Understanding Industrial Relations Code, 2020

The Industrial Relations Code, 2020 is a significant piece of legislation that consolidates and amends four labor laws in India.

It replaces the Industrial Disputes Act, 1947, the Industrial Employment (Standing Orders) Act, 1946, the Factories Act, 1948, and the Apprenticeship Act, 1961.

The Code aims to simplify and streamline the process of industrial relations, making it easier for employers and employees to navigate the system.

The Code introduces several key changes, including the definition of a "workman" which now excludes certain categories of employees.

The Industrial Relations Code, 2020, has introduced several changes to employment rules in India. A worker is now defined based on their wages, with those earning up to Rs 18,000 falling under this category.

Fixed-term employment has been made more flexible, allowing employers to keep fixed-term employees for a specific duration without having to pay retrenchment compensation. These employees are entitled to the same salary or social security as regular employees.

The time limit for raising an industrial dispute with an employer has been reduced from 3 years to 2 years. This means that employees must act quickly to address any grievances they may have.

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Definitions and changes in employment laws have been made to ensure fairness and clarity. The definition of an employee has been added to the code, using the term "employee/worker" to avoid discrimination.

A worker is now defined based on their wages, with those earning up to Rs 18,000 falling under this category. This change affects the way labor laws are applied to workers.

The definition of an employer has been completely modified, and now includes the term "employer" as a distinct entity. The definition of "industry" has also been modified to include systematic activities carried out by cooperation between an employer and their workers.

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Key changes include the introduction of fixed-term employment, where employers can keep fixed-term employees for a specific duration without paying retrenchment compensation. However, these employees are entitled to the same salary or social security as regular employees.

A few notable changes include:

Fixed-term employees are entitled to all statutory benefits, including ESI, EPF, bonus, and wages, just like regular employees doing similar work.

To qualify for gratuity, a fixed-term employee must render service under the contract for at least one year.

The termination of a fixed-term employee's service due to the completion of their contract term is not considered retrenchment.

Here are the key benefits for fixed-term employees:

Industrial disputes can arise from various situations, including the discharge, dismissal, retrenchment, or termination of a worker.

The definition of industrial dispute has been modified to include these situations, providing clarity on what constitutes a dispute.

A negotiating union or negotiating council has been introduced in the definition, allowing for a collective body to negotiate with employers.

The maximum number of members in the Grievance Redressal Committee has been increased from 6 to 10 in an industrial establishment employing 20 or more workers.

Trade union disputes can now be referred to arbitration by both the employer and workers, requiring a written agreement to proceed.

Here are some key changes to the definition of industrial disputes and trade unions:

The Code also expands the prohibition on strikes and lock-outs to all industrial establishments, requiring a 14-day notice period before any action can be taken.

Industrial disputes can arise from various situations, including the discharge, dismissal, retrenchment, or termination of a worker. This has been modified to include disputes arising from the discharge of such workers.

The definition of an industrial dispute has been expanded to include disputes arising from the discharge of a worker. The Code also includes metro railway in the definition of railways.

Trade union disputes can be a significant issue, and the Code has introduced provisions to address this. The maximum number of members in the Grievance Redressal Committee has been increased from 6 to 10 in an industrial establishment employing 20 or more workers.

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The Code has introduced a new feature of "Recognition of Negotiating Union". A Negotiating Union or Negotiating Council has been inserted in the definition. This allows for a negotiation union in an industrial establishment to negotiate with the employer.

The definition of wages has been revised. A new feature of "Recognition of Negotiating Union" has been introduced, which provides for a negotiation union in an industrial establishment to negotiate with the employer.

The Code prohibits strikes or lock-outs in any establishment unless a prior notice of 14 days is provided. This will impact the ability of workers to strike and employers to lock-out.

Here are some key points to keep in mind:

The Bharatiya Mazdoor Sangh (BMS) is urging the Indian government to roll out the four labour codes in phases. This is because the BMS claims that while the Wage Code and the Social Security Codes are beneficial to ordinary workers, there should be a rethink on some of the clauses in the Industrial Relations Code and the Occupational Safety and Health and Working Conditions Code.

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The BMS is concerned about the hasty roll out of the labour codes that were passed in Parliament in 2019 and 2020. The organisation has pointed out that the codes are central to labour reforms, and the government hopes that they will benefit workers, attract investments, and also improve the ease of doing business for companies.

The Code on Wages, 2019, relates to wages, including minimum wages and equal remuneration. The Industrial Relations Code, 2020, is aimed at simplifying regulations concerning industrial relations, trade unions, and dispute resolution.

The BMS has backed provisions such as the inclusion of social security provisions for gig and platform workers in the Code on Social Security 2020. The organisation is also seeking the immediate implementation of the Wage Code and Social Security Code.

The BMS has claimed affiliation with over 7,000 trade unions, 42 federations, and 2.5 million members. The organisation is opposing many clauses that are against Workers’ interests in the Industrial Relations Code and also the Occupational Safety and Health and Working Conditions Code.

The Indian Labour Conference (ILC), the highest tripartite body of the labour ministry, has not been convened since 2015. The BMS is demanding that the ILC should be convened at the earliest.

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Under the Industrial Relations Code, 2020, employers have several obligations to fulfill. The Code requires employers to maintain a register of all contracts of service or employment, which must be kept at the workplace and made available for inspection by the Inspector.

Employers must also provide their employees with a written contract of employment, which must include details such as the period of employment, wages, and benefits. This contract is a crucial document that outlines the terms and conditions of employment.

Employers are also required to provide their employees with a copy of the Code, as well as any other relevant laws or regulations. This is to ensure that employees are aware of their rights and obligations under the law.

