The Industrial Relations Code, 2020
Act No. 35 of 2020 | Complete Educational Guide
📜 Section 1 — Short Title, Extent & Commencement
This law is officially called the Industrial Relations Code, 2020. Think of it as a big rulebook that covers the whole of India. It replaced three older laws:
- The Trade Unions Act, 1926
- The Industrial Employment (Standing Orders) Act, 1946
- The Industrial Disputes Act, 1947
When did it come into force?
The Central Government notified 21st November 2025 as the date when this Code came into force via S.O. 5320(E).
Imagine you work in a factory in Mumbai. Earlier, your rights as a worker were scattered across 3 different laws. Now, one single book — the IRC 2020 — covers everything: your union rights, your job security, and how disputes are resolved.
📘 Section 2 — Key Definitions (The Alphabet of the Code)
Section 2 has 43 sub-clauses (a) to (zr). These define every important word used in the Code. Let's understand the most important ones in plain English:
👷 Worker vs Employee
Worker — Any person doing manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward. Supervisory workers earning above ₹18,000/month are NOT workers.
Employee — Broader term, includes managerial and administrative staff. Excludes Armed Forces members and apprentices.
🏭 Industry
Any systematic activity where employer and workers cooperate to produce goods or services for satisfying human wants. Excludes: charitable organisations, sovereign govt functions, domestic service.
⚡ Industrial Dispute
Any dispute between employer-employer, employer-worker, or worker-worker connected with employment, non-employment, terms of employment, or conditions of labour. Even a dispute between ONE worker and their employer is an industrial dispute!
💼 Fixed Term Employment (New Feature!)
A new concept introduced. The worker gets all benefits like a permanent worker proportionately, including gratuity after 1 year of service. Employer gets flexibility to hire for a fixed period in any sector.
📊 Important Definitions — Quick Reference Table
| Term | Plain English Meaning | Example |
|---|---|---|
| Appropriate Government | Central Govt for railways, mines, banking etc; State Govt for others | A railway worker's dispute goes to Central Govt |
| Award | Decision by Tribunal or arbitrator on a dispute | Tribunal orders reinstatement of fired worker |
| Lay-off | Employer unable to give work due to shortage of raw material, power, machinery breakdown etc. | Factory closed for 10 days due to coal shortage |
| Lock-out | Employer temporarily closes workplace or refuses to employ workers | Owner shuts factory gates during wage dispute |
| Retrenchment | Employer terminates worker's service (NOT punishment). Excludes retirement, superannuation, fixed-term end. | Company downsizes due to losses |
| Strike | Workers collectively stop working. Also includes: 50%+ workers taking casual leave together on same day! | 200 out of 300 workers call in sick on Monday |
| Settlement | Written agreement between employer and worker, either during conciliation or independently (if copy sent to authority) | Both sides sign agreement for 15% wage hike |
| Wages | Basic pay + Dearness Allowance + Retaining Allowance. Excludes: HRA, overtime, gratuity, bonus, conveyance. | ₹20,000 basic + ₹3,000 DA = ₹23,000 wages |
| Average Pay | Monthly: avg of last 3 calendar months | Weekly: last 4 weeks | Daily: last 12 working days | Used to calculate lay-off and retrenchment compensation |
| Closure | Permanent shutting down of a workplace or part thereof | Company permanently closes its Delhi branch |
| Standing Orders | Workplace rules on matters in First Schedule (classification, attendance, misconduct etc.) | Factory rule: "Misconduct includes fighting at work" |
| Trade Union | Any combination (permanent or temporary) formed to regulate relations between workers and employers | INTUC, AITUC, BMS are Trade Unions |
| Conciliation Officer | Govt officer who tries to bring both sides to a settlement without going to court | Labour Commissioner mediates between employer and union |
| Unfair Labour Practice | Practices listed in Second Schedule that employers/workers are prohibited from doing | Firing a worker because they joined a union |
🏗️ Section 3 — Works Committee
Who needs it?
Every industrial establishment where 100 or more workers are employed (or were employed on any day in the past 12 months).
Who is in it?
Representatives of both employer and workers. Workers' representatives must be at least equal to employer's representatives. They are chosen in consultation with registered Trade Unions.
What does it do?
- Promotes good relations and harmony between employer and workers
- Comments on matters of common interest
- Tries to resolve differences before they become major disputes
A textile factory has 500 workers. A Works Committee is formed with 10 worker reps and 10 employer reps. When the company wants to change shift timings, instead of a strike, both sides discuss it in the Works Committee first.
📋 Section 4 — Grievance Redressal Committee (GRC)
Who needs it?
Every industrial establishment employing 20 or more workers.
