The Industrial Relations Code - 2020

The Industrial Relations Code - 2020

• Karma
• February 13 02:45:12, 2021

This code is nothing but the amalgamation of 3 different Act - 

• Industrial Employment Standing Order Act, 1946
• Industrial Disputes Act, 1947
• Trade Unions Act, 1926

What is discussed in this code?

This code consists of 14 Chapters & 3 Schedules discussing the Bipartite forum, Trade unions, Standing orders, notice of change, Redressal of Industrial dispute, Strikes & Lockout, Lay off & Retrenchment, Reskilled Fund, Unfair Labour practices & offences & penalties. This Act is applicable to whole of India.

This Code has introduced –

• The Industrial Relations Code 2020 seeks to consolidate & amend the laws relating to trade unions, conditions of employment in industrials establishments or undertaking, investigating & settlement of industrial disputes.
• New definitions in this Code:
• “Workers” - which includes the persons in supervisory capacity getting wages up to eighteen thousand rupees per month or an amount as may be notified by the Central Govt. from time to time.
• “fixed term employment” - means the engagement of a worker on the basis of a written contract of employment for a fixed period.
• “industry”- that any systematic activity carried on by co-operation between the employer & workers for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature) with certain exceptions.
• Casual leave within the ambit of the definition of strike.
• Grievance Redressal Committee.
• The criterion for recognition of negotiating union has been fixed at fifty-one per cent. or more workers on a muster roll of that industrial establishment.
• The threshold of three hundred or more workers for an industrial establishment to obtain certification of standing orders
• The employer prepares & adopts the model standing order of the Central Govt.
• Industrial Tribunals in the place of existing multiple adjudicating bodies like the Court of Inquiry, Board of Conciliation & Labour Courts.
• Removal of reference system for adjudication of Industrial Disputes, except the reference to the National Industrial Tribunal for adjudication.
• Prohibit strikes & lock-outs in all industrial establishments without giving notice of fourteen days.
• The obligation of industrial establishments pertaining to mine, factories & plantation having three hundred or more workers to take prior permission of the appropriate Govt. before lay-off, retrenchment & closure with flexibility.

 

Highlights & our comments –

 

