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Labour Codes India Restores the Concept of Negotiating Under New Industrial Relations Code 2020, Yet to Be Implemented!

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Labour Codes India Restores the Concept of Negotiating Under New Industrial Relations Code 2020, Yet to Be Implemented!


How Does the New Industrial Relation 2020 Code Defines the Negotiating Trade Union as?

The Industrial Relations Code, 2020 introduces the concept of a “negotiating trade union”.

A negotiating trade union refers to a single trade union, chosen based on the qualifiers set out under Section 14 of the Industrial Relations Code, to undertake negotiations between the employer and workers, on prescribed matters. Defined in Section 2(z), “negotiating union or negotiating council”, as the case may be, is further explained in Section 14, which discusses their aspects and conditions.

The 2019 draft Bill of the Industrial Relations Code set out that, if there were more than one registered trade union of workers functioning in an establishment, the trade union having more than 75% of the workers as members would be recognised as the sole negotiating union. The 2020 Bill, which was finally passed as the Code, lowered this threshold to 51% of the workers, that is, a simple majority. When there is only one trade union, it automatically becomes the negotiating trade union.

The purpose of choosing a singular trade union as the “negotiating union” is to streamline and ensure clarity in the process of collective bargaining. A negotiating trade union solves the problem of conflict between various trade unions and makes clear who an employer should build a relationship with, regarding prescribed worker issues. It is a well-established principle of collective bargaining that the power of employees is in the numbers.


Laws Subsumed Under the Industrial Relations Code of 2020?

On Nov. 28, 2019, Mr. Santosh Kumar Gangwar, Minister of Labour and Employment, introduced the Industrial Relations Code, 2019, in the Lok Sabha. On Dec. 23, 2019, it was sent to the Standing Committee on Labour. 


The Code replaces three existing laws: 

The Industrial Disputes Act, 1947

The Trade Unions Act, 1926

The Industrial Employment (Standing Orders) Act, 1946

It consists of 14 chapters with 104 sections and three schedules dealing with matters such as definitions, bipartite forums, trade unions, standing orders, strikes and lock-outs, lay-offs, retrenchment and closure, as well as offences and penalties. It is worth noting that the new labour codes have been welcomed by the industry but have drawn flak from trade unions, labour rights organizations and activists.


Collective bargaining across some prominent countries

Collective bargaining is a process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects of workers’ compensation and rights for workers.

The interests of the employees are commonly presented by representatives of a trade union to which the employees belong. A collective agreement reached by these negotiations functions as a labour contract between an employer and one or more unions, and typically establishes terms regarding wage scales, working hours, training, health and safety, overtime, grievance mechanisms, and rights to participate in workplace or company affairs. [1] Such agreements can also include ‘productivity bargaining’ in which workers agree to changes to working practices in return for higher pay or greater job security. [2]



In June 2007 the Supreme Court of Canada extensively reviewed the rationale for regarding collective bargaining as a human right. In the case of Facilities Subsector Bargaining Association v. British Columbia, the Court made the following observations:

The right to bargain collectively with an employer enhances the human dignity, liberty and autonomy of workers by giving them the opportunity to influence the establishment of workplace rules and thereby gain some control over a major aspect of their lives, namely their work…



In Sweden the coverage of collective agreements is very high despite the absence of legal mechanisms to extend agreements to whole industries. In 2018, 83% of all private sector employees were covered by collective agreements, 100% of public sector employees and in all 90% (referring to the whole labour market). This reflects the dominance of self-regulation (regulation by the labour market parties themselves) over state regulation in Swedish industrial relations.


United States

In the United States, the National Labour Relations Act (1935) covers most collective agreements in the private sector. This act makes it illegal for employers to discriminate, spy on, harass, or terminate the employment of workers because of their union membership or to retaliate against them for engaging in organizing campaigns or other “concerted activities”, to form company unions, or to refuse to engage in collective bargaining with the union that represents their employees. It is also illegal to require any employee to join a union as a condition of employment. Unions are also able to secure safe work conditions and equitable pay for their labour.


Brief history of labour unions in India

In India, labour unions have a long history that dates to the British colonial era in the late 19th century. The first labour union in India was established in 1890 by mill workers in Bombay. The All India Trade Union Congress (AITUC), which later grew to be the country’s biggest labour union group, was established in 1920.

