Industrial Relations Code, 2020.pdf

Industrial Relation Code

1. The Industrial Relations Code, 2020: An Overview
Online Training Programme on New Labour Codes
Dr. Sanjay Upadhyaya, Senior Fellow
V.V. Giri National Labour Institute, Noida

2. Context
Everysocietyneedscontinuoussupplyofgoodsandservices,whichis
possibleonlywiththecooperationofindustryandtheworkers
However,theinterestofboththesepartiesarenotthesame.Whilethe
employerwantsthemaximumreturnonthecapitalinvestedbyhim,the
workerswantmaximumreturnintermsofremuneration,socialsecurity
andconditionsofservice,etc.
Thereis,therefore,alwaysachanceofconflictandtusslewhichneeds
tobeminimized,ifnoteliminatedaltogetherbywayofputtinginplace
appropriateregulatorymeasures
Thatiswhymostofthecountriesintheworld(includingIndia)have
enactedlabourlaws/legislationsaspertheirneeds

3. AspertheschemeoftheIndianConstitution,bothParliamentandState
Legislaturesarevestedwiththepowertomakelabourlaws.Thatishowover
theyears,morethan150labourlegislationshavebeenenactedbytheCentre
andStatescoveringaspectslikewages,socialsecurity,industrialrelationsand
occupationalsafety,healthandworkingconditions,etc.
Asfaras,theregulationoftherelationsbetweentheemployersandemployees
engagedinvarioussectorsandsub-sectorsofindustryandservices,wehadin
Indiatillrecently,TheTradeUnionsAct,1926,TheIndustrialEmployment
(StandingOrders)Act,1946andtheIndustrialDisputesAct,1947.

4. Theseenactmentsprimarilydealtwithaspectslikeprocedurefor
registrationoftradeunions,theirrightsandduties(TradeUnionsAct,1926);
regulationofconditionsofserviceincludingaspectslikerecruitment,
discharge,misconduct(includingactsoromissionswhichconstitute
misconduct),disciplinaryaction,holidaysandleavesetc,bywayofframing
ofthestandingordersandobligatingtheemployerstoincludethese
mattersintheStandingOrdersandgettingthesamecertified(Industrial
EmploymentStandingOrdersAct,1946)andtheprocedureandmechanism
forinvestigationandsettlementofindustrialdisputesaswellasthe
procedureforresortingtolay-off,retrenchmentandclosure,etc.(IDAct,
1947)

5. However,tillrecently,therewasacommonperceptionthatmanyofthe
provisionsoftheseenactmentsarearchaic,obsoleteandnotinconformity
withthepresentdayneedsofindustryandworkersandhenceitwasfeltthat
therewasaneedtoconsolidateandrationalizetheprovisionsofthese
enactmentsasperthepresentdayneeds
Inthiscontext,acomprehensiveandmassiveexercisewasmadeto
consolidateandamalgamatethesalientfeaturesoftheabovementioned
threeenactmentsinonecodealongwithrationalizationofthevarious
provisionsintheshapeoftheenactmentoftheIndustrialRelationsCode,
2020.

6. TheIndustrialRelationsCode,2020isoneofthefourLabourCodes
envisagedundertheoverallschemeofcodificationofvariouscentral
labourlegislations(total29innumbers)
ItisexpectedthatthecodificationofthetheseLabourLawsby
consolidationofrelevantprovisionsatoneplacewouldhelpinfacilitating
theimplementationandremovingthemultiplicityofdefinitionsand
authoritieswithoutcompromisingwiththeavailablesafeguards

7. TheIRCode,2020seekstobringtransparencyandaccountabilityinthe
enforcementoflabourlawswhichisexpectedtoleadtobetterindustrial
relationsandthushigherproductivity
Itisexpectedthattheeaseofcomplianceoflabourlawswouldpromote
settingupofmoreenterprises,thuscatalyzingthecreationofample
employmentopportunitiesintheCountry

8. TheIndustrialRelationsDraftCode,wasintroducedinLokSabhaon
28.11.2019.ItwasreferredtotheParliamentaryStandingCommitteeon
23.12.2019forexamination
IntheprocessofexaminationoftheCode,theCommitteeinvitedthe
viewsandsuggestionsfromtradeunions,employersorganizations,civil
societyorganisationsandindividualsthroughaPressCommuniquéand
receivedalargenumberofviews/suggestions

