[2021] 

124 taxmann.com 163 (Article)
Date of Publishing: February 8, 2021

Industrial Relations Code, 2020: Resolving The Unresolved

image
PRITESH RAJ
INTRODUCTION

In a   The Industrial Relations Code, 2020.

devel
oping
count
ry
like
India
with
plans
to
make
its
econo
my
more
invest
ment
-
frien
dly, it
is
perti
nent
to
have
a
coher
ent
labou
r
policy
that
acco
mmo
dates
both
empl
oyees
and
empl
oyers
witho
ut
being
preju
diced
towar
d
either
side.
As
per a
Unio
n
Gover
nmen
t
repor
t, 40
labou
r laws
exclu
sive
of
nume
rous
other
state
laws
regul
ated
innu
mera
ble
labou
r-
inten
sive
aspec
ts11.

2.   The Occupational Safety, Health & Working Conditions Code, 2020

3.   The Code on Social Security, 2020.
 4.   The Code on Wages, 2019.
The present article delves into "The Industrial Relations Code, 2020. Excessive labour laws used to
build a state of turmoil within industries with myriad redundant provisions. Numerous reports and
surveys had consistently suggested amalgamating existing labour laws into a set of Codes over the
period of time.

In its bid to make labour laws amenable to numerous needs, the Government of India came up with
four labour codes to replace the existing ones. They were:
2
1.   The Industrial Disputes Act, 19473
2.   The Trade Unions Act, 19264
3.   The Industrial Employment (Standing Orders) Act, 19465.
These three legislations encompassed broad aspects related to Disputes, Trade Unions, Employment
conditions of workers and their relation with employers at times of conflict. Different statutes for each
of these aspects had resulted in comparatively less coherence between them. In order to ensure all these
provisions are at the same footing with the impending economic and sociological need of Industries, a
number of provisions incorporated in the Code from erstwhile Acts were amended to bring them in sync
with the imminent needs of the society. The incumbent Government presented The Industrial Relations
Code Bill, 2020 before the Lok Sabha. The Bill was smoothly passed in both Houses of Parliament and
received assent of the President on 28th September 2020 ". The present Code was formed after the
amalgamation of the following three erstwhile labour acts,

.
6

Though this Code is now into effect, the bigger question is whether it is capable of achieving the
intended result. In this article, the author has delved into several aspects of the Industrial Relations
Code, which has attracted scepticism because of its possibility of being used in a manner that is
detrimental to the legislative intentions with which it was brought into effect.

1. RETRENCHMENT

It is   An establishment having less than the threshold number of workers under its
an muster roll.
essen
tial
aspec
t of
Indus
trial
Relati
ons
Code
which
has
been
emul
ated
verba
tim
from
the
Indus
trial
Dispu
te
Act,
1947,
excep
ta
few
chang
es to
bring
it at
par
with
the
impe
ding
needs
.
Time
in
and
out,
nume
rous
repor
ts
and
surve
ys
had
indic
ated
how
the
retre
nchm
ent
policy
is
 disco
uragi
ng
invest
ment
in
India.
To
subst
antiat
e
these
sugge
stions
, the
Eco
nom
ic
Surv
ey
Rep
ort,
2019
,
state
d that
nume
rous
India
n
indus
tries
were
facin
g the
brunt
of
stunt
ed
growt
h in
terms
of the
numb
er of
 empl
oyees
in
their
establ
ishm
ent.
The
reaso
ning
for
this
dwarf
ism
(a
term
coine
d in
Econ
omic
Surve
y
Repo
rt) is
the
hard
and
fast
retre
nchm
ent
policy
prese
nt in
the
ID
Act,
which
make
s
retre
nchm
ent of
the
workf
 orce
diffic
ult
after
the
firm
reach
es the
thres
hold
of
100
empl
oyees
on its
must
er
roll.
To do
away
with
this
diffic
ulty,
the
Unio
n
Gover
nmen
t has
incre
ased
the
thres
hold
limit
attrac
ting
the
speci
al
provi
sions
relati
ng to
 work
ers'
retre
nchm
ent
from
erstw
hile
100
to
30071
.

2.  
An establishment having equal or more than the threshold number of worker under
its muster roll.
While the former did not require the appropriate Government's prior permission to retrench
employees, the later required prior approval of the appropriate Government on this behalf. Earlier, the
threshold of 100 between the two categories had created undue pressure on smaller establishments. To
avoid attracting special provisions related to retrenchment, the industrial establishment did not employ
workers more than the threshold limit. This change in policy by increasing the threshold from 100 to
300 has the potential to provide multi-fold support to both existing as well as the new industrial
establishment. It will provide them with necessary leeway to expand their establishment to incorporate
more employees without attracting stringent regulations under retrenchment policy.

