Industrial Relations Code, 2020, Consolidates and Amends Labour Laws in India

The Industrial Relations Code, 2020, an Act of Parliament, received the President's assent on September 28, 2020, and was subsequently published for general information on September 29, 2020. This comprehensive legislation was enacted to consolidate and amend the laws relating to Trade Unions, conditions of employment in industrial establishments or undertakings, and the investigation and settlement of industrial disputes, along with connected or incidental matters. The Code specifically repeals and replaces three significant prior enactments: the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947. The new Code introduces several key provisions, including a revised definition of "worker" to encompass working journalists and sales promotion employees, while excluding those in managerial or administrative capacities or supervisory roles earning above a specified threshold. It also formalizes "fixed term employment," ensuring such workers receive benefits equivalent to permanent workers on a proportionate basis, including gratuity after one year of service. The legislation further redefines "wages" by specifying inclusions and exclusions, with a crucial proviso that if certain excluded payments exceed fifty percent of total remuneration, the excess amount will be considered part of wages. The Code is slated to come into force on such date as the Central Government may appoint by notification in the Official Gazette, with the possibility of different dates for different provisions.

The legislative intent behind the Industrial Relations Code, 2020, was to streamline and modernize India's complex labour law framework, which was previously characterized by fragmented statutes. By consolidating the laws governing trade unions, industrial employment, and dispute resolution, the Code aimed to foster a more coherent and efficient industrial relations environment. A significant policy rationale was to enhance ease of doing business while simultaneously safeguarding the rights and welfare of workers. The earlier legal position, spread across multiple Acts, often led to ambiguities and operational challenges for both employers and employees. The Code addresses these statutory gaps by introducing clear definitions and mechanisms. For instance, it mandates the constitution of Grievance Redressal Committees in establishments with twenty or more workers, providing a structured approach for resolving individual grievances, and allows aggrieved workers to directly approach a Tribunal after a specified period of unsuccessful conciliation. The Code also establishes a framework for the recognition of negotiating unions or councils, requiring employers to engage with a sole negotiating union if it commands the support of fifty-one percent or more of the workers, or a negotiating council comprising unions with at least twenty percent support, thereby promoting collective bargaining. Furthermore, the Code raises the threshold for the applicability of standing orders (rules defining conditions of employment) and special provisions related to lay-off, retrenchment, and closure from 100 to 300 workers, which is intended to reduce the regulatory burden on smaller establishments. It also introduces a Worker Re-skilling Fund, requiring employers to contribute fifteen days' wages for every retrenched worker, with the amount to be credited to the worker's account within forty-five days, thereby providing a safety net and facilitating re-employment. The legislation provided: “An Act to consolidate and amend 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.” This central objective underscores the Code's ambition to create a unified and contemporary legal regime for industrial relations. The Code also outlines specific penalties for unfair labour practices by both employers and trade unions, and for various contraventions of its provisions, with a mechanism for compounding certain offences. It also bars the jurisdiction of civil courts in matters covered by the Code, ensuring that disputes are resolved through the prescribed industrial relations machinery.

Keywords: Industrial Relations Code, 2020, labour law, Trade Unions, industrial disputes, fixed term employment, worker re-skilling fund, standing orders, retrenchment, lay-off, closure, conciliation, tribunals, unfair labour practices

Geo Tags: India District: Not Applicable