The Industrial Relations Code, 2020 marks a significant reform in India's labor legislation landscape, aiming to streamline dispute resolution, reduce litigation, and promote industrial harmony. The Industrial Relations Code, 2020 is one of four Labor Codes included in the Central Government's largest reform scheme in decades.
It includes the following three main central statutes that deal with collective bargaining and industrial dispute resolution:

• The Industrial Disputes Act, 1947
• The Trade Unions Act, 1926
• Industrial Employment (Standing Orders) Act, 1946

The Industrial Disputes Act, 1947 aimed to provide workers with a mechanism that gives them relief against layoffs, retrenchment, and wrongful dismissal that is against the letter of the law. By restricting the scope of unlawful strikes and lockouts and punishing unfair labour practices, it also sought to foster positive labour relations. In order to guarantee that collective bargaining could occur in a cordial setting, it consequently contained a dispute resolution procedure in addition to limitations on layoffs, retrenchments, and lockouts. The Trade Unions Act, 1926 gave workers the ability to organise and engage in collective bargaining in order to improve working conditions, increase pay, shield them from predatory employment, and ensure they received a fair portion of the company's earnings. The Industrial Employment (Standing Orders) Act, 1946 aimed at providing standardized terms and conditions of work to all workmen in a particular establishment. Consequently, discriminatory employment contracts were outlawed and workers were informed of their rights. By guaranteeing employers fair labour practices, it fostered industrial peace and harmony. This blog critically analyzes the improvements brought in by the IRC compared to its predecessor—the Industrial Disputes Act, 1947 (IDA)—while examining the practical implications for employers, employees, and industrial establishments.
 

Scope And Applicability Of The Code

The Industrial Relations Code, 2020 is intended to consolidate and amend the laws governing Trade Unions, working conditions in Industrial Establishments, and the swift resolution of industrial disputes. The code regulates the subsequent areas:

• Registration of Trade Union
• Cancellation of Trade Union
• Alteration in Name of Trade Union
• Formation of Work Committee
• Incorporation of a Registered Trade Union
• Recognition of Negotiating Union
• Preparation of Standing Order
• Register of Standing Order
• Constitution of Industrial Tribunal
• Illegal Strikes and Lock-outs
• Procedure for Retrenchment and Re-employment of Retrenched Worker
• Compensation to Workers in case of Transfer of Establishment
• Prohibition of Lay-off
• Closure of an Industrial Establishment

Mechanisms For Resolving Industrial Disputes Under Industrial Relations Code 2020

Conciliation and Mediation

Conciliation, often interchangeably referred to as mediation, is one of the oldest and most widely adopted methods of resolving industrial disputes not only in India but also globally. It involves the intervention of a neutral third party who facilitates negotiations between disputing parties with the objective of arriving at a mutual agreement. There are two primary types of conciliation machinery as per the Act:

Conciliation Officers: These are individuals appointed by the appropriate government and operate within the labour department. They are designated either for a specific industry or a defined geographical area. Their primary function, as per Section 4 of the Act, is to create a harmonious environment in the industry that encourages settlement between the disputing parties. This role is administrative, not judicial.

Board of Conciliation: This is a multi-member body appointed by the government, consisting of a chairman and two to four members who represent both employers and employees. The members are appointed based on the recommendations made by the concerned parties.

A conciliation officer is expected to carry out a fair investigation into the matter and facilitate dialogue that could lead to a settlement. According to Section 11, conciliation officers have the authority to call witnesses, examine documents, and enter premises relevant to the dispute. Sections 12 and 13 deal with their duties, which include submitting a report to the government on whether a settlement was achieved.

If the government, upon reviewing the report, finds that conciliation has failed, it may refer the matter to a Board of Conciliation or other adjudicating authorities. If not, it may choose to directly communicate its decision to the parties. Despite its effectiveness in many instances, conciliation can fail when parties withhold full disclosure during proceedings, preferring to reserve their arguments for formal legal remedies if needed. When conciliation fails, the dispute often moves to adjudication, making it one of the major reasons for the failure of conciliation proceedings.

