The Industrial Relations Code (Code) is enacted with the object to amend and consolidate laws relating to the trade unions, employment conditions in industrial establishments and undertakings, investigation and settlement of the industrial matters, and the connected matters.
The Industrial Relations Code is enacted to reform the present laws related to the recognition of trade unions to protect the workers’ rights, conditions of employment in industrial establishments, employer-workers relationship, and settlement of the disputes arising in the industries.
The Code under 14 Chapters, with 104 Sections and 3 Schedules, integrates, and simplifies the below-mentioned Acts relating to Trade Unions, Employment Conditions in Industrial Establishments and Undertakings, Investigation and Settlement of the Industrial Matters, and incidentally connected matters:
The Code is applicable to the whole of India.
The Central Government will notify in the Official Gazette of the date on which the Code will become effective and operational. It may be a single date appointed to bring the entire Code operational, or there may be different dates appointed for different provisions to come into force.
The appropriate Government may order to constitute a Works Committee by 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. The Committee should have an equal number of representatives of the employer and workers engaged in such establishment. The Government casts the duty upon such Works Committee of promoting 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. The Committee should have adequate women workers representation and total members shall not exceed ten. It should have an equal number of representatives of the employer and workers engaged in such an establishment. The chairperson of the Grievance Redressal Committee shall be selected from among persons representing the employer and the workers alternatively on a rotational basis every year.
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.
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.
The Standing Orders apply to every industrial establishment that has 300 or more workers employed or were employed on any day of the preceding 12 months excluding the workers of industrial establishments to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control, and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defense Service (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, apply.
The model standing orders relating to the conditions of service and other incidental, connected matters shall be made by the Central Government.
The employer, within a period of 6 months from the effective date of the Code should prepare a draft standing order based on the Central Government’s model order for the matters specified in the First Schedule to the Code and on any other matter the employer considers it necessary to incorporate based on the nature of activity in its industrial establishment or undertaking which should be consistent with the Code and First Schedule. While drafting the standing order, the employer should consult the trade union or the recognized negotiating union, or the council and forward it electronically or otherwise to the Certifying Officer for Certification. The standing order that adopts the Central Government’s model order without any modifications, is deemed to have been certified and the employer should forward the information to the concerned Certifying Officer as prescribed.
The Certifying Officer, upon the receipt of the draft order, will issue notice to the respective trade union or the negotiating union or council of such industrial establishment seeking their comments. The Certifying Officer should complete the procedure for the draft standing order or the draft modifications within a period of 60 days and certify the draft or modifications within 7 days and send copies to the employer and to the trade union/negotiating union/council. from the date of receipt of it failing which such draft or the modifications shall be deemed to have been certified on the expiry of the said period.
The existing standing orders of any industrial establishment at the time of commencement of this Code if not inconsistent with the requirements prescribed under the Code, is deemed to be the certified order under this Code.
The employer cannot make changes to the conditions of service applicable to any worker in respect of matters specified in the Third Schedule:
The employer need not give any notice for effecting any changes:
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 forward 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:
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.
The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes and for performing such other functions as may be assigned to them under this Code. Such Tribunal shall also exercise the jurisdiction, powers and authority conferred on the Tribunal, as defined in clause (m) of section 2 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 by or under that Act.
The Tribunal will decide the cases only relating to:
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.
The workers employed in an industrial establishment are prohibited to go on strike, in breach of contract:
The employer of an industrial establishment is prohibited to lock-out any of his workers:
The notice of strike or lock-out under is not necessary where there is already in existence a strike or lock-out, but the employer should send intimation of such lock-out or strike on the day on which it is declared, to such authority as may be specified by the appropriate Government either generally or for a particular area or for a particular class of services.
The notices received by the concerned workers or employer as mentioned above in the case of strike or lockout, the same should be reported to the appropriate Government within 5 days or to such authority as that Government may prescribe and to the conciliation officer, the number of such notices received or given on that day.
A strike or lock-out shall be illegal if it is:
Where a strike or lock-out in pursuance of an industrial dispute has already commenced and is in existence at the time of the filing of the application relating to such industrial dispute in the Tribunal or of the reference of such industrial dispute to an arbitrator or a National Industrial Tribunal, the continuance of such strike or lock-out shall not be deemed to be illegal, provided that such strike or lock-out was not at its commencement in contravention of the provisions of this Code or the continuance thereof was not prohibited by an order of the appropriate Government.
