In order to create a prosperous, independent India (Aatmanirbhar), worker empowerment is essential.  Approximately 90% of India's workforce, or more than 50 crore workers, are still employed in the unorganized sector despite the country's more than 70 years of independence, frequently without access to basic social security and welfare benefits.  These workers, whether in the organized or unorganized sector, have historically been caught up in a complicated web of overlapping labor laws, which has hindered the efficient implementation of welfare benefits and caused procedural obstacles.

For the first time, the government has extended the umbrella of labor protections to cover the entire workforce, including those in the unorganized sector, gig economy, and self-employment. The new codes guarantee minimum wages, formalize employment through appointment letters, expand social security coverage, and ensure equal benefits for fixed-term and contract workers. By reducing the number of legal provisions by over 60% and streamlining compliance, these reforms not only empower workers but also promote ease of doing business and foster inclusive economic growth

Shramev Jayate

The Shramev Jayate initiative introduced a series of transformative reforms to empower workers and modernize India's labor ecosystem. One of its landmark features was the Universal Account Number (UAN), which gave workers the benefit of portability—enabling them to securely access and withdraw their provident fund from anywhere in the country, thus simplifying job transitions and ensuring continuity of social security.

• This voluntary, contributory pension scheme ensures a minimum monthly pension of ₹3,000 for unorganized workers after the age of 60, providing a safety net for millions who previously lacked any form of old-age security.
• By codifying 29 central labor laws into comprehensive labor codes, the government has taken a historic step to provide workers with security, respect, health, and welfare measures in a simplified and accessible manner.

Industrial Relations Code, 2020

The Industrial Relations Code, 2020 is an important piece of legislation aimed at amending the laws relating to trade unions, conditions of employment in industrial establishments or undertakings, investigation and settlement of industrial disputes, and matters connected therewith or incidental thereto.

• The Industrial Relations Code, 2020, often known as "IRC 2020," was passed by Parliament on September 23, 2020.
• Following presidential assent on September 28, 2020, it was published in the Official Gazette on September 29, 2020, along with two additional labor codes.
• The Code on Wages 2019 ("CoW 2019") was approved and released into the public domain on August 8, 2019.
• The Industrial Relations Code, 2020, replaces and combines three existing labor laws: the Industrial Disputes Act, 1947; the Trade Unions Act, 1926; and the Industrial Employment (Standing Orders) Act, 1946.

Purposes

• Simplification and Consolidation: The code simplifies and consolidates labor regulations pertaining to industrial relations.
• Promotion of Harmony: Aims to minimize industrial conflicts and foster harmonious industrial relations.
• Protection of Workers' Rights: Guarantees protection of workers' rights, including collective bargaining and the ability to organize trade unions.
• Flexibility in Employment: Allows businesses to manage staff with flexibility, including layoffs, retrenchments, and closures.
• Dispute Resolution: Provides procedures for efficient settlement of labor issues through conciliation, arbitration, and adjudication.

Key Changes Brought Forward

• Employee vs. Worker: The IRC introduces a new definition for 'employee' and broadens 'worker' to include journalists, sales employees, and those in supervisory roles earning under ₹18,000/month.
• Employer: Now includes contractors and legal representatives of deceased employers.
• Appropriate Government: The Central Government remains the authority for PSUs even if shareholding drops below 50%.
• Industry: Redefined to include systematic, cooperative activities but excludes philanthropic and domestic services.
• Industrial Dispute: Now includes disputes between individual workers and employers regarding termination, dismissal, retrenchment, etc.
• Wages: Expanded to include all monetary remuneration but excludes bonuses, HRA, PF contributions, travel allowances, commissions, and retirement benefits.

Fixed-Term Employment

Initially, the Industrial Employment (Standing Orders) Act, 1946 required employers in industrial establishments to define employment conditions through certified standing orders, which governed employer-employee relations.

Fixed-term employment was introduced through the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, which amended the 1946 Rules to include fixed-term employment for all sectors, expanding beyond the earlier limited scope such as apparel manufacturing.

