In June 2002, the Second National Commission on Labour submitted its report wherein the Commission recommended that the existing labour codes should be widely consolidated into following groups:-
(ii) Industrial relations;
(iii) Social security;
(iv) Welfare & working conditions.
(i) Trade Union Act, 1926;
(ii) Industrial Disputes Act, 1946; and
(iii) Industrial Employment (Standing Orders) Act, 1946.
Consequently, on 28th November, 2019 the Industrial Relations Code, 2019 was proposed in the Lok Sabha which was then referred, for its perusal and making report, to the Department of the Parliamentary Standing Committee on Labour. On 23rd April, 2020 the said committee through its 8th report recommended various amendments in the proposed legislation in order to give momentum to the economic activities in India without even negotiating with the fundamental aspects of the advantage to the workers. On perusal of the recommendations of the Parliamentary Standing Committee, the said Industrial Relations Code, 2019, which was pending in the Parliament, was withdrawn by the Union Government in order to introduce a new legislation with certain amendments.
On 22nd September, 2020 the new legislation was passed in the Lok Sabha as the “Industrial Relations Code, 2020” (hereinafter referred to as the “Code”). The Union Government will notify the date on which the Code will come into force. The Code brings forth a wider framework for protection of the workers’ rights to form unions, to lay down provisions for inspection & resolution of industrial disputes and to reduce conflicts between the workers and their employers. The objective of the Code is to maintain peace & harmony in the industry by streamlining the dispute resolution mechanism so that the relationship between the workers & employers could cordially exist.
KEY FEATURES OF THE INDUSTRIAL RELATIONS CODE, 2020
The key modifications in the Code are as follows:-
Definition of “Industry”:
“Industry” as per the Code is defined as “any systematic activity for production, distribution/supply of goods or services between workers & employers in order to satisfy the needs of human that are neither religious nor spiritual, regardless of whether such activity has capital investment or is pursued with a motive to make profit.” Institutions engaged in social/philanthropic/charitable services; domestic services & government’s sovereign activities have been particularly excluded from the definition. Furthermore, the Union Government may exclude from the purview of “industry” any other activity, which it deems fit.
Increased wage ceiling for supervisory employees to be covered under workers:
For the inclusion of supervisory employees under the purview of “workers”, the threshold limit has been increased from Rs. 10,000 to Rs. 18,000. Therefore, only those supervisory employees will qualify to be known as “workers”, whose monthly wages is between Rs. 10,000 & Rs. 18,000 and in order to terminate their service, their employees has to act in accordance with the retrenchment requirements.
Reinforcing the Grievance Redressal Machinery (GRM):
As per the Code, for constituting a Grievance Redressal Committee (GRC), maximum of ten members are required as compared to the existing law wherein maximum of six members were required. Also, there is a mandatory requirement of having sufficient representation of women workers in the GRC. Further, for presenting the grievances before the GRC, 1 year limitation period has been stipulated. Furthermore, there is a provision of taking recourse to conciliation, if the workers are aggrieved by the decision of the GRC or GRC fails to resolve the grievances. The constitution of GRC is a mandatory requirement otherwise it would be punishable with a fine up to Rs. 100,000.
Enhanced threshold for Standing Orders (SO):
There is a requirement under the Standing Orders Act that only those industrial establishments defined under the Act, having 100 or more workers are required to articulate standing orders & has to get them certified. The applicability threshold has been reduced to 50 workers by certain states. The Code lays down a wider definition of ‘industrial establishment’ & enhances the certified standing orders’ (CSO) applicability threshold to 300 or more workers. Such applicability threshold will bring uniformity & further removes the requirement of CSO for small and new industrial establishment. However, the industrial establishment having CSO will be governed by the same provisions provided they are not contrary to the provisions of the Code. Therefore, until and unless there is any conditional or specific exclusion provided under the Code, the Information Technology-enabled services (ITeS) units or Information Technology (IT) are required to have certified standing orders. Furthermore, the commercial establishments like offices which don’t come under the ambit of ‘industrial establishment’ under the Standing Orders Act would be covered under the broad definition of ‘industrial establishment’ as defined under the Code.
