HIDAYATULLAH NATIONAL LAW UNIVERSITY

UPARWARA, NEW RAIPUR, CHHATTISGARH

THE INDUSTRIAL RELATIONS CODE, 2019

– AN OVERVIEW

Submitted to Dr. Balwinder Kaur

(Faculty in Labour Law)

Submitted by: Vedant Tapadia

Semester: IV Section: A

Roll number: 170

Submitted on – 14th July 2020

 Declaration

I hereby declare that this project work titled “The Industrial Relations Code, 2019 – An
Overview” represents my own ideas, and where others’ ideas or words have been included, I
have adequately cited and referenced the original sources. I also declare that I have adhered to
all principles of academic honesty and integrity and have not misrepresented or fabricated or
falsified any idea/data/fact/source in my submission.

Name: Vedant Tapadia

Semester: IV

Section: A

Roll number: 170

I
 Acknowledgements

I feel very delighted to write a project on “The Industrial Relations Code, 2019 – An Overview”.

I would like to sincerely like to thank my Labour Law teacher, Dr. Balwinder Kaur Ma’am for

giving me this topic and guiding me throughout the project. Through this research project I

have learned a lot about the aforesaid topic and this in turn has helped me grow as a student.

I also thank my friends for their precious inputs which have been extremely helpful in the

completion of this project. At last I would like to thank the Almighty who gave me the strength

to accomplish the project with sheer hard work and honesty.

Vedant Tapadia
Roll No - 170
Semester IV
Section-A

II
 Contents

• Declaration ………………………………………………………I

• Acknowledgements …………………………………….............II

• Chapter 1: Introduction…………...…………………………………4

❖ Research Questions ……………………………………….. 6

❖ Objectives ………………………………………………... 6

❖ Research Methodology …………………………………... 6

❖ Sources of Data ………………………………….. . 6

❖ Organization of Study .................................................................. 6

• Chapter 2: Need for Labour Law Reforms in India…...…………….7

• Chapter 3: Highlights of the Bill: Key Features……………………..8

• Chapter 4: Comparison with the Current Laws: Major Changes…..14

• Chapter 5: Criticism………………………………………………...17

• Chapter 6: Conclusion……………………………………………...19

• References …………………………………………………………..21

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 CHAPTER 1
INTRODUCTION

The prosperity of any economy depends on its industry to a large extent. The Labour Law
covers a spectrum of activities like manufacturing, trading, transporting, exporting, importing,
storing etc. Two element of labour legislation are that it aims at the establishment of a
harmonious relationship between a worker and employer to emphasize the need for healthy
participation in the production of goods and provision of services and thereby constitute
measures for strengthening the economy of the nation. Also, it emphasizes that both,
management and labour belong to a single family and should endeavour to improve the
standard of living of the workers, giving room for labour harmony1.

There are many labour laws to administer industries but still there is industrial unrest all over
the world. The reasons for unrest may be the inadequate enforcement of labour laws leading to
unfair practices like irregular payments, arbitrary deductions from wages, adverse working
conditions, unfair recruitment practices, inadequate social security etc. The demonstrations,
strikes and lockouts are commonly seen world over. The fact is that the outdated and static
labour laws are not able to cope with the changing market scenario and thus adversely affect
the process of modernization2.

The Indian Labour Law System is characterized by a multiplicity of labour legislations. With
the ever-increasing disputes in the industrial sector, there is a need for labour law reforms.
However, frequent amendments prolong confusion and does little to resolve the ambiguities in
law3. Moreover, the labour laws in India were enacted at a time when even the meaning of
globalization, privatization and liberalization was not well understood by the global society.
There were attempts by the legislators to enact a new legislation many times, but they failed.

India’s effort to implement major legislative reforms has been recognized by the World Bank
as India joins the list of top ten improvers in the ‘Ease of Doing Business’ rankings published
by the World Bank for the third consecutive year. Major contributors to India’s jump to 63rd

1
Institute of Company Secretaries of India, National Seminar on Corporate Compliance Management-
Backgrounder, page. 51-61, (March 29, 2007).
2
J P Sharma, Labour law reforms in china and India: Is the china model an answer?, 1, (Institute of Company
Secretaries of India), http://knowledge.icsi.edu/download/aruna_nagendran/200708020901.pdf [Last accessed
on: 13-07-2020].
3
T Damu, It is time to liberalise labour legislation, June 2002,
http://tata.com/article/inside/4LlgWfIyB9s=/TLYVr3YPkMU= [Last accessed on: 12-07-2020].

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place are reforms in insolvency law, starting business in India and the implementation of the
‘Make in India’ campaign. Having gathered some momentum, the Indian Government
envisions to bring India within the top 50 countries in ‘Ease of Doing Business’ by 20214. A
key focus area for achieving this goal is a much-needed overhaul of Indian labour laws.