Employers must also ensure that their employees are not required to work for more than 48 hours in a week, unless they have given their consent in writing. This is a key provision to prevent employee exploitation.

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Employers are also required to pay their employees within 7 days of the date of receipt of the wages bill, or on a date mutually agreed upon. This is to ensure that employees receive their wages in a timely manner.

The Code also requires employers to provide their employees with a minimum of 14 days' notice before terminating their employment. This is to give employees sufficient time to prepare for the termination of their employment.

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Standing Orders require industrial establishments with at least 300 workers to prepare them. This threshold was increased from 100 workers in the 2019 Bill to reduce the regulatory burden on smaller establishments.

Preparing standing orders involves defining standardized terms and conditions of employment, which can be complex in larger industrial establishments. The government might have considered this change to prioritize regulation of labor relations in larger establishments.

Establishments with 300 or more workers must prepare standing orders, which cover a broader range of establishments than the original 100-worker threshold.

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If you're an employer of an industrial establishment with at least 300 workers, you're required to obtain prior permission from the central or state government before closing down, laying off, or retrenching workers. This is a mandatory requirement under the Industrial Relations Code, 2020.

A fine of up to INR 10,00,000 can be levied on any person who contravenes this provision, which is a significant penalty. If you're considering closure, lay-off, or retrenchment, make sure you're aware of this requirement.

In case any worker is suspended pending investigation or inquiry, they'll receive a subsistence allowance of 50% of their wages for the first 90 days and 75% of their wages for the remaining period of suspension. This is a crucial aspect to consider when dealing with worker suspensions.

The threshold for seeking prior permission from the government has changed over time. In the 2019 Bill, establishments with at least 100 workers were required to seek permission, whereas in the 2020 Bill, the threshold was increased to establishments with at least 300 workers.

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Here's a summary of the key compliances under the Industrial Relations Code, 2020:

The concept of standing orders is crucial in the context of industrial establishments. The 2019 Bill initially proposed that all establishments with 100 workers or more must prepare standing orders.

This threshold was set to ensure that a significant portion of the workforce had access to standardized and well-defined terms and conditions of employment. The rationale behind this threshold was to cover a broader range of establishments.

In the 2020 Bill, the threshold was increased to establishments with at least 300 workers. This change indicates a shift towards applying this requirement to larger industrial establishments.

Smaller businesses may have fewer resources to dedicate to administrative tasks such as preparing and maintaining standing orders. The change may reflect an intent to prioritize the regulation of labor relations and working conditions in larger industrial establishments.

Larger establishments often have a more substantial impact on the labor market and the overall economy. The government may have considered that it is more efficient to concentrate resources and regulatory oversight on larger establishments.

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The specific threshold chosen is a matter of legislative discretion and policy choice. The government may have conducted assessments, consultations, or studies to determine the most appropriate threshold.

Ultimately, the change in the threshold aims to strike a balance between protecting the rights and interests of workers and minimizing the administrative burden on businesses.

Industrial Relations Code, 2020 has introduced significant changes to the way unions and employers negotiate. A new feature of "Recognition of Negotiating Union" has been introduced, allowing for a negotiation union in an industrial establishment with registered trade unions to negotiate with the employer.

The definition of wages has been revised, but it's not directly related to union negotiation. The Code provides for a negotiation union in an industrial establishment, having registered trade unions, for negotiating with the employer. This means that employers will have to engage in collective bargaining with the recognized negotiation union.

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The recognition of a negotiating union is a crucial step in the negotiation process. The Code provides for the establishment of a negotiation union in an industrial establishment with 300 or more workers, as notified by the appropriate Government. This will impact the way employers and unions interact.

The Code prohibits strikes or lock-outs in any establishment unless a prior notice of 14 days is provided. This will impact the ability of workers to strike and employers to lock-out, making it essential for unions and employers to engage in negotiation before taking any drastic measures.

Here are the key changes related to union and employer negotiation:

The Industrial Relations Code, 2020 has had a significant impact on various industries in India. The code has introduced a new definition of "trade union" which includes a trade union that is registered under the Trade Unions Act, 1926.

This change is expected to benefit workers by allowing them to form unions more easily. The code has also introduced a new provision for the recognition of trade unions, which requires employers to recognize a trade union if it has the support of at least 10% of the workforce.

The code has also introduced a new provision for the settlement of industrial disputes, which requires employers and employees to engage in conciliation proceedings before resorting to legal action.

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The definition of industry has undergone a change to include any systematic activity carried on by cooperation between an employer and his workers. This can involve workers employed directly by the employer or through any agency, including a contractor.

To be considered an industry, the activity must be systematic and involve cooperation between the employer and workers. This is a broad definition that encompasses a wide range of businesses and organizations.

One key aspect of this definition is the exclusion of certain types of institutions. These include organizations that are wholly or substantially engaged in charitable, social, or philanthropic services; sovereign functions; or domestic services.

Here are some examples of what is excluded from the definition of industry:

This definition has significant implications for businesses and organizations that may be impacted by changes in industry regulations.

Labor laws can be comprehensive, but some industries require specific regulations or exemptions due to the unique nature of their operations.

The Code makes provision for exemption of any new industrial establishment or a class of establishments from the provisions of the code in public interest.

Granting exemptions allows the government to encourage and promote industrial growth and investment by offering incentives to certain new industrial establishments.

This can attract businesses to set up operations in areas or industries crucial for economic development, such as job creation and overall societal benefit.

The government uses its discretion to assess whether granting an exemption aligns with the broader welfare and interest of the public.

The power to grant exemptions is not absolute or without oversight, and the government typically has to provide reasons and justifications for the exemption.

The exemption process should be transparent and subject to scrutiny, with mechanisms in place to review and potentially revoke exemptions if they are not serving the public interest as intended.