Industrial Relations Code: New Labour Law Amendments

Varun Hariharan

06 Oct, 2020

The Parliament passed three significant bills which affected major labour codes in India. These bills were a game-changer to the working of Indian labour law.

The parliament passed the following bills:

1. The Industrial Relations Code Bill, 2020;
2. The Social Security Code Bill, 2020; and
3. The Occupational Safety, Health and Working Conditions Code Bill, 2020.

In this article, we will emphasize on the Industrial relations Code Bill, 2020 amendment.  Apart from this, the article will also cover different features brought out by the bill.

Labour Law Amendments- Why was this code brought out?

On a plain reading of the bill, the object states to unite all the conditions relating to workplaces or industrial establishment, Unions which apply to workplaces and related conditions pertaining to grievance handling and investigation of work-related issues.

Hence the above code brings about changes to the conditions which affect workers in a particular establishment. This bill would apply to the whole of India.

More precisely, this code seeks to merge three major labour laws which govern the relationship between the employer and employee.  Furthermore, this bill seeks to either amend or repeal the existing labour laws.

Which laws would change due to labour law amendments?

The following laws would be affected due to the labour law amendments:

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

From the plain reading of the above laws, the industrial relations code would affect the relationship which the worker has in a workplace. Apart from this, the amendment would also affect the procedure in which an industry handles disputes.

What are the major changes brought about by these labour law amendments?

The industrial relations code brought about changes which would affect workplaces.

The following changes were brought out as a result of the amendments:

• Meaning of Industry- The definition of ‘Industry’ is provided under Section 2(j) of the Industrial Disputes Act, 1947 (the ‘Act’).

The industrial relations code brought the following changes to the definition:

• The Act does not provide a concise definition for many terms. However, the code has incorporated some definitions which provide clarity. The following definitions have been included under the Industrial Relations Code:
  • Meaning of Hospital Wards and Dispensaries.
  • Any form of institution which carries out scientific research, educational research and training facilities.
  • Any form of industries which will include Khadi and Village Industries.
  • Any profession which is practised by an individual or a group of individuals or somebody association. This would be applicable to the group or body of representatives if the number of individuals employed is lesser than ten.
  • Any profession or activity which is carried out by a club or a co-operative society. This club or co-operative society will include a body of individuals which form a part of the society if the number of individuals is lesser than ten.
  • These definitions have not been included under the meaning of section 2(P) of the Code.
• These labour law amendments have specifically excluded some form of organisations which carries out any form of services such as social, charitable and philanthropic purpose. Apart from this, the amendments have specifically excluded any form of domestic services and sovereign functions.
• Meaning of Industrial Dispute widened- Section 2(q) provides the meaning of an industrial dispute.

This meaning has been expanded to include any form of dispute which is arising out of:

• Any form of dispute which arises as a result of discharge of the worker;
  • Any form of dispute which arises as a result of the dismissal of the worker;
  • Any form of dispute which arises out of retrenchment of workers; or
  • Any form of dispute that relates to the termination of workers.
• The industrial relations code has widened the meaning of ‘Strike’. Under section 2(ZK), the Industrial relations code has provided a clear and concise definition for ‘Strike’.

The strike would include the following:

• Any concerted casual leave which is taken by a group of employees.
  • The group of workers should form an association for being under the term strike.
  • The percentage of workers must be considered for the above definition of the strike.
  • The percentage of workers must be more than 50% or more to be considered for the purpose of the strike.
• Meaning of Worker has been amended.

Under section 2(zr), the meaning of worker has been amended to include the following:

• Journalists and media individuals have been considered under this. Originally the definition of journalists is present under section 2(f) of the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955.
  • The meaning of worker also includes any Sales employee or sales worker under section 2(d) of the Sales Promotion Employees (Conditions of Service)Act, 1976.
  • This definition has also included any individual who has a supervisory role and is drawing less than Rs. 18,000/- per month. The above amount will be as per the rules brought out by the Central Government for the meaning of worker.
  • Previously, this amount was Rs. 6,500/- per month under the Industrial Disputes Act, 1947.
• Changes in the meaning of the Fixed Term of Employment (FTE) – Under section 2(o) the industrial relations code has brought out changes in the meaning of FTE.
  • Any worker or individual who has a fixed contract of employment is entitled to receive any form of statutory benefits under the meaning of the code.
  • The number of benefits received by the worker who is under a fixed term of employment must be the same as a permanent worker. This would also be calculated based on the period of service rendered. This will be the case if the individual’s period of employment does not extend the qualifying period of employment, which is required as per the statute.
  • Under this amendment, fixed-term employees would be entitled to receive gratuity if they have served employment for an organisation for more than a year.
• The meaning of employer has also been changed under these labour law amendments.

