The Industrial Relations Code – 2020

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

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THE INDUSTRIAL RELATIONS CODE, 2020 – Penalties

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