Industrial Relations Code, 2020 - FAQs

Objectives, Threshold & Definitions under IR Code

What is the object of enacting Industrial Relations Code, while there are existing laws relating to the Industrial Disputes?

The purpose of enacting the Industrial Relations Code is to consolidate the laws relating to the Industrial Disputes, Trade Unions and the Standing Orders by introducing the term ‘Industrial Relations’ under one roof to harmonize and expand the framework to protect workers’ rights, mitigate frictions between the employer and workers.

Is there any increase in the threshold of workers under the Code?

Yes, the Code has increased the threshold from 100 to 300 or more workers employed or have been employed on any day in the preceding 12 months to constitute a Works Committee and for the applicability of the Standing Orders.

Are there any changes in the definitions or inclusion of new terms under the Code?

Yes, the notable changes are:

Re-defining the term Industry as any systematic activity carried on by co-operation between the employer and worker (includes direct employment, through agency and contractor), for production, supply, or distribution of goods or services with a view to satisfying human wants or wishes (except wishes / wants of mere religious/spiritual nature) whether or not: (i) any capital has been invested for the purpose of carrying out such activity; or (ii)such activity is carried on with a motive to make a profit or gain. However, institutions owned or managed by organizations wholly or substantially engaged in charitable, social, or philanthropic services, the activity of appropriate government constituting sovereign functions, domestic services do not fall under this definition.  

Expansion of the definition of Worker to include persons getting wages up to Rs. 18000.

Modification of the term Strike as 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 and includes the concerted casual leave on a given day by 50% percent. or more workers employed in an industry.

Re-defined the term Wages uniformly under all the 4 labour codes as:

Wages means all remuneration whether, by way of salaries, allowances, or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes:

  • (i) basic pay;
  • (ii) dearness allowance; and
  • (iii) retaining allowance, if any,

but does not include:

  • (a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment; 
  • (b) the value of any house accommodation, or of the supply of light, water, medical attendance, or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government; 
  • (c) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; 
  • (d) any conveyance allowance or the value of any traveling concession; 
  • (e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; 
  • (f) house rent allowance; 
  • (g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal; 
  • (h) any overtime allowance; 
  • (i) any commission payable to the employee; 
  • (j) any gratuity payable on the termination of employment; 
  • (k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment:

Provided that, for calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceeds one-half or such other percent. as may be notified by the Central Government, of all remuneration calculated under this clause, the amount which exceeds such one-half, or the percent. so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause:

Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g), and (h) shall be taken for computation of wage.

Explanation: Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen percent. of the total wages payable to him, shall be deemed to form part of the wages of such employee.

Benefits under Fixed Term Employment - IR code

Are there any benefits provided for the workers employed under fixed term employment?

Yes, the Code provides for statutory benefits such as PF, ESI, Bonus, Gratuity for the fixed term employees.

Workers Re-skilling scheme - IR Code

What is a worker re-skilling fund?

The Code has introduced the concept of a special fund for the workers to re-skill when they are retrenched.

This Fund shall consist of (i) the contribution of the employer of an industrial establishment an amount equal to 15 days wages last drawn by the worker immediately before the retrenchment, or (ii) such other number of days as may be notified by the Central Government, for every retrenched worker in case of retrenchment only; and (iii) the contribution from such other sources as may be prescribed by the appropriate Government.

This fund shall be utilized by crediting 15 days wages last drawn by the worker to his account who is retrenched, within 45 days of such retrenchment.

Forums & Redressal Mechanisms - IR Code

What is the role of Bi-Partite Forums?

The appropriate Government may order the employer having an industrial establishment comprising 100 or more workers are employed or have been employed on any day in the preceding 12 months, to constitute a Works Committee. It is the duty of such Works Committee to promote measures to secure, preserve the harmonious and good relationship between the employer and workers.