• For the first time Sec 2(b)(ii) incorporates that for disputes between contractor and contract labour, the appropriate government will be the centre or the state where the industrial establishment in which the dispute first arose is located.
• Earlier definition of “Workman” under ID Act 2(s) included apprentices (i.e. General Apprentices) however, the new definition of “Worker” in the Code excludes Apprentices.
• Do not know what Govt. wants to say, general apprentices are prohibited or allowed but cannot raise dispute or an error in drafting this.
• Sec 2(o) defines “Fixed Term Employment” which is newly introduced. A fixed term employee is entitled to all benefits irrespective of qualifying period. He is also entitled to gratuity if works for 1 year. The benefits provided to a fixed term employee are equal to those of a permanent worker.
• However, even today practice of hiring Project based employment is seen rampantly in the industry, though the concept of Fixed Term Employment is introduced now. Barring few cases, industries are seen employing persons under fixed contracts even for regular jobs which will be challengeable in the court of Law. We advise our clients to refrain from such practice. Hope, going forward this trend will not continue.
• Sec 2 (p) defines “Industry” which now has included “worker employed through contractor”. But excluded charitable institutions.
• This Code did not find any pace to insert a definition of “go slow”. What does it mean, it does not exist practically?
• “Retrenchment”, says about termination on completion of fixed term employment being not covered under retrenchment. Then what was the purpose of introducing Fixed Term Employment except extending them benefits? Will this Clause lead to exploitation?
• The definition of “Strike” at Sec 2(zk) - Casual leave taken by 50 % or more workers in an industry in a given day. This will be more apt to Unionised category of factory or MR of Pharma Companies.
• Sec 2(zq) defines “Wages”. Very Difficult to understand & make others to understand –
• Though specifically (a) to (i) is excluded from the definition, however, for calculating wage if these components such as bonus, the value of house accommodation, PF, Conveyance, Special expenses, HRA, remuneration payable under the settlement, OT or even commission payable to an employee exceeds one half of the remuneration, the amount which exceeds one half shall be deemed as remuneration and added in wages.
• Further, in the definition of wages it is also provided that for the purpose of equal wages to all genders, emoluments in sub-clauses (d) Conveyance allowance, (f) HRA, (g) remuneration under settlement, (h) OT shall be included for computation of wage, for women employees.
• The definition also clarifies that any remuneration paid in kind not exceeding 15% of the total wages shall be deemed to form part of the wages.
• Sec 2(zr) i.e the definition of “Worker” in the new Code includes working journalists (as per Working Journalists Act) & sales promotion employees (as per Sales Promotion Act). It meant to be for Industrial Relations Code, Standing Orders and Trade Union.
• Sec 14 Provides for negotiating union or negotiating council in every establishment wherever there is a registered trade union.
• Sec 14(2) says that wherever there is one trade union of workers functioning, the employer shall recognise such trade union as the sole negotiating union of the workers. This may be a new addition in this Code, but it’s already there in Maharashtra under MRTU & PULP Act.)
• Further Sec 14(3) states that in cases of more than 1 union, the employer will recognise that having membership of 51% or more worker on the muster roll.
• In the event, no union has 51% or more membership, then the employer shall constitute a negotiating council for negotiations, consisting of representatives of unions which has the support of not less than 20% of the workforce @ one representative for each 20%.
• if the majority of the negotiating council reaches an agreement it will be construed as settled.
• Negotiating Council or recognition will be valid for 3 years, but not more than 5 years as agreed by the parties.
• Sec 14(7) advises that facilities have to be provided to the negotiating union or council as may be prescribed.
• It also prescribes for a registered trade union in the unorganised sector. “Unorganised sector” is defined in Sec 2(zp) as defined under Unorganised Workers Social Security Act, 2008.
• Previously, under the Industrial Employment Standing Orders Act, “Industrial Establishment” meant only a factory and only covered such establishments where 100 or more workmen were employed. However, Sec 1(3) of that Act, its application was extended by notification by various state governments, where even 50 or more workmen were employed. Now as per Code (Sec 28) the standing orders are applicable to every industrial establishment as defined under Sec 2(r) of the Code employing 300 or more workers. Can we say. Govt. is trying to show that they are very liberalised & pro-Business? Wait. Look at what is next & then make up your mind.
• Employer is expected to prepare draft standing orders within 6 months from the commencement of this Code.
• The employer is required to consult the trade unions or the negotiating council in respect of the draft standing orders and forward it to the certifying officer for certification.
• If the employer adopts model standing orders (means as stated in the Act), He shall forward such intimation to the certifying officer and the same shall be deemed to be certified.
• It means, can we construe, all such establishments/industries having 300 or more workers now compulsorily will have some sort of negotiating body of workers, if there was none earlier? If so, this too much for any industry.
• If standing orders are already existing, shall continue and be deemed to be certified under this law.
• As per this Code (Sec 77), all provisions with respect to Lay-Off, Retrenchment and Closure are applicable to a factory having 300 or more workers instead of 100 as before.
• Worker Reskilling Fund - New provision. The employer shall contribute an amount equal to 15 days’ wages last drawn for every retrenched worker in the fund which shall be credited to the retrenched worker within 45 days of retrenchment.
• One more unfair treatment for employer - Clause 13 of schedule 2 clarifies unfair labour practice on behalf of management for failure to implement award, settlement or agreement. However, there is no corresponding right with the management to approach authority under this Code if the workman or union violate said award, settlement or agreement.
• Be cautious as Govt. is coming heavily to have deterrent for not to commit any offence or not to omit what you are supposed to do. The fine amounts with respect to penalties have been increased by 10 times or more as compared to earlier. Please refer the chart of Penalties at the end of each Code in our Presentation.

Comparison On Code of Industrial Relation

 