Time-bound Disciplinary proceedings for Misconduct by workers:
For the protection of interest of the workers, the Code has introduced 90 days’ time-limit for completion of an inquiry/investigation of misconduct committed by a worker, which further involves suspension by his employer.
Recognition of Single body for negotiating with the Management:
The Code lays down a provision for formulation of a council for negotiating with employers on the specified matters as a single negotiating body. A negotiating body shall be recognized as single negotiating body of the industrial establishment only when it has a registered trade union with a membership of minimum 51% workers. However, even in presence of multiple trade unions, no sole trade union gains majority, then in such a situation, a negotiating council is required to be formed by the representatives of each crucial trade union having a minimum of 20% workers in order to function as a single negotiating body.
Enhanced threshold for Retrenchment, Lay-off & Closure in certain industrial establishments:
As per the Code, the industrial establishments functioning as mines, plantations & factories are required to have permission of the appropriate government for retrenchment of the workers, lay-off and closure of the industrial establishments, in case the establishments employed, on an average, 300 or more workers per working day in the previous year. It is further upon the appropriate government to increase the above threshold if it deems fit. As per the existing legal regime, this threshold has been increased by few States to 300 workers whereas in general it is 100 workers. Such modification will not only ensure uniformity in each States but also provides significant functional independence to all the employers in the establishment, which will eventually motivate them to hire more number of workers.
Discouragement of Arbitrary lock-outs & Strikes:
Under the current legal regime, only those workers who are engaged in public utility services could go on a strike after fourteenth day of their forty second days’ advance notice of the strike. However, the Code mandates the workers to give sixty days’ advance notice of the strike & also doesn’t allow them to continue with the strike within fourteen days of the notice. Similar provisions for lock-outs have been specified for the employers. Furthermore, the definition of “strike” under the Code extends to include under its ambit any mass/concentrated casual leave by 50% workers or more on a particular day. Therefore, the Code seeks to balance the interests of all parties aggrieved by the lock-outs & strikes by discouraging or creating deterrence among the employers & workers from conducting any arbitrary lock-outs & strikes, through enlarging the ambit of strikes & introducing prior requirement of a notice.
Extension of certain advantages of Permanent Employees to Fixed-term workers:
Under the current regime, only those industrial establishments having certified Standing Orders (CSO) are empowered to extend the advantages of permanent employees to fixed-term workers undertaking similar work. The fixed-term workers’ advantages, including gratuity, could be availed by the fixed-term workers working in an industrial establishment having CSO, only in the case of rendering services for a period of 1 year. Therefore, employers who engage fixed-term employees may have to shoulder an extra financial liability.
It is of vital importance that with the aim of achieving worldwide excellence in work ethics & provisions for safeguarding the interests of several parties in the company, this Code has proved to be a welcome step. The advantages provided to the workers under the Code shall be executed on a Pan-India basis as they are progressive in nature.
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2. Monika Taparia, “The Industrial Relations Code, 2020”, available at https://www.lawrbit.com/article/industrial-relations-code-2020/ (visited on October 10, 2020).
3. Ramapriya Gopalakrishnan, “The Industrial Relations Code, 2020: Implications for Workers’ Rights”, available at https://www.livelaw.in/columns/the-industrial-relations-code-2020-implications-for-workers-rights-164921 (visited on October 11, 2020).
4. Zia Haq, “Understanding the new Labour Codes”, available at https://www.hindustantimes.com/india-news/understanding-the-new-labour-codes/story-llI015EZK8EYtDHmP9SXVP.html (visited on October 12, 2020).
5. Vallari Sanzgiri, “Labour Code Issues: Spelling out the ABCs”, available at https://sabrangindia.in/article/labour-codes-issues-spelling-out-abcss (visited on October 13, 2020).