A complete overview of Industrial Relations Code, 2020

The Industrial Relations Code Bill, one of the much-anticipated labour codes, was cleared on 23rd September 2020 alongside the Code on Social Security Bill, 2020, as well as the Occupational Safety, Health and Working Conditions Code Bill, 2020.

Legislations repealed by the code:

The IR Code is going to repeal the below legislations:

1. The Industrial Disputes Act, 1947 (“ID Act”)
2. The Industrial Employment (Standing Orders) Act, 1946 (“SO Act”); and
3. The Trade Unions Act, 1926 (“TU Act”)

Various crucial provisions of the IR Code include:

1. Industrial Disputes

Definition of Industry:

It’s already redefined the term “industry” and currently means any kind of strategic activity taken place with thorough association between an employer and an employee (be it about direct employment or through an agency, through a contractor) regarding production, supply, or distribute the products or services along with a vision of fulfilling human needs or desires ( not as the needs or wishes that are moreover spiritual or are based on religion), but don’t comprise the below aspects:

1. Any kind of institution associated with a charitable, social service, or philanthropic service;
2. Government activities are undertaking the sovereign functionalities of the concerned government.
3. Any kind of regional service; or
4. Any kind of activity as specified by the Central government

Fixed Term Employment

The ‘fixed-term employment’ was one of the theories put forth by the IR Code that refers to the employment of a worker at a certain price, as per the written contract. Any worker employed with a certain term associated similar benefit as it is meant for the permanent workers handling same kind of work or anything similar. He becomes eligible for statutory advantages as well meant for the permanent workers in proportion with the service tenure, and thus becomes eligible for gratuity in case the service is delivered for one year of time.

Applicability of Special Provisions-Lay-off, Retrenchment, and Closure in Certain Establishments:

In case of earlier establishments employing a hundred or beyond a hundred workers, employers were essential to have initial permission of the concerned government for laying off any of the employees or shutting down an establishment though post IR code this threshold has witness growth to three hundred or more than three hundred workers.

Increase in Wage Ceiling for Worker:

As per the ID Act, a worker’s Ceiling was INR 10k, which has become INR 18K at present. This also includes those workers associated with supervisory positions.


The ‘wages’ as a term within the IR Code refers whole range of remunerations offered by mode of salary, various perks, or something that can be paid to someone employed regarding his/her employment. This includes basic pay, allowances like dearness allowances, retaining allowances, etc., though it doesn’t involve any kind of bonus not falling within the remuneration.

2. Worker Re-skilling Fund

The IR Code is meant for developing a re-skilling fund of the worker offered by the Government, which must include:
Any amount needs to be offered by the employer of any industrial setup equivalent to that of wages of 15 days last withdrawn by the worker instantly prior to retrenchment, or a similar number of days, as it is specified by the Central Government, for each retrenched worker specifically for retrenchment; and
Contribution made by similar other sources as may be suggested by the concerned Government.

3. Compounding of Offences

The IR Code offers for compounding of charges though explicitly for similar charges that are not punishable as per the IR Code limited to imprisonment explicitly, or in addition to fine with imprisonment. Regarding charges punishable along only the fines, the charges may be compounded for an amount of fifty percent of the highest amount of fine.

4. Employment Standing Orders

As per the code industrial establishment in which three hundred or more than three hundred workers employed on any of the previous 12 months are essential to confine standing orders.
The officer associated with certifying must finish the method of certification of the draft standing orders or the changes made with it in a period of 60 days from the day of receiving, not meeting which the draft standing orders are going to be considered as certified. The investigation is essential to be finished in a period of 90 days from the day on which suspended on those occasions if the worker is suspended.

5. Trade Unions

Negotiating Union and Negotiating Council:

The IR Code acknowledges to associated unions and the councils regarding negotiations.

Membership of Minors:

Criterions for minors have been reduced and have reached 14 years, from 15 years.


In case the Registrar of Trade Unions releases an order declining the registration of trade union or discarding the certificate of registration, the appeal is going to remain prior to the Industrial Tribunal essential to be included within the IR Code. Earlier, as part of Trade Union Act, one may make an appeal before the High Court or the associated Labour Court or Industrial Tribunal.

Adjudication of Disputes Under the IR Code, when a dispute appears between (a) trade unions, or (b) workers as part of trade union or (c) workers declined to take admission as the members of union will be established upon applying for adjudication at the Industrial Tribunal formed within the IR Code with jurisdiction over the office with registration of similar trade unions.

The IR Code has increased the lay off from the present 100 workers to 300. This spike in threshold is meant for providing greater flexibility to the employers in hiring and removing workers without any need of government permission. It has been increased for industrial setups with more than 300 workers won’t need a standing order. Various fresh concepts have been introduced. But, various trade unions have put criticism towards IR Code, citing that the fresh code will encourage policies of hiring and firing and would take to random conditions.


The IR Code has repealed different labour laws present in India and has broadened the coverage of it. It is extremely crucial for employers to have an assessment of it and meet with norms of fresh code.

Important: Please note that the information on this page / site is provided as general information for better understanding for the user and does not constitute tax, legal, or other professional advice and must not be used as such. Please consult your professional adviser(s) if you have any questions / doubts regarding the above.

Related Knowledge

Enhance your knowledge with

Subscribe To Our Newsletter

To get the latest news on changes of compliance