These  new codes define fixed term employment as the: "engagement of an employee on the basis of a written contract of employment for a fixed period: Provided that:

1. his hours of work, wages, allowances and other benefits shall not be less than that of a permanent employee doing the same work or work of a similar nature; and
2. he shall be eligible for all benefits, under any law for the time being in force, available to a permanent employee proportionately according to the period of service rendered by him even if his period of employment does not extend to the required qualifying period of employment.

Fixed-term employees are engaged through written contracts for a fixed period, which can be renewed by mutual consent. Unlike the earlier rules under the 1946 Act, the Industrial Relations Code does not impose any limit on the number or duration of renewals, effectively allowing indefinite renewal of fixed-term contracts.

In furtherance of introduction of the definition of 'fixed term employment', the definition of 'retrenchment' has been expanded to specifically exclude the situation of completion of tenure of fixed term employment.

Strikes

Under the Industrial Disputes Act, 1947, a strike is defined as a cessation of work by employees acting in combination or under a common understanding. Workers intending to strike were required to give at least six weeks' advance notice to the employer.
Strikes were prohibited during conciliation proceedings and for seven days after their conclusion, as well as during the pendency and for two months after the conclusion of proceedings before a Labour Court, Tribunal, or arbitrator.

Whereas as per the new code  it  expands the definition of a strike to include not only cessation of work but also concerted casual leave by 50% or more workers, thereby broadening what constitutes a strike.
The notice period for strikes has been reduced from six weeks to 14 days' advance notice, but this notice is valid only for 60 days, encouraging timely resolution or action.

The Code extends the prohibition on strikes during conciliation, arbitration, and adjudication proceedings to all industrial establishments, not just public utility services, and increases the prohibited period around arbitration or court proceedings to 60 days before and after such proceedings.

Employers are now required to notify the government and the arbitration officer within five days of the commencement of a strike or lockout, adding a layer of transparency and control.

Grievance Redressal Committee

The maximum number of members in the Grievance Redressal Committee has been increased from 6 to 10 in an industrial establishment employing 20 or more workers.

The Negotiating Union Or Council

Before

Before the Industrial Relations Code, 2020, the concept of a negotiating union or negotiating council was not explicitly defined or regulated under the Industrial Disputes Act, 1947 or related laws. Trade unions were recognized primarily through registration under the Trade Unions Act, 1926, and collective bargaining was generally conducted by whichever union had majority support or by multiple unions informally. There was no statutory mechanism specifying thresholds for recognition or the constitution of a negotiating council when no single union had majority support.

After

The Industrial Relations Code, 2020 introduced a clear and structured framework for recognizing a negotiating union or negotiating council in form of Section 14.

• If there is only one registered trade union in an industrial establishment, the employer must recognize it as the sole negotiating union.
• If multiple unions exist, the union with the support of 51% or more of the workers on the muster roll is recognized as the sole negotiating union.
• If no union crosses the 51% threshold, the employer is required to constitute a negotiating council comprising representatives from all registered unions that have at least 20% support of the workforce.
• Representation in the council is proportional, with one representative for every 20% of workers supporting a union.
• Agreements reached by the negotiating council require the majority consent of the representatives.
• This recognition is valid for three years and can be extended up to five years by mutual consent.
• The Code also mandates that employers provide facilities such as notice boards, venues, and other necessary amenities to the recognized negotiating union or council to facilitate dialogue and collective bargaining.

Applicability Of Standing Orders

The key differences are:

• Threshold Increase: From 100 (or 50 in some states) to 300 workers.
• Removal Of State-Specific Thresholds: The IRC 2020 centralizes and fixes the threshold at 300, removing the earlier flexibility for states.
• Centralized Model Standing Orders: Prepared by the Central Government rather than state governments.
• Mandatory Consultation: Employers must consult recognized negotiating unions or councils before certification, enhancing worker participation.

