Industrial Relations Code, 2020 Consolidates Labour Laws, Introduces New Framework

New Delhi: The Industrial Relations Code, 2020, an Act of Parliament, was published on June 16, 2025, in the Gazette of India. This comprehensive legislation aims to consolidate and amend the laws relating to trade unions, conditions of employment in industrial establishments, and the investigation and settlement of industrial disputes. The Code will come into force on a date to be appointed by the Central Government through notification, with different dates possible for different provisions.

The new Code introduces several key provisions and changes to the existing labour law landscape. It defines various terms crucial to industrial relations, including "Appellate Authority," "Appropriate Government," "Arbitrator," "Average Pay," "Award," "Banking Company," "Certifying Officer," "Closure," "Conciliation Officer," "Conciliation Proceeding," "Controlled Industry," "Employee," "Employer," "Executive," "Fixed Term Employment," "Industry," "Industrial Dispute," "Industrial Establishment or Undertaking," "Insurance Company," "Lay-off," "Lock-out," "Major Port," "Metro Railway," "Mine," "National Industrial Tribunal," "Negotiating Union or Negotiating Council," "Notification," "Office Bearer," "Prescribed," "Railway," "Registered Office," "Registered Trade Union," "Registrar," "Retrenchment," "Settlement," "Standing Orders," "Strike," "Trade Union," "Trade Union Dispute," "Tribunal," "Unfair Labour Practice," "Unorganised Sector," and "Wages," and "Workman." Notably, "fixed term employment" is defined as the engagement of a workman on a written contract for a fixed period, ensuring benefits proportional to service rendered and gratuity after one year. The definition of "wages" has been streamlined to include basic pay, dearness allowance, and retaining allowance, while excluding certain other payments, with a proviso for payments exceeding 50% of total remuneration to be included.

The Code mandates the establishment of bi-partite forums, including Works Committees in establishments with 100 or more workmen and Grievance Redressal Committees in establishments with 20 or more workmen, with provisions for adequate representation of women. It outlines detailed procedures for the registration, rights, and liabilities of Trade Unions, including the recognition of a Negotiating Union or Negotiating Council based on verified support from workmen. For the first time, the Code sets a threshold of 300 or more workmen for the applicability of Standing Orders, which govern conditions of service. Employers are required to prepare draft standing orders based on model orders and have them certified. The legislation also specifies a process for voluntary arbitration of disputes and establishes a machinery for dispute settlement through Conciliation Officers, Industrial Tribunals, and National Industrial Tribunals, with provisions for transfer of pending cases from previous enactments. Strict prohibitions and notice requirements are laid down for strikes and lock-outs, with penalties for illegal actions.

Special provisions address lay-off, retrenchment, and closure, particularly for establishments employing 300 or more workmen, requiring prior permission from the appropriate government. A significant introduction is the Worker Re-skilling Fund, to which employers contribute, aimed at providing support to retrenched workmen. The Code explicitly prohibits unfair labour practices by both employers and workmen, as detailed in the Second Schedule, and prescribes penalties for various offences, including violations related to standing orders, illegal strikes/lock-outs, and unfair labour practices. Offences by companies are also addressed, with provisions for compounding of certain offences. The legislation provided: “...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.”

The legislative intent behind