Module 6

MODULE 6
THE INDUSTRIAL RELATIONS CODE, 2020

The 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 and for matters connected therewith or incidental thereto. It
received the President's assent on 28th September 2020.

6.1. DEFINITION OF WORKER

As defined in Section 2(f) of the Working Journalists and Other Newspaper Employees
(Conditions of Service) and Miscellaneous Provisions Act, 1955 and Section 2(d) of the Sales
Promotion Employees (Conditions of Service) Act, 1976, the definition of a 'worker' has been
extended to include working journalists within its scope. In addition, under the definition,
individuals employed in a supervisory capacity and earning less than Rupees Eighteen
Thousand Only (Rs. 18,000/-) per month (or any amount as notified by the Central
Government) have also been brought under the ambit of this definition.

6.2. DEFINITION OF INDUSTRY

The definition of 'industry' under the Code clearly excludes-
• the organizations wholly or substantially engaged in any charitable, social or
philanthropic service owned or operated by the organisation; or
• any activities of the competent government relating to its sovereign duties including
any activities carried out by the central government departments dealing with defence
science, nuclear energy and space; or
• any domestic service or any other practise, as the Central Government may have
notified.

6.3. DEFINITION OF INDUSTRIAL DISPUTE

This definition has been extended to include within its meaning, any conflict or discrepancy
between an individual worker and an employer related to or resulting from any discharge,
dismissal, retrenchment or termination of that worker.

6.4. STRIKE

This definition has been extended to include the concerted casual leave of fifty percent or more
employees working in an industry on a given day. Under the Industrial Disputes Act, some
other organisations such as hospitals, educational institutions, research institutions, etc. that
were previously exempted, have now been exempted from this set of exceptions.

A strike is a legal right. It is an important right recognised under the Industrial
Disputes Act, 1947. The scheme of the Industrial Disputes Act, 1947 implies a
right to strike in industries. A wide interpretation of the term industry by the
courts includes hospitals, educational institutions, clubs and government
departments. Section 2 (q) of the Act defines strike as "strike means a cessation
of work by a body of persons employed in any industry acting in combination
or a concerted refusal, or a refusal, under; a common understanding of any
number of persons who are or have been so employed to continue to work or
to accept employment”. Sections 22, 23, and 24 all recognize the right to strike.
Section 24 differentiates between a legal strike and an illegal strike.

6.5. DEFINITION OF EMPLOYER

The definition of ‘employer’ includes the occupant of the factory as specified in section 2(n)
of the Factories Act, 1948 in relation to an establishment that is a factory and, where a person
has been appointed as a factory manager under section 7(1)(f) of that act, the person so named.
It also includes the person who, or the authority that has absolute power over the affairs of the

establishment, and where the affairs are entrusted to the manager or managing director, the
manager or managing director, in respect of any other establishment. The definition also
includes entrepreneurs and deceased employer’s legal representatives.

6.6. EXPLANATION OF FIXED TERM EMPLOYMENT

The Code incorporates a new 'fixed-term employment' provision which refers to the
engagement of a worker for a fixed duration on the basis of a written contract of employment,
provided that, his or her working hours, salaries, allowances and other benefits shall not be less
than that of a permanent worker doing same or similar work. The concerned person shall be
eligible for all statutory benefits available to a permanent worker. These shall be proportionate
to the length of service provided by the worker, even if the period of employment does not
extend to the qualifying period of employment specified by the statute. If he / she performs a
service under the contract for a term of one year, he / she is liable for gratuity.

6.7. STANDING ORDERS

The Code specifies that all industrial enterprises with three hundred (300) employees are bound
by the regulations relating to standing orders. Employers of such institutions are required to
draw up Standing Orders in respect of the matters referred to in the First Schedule of the Code.
The schedule discusses the following subjects:

- Classification of staff, whether permanent, temporary, interns, probationers, or fixed-
term employees

- Way of intimating times and hours of service, holidays, pay days and salary scales to
employees

- Shift Working
- Attendance and late arrival
- The conditions, the process for applying, and the authority that may grant leave and

vacations
- Requirement for accessing premises through certain gates, and liability for search
- Closing and reporting of parts of the industrial establishment, temporary stoppages of

work and the employer's and workers' rights and responsibilities resulting from them