Despite the appearance of the Government having a lackadaisical attitude toward employees in an
establishment having less than 300 workmen, it has provided several safeguards from retrenchment to
smaller establishment employees not attracting special provisions. To ensure that smaller
establishments do not employ the method of hire and fire under the guise of retrenchment, the entire
set of safeguards provided to workers of smaller establishment under ID Act has been adopted and in
no manner has it been amended to provide any form of undue benefit to Employer. Further on, increase
in threshold limit has the potential to increase employment opportunities. Thus, the incumbent
retrenchment policy present in the Code is a well balanced one imparting boost to both, the employer as
well as the employee.

2. RESKILLING FUND

The re-skilling fund is an added benefit that is to be provided to workers retrenched from their jobs.
This benefit was not provided to workmen under the earlier ID Act, 1947. This is amongst the
new additions which have been made to labour laws in India. Provision related to Re-Skilling fund has
been promulgated in Section 83 of the Industrial Relations Code, 2020.

Under the present Code and the erstwhile Act, provisions related to retrenchment of employees were
divided into two different categories. These categories were

.
8

A perusal of the Standing Committee Report and the concerned Code provides us with an insight that
this fund is restricted to minimal situations. It is to be provided to workers who have been retrenched
from their establishment but not in cases where the establishment is going ahead with closure. The
reasoning for such restriction over re-skilling fund is that it would put undue burden on employers
going ahead with closure instead of just reducing workforce.

According to the said provision, a workman who has been retrenched will be provided with 15 days of
wage in the form of re-skilling fund deposited in his account within 45 days after being
retrenched. The re-skilling fund which will be provided to retrenched worker will be in addition to the
retrenchment compensation provided to him. Thus, the final amount payable to the retrenched
workman will be,

Re-Skilling Fund + Retrenchment Compensation 9 + Amount in lieu of notice 10 (if notice

not given 1 month/3 month prior to the retrenchment) = The final amount

The re-skilling fund, despite all its benefits fails to stand up to the meaning its name denotes. Instead of
being used to re-skill employees retrenched, it is an amount which is provided to the retrenched
employee to be utilized at his own discretion. This makes the provisions redundant with respect to the
objective it is meant to fulfil.

3. FIXED TERM EMPLOYMENT

Despite consistent demand on part of trade unions not to include FTE in the Industrial Relations Code,
the Government did include it and made it an essential aspect of the new Code 11. In simplified terms, it
is the employment of an individual under a contract for a certain specified period of time. This is one of
the new provisions, not present in erstwhile acts. These FTE employees are to be provided with the
same wage, allowances and other benefits as the permanent workers are provided with. Further on, they
shall be entitled to the same statutory benefit as the other permanent employee even if they have not
completed the stipulated period of time in the establishment as their employee. Employee under FTE
provision shall also be eligible for gratuity if he renders service to the establishment for a term of one
year or more.

This new provision will provide the employer necessary flexibility to hire workers for a fixed period of
time on the basis of impeding demand. This will give them opportunity to regulate workforce in their
establishment. On the other hand, FTE will entail all the benefits which a Permanent Employee has in
the said industry, making it beneficial for both sides. Moreover, there is no limit on the number of times
that an individual can be hired by an establishment on FTE. Despite all the benefit that the said
provision entails, there is a possibility that the establishment may start hiring majority of its worker on
FTE basis on an individual basis which will make the power of trade unions to collectively bargain as
redundant.

4. NEGOTIATING UNION/COUNCIL

The new Code recognizes a negotiating council12 which is capable of negotiating on behalf of the workers
at times of dispute between the employer and the employee. The negotiating councils have been divided
into three parts,

A. Where only one trade union is present in an establishment 13

In such a situation, the said trade union will be recognized by the employer as sole negotiating union on
behalf of the workers.

B. Where more than one trade union is present in the establishment. 14

The trade union having 51% or more workers will be recognized as the sole negotiating council on
behalf of the worker.

C. Where, there are multiple trade unions and none comes under the aforementioned two categories. 15

In such a situation, the employer shall form a negotiating council having representatives of trade unions
having more than 20% of workers on the muster roll as their member.

During industrial dispute with establishments having multiple trade unions to represent its workers
there used to arise, an uncertainty about competence of a trade union to represent the workforce in its
entirety. The concept of Negotiating Union is a solution to the said problem providing for a chalked out
process to determine which competent individual to represent the workforce at times of dispute.