Notice Of Change In Conditions Of Service

• New Provision Introduced: Under the IRC 2020, employers are generally required to give advance notice before making changes to a worker's conditions of service.
• Exception: No advance notice is needed if the change is made in compliance with an order from the appropriate Government.

Industrial Tribunals

The IRC 2020 replaces older adjudicatory bodies like the Court of Inquiry, Board of Conciliation, and Labour Courts with Industrial Tribunals.

• Each tribunal will have two members: one judicial and one administrative, unlike the single-member setup under the earlier ID Act.

Worker Re-Skilling Fund

A new Re-skilling Fund is introduced for retrenched workers.

• Fund Sources Include:
• Employer's contribution equivalent to 15 days' last drawn wages (or another notified amount).
• Other contributions as prescribed by the government.
• The retrenched worker must be paid from the fund within 45 days of retrenchment. This is in addition to regular retrenchment compensation.

Offences & Penalties

• Imprisonment Terms Reduced: Jail time for offences like instigating illegal strikes/lockouts, aiding them financially, breaching settlements/awards, or disclosing confidential info has been reduced from up to 6 months to 1–3 months.
• Increased Fines: Fines for these offences have increased significantly—from ₹1,000 to between ₹10,000 and ₹2,00,000.
• Stricter Monetary Penalties:
• Not obtaining prior permission for lay-offs, retrenchments, or closures now attracts fines up to ₹10 lakh (1st offence) and ₹20 lakh (repeat offence).
• Unfair labour practices now carry fines up to ₹2 lakh.
• Imprisonment for first-time offences has been removed; it applies only for repeat offences.

Compounding of Offences:

New Provision Introduced: IRC 2020 allows for compounding of offences—unlike older central laws which lacked such a provision. Compounding Rates:

• 50% of the maximum fine for offences punishable with fine only.
• 75% for offences punishable with imprisonment (up to 1 year) or fine.

Utilization: Collected amounts go to the Social Security Fund under the Code on Social Security, 2020 (CSS 2020).

Why These Codes Are Still Not Implemented?

• Dual Responsibility Between Centre and States: Labour is a concurrent subject, so while the central government has passed the codes, each state must draft and notify its own rules for implementation. This has led to delays and inconsistencies, as many states have yet to finalize their rules.
• Stakeholder Resistance and Lack of Consensus: Trade unions and worker groups have raised concerns about dilution of labour rights, restrictions on strikes, and easier retrenchment norms, leading to strong opposition and demands for further amendments before implementation.
• Inclusion of the Informal Sector: Bringing the vast informal sector, which employs the majority of India's workforce, under the purview of the new codes is a major challenge due to its size, lack of awareness, and resistance to formalization.
• Complex Compliance and Documentation: The new codes introduce stricter compliance requirements and demand more comprehensive documentation, which poses difficulties for employers—especially small businesses and foreign companies unfamiliar with India's regulatory environment.
• Ambiguities and Need for Clarification: There are still gaps, ambiguities, and unanswered questions in the codes, such as clarity on wage definitions, principal employer liability, and dispute resolution mechanisms, causing uncertainty among employers and workers and delaying rollout.

Citations:

1. https://labour.gov.in/sites/default/files/ir_as_introduced_in_lok_sabha.pdf
2. https://karmamgmt.com/blog/labour-codes-india-restores-the-concept-of-negotiating/
3. https://www.comply4hr.com/showsec.asp?seccode=IDC14
4. https://blog.ipleaders.in/industrial-relations-code-2020-an-overview/
5. https://prsindia.org/billtrack/the-industrial-relations-code-2020
6. https://www.amsshardul.com/wp-content/uploads/2020/11/Alert-Employment-Law-The-Industrial-Relations-Code-2020-1.pdf
7. https://ijlmh.com/wp-content/uploads/Collective-Bargaining-in-India-Under-the-Industrial-Relations-Code-2020.pdf
8. https://dtnbwed.cbwe.gov.in/images/upload/IR-Code--_IG3Q.pdf