Composition Rules:
- Equal number of employer and worker members
- Maximum 10 members total
- Chairperson alternates between employer and worker side every year (rotational basis)
- Women workers must be represented in proportion to their share in total workforce
Timeline — How the GRC Process Works:
| Step | Action | Time Limit |
|---|---|---|
| 1 | Aggrieved worker files application to GRC | Within 1 year of cause of action |
| 2 | GRC completes its proceedings | Within 30 days of receiving application |
| 3 | If GRC fails or worker unhappy, appeal to Conciliation Officer (via Trade Union) | Within 60 days of GRC decision |
| 4 | If conciliation fails, worker can go directly to Tribunal | After 45 days from conciliation application |
| 5 | Application to Tribunal must be made | Within 2 years of dismissal/discharge |
Important Rule — Majority Decision:
GRC decision is valid only if more than half of worker representatives agree. Otherwise no decision is deemed reached.
Ramesh, a factory worker, is denied his leave for 3 months. He files a grievance with the GRC on January 1. The GRC must resolve it by January 31. If unhappy, Ramesh has until March 31 to go to the conciliation officer.
⭐ Important: Individual Dispute = Industrial Dispute
Even if only ONE worker is dismissed, that single person's dispute IS an industrial dispute under Section 4(9). The worker doesn't need a union behind them to get legal remedy!
📊 Works Committee vs Grievance Redressal Committee
| Feature | Works Committee (S.3) | Grievance Redressal Committee (S.4) |
|---|---|---|
| Worker threshold | 100 or more | 20 or more |
| Purpose | Promote harmony, discuss common interests | Resolve individual worker grievances |
| Max members | Not specified (parity required) | Maximum 10 |
| Women representation | Not specifically mentioned | Mandatory (proportionate) |
| Time limit | None specified | 30 days to complete proceedings |
| Nature of disputes | Collective/common issues | Individual grievances |
| Appeal option | No formal appeal | Appeal to Conciliation Officer → Tribunal |
📝 Sections 5–9: Registration of Trade Unions
Who can register? (Section 6)
- Minimum 7 members needed to apply for registration
- At least 10% of workers OR 100 workers (whichever is LESS) in the industry must be members
- After registration, union must maintain minimum membership at all times
Rules the Union Constitution must have (Section 7):
- Name and objects of the union
- How to maintain membership list
- How office-bearers are elected (every 3 years)
- Annual audit of accounts
- How the union can be dissolved
How to Apply (Section 8):
Application to Registrar electronically or otherwise, with affidavit, copy of rules, and resolution by members. If union exists for more than 1 year before applying, also attach statement of assets and liabilities.
Cancellation of Registration (Section 9):
- On union's own application
- If union violates Code provisions
- If membership falls below 10% / 100 workers minimum
- 60 days notice must be given before cancellation (except on union's own application)
A garment factory has 500 workers. To register a new union: at least 7 people apply, but 10% of 500 = 50 workers must be members (since 50 is less than 100). So the union needs 50+ members to qualify for registration.
⚖️ Sections 16–18: Legal Immunities of Registered Trade Unions
Civil Immunity (Section 16)
A registered union cannot be sued in civil court for acts done in contemplation or furtherance of an industrial dispute — even if those acts cause others to break contracts or interfere with business.
Exception: If the union agent acted without executive knowledge or against their instructions, the union is not liable.
Criminal Immunity (Section 17)
Union members are NOT guilty of criminal conspiracy under IPC Section 120B merely for agreements to further union objectives — UNLESS the agreement is to commit an actual crime.
Enforceability of Agreements (Section 18)
Agreements between union members are NOT void just because they restrain trade — even though such agreements are normally void under contract law!
Workers' union calls a strike. In the process, they ask delivery trucks not to enter the factory. The transport company sues the union for loss. The union's civil immunity under Section 16 protects them from this suit — as long as it was done in furtherance of an industrial dispute.
🤝 Section 14 — Negotiating Union & Negotiating Council (NEW!)
This is a brand new concept introduced by IRC 2020. It determines WHO gets to formally negotiate with the employer.
Single Union
If only one registered union exists → employer MUST recognize it as the sole negotiating union.
Multiple Unions — Clear Winner
If one union has 51% or more workers' support → recognised as sole negotiating union.
Multiple Unions — No Clear Winner
If no union has 51%+ support → a Negotiating Council is formed. Only unions with 20%+ worker support get representation. Each 20% = 1 seat.
How long is recognition valid?
3 years (extendable up to 5 years by mutual agreement)
A company has 1000 workers and 3 unions: Union A (400 workers = 40%), Union B (350 = 35%), Union C (250 = 25%). No single union has 51%+. So a Negotiating Council is formed. Union A gets 2 seats (40% ÷ 20%), Union B gets 1 seat (35% ÷ 20%), Union C gets 1 seat. Union C just barely qualifies with 25%.