One of the labour law reform measures proposed by the Labour Ministry of the Indian
Government involves, As a part of the labour reform initiative, is the amalgamation of 44
labour laws into four codes: (i) code on wages, (ii) code on industrial relations, (iii) code on
social security and safety, and (iv) code on health and working conditions.

The Code on Industrial Relations Bill, 2019 (IR Code), which aims to streamline industrial
relations and help India improve its ease of doing business index, was introduced in the Lok
Sabha by the Minister of Labour and Employment, Mr. Santosh Kumar Gangwar, on
November 28, 20195. The Union Cabinet chaired by the Prime Minister, Mr. Narendra Modi,
has given its approval for the introduction of the IR Code in the Parliament. The IR Code is the
third of four labour codes to receive the approval from the Cabinet. It was subsequently referred
to the Standing Committee on December 23, 2019. The report by the Standing Committee was
submitted before the floor of the house in March 2020.

The IR Code seeks to amalgamate, simplify and rationalize the provisions of 3 central
enactments relating to industrial relations: (i) the Trade Union Act of 1926; (ii) the Industrial
Disputes Act of 1947; and (iii) the Industrial Employment (Standing Orders) Act of 1946
(collectively, the "Enactments"). The Statement of objects and reasons of the IR Code states
that amalgamation of the three Enactments would “facilitate the implementation and also
remove the multiplicity of definitions and authorities without compromising on the basic
concepts of welfare and benefits to workers”6.

This Project emphasizes the need for modern and simpler labour laws in India and what
outcomes the Labour Code on Industrial Relations Bill, 2019 could bring in if it is implemented
properly.

4
“Non-Standard Employment Around the World”, 2016, International Labour Organisation,
https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/ wcms _53432
6 pdf [Last accessed on: 11-07-2020].
5
List of Central Labour Laws Under Ministry of Labour and Employment”, Ministry of Labour and Employment,
https://labour.gov.in/sites/default/files/Central%20Labour%20Acts_0.pdf. [Last accessed on: 11-07-2020].
6
Report of the 2nd National Commission on Labour, Ministry of Labour and Employment, 2002,
https://www.prsindia.org/uploads/media/1237548159/NLCII-report.pdf. [Last accessed on: 11-07-2020].

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Research questions

• What is the need for an integrated Labour Law Legislation?

• What is the status of current Indian Labour Legislations?
• What are the prospects in relation to Labour Legislations in India?
• What are the key features of the new Industrial Relations code?
• What are the key changes brought about with the new code?
• What are the drawbacks of the new Industrial Relations code?

Objectives
- To study the need of proper and dedicated Labour Laws in India.
- To study the changes made with the enactment of the new Legislation.
- To trace probable prospects and suggestions for better implementation of Labour laws.
- To study the drawbacks of the new Industrial Relations code, 2019.

Research methodology

Doctrinal research has been used in the completion of the project, which is based on
principles, doctrines, etc. This project work has been carried out following the descriptive
analytical approach.

Sources of data

Primary sources like case laws have been referred to. And secondary sources of data like
books, various websites have also been used in the completion of this project. Footnotes have
been provided wherever necessary.

Organization of the study

The project is divided into 6 chapters. The first chapter covers the introduction of the project
including the dependence of the economy and development on the countries Labour Laws.
The 2nd chapter elucidates the need of the new legislation among the existing legislations
including the previous attempts to reform Labour Laws in India while the 3rd and the 4th
chapter talks about highlights of the code and the changes it entails, respectively. Finally, the
criticisms are elaborated in the 5th chapter and the 6th chapter concludes the project.

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 CHAPTER 2

NEED FOR LABOUR LAW REFORMS IN INDIA

In India, there is a multiplicity of labour laws. The country has had numerous labour
legislations right from the 19th century. After Independence also, there were many labour
legislations enacted to protect the labour force from exploitation. Under the Constitution of
India, labour is a subject in the concurrent list where both the Central and State Governments
are competent to enact legislation. As a result, a number of labour laws have been enacted in
India catering to different aspects of labour, including industrial relations, wages, social
security, health and safety, welfare and working conditions. There are over 200 labour
legislations in India out of which 44 are Central legislations. Majority of these laws govern
only the workers in the organized sector in India. The workforce in the unorganized sector do
not have trade unions, no written job contracts, no paid leave, no social security, no collective
bargaining and no fair dispute settlement methods7.