5. GRIEVANCE REDRESSAL COMMITTEE

The new Code presents umpteen numbers of redressal mechanisms for adjudication of dispute arising
between the employer and employee16. One such new form of redressal mechanism is that of Grievance
Redressal Committee wherein the aggrieved worker can approach an internal committee consisting of
equal number of employer and worker who will adjudicate upon the issue and provide their verdict on
the basis of impeding situation and the facts presented before them. Every establishment employing 20
or more workers will have to constitute a Grievance Redressal Committee to resolve individual
grievances disputes.

One significant amendment to the provisions related to grievance redressal commission is that the
decision of the Committee will be on the basis of majority, with the condition that majority of
employees member of the Committee should also be supporting such decision, otherwise the said
decision will become null. This provides an added safeguard to the employee, providing him with a pro-
employee committee. Such a Committee has the potential to decrease unnecessary disputes reaching
tribunals.

Moreover, earlier the number of membership of Grievance Redressal Committee was set at a cel=illing
of 6 members. This has been increased to 10 members providing for better representation of employer
as well as employee on the committee. Furthermore, the limitation period of referring disputes to
Grievance Redressal Committee has been decreased to one year. This decrease in limitation period will
lead to decrease in unreasonable complaints.

6. INDUSTRIAL TRIBUNALS

A. INDUSTRIAL TRIBUNAL

In a shift from earlier ID Act, the Industrial Relations Code has done away with labour courts. Instead it
has provided for Industrial Tribunals 17 as the sole arbitrator to decide upon Industrial Disputes. The
Tribunal is to be either a two member body consisting of a judicial member who will act as the presiding
officer and an administrative member or a single bench having either a judicial member or an
Administrative member. There shall be one or more than one industrial Tribunal for adjudication of
any number of industrial disputes depending upon the caseload present. While qualification, method of
recruitment and other terms of conditions have not been stipulated in the act, it has provided that the
administrative members should be an individual who has held rank equivalent to Joint Secretary to
Government of India and no such minimum threshold has been stipulated for the Judicial member.

Prior experience in labour matters has also not been made an essential qualification for Administrative
Member, which can hamper the justice delivery mechanism of Tribunal. Though, an essential aspect is
that the administrative member has to be an individual who has held/is holding the position of Joint
Secretary to the Government of India. Now an individual ideally attains the position of Jt. Secretary
after devoting at least 16 years of service. Sixteen years of service already provides them with a diverse
range of experience to adjudicate upon such issues. Moreover, considering the number of such tribunals
that will be constituted around the nation, it will be unfeasible to find individuals who have had
experience in labour-related matters and were/are at the rank of Jt. Secretary, leading to a number of
seats remaining vacant

B. NATIONAL INDUSTRIAL TRIBUNAL

In addition to the regular industrial Tribunal, the new Code postulates the National Industrial
Tribunal18, which will adjudicate only upon those issues that can have national or inter-state
ramifications in the opinion of Central Government. Unlike the usual Industrial Tribunal, National
Industrial Tribunal will always have a two member bench consisting of a Judicial Member who has
been/is a High Court Judge and an Administrative member, who has been/is an officer of the rank of
Secretary, Government of India or a rank equivalent to it. Moreover, sensing the importance and
relevance of National Industrial Tribunal, the administrative member should have had experience in
handling labor-related matters. This condition on the part of the Administrative member ensures that
competent individuals having experience related to labour-related matters are
appointed to such responsible posts, decisions of which could have nationwide
ramification.

7. STRIKES AND LOCKOUTS

In the erstwhile ID Act, a prior notice of 14 days 19 was essential only in cases of strike in establishment
having they work profile related to public utility like railways, ports, postal, telecom etc. Unlike ID Act,
the incumbent Industrial Relations Code has barred un-notified strike in all sorts of industries without
prior notice irrespective of whether they are Public Utility Service20.

A number of conditions PROVISION IN ERSTWHILE PROVISION IN INDUSTRIAL

have been imposed on ACT RELATIONS CODE
industrial establishment
workers with regards to
their right to strike. For
instance, workers need to
give a prior notice of 60
days before striking21.
They are also forbidden
to strike within 14 days of
giving such notice or
before expiry of date of
strike specified in such
notice22

Industrial Disputes Retrenchment policy: Earlier The threshold has been increased
Act, 1947 the threshold limit for attracting to 300 from erstwhile 100.
Special provisions related to
retrenchment, layoff and closure
was 100.
Industrial Disputes National Industrial Tribunal: The new code has included
Act, 1947 Erst while ID Act, did not include provisions related to National
provisions for a national IndustrialIndustrial Tribunal as well
Tribunal to adjudicate upon stipulated the strength of bench
dispute having national or inter- and broad qualifications which
state ramification. they have to fulfil.
Industrial Disputes Grievance Redressal 1. Unlike earlier provision
Act, 1947 Committee: decision of Grievance Redressal
1.The erstwhile ID Act also Committee was based on not just
included provisions related to the decision of majority but also
on the fact whether majority of
Grievance Redressal Committee. the employee member of the
Decisions upon issues were based committee were on side of the
on the decision of majority. majority decision. If that is not
the case then the decision is
2. Total membership of Committee considered to be void.
can be at most 6. 2. Total membership of
committee can be atmost 10
3. 3 Year Limitation period to file
complaint before the committee. 3 Limitation period to file
compliant before the committee
has been set at 1 year.