9. ThecommitteealsotookoralevidenceoftherepresentativesofCentral
TradeUnionOrganizationsandvariousotherAssociationssuchasAll
IndiaRailwaymen’sFederationsandAllIndiaDefenceEmployees
Federation;representativesofindustrialandcommercialestablishments,
stategovernmentsandacademiccommunity
Thecommitteesoughtalargenumberofclarificationsfromthe
governmentonvariousissuesandsubmitteditsreporton23April2020.
ItwaspassedbyLokSabhaonSep.22,2020,byRajyasabhaonSep.23,
2020andwasnotifiedinthegazetteonSep.29,2020

10. Broad Scheme of the Code
TheIRCodehastotal104sectionsspreadover14chaptersandthree
schedules
Chapter 1Preliminary Chapter 10Special Provisions relating to Lay-
off, Retrenchment, and Closure
Chapter 2Bi-partite Forums Chapter 11Worker Re-Skilling Fund
Chapter 3Trade Unions Chapter 12Unfair Labour Practices
Chapter 4Standing Orders Chapter 13Offenses and Penalties
Chapter 5Notice of Change Chapter 14Miscellaneous
Chapter 6Voluntary Reference of
Disputes to Arbitration
Schedule 1Matters to be Provided in Standing
Orders under the Code
Chapter 7Mechanism for Resolution of
Industrial Disputes
Schedule 2Unfair Labour Practices
Chapter 8Strikes and Lockouts Schedule 3Conditions of Service for Change of
which Notice is to be Given
Chapter 9Lay-off, Retrenchment, and
Closure

11. Outofthe14chapters,3chaptersi.e.Chapter6dealingwith
VoluntaryReferenceofDisputestoArbitration,Chapter11dealing
withWorkerRe-SkillingFund,andChapter12dealingwithUnfair
LabourPracticeshaveonlyonesectioneachandthreechaptersi.e.
Chapter1–Preliminary,Chapter2dealingwithBi-PartiteForums,
andChapter5dealingwithNoticeofChange,haveonlytwo
sectionseach

12. THE FIRST SCHEDULE
MATTERS TO BE PROVIDED IN STANDING ORDERS UNDER THE CODE
[Sections 2(ze) and 30(1) and (5)]
1.Classificationofworkers,whetherpermanent,temporary,
apprentices,probationers,badlisorfixedtermemployment
2.Mannerofintimatingtoworkersperiodsandhoursofwork,
holidays,pay-daysandwagerates
3.Shiftworking
4.Attendanceandlatecoming
5.Conditionsof,procedureinapplyingfor,andtheauthoritywhich
maygrantleaveandholidays

13. 6.Requirementtoenterpremisesbycertaingates,andliabilityto
search
7.Closingandreportingofsectionsoftheindustrialestablishment,
temporarystoppagesofworkandtherightsandliabilitiesofthe
employerandworkersarisingtherefrom
8.Terminationofemployment,andthenoticethereoftobegivenby
employerandworkers
9.Suspensionordismissalformisconduct,andactsoromissionswhich
constitutemisconduct
10.Meansofredressforworkersagainstunfairtreatmentorwrongful
exactionsbytheemployerorhisagentsorservants
11.Anyothermatter

14. THE SECOND SCHEDULE
[Sections 2 (zj), 84 and 86 (5)] UNFAIR LABOUR PRACTICES
I.ONTHEPARTOFEMPLOYERS ANDTRADEUNIONSOF
EMPLOYERS
(1)Tointerferewith,restrainfrom,orcoerce,workersinthe
exerciseoftheirrighttoorganise,form,joinorassistaTrade
Unionortoengageinconcertedactivitiesforthepurposesof
collectivebargainingorothermutualaidorprotection
(2)Todominate,interferewithorcontributesupport,financialor
otherwise,toanyTradeUnion
(3)ToestablishemployersponsoredTradeUnionsofworkers
(4)ToencourageordiscouragemembershipinanyTradeUnionby
discriminatingagainstanyworker