In a dynamic context, laws need to be reviewed from time to time. To bring the labour laws in
tune with the emerging needs of the economy and the labour force, it is very essential to revise
and update the labour laws in India. A holistic and multidisciplinary approach is required to
solve the problem relating to labour reforms. We are at the threshold of a new era of industrial
relations in which labour reforms should provide further impetus to promoting the new work
culture wherein workers feel economically secure and employers not burdened. The core issues
of labour reforms can be solved by liberalizing existing labour legislation, enacting a flexible
exit policy, right sizing, reforming trade unions, continuously retraining and updating
workforce skills, worker participation in management and by good and clean corporate
governance8.

Keeping all this in mind changes need to be undertaken in the present labour legislations and
at the same time bring new legislations. After the implementation of New Economic Policy in
1991 that focuses on liberalization and privatization, most of the Indian labour laws have
become outdated because modelled on English provisions they were formulated decades back
and unable to cope with changing situation. Moreover, due to inadequate enforcement of labour

7
Supra No. 3
8
Bipin Kumar, Industrial Relations Theory and Practice, 18, New Delhi: Regal Publications, (First Edition,
2013).

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laws, unfair practices like irregular payments, arbitrary deductions from wages, unsafe working
conditions, long working hours, unfair recruitment practices, no adequate security against old
age, denying compensation for accident etc. are commonly seen against labour.

Workers non-cooperation and frequent strikes are the other commonly faced problems.
Employers do not feel comfortable with complex labour laws. Moreover, there is unnecessary
confusion regarding simple common definitions making the laws difficult to interpret. Terms
like worker, wages, establishment, appropriate government, etc. have different meaning under
different labour laws. There is no need for different definitions of these terms. All these
shortcomings and flaws demand Labour reforms to rationalize and simplify the existing laws.
The existing laws as has been stated earlier are outdated, complicated resulting in ineffective
implementation and negligible compliance which needs reformulation. A country like India
that is on the verge of taking its place on the world-stage, as a major economy has no option
but to design its labour laws that favours global market. It is time to treat labour as an asset and
not as a liability in India.

PREVIOUS ATTEMPTS TO REFORM LABOUR LAWS IN INDIA:

In order to encourage compliance and to make it easier to do business, there have been various
suggestions in the past to separate the large number of labour statutes into different aspects of
labour law. The First National Law Commission on Labour in its 1969 report had suggested
cosmetic changes, which include changing the name of the Industrial Dispute Act to Industrial
Relations Act so that it would not sound a discordant note and encourage smooth industrial
relations. Secondly, the consolidation of the Trade Unions Act (1923), the Industrial
Employment (Standing Orders) Act (1946), and the Industrial Disputes Act (1947) was
recommended. But despite the NCL recommendation report, no attempts were made to
consolidate and simplify laws. After a decade the newly formed Janata Party government
introduced the Industrial Relations Bill (IR Bill) (1978) in parliament, but it was later dropped.
In 1982, the Congress government introduced another IR Bill. But due to no clarity on the
attendant legislations to be brought in for the categories excluded from the IDA, that move also
failed. As early as in 2002 also, the Second National Commission on Labour had suggested the
formulation of labour codes similar to those in Germany, Hungary: Poland and Canada. One
of the key tasks of the Second NLC was to rationalize the existing labour laws9.

9
See generally C Venkata S Ratnam, Second NLC: Labour in an economy in transition, 35 (32) Economic and
Political Weekly 2812–2814 (2000), http://www.jstor.org/stable/4409582 [Last accessed on: 10-07-2020].

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 CHAPTER 3

HIGHLIGHTS OF THE BILL: KEY FEATURES

In India, labour falls under the Concurrent List of the Constitution. Therefore, both Parliament
and state legislatures can make laws regulating labour. Currently, there are over 100 state and
40 central laws regulating various aspects of labour such as resolution of industrial disputes,
working conditions, social security and wages.

The Second National Commission on Labour (2002) found existing legislation to be complex,
with archaic provisions and inconsistent definitions. With regard to a law on industrial
relations, the Commission recommended the consolidation of existing labour laws into two
laws; one which would apply to establishments employing 20 or more workers, and another
law which would apply to establishments employing 19 or lesser employees. The law
applicable to establishments with 20 or more workers would: (i) apply uniformly to all such
establishments regardless of the nature of activity, (ii) seek to reduce government intervention
in employer-worker relations by encouraging collective negotiation between trade unions and
management, and (iii) recognize negotiating agents to represent the concerns of workers in
labour disputes10. The other law would contain less stringent provisions on industrial relations,
social security, health and safety, and wages (to reduce the compliance burden on small scale
industries).