Voluntary Arbitration

Voluntary arbitration combines the principles of arbitration and mutual consent. In arbitration, an impartial third party (an arbitrator or a board of arbitrators) is appointed to resolve a dispute. The term 'voluntary' implies that both parties agree willingly to abide by the arbitrator's decision without external pressure.

Section 10A of the Industrial Disputes Act, 1947 lays down provisions for voluntary arbitration. However, in practical terms, many of these disputes end up being resolved through adjudication. The distinction between arbitration and adjudication lies mainly in the appointment of the judge: in arbitration, the disputing parties select the arbitrator, while in adjudication, the judge is appointed by the state.

The origin of voluntary arbitration in India can be traced back to the famous dispute regarding the plague bonus in Ahmedabad Textile Mills, where Mahatma Gandhi played a vital role in mediating the dispute. To promote arbitration and reduce industrial confrontations, the Trade Unions and Industrial Disputes (Amendment) Bill, 1988 proposed making voluntary arbitration compulsory. According to this Bill, legal strikes could only be undertaken after one of the parties declined to opt for arbitration as a means of settlement.

Despite legislative encouragement, voluntary arbitration has not been widely adopted. This limited usage has been reflected in various statistical studies.

In the landmark case of Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha[1], the Supreme Court provided arbitrators with quasi-judicial powers akin to those of labour tribunals. The Court ruled that arbitrators could examine the legality of employee dismissals and, if necessary, overturn employer decisions. This expanded the role of arbitrators significantly, endowing them with appellate authority in certain labour disputes.

Adjudication

Adjudication serves as the final legal remedy when other forms of dispute resolution, such as conciliation or arbitration, fail. It involves compulsory settlement by legal authorities such as labour courts, industrial tribunals, or national tribunals. Adjudication does not necessarily replace conciliation but functions as a secondary recourse. The decision to refer a dispute for adjudication rests with the appropriate government. If the government consults the parties before making the reference, it is termed voluntary adjudication; otherwise, it is considered compulsory adjudication. Adjudicating bodies handle a wide range of matters including:

• Legality of actions taken by employers under standing orders.
• Interpretation and application of standing orders.
• Providing relief to wrongfully terminated workers.
• Reinstatement of withdrawn employee privileges.
• Other disputes not within the purview of industrial tribunals.
   

Types of Adjudicating Bodies

• Labour Courts (Section 7): These courts handle individual disputes and matters related to employment conditions not reserved for tribunals. They assess the legality of standing orders and deal with unfair dismissals.
   
• Industrial Tribunals (Section 7A): Set up temporarily by the government, these tribunals have broader jurisdiction. They address issues such as:
  • Wages and payment methods.
  • Bonuses and provident fund entitlements.
  • Working hours and rationalisation of manpower.
  • Leave and holiday policies.
  • Disciplinary rules within the industry.
  • Any other issues deemed necessary by the government.
     
• National Tribunals (Section 7B): Formed by the Central Government for disputes of national significance, these tribunals consist of one presiding officer and two assessors. Once a dispute is taken up by a national tribunal, labour courts and industrial tribunals lose their jurisdiction over the matter.
   

Court of Inquiry: An Obsolete Mechanism

The Court of Inquiry was first introduced by the Trade Disputes Act, 1929 and later incorporated in Section 6 of the Industrial Disputes Act, 1947. However, due to its ineffectiveness, the government discontinued its use. The Trade Unions and Industrial Disputes (Amendment) Bill, 1988 formally abolished this mechanism, making it redundant in the current legal framework.
 