15. (5)Todischargeordismissworkers—
(a)bywayofvictimization
(b)notingoodfaith,butinthecolourableexerciseoftheemployer'srights
(c)byfalselyimplicatingaworkerinacriminalcaseonfalseevidenceoron
concoctedevidence
(d)forpatentlyfalsereasons
(e)onuntrueortrumpedupallegationsofabsencewithoutleave
(f)inutterdisregardoftheprinciplesofnaturaljusticeintheconductofdomestic
enquiryorwithunduehaste
(g)formisconductofaminorortechnicalcharacter,withouthavinganyregardto
thenatureoftheparticularmisconductorthepastrecordorserviceofthe
worker,therebyleadingtoadisproportionatepunishment

16. (6)Toabolishtheworkofaregularnaturebeingdonebyworkers,
andtogivesuchworktocontractorsasameasureofbreakinga
strike
(7)Totransferaworkermalafidefromoneplacetoanother,under
theguiseoffollowingmanagementpolicy
(8)Toinsistuponindividualworkers,whoareonalegalstriketosign
agoodconductbond,asapreconditiontoallowingthemto
resumework
(9)Toshowfavouritismorpartialitytoonesetofworkersregardless
ofmerit
(10)Toemployworkersasbadliworkers,casualsortemporariesand
tocontinuethemassuchforyears,withtheobjectofdepriving
themofthestatusandprivilegesofpermanentworkers.

17. (11)Todischargeordiscriminateagainstanyworkerforfilingcharges
ortestifyingagainstanemployerinanyenquiryorproceeding
relatingtoanyindustrialdispute
(12)Torecruitworkerduringastrikewhichisnotanillegalstrike
(13)Failuretoimplementaward,settlementoragreement
(14)Toindulgeinactsofforceorviolence
(15)Torefusetobargaincollectively,ingoodfaithwiththe
recognisedTradeUnions
(16)Proposingorcontinuingalock-outdeemedtobeillegalunder
thisCode

18. II. ON THE PART OF WORKERS AND TRADE UNIONS OF WORKERS
(1)Toadviseoractivelysupportorinstigateanystrikedeemedtobe
illegalunderthisCode
(2)Tocoerceworkersintheexerciseoftheirrighttoself-
organisationortojoinaTradeUnionorrefrainfrom,joiningany
TradeUnion
(3)Forarecogniseduniontorefusetobargaincollectivelyingood
faithwiththeemployer
(4)Toindulgeincoerciveactivitiesagainstcertificationofa
bargainingrepresentative

19. (5)Tostage,encourageorinstigatesuchformsofcoerciveactionsas
willful,"go-slow",squattingontheworkpremisesafterworking
hoursor“Gherao"ofanyofthemembersofthemanagerialor
otherstaff
(6)Tostagedemonstrationsattheresidenceoftheemployersorthe
managerialstaffmembers
(7)Toinciteorindulgeinwillfuldamagetoemployer'sproperty
connectedwiththeindustry
(8)Toindulgeinactsofforceorviolenceortoholdoutthreatsof
intimidationagainstanyworkerwithaviewtopreventhimfrom
attendingwork

20. THE THIRD SCHEDULE (Section 40)
CONDITIONS OF SERVICE FOR CHANGE OF WHICH NOTICE IS TO BE GIVEN
1.Wages,includingtheperiodandmodeofpayment
2.Contributionpaid,orpayable,bytheemployertoanyprovidentfund
orpensionfundorforthebenefitoftheworkersunderanylawfor
thetimebeinginforce
3.Compensatoryandotherallowances
4.Hoursofworkandrestintervals
5.Leavewithwagesandholidays
6.Starting,alterationordiscontinuanceofshiftworkingotherwise
thaninaccordancewithstandingorders

21. 7.Classificationbygrades
8.Withdrawalofanycustomaryconcessionorprivilegeorchangein
usage
9.Introductionofnewrulesofdiscipline,oralterationofexisting
rules,exceptinsofarastheyareprovidedinstandingorders
10.Rationalisation,standardisationorimprovementofplantor
techniquewhichislikelytoleadtoretrenchmentofworkers
11.Anyincreaseorreduction(otherthancasual)inthenumberof
personsemployedortobeemployedinanyoccupationorprocess
ordepartmentorshift,notoccasionedbycircumstancesover
whichtheemployerhasnocontrol