The Bill applies to all establishments except those engaged in charitable and philanthropic
work, domestic work, sovereign functions of the state and any notified activity. It provides for
the recognition of trade unions, notice periods for strikes and lock-outs, standing orders, and
resolution of industrial disputes. It replaces the Industrial Disputes Act, 1947; the Trade Unions
Act, 1926; and the Industrial Employment (Standing Orders) Act, 1946 which are all ancient
legislations. The salient features of the bill are as follows11: -

10
Raktima Roy and Arpita Sengupta, Analysis of the labour code on industrial relations bill – part II (standing
orders and negotiating agent), Journal of Indian Law and Society,
https://jilsblognujs.wordpress.com/2015/07/09/analysis-of-the-labourcode-on-industrial-relations-bill-part-ii-
standing-orders-and-negotiating-agent/ [Last accessed on: 13-07-2020].
11
Ayani Srivastava and Arpita Sengupta, Analysis of the Labour Code on Industrial Relations Bill – Part IV,
Journal of Indian Law and Society, (August 1, 2015), https://jilsblognujs.wordpress.com/2015/08/01/analysis-
of-the-labour-code-on-industrialrelations-bill-part-iv/ [Last accessed on: 13-07-2020].

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(1) TRADE UNIONS

Registration: Seven or more members of a trade union can apply to register it. Trade unions
that have a membership of at least 10% of the workers or 100 workers, whichever is less, will
be registered. The overall membership cannot go below seven workers. Only one-third of the
total number of office bearers of the union or five office bearers, whichever is lower, can be
from outside the industry with which the union is connected.

Recognition: The central or state government may recognise a trade union or a federation of
trade unions as Central or State Trade Unions respectively.

Negotiating union and council: The trade union with at least 75% of the workers as members
will be considered the sole negotiating union, for the purpose of negotiating with the employer
of the establishment. In case no union has at least 75% of the workers as members, a
negotiating council shall be formed consisting of representatives of unions that have at least
10% of the workers as members. One representative shall be included for each 10% of the total
workers on the rolls as members.

(2) STRIKES AND LOCK-OUTS

Strikes: In all industrial establishments, an employee cannot go on strike: (i) unless he gives
notice for a strike within 60 days before striking, and (ii) within 14 days of giving such notice.

Lock-outs: Similar notice provisions exist for lock-out of workers. Lock-out refers to the
following actions by an employer: (i) temporary closure of an establishment, (ii) suspension of
work, or (iii) refusal to continue employing workers.

(3) LAY-OFF AND RETRENCHMENT

Lay-off and retrenchment: The Code defines lay-off as the inability of an employer, due to
shortage of coal, or power, or breakdown of machinery, from giving employment to a worker.
Retrenchment refers to the termination of service of a workman for any reason other than
disciplinary action. It does not include retirement, non-renewal of contract, or completion of
tenure of fixed term employment12.

12
General Knowledge Today, Draft Labour Code, December 29, 2015, http://www.gktoday.in/blog/draft-
labour-code. [Last accessed on: 12-07-2020].

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Establishments in which at least 50 workers are employed, are required to give to every worker
who has completed at least one year of continuous service: (i) 50% of basic wages and dearness
allowance if he is laid off, and (ii) one month’s notice (or equivalent wages) and 15 days’ wages
for every year of continuous service for such period to a worker who has been retrenched.

Further, if the establishment has at least 100 workers, prior permission of the central or state
government must be obtained before lay-off or retrenchment. In case of retrenchment, the
notice requirement is extended to three months (or equivalent wages). The central or state
government can modify this threshold by notification.

The provisions on lay-offs only apply to factories, mines, or plantations. The provisions on
retrenchment apply to all establishments.

Worker re-skilling fund: The fund will be set up by the appropriate government. It will consist
of contributions from employers equal to 15 days (or as specified by the central government)
of the last drawn wages of every retrenched worker. Contributions from other sources may be
prescribed by the appropriate government. Funds must be utilised within 45 days of
retrenchment as may be prescribed.

(4) DISPUTE RESOLUTION

Bi-partite Fora: The appropriate government may require employers in establishments with
100 or more workers to constitute a Works Committee. The Committee will help resolve
conflicts between workers and employers. It will be composed of representatives of workers
and employers. The number of representatives of workers cannot be less than the number of
representatives of employers. Further, every establishment with 20 or more workers must
constitute a Grievance Redressal Committee. The Committee will resolve disputes related to
grievances of individual workers on non-employment, terms of employment or conditions of
service. It will consist of equal representatives of the employer and workers up to a maximum
of ten workers.

Arbitration: The Code allows for industrial disputes to be referred to arbitration by the
employer and workers if both parties agree to do so. Industrial disputes refer to disputes
between: (i) employers and employers, (ii) employers and workers, or (iii) workers and
workers, on the employment or non-employment, terms of employment, conditions of labour,

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or disputes between an employer and worker on discharge, dismissal, or retrenchment of the
worker.