Industrial Establishments having 20 or more workers shall have 1 or more Grievance Redressal Committees to resolve the disputes arising out of individual grievances. An application in respect of any individual grievance/dispute may be filed before the Committee by any aggrieved worker within 1 year from the date on which the cause of action of such dispute arises. The Committee may complete its proceedings within 30 days of receipt of the application. The worker who is aggrieved by the decision of the Committee or whose grievance is not resolved in the said Committee within the period of 30 days, may, within a period of 60 days from the date of the decision of the Committee or from the date on which the 30 days period expires, file an application for the conciliation of such grievance to the conciliation officer through the Trade Union, of which he is a member.

What are the redressal mechanisms for Industrial Disputes?

Industrial Disputes have to resolve either through Arbitration, or the industrial tribunal.

Arbitration

In the situation where any industrial dispute is likely to arise or exists, the employer and the workers, are recommended to refer such matters to arbitration. The employer and workers have to execute a written agreement about the arbitrable matters, specifying the appointment of arbitrator(s), related terms, and a copy of the agreement should be forwarded to the appropriate Government and the Conciliation Officer.

When an industrial dispute has been referred to arbitration and the appropriate Government is satisfied that the persons making the reference represent the majority of each party, the appropriate Government may issue a notification and when any such notification is issued, the employers and workers who are not parties to the arbitration agreement but are concerned in the dispute shall be given an opportunity of presenting their case before the arbitrator or arbitrators, provided,

Where the industrial dispute is a dispute other than the termination of an individual worker by way of discharge, dismissal, retrenchment, or otherwise, the workers shall be represented before the arbitrator:

  • where there is negotiating union or negotiating council, by the negotiating union; or negotiating council; or 
  • where there is no negotiating union or negotiating council, by the Trade Union; or 
  • where there is no Trade Union, by such representatives of the workers chosen in such manner as may be prescribed;
  • where such industrial dispute relates to termination of an individual worker by way of discharge, dismissal, retrenchment, or otherwise, the concerned workers shall be represented in person or through a representative authorized by him;
  • where an industrial dispute has been referred to arbitration and a notification has been issued the appropriate Government may, by order, prohibit the continuance of any strike or lock-out in connection with such dispute which may be in existence on the date of the reference.

Conciliation

The appropriate Government may appoint such a number of persons, as it thinks fit to be conciliation officers, charged with the duty of mediating in and promoting the settlement of industrial disputes. A conciliation officer may be appointed for a specified area or for specified industries in a specified area or for one or more specified industries and either permanently or for a limited period.

Industrial Tribunal and National Tribunal

The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes and will decide the cases only relating to:

  • the application and interpretation of standing order; 
  • discharge or dismissal of workmen including reinstatement of, or grant of relief to, workmen dismissed;
  • illegality or otherwise of a strike or lockout;
  • retrenchment of workmen and closure of establishment; and
  • Trade Union disputes.
  • The remaining cases shall be decided by the bench of the Tribunal.

The Central Government may constitute one or more National Industrial Tribunals for the adjudication of industrial disputes which, in the opinion of the Central Government, involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by such disputes.

Trade Unions - IR Code

How the Trade Unions are to be formed?

Any trade union having 7 or more members may register it under the Code electronically or otherwise. At the time of making an application for registration,  the trade union should have at least 10% of the workers or 100 workers, whichever is less, as its members are engaged or employed in the industry or industrial establishment with which the union is connected. The Code introduces the concept of recognizing a registered trade union in an industrial establishment as the negotiating union or council to negotiate with the employer on matters the appropriate Government may prescribe.

Notice of Changes in Service conditions - IR Code

What are the conditions an employer to bear in mind while changing the conditions of service applicable to a worker?

The employer cannot make changes to the conditions of service applicable to any worker in respect of matters specified in the Third Schedule:

  • without giving reasonable notice to the workers about the proposed changes; or  
  • within 21 days of giving such notice.

The employer need not give any notice for effecting any changes:

  • where the change is effected in pursuance of any settlement or award;  
  • where the workers likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control, and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Services Regulations, Civilians in Defence Services (Classification, Control, and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply; 
  • in case of an emergent situation which requires a change of shift or shifts working, otherwise than in accordance with standing orders, in consultation with Grievance Redressal Committee;  

if such change is effected in accordance with the orders of the appropriate Government or in pursuance of any settlement or award.

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