22. Salient Features of the Code

23. Contractingthescopeof‘Industry’bydefiningthesamesoasto
excludeinstitutionsownedormanagedbyorganizationswhollyor
substantiallyengagedinanycharitable,socialorphilanthropic
services;sovereignfunctions;domesticservices;andanyother
activityasmaybenotifiedbytheCentralGovernment{Section2(m)in
theCode}
Thisnewdefinitionisbasedonthedefinitionofindustrypassedbythe
Parliamentin1982(46of1982)butwhichcouldnotcomeintoforce
{Section2(m)intheCode}

24. Changeinthedefinitionofwagesundersection2(z)ofthecodesoas
toexcludeacomponentofhouserentallowance,conveyance
allowance……whichwereincludedinthedefinitionof‘wages’under
section2(rr)oftheIndustrialDisputesAct,1947
Thechangeddefinitionwouldhaveanimpactonthequantumof
compensationpayabletoaworkerintheeventofretrenchment,
closureorlay-off

25. Revision/modificationinthedefinitionof‘worker’bywayof
enhancingthesalarylimitfromINR10,000toINR15,000permonthor
anamountasmaybenotifiedbythecentralgovernmentfromtimeto
time{Section2(zm)inthecode}soastoincludepersonsengagedin
supervisorycapacitydrawingsalaryuptothislimit
Modification/changeinthedefinitionof‘strike’soastoincludethe
concertedcasualleaveonagivendayby50percentormoreworkers
employedinanindustry,alsowithinitsambit{Section2(zf)inthe
code}

26. Introduction of Fixed Term Employment
Definingof‘FixedTermEmployment’(engagementofaworkeronthe
basisofawrittencontractofemploymentforafixedperiod)and
includingthesameasoneofthecategoriesofemploymentin
classificationofworkersintheScheduleformatterstobeprovidedin
StandingOrders{Section2(l)inthecode}

27. Inaddition,insertionofaprovisionthatafixedtermemployeewillget
allstatutorybenefitslikesocialsecurity,wages,etc.atparwiththe
regularemployeeswhoaredoingworkofsameorsimilar{Section2(l)
inthecode}
Further,tobringclarityaclausehasbeenaddedthatterminationof
theservicesofaworkerasaresultofcompletionoftenureoffixed
termemploymentwouldnotfallinthecategoryofretrenchment
{2(zc)andFirstScheduleitem1intheCode}

28. Fixedtermemploymentmayallowemployerstheflexibilitytohire
workersforafixeddurationandforworkthatmaynotbepermanent
innature
SincetheCodeentitlesfixedtermemployeestothesamebenefits
andconditionsofworkasareavailabletopermanentemployees,this
couldhelpimprovetheconditionsoftemporaryworkersin
comparisonwithcontractworkerswhomaynotbeprovidedwith
suchbenefits

29. A comparison between different types of employments

30. Provision of Negotiating Union and Council
Thetradeunionwithatleast51%oftheworkersasmemberswillbe
consideredthesolenegotiatingunion,forthepurposeofnegotiating
withtheemployeroftheestablishment.
Incasenounionhasatleast51%oftheworkersasmembers,a
negotiatingcouncilshallbeformedconsistingofrepresentativesof
unionsthathaveatleast20%oftheworkersasmembers.
Onerepresentativeshallbeincludedforeach20%ofthetotalworkers
ontherollsasmembers.

31. Inaddition,anenablingclausehasbeenaddedtoprescribethrough
Rulesmattersonwhichnegotiationswilltakeplace,mannerof
verificationofmembershipandfacilitieswhichwillbeprovidedat
establishmentleveltotheNegotiatingUnion/Councilbyan
establishment(Section14intheCode)

32. Thepreviouslyexistingthresholdofworkersforthepurposeof
seekingpermissionbeforeclosure,retrenchmentandlay-offby
establishmentshasbeenincreasedto300.
InsomeStates(suchasAndhraPradesh,Assam,Haryana,Jharkhand,
MadhyaPradesh,Rajasthan,UttarakhandandUttarPradesh),this
thresholdwasalreadyenhancedfrom100to300
Changing of the Threshold for the Purpose
of Seeking Permission Before Closure, etc.