Resolution of industrial disputes: The central or state governments may appoint conciliation
officers to mediate and promote settlement of industrial disputes. These officers will investigate
the dispute and hold conciliation proceedings to arrive at a fair and amicable settlement of the
dispute. If no settlement is arrived at, then either party to the dispute can make an application
to an Industrial Tribunal.

Industrial Tribunals: Industrial Tribunals may be set up for settling industrial disputes. An
Industrial Tribunal will consist of two members: (i) a Judicial Member, who is a High Court
Judge or has served as a District Judge or an Additional District Judge for a minimum of three
years; and (ii) an Administrative Member, who has over 20 years of experience in the fields of
economics, business, law, and labour relations.

The central government may also constitute National Industrial Tribunals for settlement of
industrial disputes which: (i) involve questions of national importance, or (ii) could impact
industrial establishments situated in more than one state. Members of the National Tribunal
will include: (a) a Judicial Member, who has been a High Court Judge, and (b) an
Administrative Member, who has been a Secretary in the central government.

The award of the Tribunal will be enforceable within 30 days. However, the government may
decide to defer the enforcement of an award in certain cases on public grounds (affecting
national economy or social justice).

(5) STANDING ORDERS

Standing orders: All industrial establishments with 100 workers or more must prepare standing
orders on matters listed in a Schedule to the Code. The central government will prepare model
standing orders on such matters, based on which industrial establishments are required to
prepare their standing orders. These matters relate to: (i) classification of workers, (ii) manner
of informing workers about work hours, holidays, paydays, and wage rates, (iii) termination of
employment, and (iv) grievance redressal mechanisms for workers.

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Notice of change: Employers who propose changes in the conditions of service are required to
give a notice to the workers. The conditions of service for which a notice is required to be given
are listed in a Schedule to the Code and include wages, contribution, and leave.

Unfair labour practices: The Code prohibits employers, workers, and trade unions from
committing unfair labour practices listed in a Schedule to the Code. These include: (i)
restricting workers from forming trade unions, (ii) establishing employer-sponsored trade
unions, and (iii) coercing workers to join trade unions.

(6) OFFENCES AND PENALTIES

The Code specifies various offences. If an employer employing 100 or more workers does not
take prior permission from the appropriate government for lay-off, retrenchment and closure,
he may be punished with a fine between one lakh rupees and ten lakh rupees. Further, an illegal
strike may be punished with a fine between one thousand rupees and ten thousand rupees, or
with imprisonment up to one month, or with both. Similarly, an illegal lock-out by an employer
may be punished with a fine between fifty thousand rupees and one lakh rupees, or
imprisonment for one month, or both. For the violation of provisions where the offence is not
specified, the penalty may be a fine up to one lakh rupees.

The Code allows for compounding (settling) of offences not punishable with imprisonment,
subject to certain conditions. Compounding may be allowed for a sum of 50% of the maximum
fine provided for the offence.

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 CHAPTER 4

COMPARISON WITH THE CURRENT LAWS: MAJOR CHANGES

Some major changes for the benefit of Industries and their interaction with their employees
have been introduced in the Labour Code on Industrial Relations, 2019. The importance and
details of these changes are mentioned as follows13:

Change no. 1 – Introduction of fixed-term contract:

The 1st major change is the provision of allowing companies to hire workers on fixed-term
contract up to any duration. The explanation of fixed-term contract is that a worker can be hired
for any of duration which may be of three months / six months / twelve months (one year)
depending on the seasonal requirements or availability of orders with that company.

Change no. 2 – The Concept of the Adjudicating Authority and Industrial Tribunal have
been redefined:

The Code has redefined the constitution of Industrial Tribunals for the settlement of industrial
disputes and speedy disposal of labour-related cases. Here and now, in place of one member,
there shall be a provision of setting up of two members’ tribunal. These two members shall be
as follow:

(1) A Judicial Member: the person who has served as High Court Judge of any state or a
District Judge or an Additional District Judge for a minimum duration of three years.

(2) An Administrative Member, who has more than 20 years of professional experience in
the fields of labour laws, business laws, economics, public affairs, finance, commerce or labour
relations etc.

Change no. 3 – The Recognition of Negotiating trade unions:

The third major change is the provision of “recognition of negotiating trade union” under
which there is a requirement of 75 % those workers’ support that shall be on the muster rolls

13
P. S. Narasimhan, Labour Reforms in Contemporary India, 44-58, Pacific Affairs, Vol. 26, No. 1 (Mar. 2020).

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of that establishment for making a trade union and negotiating with the employer in that
establishment.

