Industrial Relations Code, 2020

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.

Key Objectives

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 Trade Unions Act, 1926;
  • The Industrial Employment (Standing Orders) Act, 1946; and
  • The Industrial Disputes Act, 1947

Highlights of the IR Code

  • Introduces the term Industrial Relations with the intent to provide a broader framework for protecting the rights of workers, minimize frictions between the employers and workers, redress and settle the differences.  
  • Provides for Fixed Term Employment enabling such employees to receive the statutory benefits such as ESI, PF, Bonus, Wages, including Gratuity like that of a permanent worker other than the notice period after the conclusion of a fixed period, and retrenchment compensation.  
  • Re-defines 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.  
  • Included the term Strike the concerted casual leave by 51% or more workers employed in an industry and the mandatory notice of 14 days is applicable not only to public utility services but to all establishments.  
  • Expands the definition of worker which includes persons getting wages up to Rs.18000. 
  • Provides for constitution of a negotiating union in an industrial establishment having registered trade unions for negotiating with the employer. 
  • Has increased the threshold of the industrial establishments from 100 to 300 workers and mandates all such establishments to prepare Standing Orders on: (i) classification of worker, (ii) manner of informing workers about working hours, holidays, paydays and wage rates, (iii) suspension for misconduct, (iv) termination of employment, and (iv)grievance redressal mechanisms for workers.      
  • Has introduced the concept of Reskilling Fund to provide training to the retrenched workers.  
  • Mandates, employer to take prior approval from the appropriate government in the event of lay-offs, retrenchment or closure, any mines, factories, plantations that are: (i) non-seasonal in nature, (ii) having three hundred or more workmen.      
  • Introduced stringent penalty provisions such as contravention of provisions under lay-off, retrenchment, closure by the establishment attracts a fine of Rs. 1 Lakh to 10 Lakhs for the first offense, and in the case of subsequent repeated offense the fine shall be of Rs. 5 Lakhs to 20 Lakhs and/or imprisonment up to 6 months.

Applicability

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.

Bi-Partite Forums

Works Committee

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.

Grievance Redressal Committee

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.

Trade Unions

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.

Standing Orders

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.

Notice of Change

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 Defense 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.

Dispute Resolution

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:

  • 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.

Mechanism for Industrial Disputes Resolution

Conciliation Officers

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

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 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.

National Industrial 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.

Strikes & Lock-Outs

Strikes

The workers employed in an industrial establishment are prohibited to go on strike, in breach of contract:

  • without giving to the employer notice of strike, as hereinafter provided, within sixty days before striking; or 
  • within fourteen days of giving such notice; or
  • before the expiry of the date of strike specified in any such notice; or 
  • during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings; or
  • during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and 60 days, after the conclusion of such proceedings; or
  • during the pendency of arbitration proceedings before an arbitrator and 60 days after the conclusion of such proceedings, where a notification has been issued under sub-section (5) of section 42; or 
  • during any period in which a settlement or award is in operation, in respect of any of the matters covered by the settlement or award.

Lock-Outs

The employer of an industrial establishment is prohibited to lock-out any of his workers:

  • without giving them notice of lock-out as hereinafter provided, within 60 days before locking-out; or  
  • within 14 days of giving such notice; or 
  • before the expiry of the date of lock-out specified in any such notice as aforesaid; or
  • during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings; or
  • during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and 60 days, after the conclusion of such proceedings; or
  • during the pendency of arbitration proceedings before an arbitrator and 60 days after the conclusion of such proceedings, where a notification has been issued under sub-section (5) of section 42; or 
  • any of the matters covered by the settlement or award.

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:

  • commenced or declared in contravention of section 62; or 
  • continued in contravention of an order issued by the appropriate Government prohibiting the strike or lock-out where an industrial dispute has been referred to arbitration.

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.