33. Provision of Workers’ Re-skilling Fund
Thefundwillbesetupbytheappropriategovernment.Itwillconsist
ofcontributionsfromemployersequalto15days(orasspecifiedby
thecentralgovernment)ofthelastdrawnwagesofeveryretrenched
worker.Thisprovisionisalsoapplicableincaseofclosure
Contributionsfromothersourcesmaybeprescribedbythe
appropriategovernment.Fundsmustbeutilizedwithin45daysof
retrenchmentasmaybeprescribed(Section83intheCode)

34. Dispute Resolution

35. Strengthening of GRC
Everyestablishmentwith20ormoreworkersisobligatedtoconstitutea
GrievanceRedressalCommittee.TheroleoftheCommitteeisresolvedisputes
relatedtogrievancesofindividualworkersconcerningnon-employment,terms
ofemploymentorconditionsofservice.Itwillconsistofequalrepresentatives
oftheemployerandworkers
WithaviewtostrengthentheGrievanceRedressalCommittee(whichisoneof
thebi-partiteforumsofsettlementofdisputesandgrievances),themaximum
numberofmembersintheGRChasbeenincreasedfromsixtoteninan
industrialestablishmentemploying20ormoreworkers{Section4(4)inthe
code}

36. Reducing Multiplicity of Adjudicating Bodies
InplaceofmultipleadjudicatingbodiesliketheCourtofInquiry,Boardof
ConciliationandLabourCourtsundertheIndustrialDisputesAct1947,
onlyIndustrialTribunalshavebeenenvisagedastheadjudicatingbodyto
decideappealsagainstthedecisionoftheconciliationofficer

37. Dispensing with the Requirement of Reference by the
Government for Adjudication
Atpresentthereisasystemofreferenceoftheindustrialdisputestothe
LabourCourt-cum-TribunalbytheappropriateGovernmentunderthe
IndustrialDisputesAct,1947.InthedraftIRCode,thereferencebythe
GovernmentwillnotberequiredfortheIndustrialTribunal,exceptfor
theNationalTribunal(Section54intheCode)

38. Strengthening of Industrial Tribunals
Constitutionoftwomembersindustrialtribunalwithsecondmemberfrom
administrativeside,inplaceofsinglememberLabourCourt/IndustrialTribunal,
atpresent
InviewofthelargenumberofpendingcasesduetovacanciesintheIndustrial
Tribunalsarisingoutofleave/resignation/transfer/deathofthesinglemember
leadingtodelayindisposalofcasesandhavingadverseimpactonthelabour
welfare
Presentlyabout23000casesarependingin22CentralGovernmentIndustrial
Tribunals(CGITs)whichincludeabout5000caseswhichweretransferredafter
mergeroftwoEmployeesProvidentFundAppellateTribunalswithCGITs

39. Abenchconsistingoftwomembersi.e.JudicialandAdministrativeshall
adjudicatecasesrelatingtodischarge,dismissal,retrenchment,closure,strike,
applicationandinterpretationofstandingorders
TheremainingcasescanbedecidedeitherbyaJudicialMemberoran
AdministrativememberoftheTribunalinthemannerasprescribed.This
flexibilityhasbeenprovidedtoensurespeedydisposalofcasesbythe
tribunal{Section44intheCode)
Thedisputesoftheregisteredtradeunionshavealsobeenincludedwithin
thejurisdictionofIndustrialTribunal{Section22intheCode}

40. Empowering the government officers to impose
penalty in certain cases
Wherethepunishmentisexclusivelyfine,suchfineshallbeimposedby
anofficer,notbelowtherankofUnderSecretarytotheGovernmentof
IndiaoranofficerofequivalentrankintheStateGovernmentappointed
bytheappropriateGovernment
SuchOfficerhasbeenprovidedwiththenecessarypowerforholding
inquiryandimposingthefineafterhearing.Thiswouldreducelitigation
inthecourtandensurespeedyredressalofcases(Section85inthe
Code)

41. Rationalization of Penalties
ThepenaltiesunderthisCodefordifferenttypesofviolationshavebeen
rationalizedtobecommensuratewiththegravityoftheviolations.For
example,Section86intheCodeprovidesthatanemployerwhocontravenes
theprovisionsofsection78(prohibitionoflay-off),79(conditionsprecedent
toretrenchmentofworkerstowhichChapter10applies),or80(procedurefor
closingdownanundertaking)shallbepunishablewithfinewhichshallnotbe
lessthanINR1,00,000,whichmayextendtoINR10,00,000forthefirst
offence{Section86(1)}
Incaseofthesecondandsubsequentoffencesrelatingtotheabove
mentionedsections,thepenaltyshallnotbelessthanINR5,00,000,which
mayextendtoINR20,00,000orwithimprisonmentwhichmayextendto6
months