📊 Key Numbers in Chapter III
| Section | Rule | Number/Threshold |
|---|---|---|
| S.6 | Minimum members to apply for registration | 7 members |
| S.6 | Workers required as members for registration | 10% of workforce OR 100, whichever is LESS |
| S.9 | Notice before cancellation of registration | 60 days in writing |
| S.14 | Support needed for sole negotiating union recognition | 51% or more |
| S.14 | Minimum support to enter Negotiating Council | 20% of workers |
| S.14 | Validity of negotiating recognition | 3 years (max 5 years) |
| S.20 | Minimum age for Trade Union membership | 14 years (non-hazardous industry) |
| S.21 | Minimum age for office-bearer | 18 years |
| S.23 | Outsiders allowed as office-bearers | Up to 1/3rd of total OR 5, whichever is less |
| S.24 | Consent needed for name change | 2/3rd of total members |
| S.25 | Notice of dissolution to Registrar | Within 14 days, signed by 7 members + secretary |
| S.26 | Annual returns filing deadline | By 31st December each year |
| S.26 | Sending altered rules to Registrar | Within 15 days of alteration |
🏭 Section 28 — Who Must Have Standing Orders?
Chapter IV applies to every industrial establishment where 300 or more workers are employed (or were employed on any day in past 12 months).
Exceptions: Government establishments where Central/State service rules apply (like railway staff, civil servants).
An IT company with 350 employees must have certified Standing Orders. A small shop with 50 employees does NOT need them.
📋 Sections 29–34: Certification Process
Step 1: Model Standing Orders (Section 29)
Central Government prepares Model Standing Orders. If an employer simply adopts the Central Govt's model without change, it is deemed certified automatically!
Step 2: If Employer Makes Own Draft (Section 30)
- Employer prepares draft within 6 months of Code becoming applicable
- Must consult Trade Union/Negotiating Union/Negotiating Council
- Submit draft to Certifying Officer
Step 3: Certifying Officer (Section 31)
Has powers of a civil court. Must complete certification within 60 days. If fails to respond in 60 days → draft is deemed certified!
Step 4: Appeal (Section 32)
If unhappy with certifying officer's order, appeal within 60 days to Appellate Authority.
Step 5: Operative Date (Section 33)
Standing orders come into force 30 days after certified copies are sent (or 7 days after appellate authority's order if appeal was filed).
| Stage | Actor | Time Limit |
|---|---|---|
| Draft preparation | Employer | 6 months from Code commencement |
| Certification by CO | Certifying Officer | 60 days (deemed certified if no response) |
| Appeal | Any party | 60 days from CO order |
| Operative date (no appeal) | — | 30 days after certified copies sent |
| Operative date (appeal filed) | — | 7 days after appellate authority's order |
| Modification lock-in period | — | Cannot modify for 6 months after operation |
💰 Section 38 — Subsistence Allowance During Suspension
What is this?
If a worker is suspended pending inquiry into misconduct, the employer MUST pay them:
- First 90 days of suspension: 50% of wages
- After 90 days (if delay not due to worker's fault): 75% of wages
Inquiry Time Limit:
Investigation/inquiry must ordinarily be completed within 90 days from suspension date.
Vijay is suspended on April 1 pending misconduct inquiry. He earned ₹20,000/month. For April, May, June (first 90 days) he gets ₹10,000/month. If inquiry isn't finished and the delay isn't his fault, from July he gets ₹15,000/month until resolved.
📋 First Schedule — Matters Covered in Standing Orders
| # | Matter | Example |
|---|---|---|
| 1 | Classification of workers (permanent, temporary, apprentice, probationer, badli, fixed term) | Who is permanent vs temporary |
| 2 | Hours of work, holidays, pay days, wage rates | Work hours 9am–6pm, pay on 1st of month |
| 3 | Shift working arrangements | Morning/evening/night shift rules |
| 4 | Attendance and late coming policy | 3 late entries = half day absent |
| 5 | Leave and holiday procedures | How to apply for casual leave |
| 6 | Entry through certain gates, liability to search | Workers must enter through Gate 2 |
| 7 | Temporary stoppages and rights/liabilities | Power cut — workers' rights during stoppage |
| 8 | Termination of employment and notice period | 1 month notice required |
| 9 | Misconduct and disciplinary procedures | What constitutes misconduct + punishment |
| 10 | Grievance redressal mechanism | How to complain against supervisor |
| 11 | Any other matter specified by appropriate Govt | As notified from time to time |
📢 Section 40 — Notice of Change
The Basic Rule:
If an employer wants to change any condition of service listed in the Third Schedule, they MUST:
- Give written notice to affected workers
- Wait 21 days before implementing the change
When is Notice NOT Required?
- When change is made as per an existing settlement or award
- For government servants covered by service rules
- Emergency situations requiring shift changes (with GRC consultation)
- Changes ordered by appropriate Government
Third Schedule — Changes Requiring Notice:
| # | Condition of Service |
|---|---|
| 1 | Wages (including payment period and mode) |
| 2 | Employer contributions to provident fund or pension |
| 3 | Compensatory and other allowances |
| 4 | Hours of work and rest intervals |
| 5 | Leave with wages and holidays |
| 6 | Starting, alteration or stopping shift working |
| 7 | Classification by grades |
| 8 | Withdrawal of customary concessions or privileges |
| 9 | New rules of discipline or alteration of existing ones |
| 10 | Rationalisation likely to lead to retrenchment |
| 11 | Increase or reduction in number of persons employed |
A factory currently pays workers on the 1st of each month. The owner wants to change this to the 15th. Under Section 40, the owner MUST give written notice to workers at least 21 days before making this change to their wage payment date.