Soon thereafter, the Trade Unions Act, 1926 (the “TU Act”) was passed.4 Over and above the flaws that later emerged, this legislation provided the labour unions with the much-needed protection, which helped the movement spread across the nation.

In the post-independence era, labour unions affiliated with political parties emerged as dominant forces in the Indian labour movement, with the Indian National Congress-affiliated Indian National Trade Union Congress (INTUC) and the Communist Party of India-affiliated AITUC being the two largest labour union organizations in the country. Today, besides INTUC and AITUC, there are several other independent and politically affiliated labour unions in India representing workers across various sectors, including the Bharatiya Mazdoor Sangh (BMS), Hind Mazdoor Sabha (HMS) and Centre of Indian Trade Unions (CITU), among others.


Recognition of labour unions

The Constitution of India upholds the right to form association. However, the TU Act does not contain provisions on recognition of labour unions but only for its registration at both state and federal levels. It does not deal with the concept of ‘representative labour union’7 and such status is accorded on a discretionary basis. Thus, despite a labour union being registered, in the absence of a statutory mandate of having a sole negotiating labour union, an employer may not recognise the union and refuse to bargain or negotiate with it.

In a bid to address the above shortcomings, the Indian Trade Unions (Amendment) Act, 1947, attempted to make recognition of labour unions by employers mandatory but it was never brought into effect. Meanwhile, some Indian states enacted laws containing provisions on recognition of labour unions, including Maharashtra, Madhya Pradesh, West Bengal, Kerala and Rajasthan, while in certain other states, recognition is governed by the voluntary ‘Code of Discipline’13 and ‘Inter Union Code of Conduct’.14


Draft rules to the IRC 2020

The federal government has introduced the Industrial Relations (Central) Recognition of Negotiating Union or Negotiating Council and Adjudication of Disputes of Trade Unions Rules, 2021 (the “Draft Rules”) which is presently pending in the draft stage.


The Draft Rules provide for the following:

  • An indicative list of matters of negotiation which lays down the scope of collective bargaining which inter alia includes classification of grades, categories of workers, wages of workers including various specified components thereof, hours of work, leave with wages and holidays, promotion and transfer policy, disciplinary procedure, allotment of quarters to employees, safety, health and working conditions related standards, and also enables them to negotiate on all other matters pertaining to service conditions which are not otherwise covered in the list.
  • Criteria for recognizing a single registered labour union as the sole negotiating union.
  • Appointment of a verification officer by the employer for the verification of membership of labour unions.
  • Detailed process of verification of membership which requires the employer to bear the entire cost of making arrangements in connection with the verification of the membership of the labour unions. The Draft Rules also require employers to deploy an electronic process for the process of election to verify the membership of labour unions through secret ballot with mutual agreement with the labour unions of the establishment.
  • Satisfaction of the conditions by the labour union for getting accorded the status of negotiating union.
  • Preparation of verification report to be submitted to the employer.
  • Grant of recognition of labour union as the negotiating union or constituents of the negotiation council.
  • List of facilities to be provided by the industrial establishment to a negotiating union or negotiating council such as notice board, venue and necessary facilities for holding discussions etc.
  • Manner of making application for the adjudication of labour union disputes.

The Draft Rules also require that the process for constitution of the new negotiating union or the negotiating council must begin three (3) months before the expiry of the tenure of the existing recognition period of the labour unions recognised by the employer under the Code of Discipline23.


The IR Code appears to benefit both workers and employers. Fixed-term employees have been given statutory recognition and a status almost equal to that of permanent employees, which makes them eligible to more benefits. Further, employers must enter into employment contracts with the employees, where they can capture the necessary terms of employment.

The introduction of a negotiating union or negotiating council will also aid in speedy redressal of any disputes that might arise between the workers and employers as there would be one negotiating body. This gives the right to workers to choose the sole negotiating body, and also benefits the employers as they will not have to negotiate with multiple trade unions at one time.


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Proprietary blog of Karma Global Tech Management LLC

This blog has been collated and compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, besides adaptation, illustration, derivation, transformation, collection from various sources, for its monthly newsletter Issue 13 of July 2023 and in case of specific or general information or compliance updates for that matter, kindly reach out to the Karma Global Team –

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