Industrial Disputes Negotiating Union/ Council: The new Code incorporated

Act, 1947 The erstwhile acts did not include provisions related to Negotiating
any provision for a Negotiating Union/Council which will have
Union or Council for an the power to negotiate on behalf
establishment. of workers on any matter of
Industrial Dispute. The
negotiating union will determined
upon the membership of different
trade unions in the
establishment.
Industrial Disputes Strikes: The ID Act, prohibited The incumbent IR Code, prohibits
Act, 1947 unannounced strikes and lockouts stirikes and lockouts in any form
only in public utility services. In of establishment (Whether they
other establishment, the are Public Utility Service or not)
employees/workers were free to without any prior notice as per
declare a strike is such a situation provisions stated in the code.
arose.
The Industrial Standing Order Threshold: As per the Code, the new
Employment Industries having 100 more threshold limit has been
(Standing Order) Act, workers had to prepare a set of g
1946. Orders as per the required norms.
Certain states, utilising there
power to amend labour laws had
even decreased the threshold to
50.
NEW PROVISION Fixed Term Employment: In
any of the three erstwhile acts
there was no provision of Fixed
term employment.
NEW PROVISION Re-skilling Fund: In any of the
three erstwhile acts there was no
provision of Re-skilling fund.
CONCLUSION
increased to 300 instead of the
earlier 100. This will bring in a
uniformity throughout the nation
and make it easier for employers
to determine working conditions
in their workplace.
The new code includes provisions
for Fixed Term Employment
which will provide establishment
leeway to hire workers on a
contractual basis.
The new code incorporates
provisions related to re-skilling
fund which will be dispensed to
retrenched workers. It will be
equivalent to 15 days of his pay.

On an overall basis, the new "Industrial Relations Code, 2020" is a balanced one providing
comprehensive provisions to deal with matters related to Industrial disputes, employment conditions,
and several other broad matters concerned with employer-employee relations. In sync with numerous
suggestions provided over time, the Government has presented a holistic code in nature, providing for
safeguards to employees and ease of doing business to employers, both at the same time.

There are some lacunas in the Code, but it is yet to be seen whether these contentious provisions will be
an impediment to its implementation. This step on the part of the Government to amalgamate the
existing requirements into one single Code is a commendable one that can increase ease of doing
business in the country. Moreover, since the legislations are part of the concurrent list of the Indian
Constitution, the state governments are also empowered to bring in necessary amendments in the
present Code to bring it in sync with the needs of the concerned state.

INDEX OF AUTHORITIES

STATUTES:

1.   Industrial Relations Code, 2020

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

1.   Eighth Report, Standing Committee on Labour (2019-2020, 17th Lok Sabha)

2.   Economic Survey, 2019 -2020
3.   40th Indian Labour Conference Report
4.   Report of the National Commission on Labour, 2002
5.   List of Central Labour Laws under Ministry of Labour and Employment
■■

1. List of Central Labour Laws under Ministry of Labour and Employment.

2. The Industrial Relations Code, 2020.
3. The Industrial Disputes Act, 1947.
4. The Trade Unions Act, 1926.
5. The Industrial Employment (Standing Orders) Act, 1946.
6. https://www.prsindia.org/billtrack/industrial-relations-code-2020
7. Section 77 of The Industrial Relations Code, 2020.
8. Section 83 of The Industrial Relations Code, 2020.
9. Section 75 of The Industrial Relations Code, 2020.
10. Section 70(a) of The Industrial Relations Code, 2020.
11. Section 2(o) of The Industrial Relations Code, 2020.
12. Section 14 of The Industrial Relations Code, 2020.
13. Section 14(2) of The Industrial Relations Code, 2020.
14. Section 14(3) of The Industrial Relations Code, 2020.
15. Section 14(4) of The Industrial Relations Code, 2020.
16. Section 4 of The Industrial Relations Code, 2020.
17. Section 44 of The Industrial Relations Code, 2020.
18. Section 46 of The Industrial Relations Code, 2020.
19. Section 22 of The Industrial Disputes Act, 1947.
20. Section 62 of The Industrial Relations Code, 2020.
21. Section 62(1)(a) of The Industrial Relations Code, 2020.
22. Section 62(1)(a) of The Industrial Relations Code, 2020.