Under section 2(m), the definition of an employer has been amended to include the following:

• ‘Contractor’- This would include an independent contractor or any other contractor who is included under the amendment.
  • Legal Representative of the Employer- The code has also included the legal representative of the employer.
  • Head of the Department– The head of the department would include any individual who manages the department or the team of an organisation.
  • Occupier of the Factory- Occupier of the factory will include any entity which employs workers to conduct work on the premises.
  • Any form of manager who overlooks the work undertaken in the factory. This would include any individual defined under section 7(1) f of the Factories Act.
  • Any individual who has control over the operations of the company or the establishment. This will be applicable if the establishment is under the control of the Managing Director (MD), or Manager or the Chief Executive Officer.
• Increase in the Threshold Limit for establishing rules for standing order- Under section 28, an industrial establishment needs to follow a particular standing order, if the establishment has more than 300 or more employees. Under the previous act, the threshold for workers stood at 100.

As per the above, such standing orders have to be specified as the rules which are specified in the Schedule as per the following:

• This schedule will include the classification of workers.
• This will also include any form of procedural rules relating to how workers are intimated on working hours in the company or any other rules that have to be followed in the company.
• Any other requirement which affects the workers. This will include the rate at which workers are paid, the minimum wage which is collected by workers.
• This schedule will also include termination of employment and any form of grievance redress mechanisms which are considered.
• If the employer or the establishment owner prepares the model order or the standing order as per the regulations of the Central Government, then such an order or standing order has to be certified based on the rules. If this procedure is not followed, then the industry or establishment has to secure certification for the clauses which are different from the standing orders which are prescribed as per the model.
• Amendment to the Notice Period for a Strike or a Lock-Out- Under section 62 and 63, the labour law amendments have prohibited any form of strike without any notice period. The notice period for any form of a strike is 14 days.

The following rules have to be applied when providing the notice period under this:

• Notice period has to be provided to the employer 14 days before conducting the strike.
  • The employer has to be aware of the strike through the period of notice.
  • Previously the notice period was only applicable to public sector^[1] undertakings (PSUs).
  • These public sector undertakings would include postal service, railways, telegraph service and telecommunication services.
  • Any form of immediate strike is not possible as a result of this amendment. Prior notice has to be provided to the employer before conducting a strike.
  • The Industrial Relations Code has increased the validity of strikes from 6 weeks to 60 days.
  • Further, one of the major benefits of the labour law amendments is excluding the period in which arbitration proceedings is conducted from strikes conducted.
  • Under section 62 and 63, allows strikes to be allowed for all establishments which are included under the definition of establishment. The previous act allowed strikes only for any form of public sector organisations.
• Increase in Limit for Government Permission in matters related to retrenchment, workmen lay-off or closure- Under chapter IX and X of the Industrial Relations Code the threshold for prior notice has been increased to 300 workers in matters related to lay-off or retrenchment of employees.

The following would be applicable:

• In the previous act (industrial disputes act) establishments and industries with more than 100 workers required the prior permission from the government authority to carry out any process of retrenchment.
  • The Industrial Relations Code has increased the requirement for the number of workers required to be present in an establishment for seeking approval. The number of workers who have to be present in an establishment has increased from 100 to 300.
  • Prior permission would only be required in some establishments such as mines, factories and plantations that employ workers above the threshold. Hence, if any establishment recruits or employs more than 300 workers, then prior permission would be required.
  • The  requirement of prior permission would not be necessary for the following circumstances:
    • Lay-off carried out by industry or establishment due to massive power outage.
    • Lay-off or retrenchment in case of a natural calamity or an act of god.
    • If the lay-off is carried out due to any form of flood, fire or any form of inflammable gas. This provision is present under section 78.
  • If there is no response from the government for 60 days, then such permission would be granted to the respective employer.
• Setting up of Industrial Tribunals- the Industrial Relations Code and labour law amendments also speaks about setting up respective tribunals for speedy disposal of cases.
  • The industrial tribunal would consist of the following:
    • Judicial Member
    • Administrative Member
    • For special cases, the industrial tribunal would consist of two members.
    • The remaining cases would be decided and considered by single member tribunal.
    • Industrial tribunals brought out as a result of the labour law amendments replace existing labour courts, authorities and administrative tribunals.
• Removal of Reference System- The labour law amendments has also removed the requirement of reference when it comes to adjudication of industrial disputes. This reference system would only be applicable for National Industry Tribunal.
  • For any form of industrial disputes the National Industry Tribunal would be set up by the Central Government.
• Reference in case of Arbitration Proceedings- Under section 42, the code brings about a provision to use arbitration proceedings to resolve any form of disputes between the employer and employee.
  • Arbitration proceedings would only include the provisions of the industrial relations code.
  • None of the provisions of the Arbitration and Conciliation Act, 1996 would be applicable to the applicable to the Industrial Relations Code.
• Under the new labour law amendments, the provision of compounding of offences is allowed.  This provision is present under section 89.
• Establishment of negotiation Union or negotiation Council- for any form of industrial disputes the negotiation council has been set up.

Conclusion