	Previous Law	New Codes
	Industrial Disputes Act, 1947
	Definition	Definition
Workman/Worker definition	Earlier the definition was known as workman. Supervisor drawing more than Rs. 1600/- p.m. excluded.	No change in Worker’s definition. However, supervisor drawing more than Rs, 18000/- p.m. excluded. definition of  Working Journalist and Sales Promotion Employees added.
Fixed Term Employment	No definition.	"fixed term employment" means the engagement of a worker on the basis of a written contract of employment for a fixed period
Retrenchment	No change in the definition.
Work Committee	No change in this provision.
Grievance Redressal Committee	Some provision existed but were not in-depth	Provision for women representation added newly. Maximum number of limit is increase to 10.
Registration of Trade Union	Seven or more members can apply for registration.	No Trade Union of workers shall be registered unless at least 10% of the workers or 100 workers, whichever is less.
Recognition of negotiating union or negotiating council	No provision in the Act.	To stop exploiting the multiplicity of unions in an establishment/ organization must have a negotiating union or negotiating council.
	Industrial Employment and Standing Order Act
Application for Standing Order	100 or more.	The provisions of this Chapter shall apply to every industrial establishment wherein 300 or more than 300 workers, are employed, or were employed on any day of the preceding twelve months
Appeal for Trade Union Forum	It used to lie with Tribunal and High Court.	Appeal against non-registration or cancellation of registration lies only before Tribunal
Appropriate Government	No provision in the Act.	State Govt or Central Govt as the case may be.
Metro Railway & Unorganised Sector	No provision in the Act.	Are incorporated in the Code.
Segregation of Industrial Establishment	No provision in the Act.	Allows exclusion of severable from the other unit or units of such establishment or undertaking which is not carrying on or aiding the carrying on of any such activity, such unit shall be deemed to be a separate industrial establishment or undertaking.
Office Bearer for Unorganised Sector	No provision in the Act.	Not more than one-third of the total number of the office-bearers or five, whichever is less.
Adjudication of Dispute of Trade Union	Only Civil Court	It will be by Tribunal
Notice of change	No provision in the Act.	21 days’ notice to be given when any change required in Third Schedule.
Industrial Tribunal	Only one single member in the Industrial Tribunal	consist of two members to be appointed by the appropriate Government. Out of which one shall be Judicial Member & other shall be Administrative Member.
Limitation for recovery of money by employer	No limitation	For one year
Period of Retrenched Worker	No such period provided.	One year only
Prohibition of strike in lockout days	14 days’ notice to be given	14 days’ notice to be given in advance which is valid upto 60 days
Representation of Women	1:2 as far as practicable	Representation shall not be less than the proportion of women workers to the total workers employed in the industrial establishment.
Workers Reskilling Fund	No provision in the Act.	The fund consists of - the contribution of the employer of an industrial establishment an amount equal to fifteen days’ wages last drawn by the worker immediately before the retrenchment. It shall be utilized by crediting fifteen days wages last drawn by the worker to his account who is retrenched, within forty-five days of such retrenchment
Power to Exempt	Did not exist in Industrial Dispute Act. Existed in Industrial employment(standing orders) Act.	Appropriate Government is satisfied in relation to any industrial establishment or undertaking or any class of industrial establishments or undertakings that adequate provisions exist to fulfil the objects of any provision of this Code, it may, by notification, exempt, conditionally or unconditionally such establishment or undertaking or, class of establishments or undertakings from that provision of this Code.
	Strikes and Lockouts
Strike	No provision in the Act.	Casual leave on a given day fifty per cent or more workers employed in an industry
Prohibition of strikes and lock-outs.	No person employed in an industrial establishment shall go on strike, in breach of contract- without giving to the employer notice of strike within six weeks before striking. During the pendency of proceedings before a Tribunal or a National Industrial Tribunal & seven days.	No person employed in an industrial establishment shall go on strike, in breach of contract- without giving to the employer notice of strike within sixty days before striking. During the pendency of proceedings before a Tribunal or a National Industrial Tribunal & sixty days.
Prior Permission for Lay off, Retrenchment and Closure in Industrial Establishment	Applied to 100 or more workers.	Applied to 300 hundred or more workers. Excludes seasonal character establishment.
Composition of Offences	No provision in the Act.	For a sum for a sum of fifty per cent. of the maximum fine provided for such offence punishable with fine only and for a sum of seventy-five per cent provided for such offence punishable with imprisonment for a term which is not more than one year or with fine.

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THE INDUSTRIAL RELATIONS CODE, 2020 – Penalties

 

