there should be no strike during any
conciliation proceedings, or within seven days of the conclusion of such
proceedings; or during proceedings before an industrial tribunal or 60 days
after their conclusion or during an arbitration proceeding. Similar restrictions
have also been imposed on the employer regarding announcing a lock-out. The
Industrial Disputes Act, 1947, had placed such restrictions on announcing

strikes only in respect of public utility serves. However, the new code extends
the restriction to all establishments.
The constraints on strikes, lock-out and other dispute resolution mechanisms will
ensure that industries continue to function without any repeated hindrance which
results in the stoppage of work. It will assist the organisation to grow properly.
Similarly, the introduction of sole negotiation and negotiating council will lessen the
time invested in reaching a cordial settlement.
The government is looking to endorse the concept of ease of doing business for
industries by bringing about changes for growth and harmony.