Earlier there was no such law at national level for recognition of trade union, though some
states like Maharashtra (Maharashtra Recognition of Trade Unions and Prevention of Unfair
Labour Practices Act, 1971), West Bengal (West Bengal Trade Unions Rules, 1998), Orissa
(Orissa verification of Membership and Recognition of Trade Union Rules, 1994 ) and Kerala
(Kerala Recognition of Trade Unions Act, 2010 ) have ratified the legal provisions for the
recognition of trade unions in the territory of their respective states. But now this principle is
applicable throughout India.

Change no. 4 – Provisions related lay off and retrenchment:

This labour code has retained the threshold on the worker count at 100 for prior government
approval before Retrenchment, but it has a provision for changing ‘such number of employees’
through notification

The new Code describes the term “lay-off” as the powerlessness of an employer by reason of
unavailability of coal/oil / Power or any such equipment failure/ breakdown which affects
normal employment work of a worker. This shortage/ no availability is also considered the
major cause of no work and provides a ground to terminate the services of a worker by the
employer which is said as “retrenchment”. Industrial establishments i.e. mines, plantations or
factories where at least hundred (100) workers are required to take prior approval of concerned
state or central government before such closure i.e. lay-off/retrenchment etc. The Union
Cabinet has accepted the demands of various trade unions and worker bodies to keep this
threshold numbers as 100 workers instead of 300. Though, the central or state government
holds the right to modify this threshold number of workers by gazette notification any
time. There is a provision of the penalty of Rupees one up to ten lakh who contravenes this
provision.

Change no. 5 – Re-skilling Fund:

The fifth major change is the provision of setting up of a “re-skilling fund” for the training of
retrenched workers/employees. The retrenched employee would be paid 15 days’ wages from
the re-skilling fund within 45 days of the date of retrenchment.

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However, in this bill, the provisions regarding “retrenchment” is not clear which always has
created the industrial disputes between employer and workers. Such unclear provisions related
to retrenchment may affect the execution by central and state government.

Change no. 6 – Modification in Concepts of Strikes and Lock-outs:

The definitions of Strikes and Lock-outs have been redefined. In strikes, the concept of Public
Utility Services has been removed. Now the code has made mandatory to serve a notice of 14
days for strikes by trade unions and lockouts by the employer in any Industrial establishment.
Under the provisions of this new code, now mass casual leaves has also been taken within the
ambit of the strike. Here, an employer is also bound to serve a notice to his workers before 14
days of lockout. The purpose of redefining this clause is to forbid strikes and lockouts in any
factory, company or industrial establishment without giving prior notice of at least fourteen
days and also during that time when the conciliation proceedings are pending.

Change no. 7 – Provisions of empowering government officers to settle Industrial Disputes:

The government officers have been empowered to adjudicate the disputes related to employers
and trade unions and they have the authority to impose a penalty as fines. By adding this
provision, the work burden over the tribunal handling such matters shall get reduced up to a
maximum extent.

Change no. 8 – Provisions of Voluntary Arbitration for Settlement of Industrial Disputes:

This new Code allows for amicable settlement of industrial disputes raised between the
employer and the workers through voluntary arbitration. Both parties (i.e. the employer and the
workers) are required to sign a written agreement of voluntary arbitration in case of dispute
arise and in such conditions, such disputes are referred to arbitrator(s). The arbitrator(s) shall
investigate the dispute and submit the arbitration award to the appropriate government.

Change no. 9 – Concept of Notice of Change:

Company or Employers who recommend necessary changes in the Service conditions of their
workers including their wages, contribution amount, and leave related matters etc. are obliged
to inform workers through serving notice as listed in the Third Schedule of the Code.

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 CHAPTER 5

CRITICISMS

Just like the previous versions of the code, this Code too has provoked widespread disapproval
of all its key provisions from the trade unions with both the right and left ideological leanings
and economists. Here are some of the key criticisms14:

(i) Legal strike virtually banned, diluting rights and bargaining power of workers:

Labour economist Prof KR Shyam Sundar of XLRI's Xavier School of Management,

Jamshedpur, says legal strike have been made virtually impossible because now (a) industrial
disputes would come under one resolution process or the other during the timeframe fixed for
strike (before a conciliation officer, tribunal or arbitration and award processes) and (b)
throwing open the option of approaching the tribunal to anyone to bring it under the resolution
process. He points out that redefining strike to include mass casual leave would make even
coincidental leaves vulnerable to stiff penalties.

(ii) Dilution of threshold for lay-offs, retrenchment and closure:

In view of persistent opposition from trade unions, the 2019 Code marks a departure from the
2017 one which had sought to increase the threshold for seeking prior permission for lay-offs,
retrenchment and closure from industrial establishments with 100 workers or more to “not less
than 300”. The new code goes back to the older threshold (of 100 or more) but allows it to be
increased through an executive order.