	OFFENCES	PENALTIES
1	An employer who contravenes the provisions of Prohibition of lay-off. or Conditions precedent to Retrenchment of workers or Procedure for closing down an industrial establishment.	It shall be punishable with Fine Rs. 1,00,000/- to Rs. 10,00,000/- (Rs. One Lakh to Rs. Ten Lakh Only). For repeat conviction it is Fine Rs. 5,00,000/- to Rs. 20,00,000/- (Rs. Five Lakh to Rs. Twenty Lakh Only) or Imprisonment up to 6 Months (Six Months) or Imprisonment & Fine both.
2	An employer who contravenes the provisions under Rights of workers laid-off for compensation (section 67) or Conditions precedent to retrenchment of workers (section 70) or Compensation to workers in case of transfer of establishment (section 73) or Compensation to workers in case of closing down of undertakings (section 75).	Fine Rs. 50,000/- to Rs. 2,00,000/- (Rs. Fifty Thous& to Rs. Two Lakh Only). For the second or subsequent offence Fine Rs. 1,00,000/- to Rs. 5,00,000/- (Rs. One Lakh to Rs. Five Lakh Only) or Imprisonment up to 6 Months (Six Months) or Imprisonment & Fine both.
3	Any person who commits any unfair labour practice as specified in the Second Schedule.	Fine Rs. 10,000/- to Rs. 2,00,000/- (Rs. Ten Thous& to Rs. Two Lakh Only). For the second or subsequent offence Fine Rs. 50,000/- to Rs. 5,00,000/- (Rs. Fifty Thous& to Five Lakh Only) or Imprisonment up to 3 Months (Three Months) or Imprisonment & Fine both
4	If default is made on the part of any registered Trade Union in giving any notice or sending any statement or other document as required by or under any of the provisions of this Code, every office-bearer or other person bound by the rules of the Trade Union to give or send the same, or, if there is no such office-bearer or person, every member of the executive of the Trade Union, shall be punishable with fine which shall not be less than one thous& rupees, but which may extend to ten thous& rupees & any continuing default shall be punishable with an additional penalty of fifty rupees per day so long as the default continues.	Every member of the executive of the Trade Union, shall be punishable with – Fine Rs. 1,000/- to Rs. 10,000/- (Rs. One Thous& to Rs. Ten Thous& Only). Any continuing default shall be punishable with an, Additional Penalty of Rs. 50/- (Rs. Fifty Only) per day so long as the default continues.
5	Any person who willfully makes, or causes to be made, any false entry in, or any omission from, the general statement required by Annual Returns under Trade Union (section 26) or in or from any copy of rules or of alterations of rules sent to the Registrar under trade Union.	Fine Rs. 2,000/- to Rs. 20,000/- (Rs. Two Thous& to Rs. Twenty Thous& Only).
6	Any person, with intent to deceive, gives to any member of a registered Trade Union or to any person intending or applying to become a member of such Trade Union & document purporting to be a copy of the rules of the Trade Union or of any alterations to the same which he knows is not a correct copy of such rules or alterations as are for the time being in force, gives a copy of any rules of an unregistered Trade Union to any person that such rules are the rules of a registered Trade Union.	Fine Rs. 5,000/- to Rs. 20,000/- (Rs. Five Thous& to Rs. Twenty Thous& Only).
7	An employer who fails to submit draft standing orders as required under standing Orders (section 30) or who modifies his standing orders otherwise than in accordance under standing Orders (section 35).	Fine Rs. 50,000/- (Rs. Fifty Thous& to Two Lakh Only) & In the case of a continuing offence An Additional Fine of Rs. 2,000/- (Rs. Two Thous& only) Per Day till the offence continues.
8	An employer who does any act in contravention of the standing orders finally certified under this Code. .	Fine Rs. 1,00,000/- to Rs. 2,00,000/- (Rs. One lakh to Rs. Two Lakh Only).  For repeat conviction it is Fine Rs. 2,00,000/- to Rs. 4,00,000/- (Rs.  Two Lakh to Rs. Four Lakh Only) or Imprisonment up to 3 Months (Three Months) or Imprisonment & Fine Both.
9	Any worker who commences, continues or otherwise acts in furtherance of a strike which is illegal under this Code.	Fine Rs. 1,000/- to Rs. 10,000/- (Rs. One Thous& to Rs. Ten Thous& Only) or Imprisonment up to 1 Month (One Month) or Imprisonment & Fine Both.
10	Any employer who commences, continues, or otherwise acts in furtherance of a lock-out which is illegal under this Code.	Fine Rs. 50,000/- to Rs. 1,00,000/- (Rs. Fifty Thous& to Rs. One Lakh Only) or Imprisonment up to 1 Month (One Month) or Imprisonment & Fine Both.
11	Any person who instigates or incites others to take part in, or otherwise acts in furtherance of, a strike or lock-out which is illegal under this Code.	Fine Rs. 10,000/- to Rs. 50,000/- (Rs. Ten Thous& to Rs. Fifty Thous& Only) or Imprisonment up to 1 Month (One Month) or Imprisonment & Fine Both.
12	Any person who willfully discloses any such information as is referred to in “Certain matters to be kept confidential” (section 61) in contravention of the provisions of that section shall, on a complaint made by or on behalf of the Trade Union or individual business affected.	Fine Rs. 20,000/- (Twenty Thous& Only) or Imprisonment up to 1 Month (One Month) or Imprisonment & Fine Both.

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