Landmark Judicial Interpretations

• Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd: The Court emphasized the necessity of fostering harmonious employer-employee relations for long-term industrial growth. It advocated compulsory adjudication to resolve disputes and prevent confrontation.
• Government of India v. National Tobacco Company: The Court held that the powers granted to the appropriate government are discretionary. Any arbitrary refusal to refer a dispute could be challenged under Article 226 of the Constitution through a writ petition.
• Hochtief Gammon v. State of Orissa: The judiciary reaffirmed its role in ensuring that executive actions are lawful. The Court stated that it is the judiciary's duty to verify whether all relevant factors were considered before the government made its decision.
• Mathura Refinery Mazdoor Sangh v. Union of India: The Supreme Court stressed the importance of involving tribunals in dispute resolution and instructed the government to seek advice from these bodies, thereby reinforcing their autonomous status.
• United Bleachers (P) Ltd. v. Labour Court, Madras: The High Court ruled that delays by the government in referring a dispute cannot justify denying relief to workers. Such denials constitute unfair labour practices and are therefore unlawful.

Key Changes in Adjudication Machinery

• Abolition of Courts of Inquiry and Labour Courts
  One of the pivotal changes brought about by the Industrial Relations Code, 2020 is the elimination of courts of inquiry and labour courts, which previously played a central role in adjudicating industrial disputes. These entities were primarily tasked with investigating the origins and nature of disputes and offering rulings based on their findings. However, the new Code consolidates these functions under a revamped adjudicatory structure.
  
  Instead of multiple layers of adjudication, the Code introduces Industrial Tribunals and National Industrial Tribunals as the principal forums for resolving industrial conflicts. These newly established tribunals will inherit the roles previously performed by labour courts, thereby centralizing the dispute resolution mechanism under fewer, more specialized bodies. The intent is to streamline the adjudication process, minimize bureaucratic redundancies, and enhance the speed and efficiency of justice delivery.
  
  Proponents of this reform argue that specialized tribunals—with broader jurisdiction and expert oversight—are better equipped to handle the complexities of modern industrial relations. However, the removal of the labour courts, which often served as accessible forums for local disputes, raises concerns about accessibility, potential case backlog, and delays due to the increased burden on fewer institutions.
   
• Integration of Digital Infrastructure
  The Industrial Relations Code, 2020 also emphasizes the incorporation of digital technology into the dispute resolution framework. This marks a notable shift toward modernizing legal and administrative procedures. Tribunals are now empowered to conduct proceedings through virtual hearings, allow for digital submission of evidence, and utilize online portals for case management.
  
  This transformation is especially significant in light of the disruptions caused by the COVID-19 pandemic, which showcased the potential of digital tools in sustaining legal functions remotely. The move is anticipated to reduce delays, increase transparency, and broaden access, particularly in remote or under-resourced regions.
   
• Strengthened Emphasis on Standing Orders
  The Code gives renewed attention to standing orders, which are formal documents outlining the rules of employment, including conditions of service, disciplinary procedures, work hours, and employee rights. Under the previous framework, namely the Industrial Employment (Standing Orders) Act, 1946, standing orders were mandated for industrial establishments employing 100 or more workers.
  
  However, the Industrial Relations Code, 2020, increases this threshold to 300 workers, reflecting the government's attempt to balance labour protection with ease of doing business. Employers falling within this category are now legally required to prepare, maintain, and implement standing orders that clearly define the terms of employment and disciplinary procedures.
  
  One of the most critical inclusions in this area is the formalization of domestic inquiries. These are internal procedures conducted by an employer in instances of alleged misconduct by an employee. The Code requires that such inquiries be conducted in a just, fair, and transparent manner, with the employee being given a reasonable opportunity to present their defence. This reform aims to curb arbitrary disciplinary actions and foster a culture of procedural fairness in workplaces.
   
• Implications for Employer-Employee Relations
  These structural changes in the formulation and enforcement of standing orders have far-reaching implications for workplace dynamics. By enhancing procedural safeguards for employees and mandating formal internal processes, the Code seeks to improve the quality of industrial relations. Workers are now better protected against wrongful dismissal, unfair treatment, and ambiguous employment terms.
  