Lay-off, Retrenchment & Closure

Lay-off

A worker (except badli or casual worker):

  • whose name is on the muster rolls of an industrial establishment; 
  • who has completed not less than one year of continuous services under an employer; 

  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:

  • if the worker refuses to accept any alternative employment in the same establishment from which the worker has been laid-off, or in any other establishment belonging to the same employer situate in the same town or village or situate within a radius of eight kilometers from the establishment to which he belongs, if, in the opinion of the employer, such alternative employment does not call for any special skill or previous experience and can be done by the worker, provided that the wages which would normally have been paid to the worker are offered for the alternative employment also; 
  • if the worker does not present himself for work at the establishment at the appointed time during normal working hours at least once a day; 
  • if such laying-off is due to a strike or slowing-down of production on the part of workers in another part of the establishment.

These provisions are not applicable to:

  • to industrial establishments to which Chapter X applies; or 
  • to industrial establishments in which less than fifty workers on an average per working day have been employed in the preceding calendar month; or 
  • to industrial establishments which are of a seasonal character or in which work is performed intermittently.

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:

  • factory as defined in section 2 (m) of the Factories Act, 1948; or 
  • mine as defined in section 2(1)(j) of the Mines Act, 1952; or 
  • plantation as defined in section 2 (f)of the Plantations Labour Act, 1951.

Retrenchment

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:

  • the worker has been given 01 months’ notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the worker has been paid in lieu of such notice, wages for the period of the notice;  
  • the worker has been paid, at the time of retrenchment, compensation which shall be equivalent to 15 days' average pay, or average pay of such days as may be notified by the appropriate Government, for every completed year of continuous service or any part thereof in excess of 06 months; and 
  • notice in such manner as may be prescribed is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification.

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:

  • the service of the worker has not been interrupted by such transfer;  
  • the terms and conditions of service applicable to the worker after such transfer are not in any way less favorable to the worker than those applicable to them immediately before the transfer; and 
  • the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the worker, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.

Continuous Service

A worker is said to be on continuous service when such worker’s service may be interrupted on account of:

  • sickness or 
  • authorized leave or 
  • an accident or 
  • a strike which is not illegal or 
  • a lock-out or 
  • a cessation of work that is not due to any fault on the part of the worker.

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:

  • 190 days in the case of a worker employed below ground in a mine; and 
  • 240 days, in any other case;

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:

  • 95 days in the case of a worker employed below ground in a mine; and 
  • 120 days, in any other case.

Note: The number of days on which a worker has actually worked under an employer shall include the days on which:

  • the worker has been laid-off under an agreement or as permitted by or under this Code or any other law applicable to the industrial establishment for the time being in force; or 
  • the worker has been on leave on full wages earned in the previous years; or 
  • the worker has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; or 
  • in the case of a female worker, she has been on maternity leave, so, however, that the total period of such maternity leave does not exceed the period as specified in the Maternity Benefit Act, 1961.

Closure

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:

  • an industrial establishment in which less than 50 workers are employed or were employed on any day in the preceding 12 months; 
  • an industrial establishment set up for the construction of buildings, bridges, roads, canals, dams, or for other construction work or projects.

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:

  • financial difficulties (including financial losses); or 
  • accumulation of un-disposed stocks; or 
  • the expiry of the period of the lease or license granted to it; or 
  • in a case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on.

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:

  • the employer provides the worker, at the place located within a radius of twenty kilometers from such undertaking engaged in a mining operation is closed down, with alternative employment with effect from the date of closure at the same remuneration as he was entitled to receive, and on the same terms and conditions of service as were applicable to him, immediately before the closure; 
  • the service of the worker has not been interrupted by such alternative employment; and
  • the employer is, under the terms of such alternative employment or otherwise, legally liable to pay to the worker, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by such alternative employment.

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.

Worker Re-Skilling Fund

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:

  • 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 
  • such other number of days as may be notified by the Central Government, for every retrenched worker in case of retrenchment only; 
  • 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.

Unfair Labour Practices

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.