⚖️ Section 42 — Voluntary Reference of Disputes to Arbitration
What is this?
Instead of going through the formal conciliation → tribunal route, the employer and workers can mutually agree to refer their dispute to an arbitrator of their own choosing. This is called voluntary arbitration because both sides choose it voluntarily.
Key Rules:
- Agreement must be in writing, signed by both parties
- If an even number of arbitrators are appointed, they must also name an umpire (tiebreaker). Umpire's decision prevails if arbitrators disagree.
- A copy of the arbitration agreement must be sent to the appropriate Govt and conciliation officer
- If Govt is satisfied that the parties represent the majority, it issues a notification — and even non-party employers/workers in that dispute get a chance to present their case
- During arbitration, Govt can prohibit any ongoing strike or lock-out
- The Arbitration and Conciliation Act 1996 does NOT apply to arbitrations under this section
Who represents workers in arbitration?
| Situation | Representative |
|---|---|
| Negotiating union/council exists | Negotiating union/council |
| No negotiating union/council but Trade Union exists | Trade Union |
| No Trade Union exists | Representatives chosen by workers in prescribed manner |
| Individual worker dismissal dispute | The concerned worker personally or through authorized rep |
TATA Steel and its workers' union have a wage revision dispute. Instead of waiting for a Tribunal (which can take years), both agree to appoint a retired judge as arbitrator. They sign an arbitration agreement, send a copy to the Labour Ministry, and the arbitrator resolves the dispute within 3 months.
🤝 Section 43 — Conciliation Officers
The appropriate Government appoints Conciliation Officers. Their job is to mediate and promote settlement of disputes. They can be appointed for specific areas or industries, permanently or for a limited period.
Conciliation Process (Section 53):
- CO holds proceedings when dispute exists/is apprehended OR when a strike notice has been given
- CO investigates the dispute and tries to bring about a fair settlement
- If settlement reached → sends report + signed memorandum to appropriate Govt
- If no settlement → sends failure report within 45 days (or 14 days if strike notice was given)
- After CO's failure report, any party can approach the Tribunal within 90 days
- CO cannot hold proceedings after 2 years from date dispute arose
⚖️ Section 44 — Industrial Tribunal (New Two-Member Structure!)
Composition — A Key Change!
The old law had only a Judicial Member. IRC 2020 introduces a two-member Tribunal:
- One Judicial Member (legal expert)
- One Administrative Member (must be at least Joint Secretary level)
- Judicial Member presides when both sit together
Two-Member Bench decides:
- Application/interpretation of Standing Orders
- Discharge, dismissal, reinstatement of workers
- Legality of strikes or lockouts
- Retrenchment and closure cases
- Trade Union disputes
All other cases can be decided by a single member bench (either Judicial or Administrative).
Age limit for members: 65 years (Section 48)
Members must be "independent persons" (Section 48)
Meaning: not connected with the dispute or industries affected by the dispute.
🏛️ Section 46 — National Industrial Tribunal
The Central Government can constitute one or more National Industrial Tribunals for disputes that:
- Involve questions of national importance, OR
- Affect industrial establishments in more than one State
Qualifications:
| Member | Qualification |
|---|---|
| Judicial Member | Is or has been a Judge of a High Court |
| Administrative Member | Is or has been a Secretary to Govt of India or equivalent, with labour relations experience |
A major airline strike affecting passengers in Delhi, Mumbai, and Chennai would be referred to the National Industrial Tribunal since it affects multiple states and is of national importance.
📜 Sections 55–58: Awards and Settlements — Their Life Cycle
When does an Award become enforceable? (Section 55)
- Normally: 30 days after communication to parties
- If Govt declares it against public interest: Govt can reject/modify within 90 days; modified award becomes effective 15 days after being laid before Legislature
Who is bound by an Award? (Section 57)
- All parties to the dispute
- Heirs/successors of employer
- ALL workers employed in that establishment (past AND future) — even those not party to the dispute!
How long does an Award last? (Section 58)
- Award operates for 1 year from when it becomes enforceable
- Govt can reduce this period or extend it up to 1 year at a time
- Maximum total operation: 3 years
- Award continues to bind parties until 60 days after notice of intention to terminate
Settlement duration (Section 58):
- For whatever period parties agree
- If no period agreed: 6 months from signing
- Continues until 60 days after notice to terminate
Payment of full wages during court challenge (Section 56):
If Tribunal orders reinstatement and employer challenges in High Court/Supreme Court, employer must pay worker full last drawn wages throughout the court proceedings — unless worker was employed elsewhere during that period.
