EMPLOYMENT UPDATE | INDUSTRIAL RELATIONS CODE, 2020
Parliament recently promulgated the Industrial Relations Code, 2020 (IR Code) which received the assent of the President on 28 September 2020. The Code will come into effect on a date notified by the Central Government in the Official Gazette. This marks the second of four labour codes which the Government announced last year. The first being the Code on Wages was passed in 2019. More detailed analysis of the Code on Wages, 2019 can be found here .
The IR Code subsumes the following acts (i) The Industrial Disputes Act, 1947 (IDA); (ii) The Trade Unions Act, 1926 (TU Act); and (iii) The Industrial Employment (Standing Orders) Act, 1946 (IE-SO Act).
The IR Code redefines the term Industry, to bring it in accordance with the other labour laws. Section 2(p) of the IR Code, excludes the following from the definition of Industry: (i) Charitable institutions; or (ii) Government activities relating to sovereign functions including defence research, atomic energy and space; or (iii) any domestic service.
The definition of Industry has not categorically excluded hospitals, agricultural operations, educational institutions and even those places run by clubs, individuals or bodies of individuals, employing less than 10 people, unlike the IDA. Therefore, it can be assumed that they are deemed to be included.
Salient features of the IR Code:
- Definitions: The IR Code defines and re-defines the terms relating to labour laws to bring them in consonance with the other labour laws and remove discrepancies: A few examples are:
(i)The term worker has been used to substitute workman which was used under the IDA and has also brought in certain changes such as excluding an apprentice from the definition of worker, but including sales promotion employees and working journalists under its ambit.
(ii)The IR Code has defined an employee, which was absent in the IDA. It has been defined to include persons doing managerial, clerical, supervisory and technical work, thereby covering a larger pool of persons engaged by industrial establishments.
(iii)The term employer has been expanded to include contractors and the legal representative of deceased employers as well. As per the revised definition, ‘employer’ now means and includes the head of the department, occupier of the factory, manager of the factory, managing director, contractor and legal representatives of a deceased employer. These provisions were missing in the definition of ‘employer’ under the ID Act.
- Standing Orders: The IR Code, like the Standing Orders Act, provides for the adoption of the standing orders in line with the model standing orders to be made by the Central Government. The IR Code provides that all industrial establishments, with 300 workers (previously 100) or more must prepare standing orders. The IR Code has further removed the provision for the Central Government making the provisions related to standing orders, applicable to establishments with less than the statutory threshold of 300 workers.
- Grievance Redressal: While a Grievance Redressal Committee (GRC) is constituted for an establishment with 20 or more workers, a Works Committee (WC) is envisioned for an establishment with 100 or more workers. While they are broadly similar, they differ in certain aspects. One such aspect is that there is a compulsory and proportional representation of women envisioned in the GRC, which is absent in a WC.
- Industrial Tribunals: The IR Code provides for the constitution of Industrial Tribunals and a National Industrial Tribunal to adjudicate disputes which may arise in the labour industry. While Section 55 of the IR Code empowers the tribunal to pass an award enforceable after 30 days, it also provides the central government to defer the enforcement of an award on the grounds of being against national economy or social justice. In place of multiple adjudicating bodies like the Court of Inquiry, Board of Conciliation and Labour Courts under the ID Act, only Industrial Tribunals have been envisaged as the adjudicating body to decide appeals against the decision of the conciliation officer, making the process of dispute resolution streamlined and less complicated.
- Strikes and Lockouts: The IR Code requires all persons to give a prior notice of 14 days’ notice before a strike or a lockout. As per the IDA, this criterion was only applicable for public utility services. The definition of strike has been amended to include within its ambit, ‘concerted casual leave on a given day by 50% or more workers employed in an industry’.
- Negotiating Union and Council: As per the IR Code, when there is more than one trade union in the establishment, the trade union with 51% of the workers as its members will be recognized as the sole negotiation union. This trade union shall be authorized solely to bargain with the employer and reach an agreement. In cases where none of the trade unions have 51% membership of the workers, then a Negotiating Council shall be set up by the employer.
MHCO Comment: The IR Code seeks to streamline the labour laws relating to trade unions, conditions of employment and industrial disputes. The rules for implementation of the IR Code have been recently codified by the Central Government. It is aimed by the government to bring the IR Code in enforcement by April, 2021.
This update was released on 09 Jan 2021.
Legal Update Team
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