- The termination of employment and the notice to be issued by the employer and the
employees thereof

- Suspension or dismissal for wrongdoing, and actions or omissions that constitute
wrongdoing

- Means of redress for employees by the employer or its agents or servants against unjust
discrimination or wrongful misconduct

- Any other matter which, by notification, may be identified by the appropriate
government

Model Standing Orders relating to terms of service and other matters incidental to or related to
this are required by the Central Government. If an employer adopts a Model Standing Order of
the Central Government with regard to matters relating to the industrial establishment or
undertaking of the employer, that Model Standing Order shall be deemed to have been certified.
The employer shall transmit to the Certifying Officer concerned the details in the manner as
prescribed.

6.8. APPLICATION OF STANDING ORDERS

The Code modifies the minimum worker threshold required for Standing Orders to be valid.
Standing Orders are laws regulating the conduct of employees. They are designed for issues
such as working hours, attendance, vacations, termination, etc. Before being implemented in
the industrial establishment, they have to be certified by the Certifying Officer appointed by
the government under the Code.

The Code has raised the minimum number of workers in an establishment from 100 to 300 for
the applicability of Standing Orders. Similarly, under Chapter X of the Code, without the prior
permission of the appropriate government, establishments with 300 or more employees will
not lay off or retrench workers. For this, the old cap was 100 workers. It is claimed that the rise
in the minimum number of workers allows employers to have unfettered rights to control the
conduct of workers in facilities with less than 300 employees. Violation of this clause will
attract a fine of Rs 1,00,000, which may be extended to Rs 10,00,000. Some argue that this will
encourage employers to recruit and fire at their whim, thus threatening job security. The
government claims, however, that the older threshold required establishments to keep fewer

than 100 employees to avoid the provisions. The reforms would allow businesses to hire more
workers, thus increasing employment.

6.9. GRIEVANCE REDRESSAL COMMITTEE

The Code specifies that any organisation employing twenty or more employees shall have one
or more grievance redressal committees to resolve disputes arising out of individual grievances.
The committee shall consist of an equal number of representatives of the employers and
workers appointed in the manner prescribed. Furthermore, the total number of members in such
a committee shall not exceed 10. The representation of women workers in the committee shall
be adequate and shall not be less than the proportion of women workers to the total number of
workers in the establishment. The earlier legislations provided for grievance resolution
authorities in institutions employing a minimum of fifty employees. It did not provide for fair
representation of women.

6.10. INDUSTRIAL TRIBUNALS

In order to decide industrial disputes, the Code provides for the establishment of one or more
Industrial Tribunals and a National Industrial Tribunal. Industrial tribunals shall be formed in
place of several existing adjudicating bodies under the Industrial Disputes Act, such as the
court of investigation, the conciliation board and the labour courts. Each Industrial Tribunal
shall be composed of two members to be appointed by the appropriate government, one of
whom shall be a member of the judiciary and one of whom shall be an administrative member.
Furthermore, the Central Government may, by notification, constitute one or more National
Industrial Tribunals for the adjudication of industrial disputes which, in the opinion of the
Central Government, involve or are of such a nature that industrial establishments located in
more than one State are likely to be interested in or affected by such disputes. The National
Industrial Tribunal will have two members to be nominated by the Central Government.

6.11. NEW FEATURES ON STRIKES

No employee will go on strike without giving a notice of strike within sixty days before going
on strike; or within fourteen days of giving such notice of strike; or before the expiry of the
date of strike given in the notice; or during pending conciliation proceedings; or seven days
after the conclusion of conciliation proceedings; or during the period of pending arbitration
proceedings. Likewise, no employer of an industrial establishment shall lock-out any of its
workers without following the conditions mentioned above.
6.12. LAY-OFF, CLOSURE AND RETRENCHMENT

Lay-off: A layoff is the temporary suspension or permanent termination of
employment of an employee or, more commonly, a group of employees (collective
layoff) for business reasons, such as personnel management or downsizing (reducing the
size of) an organization.

Closure: As per Industrial Disputes Act, 1947 closure means the permanent closing down
of a place of employment or part of it as the case maybe.