⚠️ Section 62 — Prohibition of Strikes & Lock-Outs
A Worker Cannot Strike if:
- Strike notice not given 60 days before striking
- Within 14 days of giving notice
- Before the date of strike specified in the notice
- During conciliation proceedings + 7 days after conclusion
- During Tribunal/National Tribunal proceedings + 60 days after
- During arbitration proceedings + 60 days after (when Govt notification issued)
- During any period when a valid settlement or award is in operation
An Employer Cannot Lock-Out if:
Same restrictions as above (same time limits apply to lock-outs).
| Situation | Restriction Period |
|---|---|
| After giving/receiving strike/lock-out notice | Cannot act for 14 days after notice |
| During conciliation proceedings | No strike/lock-out + 7 days after conclusion |
| During Tribunal/NIT proceedings | No strike/lock-out + 60 days after conclusion |
| During arbitration proceedings (with Govt notification) | No strike/lock-out + 60 days after conclusion |
| During operation of settlement/award | No strike/lock-out on matters covered |
Employer Reporting Duty (Section 62(6)):
Within 5 days of receiving/giving strike/lock-out notices, employer must report the number of notices to appropriate Govt and conciliation officer.
🚫 Section 63 — Illegal Strikes & Lock-Outs
A strike or lock-out is illegal if it:
- Was commenced or declared in violation of Section 62
- Continued despite prohibition order under Section 42(7)
Exceptions — NOT illegal even without notice:
- Strike/lock-out commenced before filing of Tribunal application and NOT in violation of Code → can continue
- Lock-out in response to illegal strike → NOT illegal
- Strike in response to illegal lock-out → NOT illegal
Section 64 — No Financial Aid to Illegal Actions
No one can knowingly spend or apply money to support an illegal strike or lock-out.
Workers give strike notice on Jan 1. They cannot strike until Jan 15 (14-day waiting period). If they strike on Jan 10, it's an illegal strike. If employer then locks out in response to this illegal strike, the lock-out is NOT illegal (Section 63(3)).
🔒 Section 67 — Rights of Laid-Off Workers
Who qualifies?
Workers (not badli/casual) on muster rolls who have completed at least 1 year of continuous service.
Compensation Amount:
50% of (Basic Wages + Dearness Allowance) for each day of lay-off (excluding weekly holidays)
After 45 Days:
If worker is laid off for more than 45 days in 12 months → employer and worker CAN agree that no further compensation is payable. BUT employer can then choose to retrench the worker (paying retrenchment compensation, with lay-off compensation set off).
Section 68 — Muster Roll duty:
Even when workers are laid off, employer MUST maintain muster rolls and allow workers to sign in during normal working hours.
Section 69 — When compensation is NOT payable:
- Worker refuses alternative employment in same/nearby establishment (within 8 km) at same wages
- Worker doesn't present himself for work at least once a day
- Lay-off is caused by strike or go-slow in another part of the establishment
Suresh works in a cement factory earning ₹15,000 basic + ₹3,000 DA. Due to limestone shortage, the factory lays him off for 20 days. His compensation = 50% × ₹18,000 × 20 days ÷ 26 working days = approximately ₹6,923.
💼 Section 70 — Retrenchment Conditions
Mandatory Pre-conditions:
Before retrenching a worker with 1+ year continuous service, employer MUST:
- 1 month written notice stating reasons (or pay wages in lieu of notice)
- Pay retrenchment compensation: 15 days average pay × number of years of service (counting any part year over 6 months as a full year)
- Serve notice on appropriate Government
Section 71 — LIFO Principle (Last In First Out):
Among workers of the same category → the one employed LAST should be retrenched first, unless employer has valid reasons to deviate (must be recorded).
Section 72 — Right of Re-Employment:
If employer wants to hire again within 1 year of retrenchment, retrenched workers (who are Indian citizens) must be given FIRST preference for re-employment.
Section 73 — Transfer of Establishment:
If ownership/management is transferred, workers with 1+ year service are entitled to retrenchment compensation (as if retrenched) UNLESS:
- Service not interrupted
- Terms not less favourable
- New employer legally liable to pay retrenchment compensation based on continuous service
🏚️ Sections 74–75 — Closure of Undertaking
Section 74 — 60 Days Notice:
Before closing any undertaking, employer must give 60 days notice to appropriate Government stating reasons. Does NOT apply to: establishments with fewer than 50 workers, or construction project undertakings.
Section 75 — Compensation on Closure:
Workers with 1+ year service entitled to notice + compensation as per Section 70 (same as retrenchment).
Exception: If closure is due to unavoidable circumstances beyond employer's control → compensation capped at 3 months average pay.
Important: Financial losses, accumulated stocks, lease expiry, or mine exhaustion are NOT considered "unavoidable circumstances"!