Offences and Penalties

The Code brings in changes in the penalties for the contravention of certain provisions as given here below:

An employer if contravenes the provisions relating to:

  • Rights of workers laid off for compensation;
  • Conditions for retrenchment of workers; 
  • Compensation to workers in case of transfer of establishment; 
  • Compensation to workers in case of closing down of the industry.

Such violations attract a fine of Rs. 50 thousand to Rs. 2 lakhs.

Contravention of the provisions relating to:

  • Rights of workers laid off for compensation; 
  • Conditions for retrenchment of workers;
  • Compensation to workers in case of transfer of establishment; 
  • Compensation to workers in case of closing down of the industry.

Attract a Fine of Rs. 1 lakh to Rs. 5 lakhs and/or imprisonment up to 6 months.

Contravention of provisions relating to:

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.

Draft Rules on Industrial Relations Code

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:

  • the Industrial Tribunal (Procedure) Rules, 1949; 
  • the Industrial Tribunal (Central Procedure) Rules, 1954; 
  • the Industrial Disputes (Central) Rules, 1957; and 
  • the Industrial Employment (Standing Orders) Central Rules,1946 

Key Definitions

Average pay means the average of the wages payable to a worker in the case of:

  • monthly paid worker, in 3 complete calendar months; 
  • weekly paid worker, in 4 complete weeks; 
  • daily paid worker, in 12 full working days,

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:

  • in relation to an establishment which is a factory, the occupier of the factory; and, where a person has been named as a manager of the factory under the Factories Act; 
  • in relation to any other establishment, the person who, or the authority which, has ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager or managing director, such manager or managing director; 
  • Contractor; and 
  • legal representative of a deceased employer.

Fixed Term Employment means the engagement of a worker on the basis of a written contract of employment for a fixed period:

Provided that:

  • his hours of work, wages, allowances, and other benefits shall not be less than that of a permanent worker doing the same work or work of similar nature; 
  • he shall be eligible for all statutory benefits available to a permanent worker proportionately according to the period of service rendered by him even if his period of employment does not extend to the qualifying period of employment required in the statute; and 
  • he shall be eligible for gratuity if he renders service under the contract for a period of 1 year.

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:

  • any capital has been invested for the purpose of carrying on such activity; or 
  • such activity is carried on with a motive to make any gain or profit,

but does not include: 

  • institutions owned or managed by organizations wholly or substantially engaged in any charitable, social, or philanthropic service; or     
  • any activity of the appropriate Government relatable to the sovereign functions of the appropriate Government including all the activities carried on by the departments of the Central Government dealing with defense research, atomic energy, and space; or 
  • any domestic service; or
  • any other activity as may be notified by the Central Government.

Industrial Dispute means any dispute or difference between:

  • employers and employers or 
  • employers and workers or 
  • workers and workers 

which is connected with the:

  • employment or 
  • non-employment or 
  • the terms of employment or 
  • with the conditions of labor of any person and
  • includes any dispute or difference between an individual worker and an employer connected with, or arising out of discharge, dismissal, retrenchment, or termination of such worker.

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:

  • voluntary retirement of the worker; or 
  • retirement of the worker on reaching the age of superannuation; or 
  • termination of the service of the worker as a result of the non-renewal of the contract of employment between the employer and the worker concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or 
  • termination of service of the worker as a result of the completion of tenure of fixed-term employment; or
  • termination of the service of a worker on the ground of continued ill-health.

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: 

  • any agreement between partners as to their own business; or 
  • any agreement between an employer and those employed by him as to such employment; or 
  • any agreement in consideration of the sale of the goodwill of a business or of instruction in any profession, trade, or handicraft.

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:

  • (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.

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:

  • who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957; or
  • who is employed in the police service or as an officer or other employee of a prison; or
  • who is employed mainly in a managerial or administrative capacity; or
  • who is employed in a supervisory capacity drawing wages exceeding eighteen thousand rupees per month, or an amount as may be notified by the Central Government from time to time.

Provided that for the purposes of Trade Unions, worker:

  • means all persons employed in trade or industry; and
  • includes the worker as defined in the Unorganized Workers' Social Security Act, 2008.

References

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