Sen says this is "subversion" of the process as it allows executives to change the threshold at
will, rendering the entire legislative processes meaningless. Prof Sunder explains that the
discretionary provision has two serious consequences. It (a) allows differential labour
structures in states and (b) more crucially, law-making is taken out of the legislature's domain
to that of the executive, “which is very bad in law”.

14
Natasha Nadkar "Trade unions oppose Industrial Relations Code", Centre for Monitoring Indian Economy
(November 2019). Available at: https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=2019-11-
22%2012:45:17&msec=426 [Last accessed on 12-07-2020]

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(iii) From permanent to fix term employment:

Prof Sundar says this change would have two consequences: (a) conversion of future permanent
vacancy to fix term ones with tremendous flexibility as it is not regulated except for wages and
social security and (b) job permanency would be totally diluted.

CK Sajinarayanan, president of the RSS-affiliated Bharatiya Mazdoor Sangh (BMS) says it

would create a new category of workers as permanent jobs would be converted to fix term jobs
with social security and wages at par with the former but “no job security or permanency”. He
further says: “This provision was introduced in the textile and garments industry in 2016. Three
years later, this industry has gone down with units shifting to Bangladesh. It has had only a
negative impact.”15

(iv) Outsiders restricted in unorganised sector-trade unions:

The Code says that the unorganised sector-trade unions would need to have 50% of office
bearers who are employees. In Sen's view this is particularly worrisome because it is meant for
the unorganised sector where workers are more vulnerable to vindictive actions in the absence
of outsiders' support even for demanding legitimate rights. Prof Sundar says this is “not a good
labour policy as it discourages empowerment of unorganised sector workers”.

(v) 75% threshold for “sole negotiating union”:

This is another departure from the 2017 Code. Prof Sundar says no trade union in the world
would fulfil this condition. This is self-defeating as it undermines collective bargaining and
encourages a crowded negotiating council that would follow (if no union qualifies to be “sole
negotiating union”). “Such a rather stiff benchmark would not help the purpose for which the
law is made”, he adds.

BMS has rejected the Code completely after a prolonged deliberation in New Delhi.
Sajinarayanan says the BMS is seeking withdrawal of the Code or it be sent to a Parliamentary
panel for full debate before being drawn up again.

15
Sunil Kumar, "Rising Tide of Labour Reforms in India" [Article], Manupatra (October 2015). Available
at: https://www.manupatrafast.com/NewsletterArchives/listing/ILU%20RSP/2015/Oct/Rising%20tide%20of%20Labour%20Refor
ms%20in%20India.pdf [Last accessed on: 12-07-2020].

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 CHAPTER 6

CONCLUSION

The test of an industrial relations system lies in the effectiveness and the finesse with which it
can harmonize the interests of economic growth and generation of productive employment with
the well-being of workers. A good industrial relations system should facilitate “change”
because change is the instrumentality of growth. Instead of permitting or promoting “change”,
Indian labour law restraints enterprises from making any “change”16.

While the IR Code addresses industry concerns and has been widely welcomed by corporate
India, there has also been strong opposition of the IR Code from trade unions and economists
cutting across ideological lines.

“Trade Unions believe that the codes are part of the government's move towards massive
privatization and flawed economic policies that have already resulted in severe slowdown in
the economy.”17

The trade unions nationwide have opposed and are still opposing the IR Code primarily because
even though the IR Code provides for employers of industrial establishments with at least 100
workers to mandatorily take the prior permission of the central or state government before lay-
off, retrenchment or closure, the central or state government have the power to modify the
abovementioned threshold of 100 workers by issuing a notification.

The government had earlier proposed to increase the threshold from 100 workers to 300
workers18. This was shot down vehemently as a result of which, the proposed IR Code includes
the provision of amendment of the threshold via a notification. The trade unions fear that the
governments can very easily issue a notification reducing the threshold, thereby taking away
the rights of workers by disguising it as simplification of labour laws.

16
Ankita Gehlot, Labour law reforms: Labour code on industrial relations act, (Manupatra) (2015),
http://www.manupatra.co.in/newsline/articles/Upload/FFDEA9F7-D723-471C-9547-ED24D9941248.pdf [Last
accessed on: 13-07-2020].
17
Natasha Nadkar "Trade unions oppose Industrial Relations Code", Centre for Monitoring Indian Economy
(November 2019). Available at: https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=2019-11-
22%2012:45:17&msec=426 [Last accessed on 12-07-2020].
18
Sunil Kumar, "Rising Tide of Labour Reforms in India" [Article], Manupatra (October 2015). Available
at: https://www.manupatrafast.com/NewsletterArchives/listing/ILU%20RSP/2015/Oct/Rising%20tide%20of%2
0Labour%20Reforms%20in%20India.pdf [Last accessed on: 11-07-2020].