📊 Lay-Off vs Retrenchment vs Closure — Quick Comparison
| Feature | Lay-Off | Retrenchment | Closure |
|---|---|---|---|
| Nature | Temporary inability to provide work | Permanent termination of service | Permanent shutting of workplace |
| Compensation | 50% of basic+DA per day | 15 days avg pay per completed year | Same as retrenchment (capped at 3 months if unavoidable) |
| Notice to Govt | Not required (Ch.IX) | Required | 60 days advance notice |
| Minimum service | 1 year continuous service | 1 year continuous service | 1 year continuous service |
| Re-employment right | Must accept alternative or lose compensation | Preference for 1 year | No re-employment right |
| Chapter IX applies to | Establishments with 50–299 workers | All with 1+ year workers | Establishments with 50+ workers |
🏭 Section 77 — Which Establishments?
This Chapter applies to factories, mines, and plantations where 300 or more workers are employed on average per working day in preceding 12 months. (Govt can increase this threshold by notification.)
📋 Sections 78–80: Prior Permission Required!
The BIG difference from Chapter IX: in large establishments, employer needs PRIOR PERMISSION from appropriate Government before lay-off, retrenchment, or closure.
| Action | Notice to Govt | Govt Decision Time | Default if No Response |
|---|---|---|---|
| Lay-Off (S.78) | Application for prior permission | Within 60 days | Deemed granted after 60 days |
| Retrenchment (S.79) | 3 months notice + prior permission application | Within 60 days | Deemed granted after 60 days |
| Closure (S.80) | Application 90 days before closure | Within 60 days | Deemed granted after 60 days |
What happens if no permission sought or permission refused?
Lay-off/retrenchment/closure is deemed illegal and workers are entitled to all benefits as if nothing happened!
Special: Mine Lay-off Exception (S.78)
Lay-off due to fire, flood, or excess inflammable gas/explosion: employer can lay off immediately but must apply for permission within 30 days.
Chapter IX still applies for:
Continuous service definition, LIFO principle, re-employment rights, transfer compensation, effect on inconsistent laws (Sections 66, 71, 72, 73, 76).
Maruti Suzuki (thousands of workers) wants to retrench 500 workers. Unlike a small factory, they must: (1) give workers 3 months notice in writing, AND (2) apply to the State Government for permission. The State Govt must decide within 60 days. If Govt doesn't respond, permission is deemed granted.
🎓 Section 83 — Worker Re-Skilling Fund
What is this?
A brand new concept in IRC 2020! The appropriate Government sets up a fund to help retrenched workers learn new skills and find new employment.
How is the Fund Built?
- Employer contribution: 15 days' wages last drawn by the retrenched worker, for every retrenched worker (case of retrenchment only — NOT for lay-off or closure)
- The Central Government can change the number of days by notification
- Additional contributions from other prescribed sources
How is the Fund Used?
The Government credits 15 days' wages directly to the retrenched worker's account within 45 days of retrenchment.
Ramesh earns ₹600/day and is retrenched. His employer must contribute ₹600 × 15 = ₹9,000 to the Re-Skilling Fund. Within 45 days of retrenchment, the Government credits ₹9,000 to Ramesh's account, which he can use for vocational training, re-education, or job search.
Why is this important?
- Helps workers transition to new jobs/skills
- Especially important in an era of automation and technology disruption
- Makes retrenchment less devastating for workers
- Encourages employers to be honest about retrenchment (vs disguised termination)
🚫 Section 84 — Prohibition of Unfair Labour Practices
No employer, worker, or Trade Union (registered or not) shall commit any unfair labour practice listed in the Second Schedule.
🏭 Unfair Practices by EMPLOYERS
- Threatening workers for joining Trade Unions
- Threatening lock-out if union organises
- Giving wage hikes to break union organising
- Setting up employer-sponsored fake unions
- Discriminating against union members
- Firing workers for participating in legal strikes
- Changing seniority due to union activities
- Refusing promotion due to union activities
- Falsely implicating workers in criminal cases
- Firing for patently false/trumped-up reasons
- Hiring workers during a legal strike
- Failing to implement awards/settlements
- Acts of force or violence
- Refusing to bargain collectively
- Illegal lock-out
👷 Unfair Practices by WORKERS/UNIONS
- Instigating or supporting illegal strikes
- Physically blocking non-striking workers
- Violence or threats against non-strikers
- Recognised union refusing to bargain in good faith
- Coercive activities against bargaining representative
- "Go-slow" (working slower than usual to pressure employer)
- Squatting on premises after work hours
- "Gherao" of management staff
- Demonstrations at manager's residence
- Wilful damage to employer's property
- Violence/threats to prevent workers from attending work
📖 What is "Go-Slow"? (Explanation 1 of Second Schedule)
Go-slow means when more than one worker conjointly works more slowly and with less effort than usual, to pressure the employer for better pay or conditions.
"Usual" is defined as: where a standard is set, that standard; where no standard, the average work of the previous 3 months.
Workers normally produce 100 units/day. To protest a wage freeze, 50 workers collectively reduce output to 60 units/day. This is a "go-slow" and is an unfair labour practice.