Retrenchment: As per Industrial Disputes Act, 1947, retrenchment means the termination

by the employer of the service of a workman for any reason whatsoever, otherwise than

as a punishment inflicted by way of disciplinary action, but doesn't include, (a) Voluntary

retirement

(b) Retirement of the workman on reaching the age of superannuation if the contract of

employment between the employer and the workman concerned contains a stipulation in

that behalf; or [(bb) termination of the service of the workman as a result of the on-renewal

of the contract of employment between the employer and the workman concerned on its

expiry or of such contract being terminated under a stipulation in that behalf contained

therein; or]

(c) Termination of the service of a workman on the ground of continued ill-health.

Industrial enterprises with more than hundred workers were required under the Industrial
Disputes Act to obtain prior authorization from the appropriate government to lay-off / retrench
workers, as well as in the event of the industrial enterprise being closed. This provision has
been waived by the Code for industrial establishments such as mines, plants and plantations
employing not less than three hundred workers or a higher number as may be stated by the
appropriate Government. However, in situations where such lay-off is due to power shortages,
natural disasters and in the case of a mine, due to fire, flooding, excess of flammable gas or

explosion, it is not mandatory to seek prior permission. In the event that the Government fails
to inform the employer of an order granting or refusing to grant an authorisation within a period
of sixty days from the date on which the application is made, the authorisation requested shall
be deemed to have been granted at the expiry of the period of sixty days and the application
shall be deemed to have been terminated.

6.13. APPOINTMENT OF A NEGOTIATING UNION/COUNCIL

In an industrial establishment that has a registered trade union for negotiation on such matters
as may be prescribed, the Code provides for a single Negotiating Union / Committee. Where
only one trade union of registered employees exists, the employer of that establishment shall,
according to the prescribed requirements, accept that trade union as the sole workers'
Negotiating Union. If more than one trade union exists, then the union with fifty-one percent
or more of the workforce will be the sole workers' negotiating union. Furthermore, if more than
one trade union of employees exists in an industrial establishment and no such trade union has
fifty-one percent or more of the workforce, the employer shall appoint a Negotiating Council
which shall have no less than twenty percent of the total workforce of that industrial
establishment.

6.14. WORKER RE-SKILLING FUND

The Code consists of provisions for the re-skilling of those workers who have been laid-off so
that they can find employment again. It establishes a Worker Re-skilling Fund that will consist
of the following:
(i) Contribution by the employer of an industrial establishment a sum equal to fifteen-day salary
last drawn by the employee immediately prior to retrenchment, or any other number of days
notified by the central government, in case of any retrenched worker only in the event of
retrenchment, and
(ii) Contribution from other sources, as may be defined by the appropriate government.

The fund shall be used by crediting fifteen days of salaries last drawn by the retrenched worker
into his account, in the manner specified, within forty-five days of retrenchment. In terms of
offering a more simplified framework for conflict resolution, the Code appears to be a step in

the right direction. The formation of a negotiating Union/Committee would also help to achieve
more balanced agreements between employers and employees.

6.15. ANALYSIS

The logistics sector was granted the status of ‘infrastructure’ in 2017. This has enabled the
sector to avail benefits such as infrastructure lending on easier terms and availing more funds
from sources like External Commercial Borrowings (ECBs) and India Infrastructure Financing
Company Limited (IIFCL). Since the subject of labour is mentioned in the concurrent list, both
the centre and states can make laws on it. Recently, the government of Uttar Pradesh conferred
‘industry’ status on the logistics sector.1 After becoming an ‘industry,’ the logistics sector will
be governed by the provisions of the Code that apply to industries. This move will also help to
reduce the cost of establishing such units and ease creating employment opportunities. It is
aimed at increasing the ease of doing business in the state thereby attracting investments. These
benefits will help to strengthen the infrastructure in the logistics sector, right from transport to
storage facilities to adoption of advanced technology and will also help to improve the supply
chain. On the national level, the flexibility offered by the Code to employers will allow logistics
companies to expand their scope while remaining in compliance with the Code.

1 ‘UP gives industry status to warehousing and logistics sector’ Financial Express

<https://www.financialexpress.com/industry/up-gives-industry-status-to-warehousing-and-logistics-
sector/1958220/>