A lock-out declared in consequence of an illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be illegal.
Knowingly spending or applying for any money in direct furtherance or support of any illegal strike or lock-out is prohibited.
A worker (except badli or casual worker):
If is laid-off, whether continuously or intermittently, the employer should pay such worker for all the days during which the worker is so laid-off, (except for the intervening weekly holidays) a compensation equal to 50% of the total basic wages and dearness allowance that would have been payable to the worker if not been so laid-off.
Provided that if during any period of 12 months, a worker is so laid-off for more than 45 days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first 45 days, if there is an agreement to that effect between the worker and the employer.
Provided further that it shall be lawful for the employer in any case falling within the foregoing proviso to retrench the worker in accordance with the retrenchment provisions at any time after the expiry of the first 45 days of the lay-off and when he does so, any compensation paid to the worker for having been laid-off during the preceding 12 months may be set off against the compensation payable for retrenchment.
Explanation: A badli worker means a worker who is employed in an industrial establishment in the place of another worker whose name is borne on the muster rolls of the establishment but shall cease to be regarded as such if he has completed one year of continuous service in the establishment.
Note: Despite those workers in any industrial establishment have been laid-off, it is the duty of every employer to maintain a muster roll and make entries in it by workers who may present themselves at the establishment at the appointed time during normal working hours.
The employer need not pay a laid-off worker in the following situations:
These provisions are not applicable to:
For questions that arise whether an industrial establishment is of a seasonal character or whether work is performed therein only intermittently, the decision of the appropriate Government thereon shall be final.
Explanation: industrial establishment shall mean:
An employer shall not retrench a worker employed in any industry who has been in continuous service for not less than 01 year under such employer until:
Any worker in an industrial establishment who is a citizen of India, is to be retrenched and he belongs to a particular category of workers in that establishment, then, in the absence of any agreement between the employer and the worker on this behalf, the employer shall ordinarily retrench the worker who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other worker.
When any worker is retrenched and the employer proposes for employment any person within 01 year of such retrenchment, the employer should give an opportunity to the retrenched workers who are citizens of India to offer themselves for re-employment, and such retrenched workers who offer themselves for re-employment shall have preference over other persons.
If the ownership or management of an establishment is transferred, by agreement or by operation of law, from the current employer to a new employer, every worker who has been in continuous service for not less than 01 year in that establishment immediately before such transfer shall be entitled to notice and compensation in accordance as if the worker had been retrenched.
This shall not apply to a worker in any case where there has been a change of employers by reason of the transfer, if:
A worker is said to be on continuous service when such worker’s service may be interrupted on account of:
Note: where a worker is not in continuous service for a period of 01 year or 06 months, the worker shall be deemed to be in continuous service under an employer:
For a period of one year, if the worker during a period of 12 months preceding the date with reference to which calculation is to be made has actually worked under the employer for not less than:
For a period of 06 months, if the worker during a period of 06 months preceding the date with reference to which calculation is to be made has actually worked under the employer for not less than:
Note: The number of days on which a worker has actually worked under an employer shall include the days on which:
When an undertaking has to be closed, the employer should serve at least 60 days’ notice before the date on which the intended closure is to become effective, clearly stating the reasons for the intended closure of the undertaking.
This doesn’t apply to:
If the appropriate Government is satisfied that owing to certain exceptional circumstances such as an accident in the undertaking or death of the employer or an extraordinary situation such as natural calamities or the like, direct that aforesaid closure provisions shall not apply in relation to such undertaking for such period, as may be specified in its order.
When an establishment is closed down for any reason whatsoever, every worker who has been in continuous service for not less than 01 year in that undertaking immediately before such closure shall be entitled to notice and compensation in accordance with the retrenchment provisions as if the worker had been retrenched. Where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the worker under the said retrenchment provisions, shall not exceed his average pay for 3 months.
The following circumstances are not considered as unavoidable circumstances beyond the control of the employer for the closure:
When an undertaking engaged in mining operations is closed down by reason merely of exhaustion of the minerals it shall be entitled to any notice or compensation in accordance with the retrenchment provisions if:
Where any undertaking set up for the construction of buildings, bridges, roads, canals, dams, or other construction work is closed down on account of the completion of the work within 2 years from the date on which the undertaking had been set up, the workers employed in it are not entitled to compensation as specified under the retrenchment provision, but if the construction work is not so completed within 2 years, the worker is entitled to notice and compensation under that section for every completed year of continuous service or any part thereof in excess of 6 months.