💰 Section 86 — Penalty Chart
| Offence | Minimum Fine | Maximum Fine | Imprisonment |
|---|---|---|---|
| Violating Ch.X (S.78/79/80) — lay-off/retrenchment/closure without permission (large establishments) | ₹1,00,000 | ₹10,00,000 | — |
| Repeat offence of above | ₹5,00,000 | ₹20,00,000 | Up to 6 months |
| Violating Ch.IX (S.67/70/73/75) — lay-off/retrenchment/closure compensation | ₹50,000 | ₹2,00,000 | — |
| Repeat offence of above | ₹1,00,000 | ₹5,00,000 | Up to 6 months |
| Unfair labour practice (Second Schedule) | ₹10,000 | ₹2,00,000 | — |
| Repeat unfair labour practice | ₹50,000 | ₹5,00,000 | Up to 3 months |
| Trade Union default in notices/statements | ₹1,000 | ₹10,000 + ₹50/day continuing | — |
| False entries in Trade Union accounts | ₹2,000 | ₹20,000 | — |
| Failing to submit Standing Orders | ₹50,000 | ₹2,00,000 + ₹2,000/day | — |
| Violating certified Standing Orders | ₹1,00,000 | ₹2,00,000 | — |
| Participating in illegal strike (worker) | ₹1,000 | ₹10,000 | Up to 1 month |
| Conducting illegal lock-out (employer) | ₹50,000 | ₹1,00,000 | Up to 1 month |
| Instigating illegal strike/lock-out | ₹10,000 | ₹50,000 | Up to 1 month |
| Financially supporting illegal strike/lock-out | ₹10,000 | ₹50,000 | Up to 1 month |
| Breach of settlement/award terms | ₹20,000 | ₹2,00,000 | Up to 3 months |
| Disclosing confidential information (S.61) | — | ₹20,000 | Up to 1 month |
| Any other violation of Code | — | ₹1,00,000 | — |
⚖️ Section 87 — Who Hears These Cases?
- No court can take cognizance of offences without a complaint by or under authority of the appropriate Government
- No court inferior to Metropolitan Magistrate or Judicial Magistrate of First Class can try these offences
🤝 Section 89 — Composition of Offences (Settling Out of Court)
Many offences can be "compounded" (settled by paying a sum instead of going to court):
- Offence punishable with fine only: Compound by paying 50% of maximum fine
- Offence punishable with imprisonment up to 1 year or fine: Compound by paying 75% of maximum fine
Composition is done by a Gazetted Officer notified by appropriate Government. Amount goes to the Social Security Fund (under Social Security Code 2020).
Cannot compound if the same offence was committed/compounded within the previous 3 years!
🛡️ Section 90 — Status Quo During Proceedings
When a dispute is pending before conciliation/arbitrator/tribunal, employer CANNOT:
- Change conditions of service to workers' disadvantage (related to dispute)
- Dismiss or punish workers for misconduct connected with the dispute
Exceptions require express written permission from the authority.
Protected Workers (sub-section 3):
Union office-bearers recognised as "protected workers" — cannot be touched even for unrelated matters without authority's permission. Limit: 1% of workforce, minimum 5, maximum 100.
⚖️ Section 94 — Legal Representation
Parties can be represented by:
- Trade union office-bearers
- Federation of unions office-bearers
- Other authorised workers/employers
Lawyers NOT allowed in conciliation proceedings.
In Tribunal/NIT proceedings, lawyers allowed ONLY with consent of OTHER side AND leave of Tribunal.
🚫 Section 97 — Civil Courts Barred
No civil court has jurisdiction on matters governed by this Code. No court can grant injunctions against acts done under this Code.
🔄 Section 104 — Repeal & Savings
This Code replaces 3 old laws:
- Trade Unions Act, 1926
- Industrial Employment (Standing Orders) Act, 1946
- Industrial Disputes Act, 1947
All actions taken under these old laws continue to be valid under corresponding provisions of this Code.
🎯 Section 96 — Power to Exempt
Appropriate Government can exempt any establishment (conditionally or unconditionally) from any provision of this Code if:
- Adequate provisions already exist to fulfil the Code's objects
- New establishments: exempted in public interest for specified period
💡 Section 83-Related: Recovery of Money (Section 59)
If money is due from employer under settlement/award, worker can apply to appropriate Government. If satisfied, Govt issues certificate to Collector to recover as arrear of land revenue.
Application must be made within 1 year of money becoming due (extendable for sufficient cause).