  However, these new compliance requirements can pose significant challenges for small and medium-sized enterprises (SMEs), many of which lack the administrative capacity to manage formal domestic inquiries or implement standing orders. Critics argue that the increased regulatory burden may affect the operational flexibility of SMEs and increase their compliance costs.
   
• Promoting a Preventive Approach to Disputes
  Another important shift in the Industrial Relations Code is the emphasis on preventive mechanisms to avert disputes before they escalate. Employers are encouraged to establish grievance redressal systems, engage in constructive dialogue with workers, and take proactive steps to address employee concerns. The idea is to promote a collaborative industrial environment rather than one marked by adversarial confrontations.
   

Projected Impact on Labor Relations in India

• Expedited Dispute Resolution: With a reduced number of adjudicatory bodies and increased reliance on digital technology, the Code is expected to result in faster case disposal. This benefits both employers and employees by reducing uncertainty and administrative delays.
• Greater Legal Clarity and Uniformity: By consolidating multiple labour laws into a single code and standardizing procedures, the Code offers more consistency in interpretation and enforcement. This will reduce ambiguity and legal disputes over conflicting provisions in different statutes.
• Compliance Challenges for SMEs: Despite its advantages, the Code may place disproportionate pressure on smaller firms that might struggle to meet new procedural requirements, particularly related to standing orders and digital infrastructure.
• Enhanced Worker Protections: The reforms signal a shift toward protecting the rights of employees, especially in areas like dismissal procedures and working conditions. The move toward institutional safeguards reflects a more balanced and equitable approach to labour relations.
   

Impact on Labour Industry

• Simplification of Legal Framework: The consolidation of multiple laws into a single Code has made it easier for stakeholders—employers, employees, and legal practitioners—to navigate legal requirements.
• Reduced Litigation Time: By eliminating Labour Courts and Courts of Inquiry and shifting to Industrial Tribunals with time-bound procedures, the resolution of disputes is now more efficient.
• Professionalization of Adjudication: The establishment of specialized tribunals brings a more professional, uniform, and technically sound approach to resolving complex industrial matters.
• Empowerment of Workers: Mandatory recognition of negotiating unions and requirements for fair domestic inquiries empower workers to voice their concerns through formal mechanisms.
• Boost to Formal Employment: With fixed-term employment now legally recognized and regulated, industries are encouraged to offer formal short-term contracts rather than relying on informal labor.
• Digitalization and Accessibility: Virtual hearings and online submissions improve access, especially for workers in remote areas, and reduce logistical delays.

Comparative Analysis

Aspect	Old Laws (Industrial Disputes Act, 1947 & Industrial Employment (Standing Orders) Act, 1946)	Industrial Relations Code, 2020
Adjudicatory Bodies	Multiple-tiered system: Labour Courts, Industrial Tribunals, and National Tribunals.	Labour Courts abolished. Only Industrial Tribunals and National Tribunals remain.
Courts of Inquiry	Used for fact-finding in industrial disputes; did not have adjudicatory power.	Abolished to streamline the system. Fact-finding now part of tribunal processes.
Overlapping Jurisdiction	Labour Courts and Industrial Tribunals had partially overlapping subject matters, causing confusion.	Jurisdiction is clearly defined and unified under Industrial Tribunals for efficiency.
Negotiating Union/Council	No formal recognition mechanism. Multiple unions could create confusion in dispute resolution.	Mandatory recognition of Negotiating Union or Council ensures single representative voice in disputes (Section 14).
Time Frame for Disciplinary Proceedings	No specified time limit; proceedings could be prolonged indefinitely.	Proceedings must be completed within 90 days of suspension, ensuring time-bound resolution.
Strike Notice Requirement	14-day prior notice only for public utility services. No restriction for other industries.	14-day prior notice is now mandatory for all industrial establishments, making strike action more regulated.
Use of Technology	No mention of digital platforms; all processes were manual.	Digital platforms introduced for filing cases, conducting hearings, and submitting evidence.
Conciliation	Conducted by Conciliation Officers; not always time-bound.	Conciliation is retained but now emphasized as a mandatory first step in many disputes.
Voluntary Arbitration	Provided under Section 10A, but rarely used.	Still permitted, but the emphasis is on conciliation and tribunal adjudication.
Approach to Resolution	Fragmented, with delays due to multiple bodies and procedural backlogs.	Centralized, time-bound, and digitized process aimed at speedy resolution.

