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Analyzing the Industrial Relations Code 2020

The imprints of a deadly pandemic, nationwide lockdowns, and a weathered economy, became the root fabric of many important decisions of governance that were taken in 2020. These important decisions and changes are set to become a reality in 2021, making a transition from an on-paper plan to an executed one. Such is the nature of the statute which will be the basis of this article, the Industrial Relations Code, 2020. This article analyzes the labour code and asks some important questions related to it.

With the nation’s self-sufficiency in question, the Indian lawmakers felt that the introduction of new labour codes was extremely important. The bill was passed by the Lok Sabha in September 2020 and will come into effect in the month of April this year. The Industrial Relations Code, 2020 seeks to consolidate and modify the laws relating to trade unions and other entities replacing the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947.

The Code, generally speaking, aims to help both employers and their employees. It streamlines the process for conflict resolution, protects fixed-term workers, mandates the enforcement of standing orders by all major industrial institutions, provides a re-skilling fund for retrenched workers, and raises penalties to discourage non-compliance. It adopts a business-friendly approach, through the prescription of a common bargaining body and greater freedom for employers to take operational decisions, to foster industrial harmony.


The first feature, or in this case development under the code is the expansion of the definition of ‘worker’ which now extends to individuals employed in a supervisory capacity earning less than Rs. 18,000 per month, for instance, working journalists, sales promotion employees, etc. Among other benefits, this simple expansion in the code will increase the job security of these workers as now their employers will have to follow retrenchment requirements to terminate their services.

The second feature is the changed meaning of the term 'industry' which now explicitly excludes institutions run by organizations engaged in voluntary, social, or philanthropic service and the sovereign operations of government and domestic service. In addition, the Central Government is allowed to exempt any other operation from the 'industry' scope. This move will impact and help in excluding educational institutions, which employ thousands of workers.

In comparison to the current scheme in which several State Governments have implemented vide notices, fixed-term work is given a legislative basis. Fixed-term workers are entitled to earn gratuity on a pro-rata basis if, under their respective contract of employment, they provide service for a duration of one year. With regards to working conditions, salaries, pensions, and other benefits, they are granted parity with permanent workers. Besides granting a fair standing to employees, in this process, the code majorly gives employers more flexibility, while staying in line with supply and demand.

The concept of 'appropriate government' runs on the threshold that, even though the government has divested its interest below 50%, the central government will continue to be the appropriate government for central public sector undertakings, giving the government to pursue further divestment in the PSUs thus assuaging the PSU staff's redress requirements in the future.

The term 'employer' was extended to cover almost all employees and contractors and legal agents of the deceased employer, who were formerly not included in the term alluded to in the Legislation on Workplace Disputes.

The Code also includes the required government approval from an entity for the closing of its establishments or laying off/reclamation of its employees in manufacturing establishments. Not only can this reform bring about uniformity in all jurisdictions, but it will also improve employer organizational independence, which will enable employers to attract more employees.

The biggest advancement of this code is the initiative to use a variety of forms to appeal disputes and dispute resolution beyond the conventional labor courts. The new Code also allows, in addition to the regular Industrial Tribunal, the creation of one or more National Industrial Tribunals to award disputes that are perceived to be domestic in nature or involve establishments in more than one State as referred to therein.

One very significant feature of the new Code is that it also includes all unresolved issues to be passed on to the proper venue in compliance with the new Code and adjudicated by De novo or from the existing point of view as fit. The amendments in the code would allow employees, by launching lawsuits with the government, to collect money from their employers.

In order to make employers more flexible to hire and fire by appointing fixed-term employees, the new Code takes a huge but much-needed step. Around the same time, the revised Code aims to balance the scales by the addition to fixed-term workers of over one year's contractual compensation, including gratuity. The new Code also provides for a rescinding fund to be set up for retired employees in another much-needed program, with contributions from both employers and the relevant government.

The code also states that in the event of a violation of contract, no unit may go on strike without notice 60 days before the strike nor within 14 days after the notice has been issued, nor before any date set out in a notice of strike, nor without notice of strike or lockouts in all industry establishments without warning. Strikes shall also be banned both before and within seven days of the completion of a conciliation process. Likewise, protests are forbidden in the duration of the termination or 60 days after their completion by an industrial tribunal of prosecutions.


The Industrial relations code, 2020 presents us with a unique take on the damage control measures that the government is trying to introduce to reshape and possibly re-establish the flourishing economy India enjoyed before the pandemic and the untimely surge.

The code definitely shines in a number of areas, for instance providing an enhanced set of benefits to fixed-term workers or the increased focus on alternative dispute resolution, or even the increased flexibility provided to employers to do business with lesser restrictions.

However, there are certain things that may not work in the favour of this code, even though it does have the potential to deliver something close to its desired result. For starters, the dismal state the economy is in, followed closely by the loss of game-changing and potentially profit-making investment opportunities. Even though an argument can be made for the clause regarding the restrictions on strikes, one cannot deny that the act has a remarkably streamlined approach towards dispute resolution and grievance redressal.

In my opinion, the implementation plan that the government has for this code is what people should look forward to, as their plan of action will ultimately decide the future of this code’s progress. Although the result of the code is yet to be experienced by the general population, one thing is certain that if implemented, the code will definitely make a difference and work in the favour of the economy and the working populations' pockets. But the real question is how many sacrifices and modifications will it need before that aspect of the code’s potential actually starts making a difference?





Gopalakrishnan R, 'The Industrial Relations Code, 2020: Implications For Workers' Rights' (, 2021) <> accessed 4 February 2021

Sharma D, 'Decoding The Industrial Relations Code, 2020 | SCC Blog' (SCC Blog, 2021) <> accessed 2 February 2021

'The Industrial Relations Code, 2020' (PRSIndia, 2021) <> accessed 2 February 2021






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