RELATIONS CODE
2020
(Act No. 35 of 2020)
📋 Chapter I: Preliminary
- Replaces 3 old laws
- 43 key definitions
- Worker ≤ ₹18,000/month
- New: Fixed Term Employment
- Strike includes 50%+ mass casual leave
🏭 Chapter II: Bi-Partite Forums
- Works Committee: 100+ workers
- GRC: 20+ workers, max 10 members
- GRC deadline: 30 days
- Individual dispute = industrial dispute
- Women representation mandatory in GRC
⚡ Chapter III: Trade Unions
- Registration: 7+ members, 10% workforce
- Civil + criminal immunity for registered unions
- Negotiating Union: 51%+ support
- Negotiating Council: 20%+ unions
- Recognition valid 3–5 years
- Office-bearers min age: 18 years
📄 Chapter IV: Standing Orders
- Applies to 300+ worker establishments
- Model SO: deemed certified if adopted
- Certification within 60 days
- Suspension: 50% wages (first 90 days)
- 75% wages after 90 days (if worker not at fault)
📢 Chapter V: Notice of Change
- 21 days advance notice for service condition changes
- 11 items in Third Schedule
- Exceptions: settlement/award, Govt orders
🤝 Chapter VI: Voluntary Arbitration
- Both parties agree to arbitrator
- Written agreement required
- Arbitration Act 1996 does NOT apply
- Even number of arbitrators → need umpire
- Govt can prohibit strike during arbitration
⚖️ Chapter VII: Dispute Resolution
- Conciliation Officer → 45 day failure report
- Industrial Tribunal: 2 members (Judicial + Administrative)
- National Industrial Tribunal: national importance / multi-state
- Award enforceable: 30 days after communication
- Award validity: 1–3 years
- Full wages during court challenge
🔴 Chapter VIII: Strikes & Lock-Outs
- 60-day notice required before striking
- 14-day waiting after notice
- No strike during proceedings + cooling period
- Illegal strike → penalties for workers
- Lock-out in response to illegal strike → NOT illegal
💼 Chapter IX: Lay-Off/Retrenchment/Closure (50–299)
- Lay-off compensation: 50% basic+DA
- Free after 45 days (with agreement)
- Retrenchment: 15 days pay per year
- 1 month notice + Govt notice
- LIFO principle
- 1-year re-employment preference
- Closure: 60 days advance notice to Govt
🏗️ Chapter X: Special Provisions (300+)
- Prior Govt permission for all 3 actions
- Retrenchment: 3 months notice
- Closure: 90 days advance notice
- Govt decision within 60 days (else deemed granted)
- Illegal if no permission sought
🎓 Chapter XI: Re-Skilling Fund
- Employer contributes 15 days wages per retrenched worker
- Credited to worker's account within 45 days
- Only on retrenchment (not lay-off/closure)
🚫 Chapter XII: Unfair Labour Practices
- 16 employer prohibited practices
- 8 worker/union prohibited practices
- Go-slow: unfair labour practice
- Gherao of management staff: unfair
- Hiring during legal strike: unfair
⚠️ Chapter XIII: Offences & Penalties
- Illegal large-establishment actions: up to ₹10 lakh
- Unfair labour practice: ₹10K–₹2 lakh
- Illegal strike by worker: ₹1K–₹10K + 1 month jail
- Illegal lock-out: ₹50K–₹1 lakh + 1 month jail
- Composition: 50% or 75% of max fine
- Min First Class Magistrate for trial
📚 Chapter XIV: Miscellaneous
- Status quo during proceedings (S.90)
- Protected workers: 1% (min 5, max 100)
- No lawyers in conciliation
- Civil courts barred
- Power to exempt establishments
- Repeals 3 old laws (effective Nov 2025)
📋 Workplace Problem Arises
Dispute between worker and employer arises regarding employment terms, wages, dismissal, working conditions, or any industrial matter. This becomes an "Industrial Dispute" under Section 2(q).
🏭 Internal Resolution — GRC (S.4)
Worker files application to Grievance Redressal Committee within 1 year. GRC must resolve within 30 days. This is the first step — keeping disputes in-house.
🤝 Conciliation (S.53)
If GRC fails or worker is unhappy, worker approaches Conciliation Officer via Trade Union within 60 days. CO investigates and tries to achieve a negotiated settlement. CO sends failure report within 45 days.
⚖️ Voluntary Arbitration (S.42)
Both parties may agree to voluntarily refer the dispute to an arbitrator. Faster than Tribunal. Award is binding. Govt can issue notification making it binding on all concerned workers.
🏛️ Industrial Tribunal (S.44)
Any party applies to Tribunal within 90 days of CO's failure report. Two-member bench (Judicial + Administrative). Single member for non-specified matters. Decides on merits and passes an Award.
🏛️ National Industrial Tribunal (S.46)
For disputes of national importance or multi-state disputes, Central Govt refers to NIT. Presided by a High Court Judge. Award submitted to Central Government.
📜 Award Communicated (S.55)
Award sent to parties and appropriate Govt. Becomes enforceable after 30 days. Govt can delay enforcement if against national economy or social justice, and may modify within 90 days.
✅ Award Binding & Enforced (S.57-58)
Award binds all parties + all workers in that establishment. Valid for 1 year (max 3 years). If employer challenges in High Court/SC, must pay worker full wages throughout court proceedings (S.56).
💰 Recovery of Money (S.59)
If employer doesn't comply with settlement/award, worker applies to Govt within 1 year. Govt issues certificate to Collector, who recovers the amount as an arrear of land revenue.