Suggestions

• Capacity Building of Tribunals - Adequate staffing, infrastructure, and training for tribunal members are crucial to prevent overburdening and maintain the quality of judgments.
• Support for SMEs - Smaller enterprises may find it difficult to comply with detailed standing order requirements and digital processes. Providing legal aid cells or simplified compliance modules could ease their burden.
• Regular Review Mechanism - A dedicated review body should periodically evaluate the performance of the new tribunals and suggest procedural reforms to enhance their effectiveness.
• Workers Awareness Programs - Workers should be educated about their rights under the new Code, especially regarding digital hearings, domestic inquiries, and recognition of negotiating unions.
• Transparent Appointment of Arbitrators - Ensuring neutrality in the appointment of arbitrators and tribunal members will build trust among workers and employers in the dispute resolution process.
• Strengthening Pre-Litigation Mechanisms - More robust conciliation and grievance redressal mechanisms at the enterprise level could reduce the number of cases escalating to tribunals.

Conclusion
The shift from the Industrial Disputes Act, 1947, to the Industrial Relations Code, 2020, marks a pivotal transformation in India's labour dispute resolution framework. By eliminating outdated and overlapping adjudicatory mechanisms such as Labour Courts and Courts of Inquiry, the new Code aims to streamline the process through centralized and specialized Industrial Tribunals. Additionally, the introduction of digital platforms, mandatory recognition of negotiating unions, and fixed timelines for disciplinary proceedings reflect a commitment to transparency, efficiency, and accountability in industrial relations.

While the Code offers significant potential for quicker and more organized dispute resolution, it also presents implementation challenges—particularly for small and medium enterprises that may struggle with compliance and adaptation to technological and procedural reforms. Nonetheless, by simplifying the structure, standardizing processes, and enhancing worker protections, the Industrial Relations Code, 2020 lays the groundwork for a more balanced and modern industrial relations environment in India.

Ultimately, the success of these reforms will depend on effective enforcement, capacity-building of tribunals, and the willingness of all stakeholders—government, employers, and workers—to embrace a more collaborative approach to conflict resolution.

References:

1. The Industrial Disputes Act, No. 14 of 1947, India Code, https://www.indiacode.nic.in (last visited Apr. 25, 2025).
2. The Industrial Relations Code, No. 35 of 2020, Gazette of India, https://labour.gov.in/industrial-relations-code-2020 (last visited Apr. 25, 2025).
3. The Trade Unions and Industrial Disputes (Amendment) Bill, 1988, Bill No. 36 of 1988, https://prsindia.org (last visited Apr. 25, 2025).
4. Ministry of Labour and Employment, Government of India. (n.d.). Official website. Retrieved from https://labour.gov.in (last visited Apr. 25, 2025).
5. Lex Forti, The Industrial Relations Code, 2020, https://lexforti.com/legal-news/the-industrial-relations-code-2020/ (last visited Apr. 25, 2025).
6. Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha, AIR 1980 SC 1896.
7. Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd, AIR 1984 SC 516.
8. Government of India v. National Tobacco Company, AIR 1972 SC 2563.
9. Hochtief Gammon v. State of Orissa, AIR 1975 SC 2226.
10. Mathura Refinery Mazdoor Sangh v. Union of India, AIR 1995 SC 1784.
11. United Bleachers (P) Ltd. v. Labour Court, Madras, AIR 1980 Mad 254.