Labour Compliance

Industrial Relations Code Bill 2019: an overview

On November 28, 2019, the Ministery of Labour and Employment introduced the Industrial Relations Code, 2019, as a part of the Labour Code in Lok Sabha, which seeks to integrate the essence of three Labour laws:

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

The Labour Code subsumes 44 labor and industrial relation laws into four codes, one of which is the Industrial Relations Code 2019.

The introduction of the Labour Code, specifically, the Industrial  Relations Code can be attributed to the Indian economy’s growth rate in the 2^nd quarter of 2019. The economy grew at 5%, which is a six-year low. While in September, India’s factory output fell for the second month straight to 4.3%. In such circumstances, it was critical and expected of the government to take measures in addressing the issues responsibly.

Key features of the Industrial Relations Code Bill 2019

1. Authorizing the companies to appoint workers for any duration on fixed-term contracts.
2. Prior government’s sanction before retrenchment of 100 workers upheld, however, this feature of the Industrial Relations Code Bill 2019 is subject to change, i.e. the number of employees, via a notification(s).
3. For speedier disposal of cases, it provides a facility by setting up of a two-member tribunal (in place of one member). However, in important cases, it will be adjudicated jointly and the remaining by a single member.
4. For the adjudication of disputes, powers have vested with the government officers, which can also result in penalties.
5. For the recognition of negotiating the union’s part, unions with the support of at least 75% of workers in an establishment would be recognized as the only ‘negotiating union’.
6. Industrial Relations Code Bill 2019 also professed that the fixed-term employees would be entitled to all the benefits the regular employees receive along with the wages.
7. Under the Industrial Relations Code Bill 2019  code, termination of service of a worker employed for a fixed-term, would not be considered an act of retrenchment upon the completion of the tenure.
8. A “re-skilling fund” aimed at training the retrenched employees for helping these workers attain new or polish their acquired skills for better employability. This would be combined with reimbursement, a payment 15 days’ salary within 45 days post retrenchment.
9. And by the means of all of the above considerations, Industrial Relations Code Bill 2019 intends to enhance the ease of doing business in the country, obviate the dilemma in setting up businesses, and consequently resulting in more employment opportunities.

Insights entailing the Industrial Relation Code 2019

Negotiating Union: A union is one of the important elements in the establishment of a fair and just work environment. They are often the sole representative of the workers. However, it was often rendered ineffective due to multiple unions, compromising the identification and addressing of the actual grievance. With the implementation of the Industrial Relation Code, negotiating over workers’ grievances with the employer stand revamped. A sole trade union with the support of 70% of the workers would solve the problem and in turn, address all the grievances.

Prohibition of Unfair Labour practices: The Code prohibits employers, workers, and trade unions from committing any unfair Labour practices listed in a Schedule to the Code, which includes but is not limited to:

• Restricting workers from forming trade unions,
• Establishing employer-sponsored trade union of workers, and
• Coercing workers to join trade unions.

Trade union registration: Under the Industrial Relations Code Bill 2019, at least seven or more members of a trade union are eligible to apply.  Trade unions constituting least 10% of the total workers in an establishment, or at least 100 workers, any of the two which is less, would be enrolled.  Any such registered trade union should always have at least seven workers as its members, employed in the concerned establishment or the allied industry.  Only upon fulfilling the condition would a central, or state government may recognize a trade union or a federation of trade unions as Central or State Trade Unions respectively.

Preparation of Standing orders: Another insightful change entailing the Industrial Relations Code Bill 2019 is in the standing orders that must be prepared by all industrial establishments, with at least 100 workers on the matters listed in a Schedule. Model standing orders shall be prepared by the central government on such matters, based on which industrial establishments are required to prepare their standing orders.  These matters relate to:

• Classification of workers and the manner of notifying the workers about the working hours which also includes (Holidays, Paydays, and wage rates)
• Termination of employment and suspension (In case of Misconduct) and
• Grievance redressal mechanisms for workers.

Intimation of change through Employers who seek to recommend changes in the conditions of service are required to give intimation to the workers via notice. The context of such change in the service is discussed in a Schedule of the Code, which roughly includes the matters related to wage, contribution, as well as leave.

Voluntary arbitration: The Code allows Voluntary arbitration for settlement in case of industrial disputes between the employer and the workers. The parties involved must sign a written document outlining the dispute to an arbitrator. The arbitrator may file the arbitration award to the government once the investigation of the dispute is over.

Resolution of industrial disputes: For Mediation and settlement of the disputes, the Central/state governments, whichever applicable, may appoint conciliation officers to intervene and advance the settlement of industrial disputes.  These officers would unbiasedly investigate the dispute and conduct conciliation proceedings for reaching a just, fair and peaceful settlement of disputes.  In the case where no settlement option offered by the officers, parties to the dispute may write an application letter to the Industrial Tribunal for settlement. 

Lay-off and retrenchment: The Code redefines the retrenchment of the employees by the employer as well as the lay-off as the inability of an employer to employ workers, due to shortage of coal, power, or breakdown of machinery, etc. Obtaining of the prior sanction of the Central/ State governments is required by the employers of industrial establishments constituting at least 100 workers before lay-off, retrenchment or closure.  However, the government can modify this threshold limit i.e. a number of workers by notification. 

Punishment- Any person contravening the provision is punishable with a fine between one lakh rupees which can go up to 10 lakh rupees.

Compliance before Retrenchment and Lay-off- Industrial establishments in which employs 50 to 100 workers are required to:

• Pay 50% of the basic wage, along with dearness allowance shall be paid to the worker who is being laid off,
• Provide 30 days of notice to the worker being retrenched, along with the wage for that period.

Penal Provision- Any person who contravenes this provision of Industrial Relations Code bill 2019 is liable to pay a fine between Rs 50,000 and 2 lakh rupees. Further, the retrenched worker would have to be the preference over other persons if in case an employer proposes to re-employ in the positions vacated through retrenchment.

Industrial Tribunals/ Labour Court in Industrial Relations Code Bill 2019

Owing to the fact that much of the Industrial Relations code 2019 is dedicated to settling disputes arising out of working of the industrial establishments, it is important to at least briefly dedicate a section of the article to the Industrial Tribunal. Jumping straight to measuring its authority, Industrial Tribunal constitutes of two members for the settlement of the industrial disputes, either of which would be:

• An official of the judiciary, who has served as High Court Judge or a District Judge, or an Additional District Judge for a minimum of 3 years; and
• An Administrative officer, who has over 20 years of experience in the spheres of economics, business, law, or labor relations.

Disputes involving the questions of national importance, Central or State Government may also form the National Industrial Tribunals and work for the settlement.

The government also appoints the Conciliation officer to resolve and promote the settlement of the industrial dispute. In case of non-settlement of dispute, any of the party can make an application to the Industrial Tribunal for the settlement of the dispute.

Conclusions derived from the Industrial Relations Code Bill 2019

Industrial Relations Code Bill is undoubtedly a crucial part of the government’s measures towards promoting ease of doing business in India. And along with this, the process of revamping the industrial setup encompassing the labor laws, more specifically, the laws concerning employment and dispute settlement is also executed. As a result, not only a fertile ground is prepared for the new businesses to grow at an unprecedented rate, but the shackles of unemployment which the country has been struggling with for a long while are also potentially destroyed. Therefore, to say the least, the government has set the standards very high in the spheres of proactive governance.