The Code introduces a special fund called Worker Re-Skilling Fund that will be set up by the appropriate Government.
This Fund shall consist of:
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.
The Code prohibits the employer, worker, trade union whether registered or not from indulging in any unfair trade practices that are listed under the Second Schedule.
The Code brings in changes in the penalties for the contravention of certain provisions as given here below:
Such violations attract a fine of Rs. 50 thousand to Rs. 2 lakhs.
Attract a Fine of Rs. 1 lakh to Rs. 5 lakhs and/or imprisonment up to 6 months.
Lay off, retrenchment or closure attract a fine of Rs. 1 lakh to Rs. 10 lakhs and if repeated after convicted, the subsequent violation attract a fine of Rs. 5 lakhs to Rs. 20 lakhs and/or imprisonment up to 6 months.
Indulging in any unfair labor practice attract a fine of Rs. 10 thousand to Rs. 2 lakhs and if repeated after conviction, the subsequent violation attracts a fine of Rs. 50 thousand to Rs. 5 lakhs and/or imprisonment up to 3 months.
The Central Government has notified the Draft Industrial Relation (Central) Rules, 2020. It shall come into force after the date of their final publication in the Official Gazette, on the date of the commencement of the Industrial Relations Code.
The Draft Rules when becomes effective will subsume the following Rules:
Average pay means the average of the wages payable to a worker in the case of:
preceding the date on which the average pay becomes payable if the worker had worked for 3 calendar months or 4 complete weeks or 12 full working days, as the case may be, and where such calculation cannot be made, the average pay shall be calculated as the average of the wages payable to a worker during the period he actually worked.
Employee means any person employed by an industrial establishment to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical, or clerical work for hire or reward, whether the terms of employment be express or implied, and also includes a person declared to be an employee by the appropriate Government but does not include any member of the Armed Forces of the Union and an apprentice engaged under the Apprentices Act, 1961.
Employer means a person who employs direct or indirect employees (through a contractor) in his establishment and where the establishment is carried on by any department of the Central Government or the State Government, the authority specified, by the head of such department, in this behalf or where no authority, is so specified the head of the department and in relation to an establishment carried on by a local authority, the chief executive of that authority, and includes:
Fixed Term Employment means the engagement of a worker on the basis of a written contract of employment for a fixed period:
Industry means any systematic activity carried on by co-operation between an employer and worker (whether such worker is employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfying human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not:
but does not include:
Industrial Dispute means any dispute or difference between:
which is connected with the:
Lay-off means the failure, refusal, or inability of an employer on account of a shortage of coal, power, or raw materials or the accumulation of stocks or the break-down of machinery or natural calamity or for any other connected reason, to give employment to a worker whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.
Explanation: Every worker whose name is borne on the muster rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during normal working hours on any day and is not given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid-off for that day within the meaning of this clause:
Provided that if the worker, instead of being given employment at the commencement of any shift for any day is asked to present himself for the purpose during the second half of the shift for the day and is given employment then, he shall be deemed to have been laid-off only for one-half of that day:
Provided further that if he is not given any such employment even after so presenting himself, he shall not be deemed to have been laid-off for the second half of the shift for the day and shall be entitled to full basic wages and dearness allowance for that part of the day.
Lock-Out means the temporary closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him.
Retrenchment means the termination by the employer of the service of a worker for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include:
Settlement means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and worker arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties as may be prescribed and a copy has been sent to an officer authorized in this behalf by the appropriate Government and to the conciliation officer.
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 and includes the concerted casual leave on a given day by 50% percent. or more workers employed in an industry.
Trade Union means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workers and employers or between workers and workers, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions:
Provided that the provisions of Trade Union in this Code shall not affect:
Trade Union Dispute means any dispute relating to Trade Union arising between 2 or more Trade Unions or between the members of a Trade Union inter se.
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:
but does not include:
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.
Worker means any person (except an apprentice as defined under the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward, whether the terms of employment be express or implied, and includes working journalists as defined in the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 and sales promotion employees as defined in the Sales Promotion Employees (Conditions of Service) Act, 1976, and for the purposes of any proceeding under this Code in relation to an industrial dispute, includes any such person who has been dismissed, discharged, or retrenched or otherwise terminated in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person:
Provided that for the purposes of Trade Unions, worker: