A Comprehensive Analysis of the Industrial Relations Code, 2020: Impact on Corporate and Labour Sectors

The Industrial Relations Code, 2020, represents a significant reform in India’s labour law landscape, consolidating and amending the laws relating to trade unions, conditions of employment, and the resolution of industrial disputes. Passed by Parliament on 28th September 2020, and receiving the President’s assent on the same day, this Code seeks to simplify and modernize the regulatory framework governing industrial relations in the country. This blog provides a detailed analysis of the key provisions, sections, and the potential impact of the Industrial Relations Code on both corporate entities and the labour force.

Overview of the Industrial Relations Code, 2020

The Industrial Relations Code, 2020, aims to streamline existing labour laws by merging three major acts:

1. The Trade Unions Act, 1926
2. The Industrial Employment (Standing Orders) Act, 1946
3. The Industrial Disputes Act, 1947

Key Provisions and Sections
1. Definitions (Section 2)
This section defines key terms used throughout the Code, such as "worker," "employer," "industry," "industrial dispute," "trade union," and others, laying the foundation for the applicability and interpretation of the Code.

2. Works Committee (Section 3) This section mandates the establishment of a Works Committee in industrial establishments with 100 or more workers. The committee is designed to promote measures for securing and preserving amity and good relations between the employer and workers.

3. Grievance Redressal Committee (Section 4) Every industrial establishment employing 20 or more workers is required to set up a Grievance Redressal Committee. The committee must resolve disputes arising from individual grievances within a specific time frame and must include adequate representation of women workers.

4. Trade Unions (Chapter III, Sections 527) The Code provides detailed provisions for the registration, recognition, and regulation of Trade Unions. Some key aspects include:
• Registration: Minimum membership requirements for the registration of a trade union.
• Negotiating Union or Council: Establishment of a sole negotiating union or a negotiating council in an establishment with multiple unions.
• Recognition: Criteria for recognizing a trade union as the sole negotiating body.

5. Standing Orders (Chapter IV, Sections 28 to 39) • Section 28 mandates that industrial establishments with 300 or more workers must have standing orders in place, outlining the conditions of employment. • Model Standing Orders (Section 29): The Central Government is responsible for formulating model standing orders that establishments can adopt. • Certification Process (Section 30): Employers must draft and submit standing orders for certification within a specified period. The process involves consultations with trade unions or workers’ representatives

6. Notice of Change (Section 40) Employers proposing to change service conditions must provide notice to the affected workers, with a 21day waiting period before implementing the changes.

7. Voluntary Reference of Disputes to Arbitration (Section 42) The Code allows employers and workers to refer industrial disputes to arbitration through a written agreement. The arbitration process is governed by the provisions of the Arbitration and Conciliation Act, 1996, with certain modifications specific to industrial disputes.

8. Resolution of Industrial Disputes (Chapter VII, Sections 43 to 51) The Code establishes the mechanism for resolving industrial disputes, including the appointment of Conciliation Officers (Section 43), constitution of Industrial Tribunals (Section 44), and the process for adjudication.

9. Strikes and Lockouts (Sections 62 to 65) The Code introduces stricter norms for strikes and lockouts, requiring notice of 14 days before a strike or lockout and prohibiting them during conciliation proceedings and up to seven days after their conclusion.

# Impact on Corporate Sector

1. Simplified Compliance The consolidation of multiple labour laws into a single code simplifies compliance for corporate entities. Companies can now manage their industrial relations obligations through a unified legal framework, reducing the complexity of dealing with multiple laws.

2. Increased Flexibility The provision allowing employers to hire workers on a fixedterm basis without restrictions typically associated with permanent employment provides increased flexibility in workforce management. This is particularly beneficial for industries with fluctuating demand.

3. Potential for Reduced Industrial Disputes By streamlining the dispute resolution process and introducing mechanisms like Works Committees and Grievance Redressal Committees, the Code aims to reduce the occurrence of industrial disputes, thus fostering a more harmonious industrial environment.
4. Greater Clarity on Employment Terms The requirement for standing orders in larger establishments ensures that employment terms are clearly defined and communicated, reducing ambiguity and potential conflicts between employers and employees
5. Stricter Regulations on Strikes The mandatory notice period and restrictions on strikes provide corporate entities with better predictability and time to address worker concerns, potentially minimizing the impact of strikes on business operations.

# Impact on Labour Sector

1. Enhanced Worker Protections
The establishment of Grievance Redressal Committees and the requirement for standing orders in larger establishments provide workers with clearer avenues for addressing grievances and understanding their employment terms.

2. Increased Representation The provisions for recognizing trade unions and forming negotiating councils ensure that workers have a collective voice in negotiations with employers, leading to better representation and protection of their rights.

3. Stricter Conditions for Industrial Actions While the Code introduces stricter norms for strikes and lockouts, these measures ensure that such actions are a last resort, undertaken after exhausting other avenues for dispute resolution, thereby protecting workers from potential repercussions of hasty industrial actions.

4. FixedTerm Employment The inclusion of provisions for fixed-term employment allows workers to access benefits typically reserved for permanent employees, such as gratuity, irrespective of their tenure, thereby providing better job security in fixed-term contracts.

5. Dispute Resolution Mechanism The streamlined process for dispute resolution, including arbitration and adjudication by Industrial Tribunals, ensures that workers have access to timely and effective remedies in case of industrial disputes.

Conclusion

The Industrial Relations Code, 2020, represents a balanced approach to reforming India’s industrial relations framework, with significant implications for both corporate entities and the labour force. By consolidating multiple laws, introducing clearer mechanisms for dispute resolution, and providing flexibility in employment terms, the Code seeks to foster a more harmonious and productive industrial environment. As the Code comes into effect, it is crucial for both employers and workers to familiarize themselves with its provisions to ensure compliance and leverage the protections and benefits it offers.