42. Provision of Compounding of Offences
Ontheapplicationfromanaccusedperson,inrespectofanyoffence
punishableunderthisCode,whichisnotpunishablewithimprisonment,
itmaybecompoundedbyaGazettedOfficertobenotifiedbythe
appropriateGovernment
Theprocessofcompositionofoffencecanbedoneeitherbeforeorafter
theinstitutionofanyprosecution,forasumoffiftypercentofthe
maximumfineprovidedforsuchoffence

43. However,nooffenceshallbecompounded,ifithasbeenrepeated
withinaperiodoffiveyearsfromcommissionofsameoffence,which
wascompoundedonfirstoccasionorforsuchpersonwasconvictedfor
thesameoffenceearlier
Anyperson,whofailstocomplywithanordermadebytheofficer
competenttocompoundshallbeliabletopayadditionalpenalty
equivalentto20%ofthemaximumfineforsuchcompoundedoffence
(Clause89intheCode)

44. Implications of the IR Code for Industry and the
Workers
Thecodebydefiningemployeeandworkerdifferentlyhasdepriveda
substantialproportionofthosewhopracticallymaybedoingthework
verymuchidenticaltothatoftheworkersofmakinguseofthedispute
resolutionmechanism
Schemeworkerswhichconstituteasubstantialproportioninthe
workforcehavebeentotallyneglectedbythiscode
Excludingtheinstitutionsowedormanagedbyorganisationsengagedin
charitable,socialorphilanthropicservicesoutofthescopeofthe
industrywouldmakethesituationquiteworseforallthoseengagedin
suchsituations,anditmayleadtoincreaseinexploitationofthe
employeesengagedinsuchinstitutions

45. Therequirementofgiving14daysofnoticepriortostrikeandlock-out
alsoinnon-publicutilityservicesmayhelpinresolutionofdisputesby
thirdpartyintervention(i.e.conciliation)andthusreducingthechances
ofimprovingindustrialrelations
Thedefinitionofretrenchmentasprovidedinthecodealsoincludes
terminationoftheservicesofworkeronthegroundofcontinuedill
healthwhichmayproviderelieftoworkersinsuchsituations

46. Theintroductionoffixedtermemployment(FTE)asoneofthe
categoriesofpermissibleemploymentwithoutanyobjectivecriteria,
minimumandmaximumperiodandwithoutanyceilingonsuccessiveuse
ofFTCsmayinthelongrungivescopetotheemployerstoshiftmanyof
theworksandactivitiesfrompermanenttofixedtermandthus
adverselyaffectingtheemploymentsecurity
Theissueofmultiplicityofunions,whichisoneoftheimportantissue
pertainingtoeffectivecollectivebargainingandhealthyindustrial
relations,hasagainbeenleftuntouchedbynotmakinganychangeinthe
requirementofthemembershipof10percentoftheworkersor100
whicheverislessforthepurposeofregistration

47. Thetradeunionmovementinthecountryatpresentisalreadyquite
weakashardly7-8percentoftheworkersareorganised.Asitiswell-
knownthatitisonlytheregisteredtradeunionswhichareimmunefrom
civilandcriminalliabilitiesforactionsinfurtheranceoftradeunion
activities.Inasituationlikethisnon-providinganytimelimitfor
registrationmayleadtoweakeningtheformationoftradeunionsfurther
difficultbythedelaytactics
Thoughtheconceptofnegotiatingunionasintroducedinthecodeisa
welcomestepbuttherequirementof51percentofthemembershipon
themuster-rolloftheestablishmentmaybeadifficultproposition

48. Asperthepresentschemeofthecode,theprovisionsconcerningto
standingorders(whichpertainstoasimportantanaspectasregulation
ofserviceconditions)beingmadeapplicableonlytoestablishments
engaging300ormoreemployees.Itleavesalargeproportionofthe
employeesinestablishmentshavinglessthan300employees

49. Thanks 
Q/A