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The trade unions further say that the bill is 'anti-worker' as it allows employers to hire and fire
workers more easily, has no safeguards for workers, makes it harder for workers to negotiate
better terms and wages with employers, and makes strike actions more difficult.19

However, statistically, the Indian economy grew at 4.5% in the second quarter of 2019-20, as
compared to 7% in the corresponding period of 2018-1920. The ease of compliance of labour
laws is anticipated to promote setting up of more enterprises, thus acting as a catalyst for
creating further employment opportunities in the country.

It is imperative that in order to meet global students of the work ethic and provisions for the
protection of several parties in the company, an act in this direction is an accurate and well
calculated step. The benefits which are accorded to the workers will be progressive and
productive changes which shall be implemented on a Pan-India basis. Several steps such as the
“Code on Wages, 2019” have been introduced and promulgated for the benefit of the workers
and the enactment of this “Industrial Relations Code, 2019” is definitely a step in the right
direction.

THE WAY FORWARD: SUGGESTIONS

(i) While examining the provisions, some thinking must also go into ensuring that benefits of
the existing laws trickle down to those they were designed for.

(ii) Simplification and consolidation of labour laws apart, the government must focus on the
key issue of job creation.

(iii) The government should be better off building a broader consensus on any major rule
changes to existing worker rights rather than rushing through them for the sake of
simplification.

19
IndustriALL Global Union, "Indian unions hold nationwide protest against anti-worker labour law reforms"
[Article] (August 2019). Available at: http://www.industriall-union.org/indian-unions-hold-nationwide-protest-
against-anti-worker-labour-law-reforms [Last accessed on: 13-07-2020].
20
Monthly Economic Report (November 2019), Reference No. 4(8)/Ec. Dn. /2017, Economic Division,
Department of Economic Affairs, Ministry of Finance. Available at
https://dea.gov.in/sites/default/files/November_2019_0.pdf [Last accessed on: 12-07-2020].

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 REFERENCES

I. PRIMARY SOURCES:

• Labour Code on Industrial Relations Bill, 2015.

• Report of the Second National Commission on Labour, 2002.
• ILO Convention 87, Freedom of Association and Protection of the Right to
Organise Convention, 1948.

II. SECONDARY SOURCES:

A. BOOKS:

• Bipin Kumar, Industrial Relations Theory and Practice, 3-253, (First Edition,
2013), New Delhi: Regal Publications.
• DR. E.M. Rao, Industrial Jurisprudence A Critical Commentary, 1-13, (Second
Edition, 2015), Gurgaon: Lexis Nexis.
• S.N. Misra, Labor & Industrial Laws, 1-18, (27th Edition, 2013), Allahabad:
Central Law Publications.
• Dr. V. G. Goswami, Labour & Industrial Laws, 1008-1039, (Tenth Edition,
2015), Allahabad: Central Law Agency.
• Reports of the National Commission on Labour, 2002-1991-1967, (2003), India:
Academic Foundation.
• Labour Sector Reforms in India, (First Edition, 2007) Sarup & Sons.

B. ARTICLES:

• J P Sharma, Labour law reforms in china and India: Is the china model an answer?,
1, (Institute of Company Secretaries of India),
http://knowledge.icsi.edu/download/aruna_nagendran/200708020901.pdf
• Ankita Gehlot, Labour law reforms: Labour code on industrial relations act,
(Manupatra) (2015),
http://www.manupatra.co.in/newsline/articles/Upload/FFDEA9F7-D723-471C-
9547- ED24D9941248.pdf
• Andor Weltner, The 1967 Hungarian Labour Code, 17 (2) The International and

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 Comparative Law Quarterly 513-516, (Apr., 1968),
http://www.jstor.org/stable/757117
• P. S. Narasimhan, Labour Reforms in Contemporary India, 44-58, Pacific
Affairs, Vol. 26, No. 1 (Mar., 1953).
• C Venkata S Ratnam, Second NLC: Labour in an economy in transition, 35 (32)
Economic and Political Weekly 2812–2814 (2000),
http://www.jstor.org/stable/4409582
• Surendra Nath, Developing New Perspective on Industrial Relations: Role of
Government, 31 (2) IJIR, 178-192 (Oct., 1995),
http://www.jstor.org/stable/27767408
• T Damu, It is time to liberalise labour legislation, June 2002,
http://tata.com/article/inside/4LlgWfIyB9s=/TLYVr3YPkMU=
• Bank unions decide to join national strike on Sep 2, Times of India,
http://timesofindia.indiatimes.com/toi-features/business/Bank-unions-decide-to-join-
national- strike-on-Sep-2/articleshow/53756106.cms
• General Knowledge Today, Draft Labour Code, December 29, 2015,
http://www.gktoday.in/blog/draft-labour-code.

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