Navigating Compliances Under the Industrial Relations Code, 2020
India’s labour law framework underwent a major transformation with the introduction of four labour codes in 2020. Among these reforms, the Industrial Relations Code, 2020 plays a critical role in regulating employer-worker relationships.
The Code consolidates three earlier laws — the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947 — into a unified legislative framework.
For employers, the Code introduces structured compliance obligations related to trade union recognition, standing orders certification, fixed-term employment provisions, dispute resolution processes, and workforce restructuring regulations.
Understanding these compliance requirements is essential for organizations seeking to maintain regulatory compliance and avoid industrial disputes.
Introduction
Managing industrial relations has always been an important responsibility for employers in India.
Earlier labour laws governing trade unions, employment conditions, and dispute resolution operated through multiple statutes, each with its own compliance procedures.
The Industrial Relations Code, 2020 simplifies this structure by integrating these provisions into a single regulatory framework.
However, simplification does not eliminate compliance obligations.
Instead, the Code introduces more structured processes for union recognition, dispute resolution, and workforce management, requiring organizations to review internal labour policies and compliance systems.
For HR leaders and compliance professionals, understanding these requirements is essential for maintaining workplace harmony and regulatory compliance.
Compliance Framework Under the Industrial Relations Code, 2020
The Industrial Relations Code, 2020 establishes a structured framework governing employer compliance in industrial relations matters.
Core Compliance Areas
| Compliance Area | Requirement |
| Trade union recognition | Recognition of negotiating union or council |
| Standing orders | Certification of employment conditions |
| Fixed-term employment | Equal benefits for contract workers |
| Layoffs and retrenchment | Compliance with statutory approval thresholds |
| Dispute resolution | Grievance committees and conciliation processes |
These provisions aim to promote structured industrial relations while simplifying regulatory procedures.
Trade Union Registration and Recognition
The Industrial Relations Code, 2020 introduces clearer mechanisms for recognizing negotiating unions within establishments.
Negotiating Union Rules
Where only one trade union exists, that union is recognized as the negotiating union.
Where multiple unions exist:
- the union supported by at least 51% of workers may be recognized as the negotiating union
- if no union receives majority support, a negotiating council may be formed
This structure helps streamline collective bargaining processes and reduce conflicts between multiple unions.
Standing Orders and Workplace Rules
Standing orders define employment conditions within an organization.
These include rules related to:
- working hours
- employee classification
- attendance policies
- disciplinary procedures
- grievance mechanisms
Applicability
Under the Industrial Relations Code, 2020, establishments employing 300 or more workers are required to prepare and certify standing orders (subject to government notification).
For smaller establishments, model standing orders may apply.
Employers must ensure that these standing orders are consistent with labour regulations.
Fixed-Term Employment Compliance
The Industrial Relations Code, 2020 formally recognizes fixed-term employment across industries.
Key Compliance Requirements
Employers must ensure:
- fixed-term employees receive wages and benefits equal to permanent employees performing similar work
- statutory benefits such as gratuity apply proportionately based on tenure
- employment contracts clearly define the duration of employment
This provision allows organizations to hire workers for specific durations while ensuring fair treatment.
Layoffs, Retrenchment, and Closure Compliance
The Industrial Relations Code, 2020 introduces revised thresholds governing layoffs, retrenchment, and closure of establishments.
Regulatory Threshold
Establishments employing 300 or more workers must obtain government approval before initiating layoffs, retrenchment, or closure.
Earlier legislation required approval for establishments employing 100 or more workers.
Employers must also comply with statutory requirements related to notice periods and compensation.
Dispute Resolution and Grievance Mechanisms
The Code emphasizes structured mechanisms for resolving industrial disputes.
Grievance Redressal Committees
Establishments employing 20 or more workers must establish grievance redressal committees.
These committees provide workers with a formal mechanism to raise workplace concerns.
Works Committees
Establishments employing 100 or more workers may also establish works committees to promote cooperation between employers and workers.
Conciliation and Tribunals
Disputes may be resolved through:
- conciliation officers
- voluntary arbitration
- industrial tribunals
These mechanisms aim to reduce prolonged litigation and encourage negotiated settlements.
Compliance Checklist for Employers
Organizations preparing for the Industrial Relations Code, 2020 may consider the following compliance checklist.
| Compliance Area | Threshold | Required Action |
| Standing orders | 300+ workers | Certify employment rules |
| Grievance committees | 20+ workers | Establish dispute resolution committees |
| Works committees | 100+ workers | Promote employer-worker cooperation |
| Union recognition | Multiple unions | Identify negotiating union |
| Workforce restructuring | 300+ workers | Obtain approval for layoffs or retrenchment |
Implementing structured compliance processes helps organizations reduce industrial relations risks.
Key Takeaways
• The Industrial Relations Code, 2020 consolidates three major labour laws into one framework.
• Employers must comply with requirements related to union recognition, standing orders, and dispute resolution.
• Fixed-term employment provisions introduce workforce flexibility while ensuring worker protection.
• Layoff and retrenchment approvals apply to establishments employing 300 or more workers.
• Structured grievance mechanisms help resolve workplace disputes more efficiently.
Frequently Asked Questions
What compliances are required under the Industrial Relations Code, 2020?
Employers must comply with requirements related to trade union recognition, standing orders certification, dispute resolution mechanisms, and workforce restructuring regulations.
Who must comply with the Industrial Relations Code?
Establishments employing workers in sectors covered by industrial relations laws must comply once the Code becomes operational.
What is a negotiating union?
A negotiating union is a trade union recognized as the official representative of workers for collective bargaining.
What are standing orders?
Standing orders are workplace rules governing employment conditions such as working hours, leave policies, and disciplinary procedures.
What is fixed-term employment under the Code?
Fixed-term employment allows employers to hire workers for specific durations while ensuring equal wages and benefits compared to permanent employees.
What is the layoff approval threshold?
Government approval for layoffs or retrenchment is required for establishments employing 300 or more workers.
How are industrial disputes resolved under the Code?
Disputes may be resolved through grievance committees, conciliation officers, voluntary arbitration, or industrial tribunals.
References
https://www.indiacode.nic.in/bitstream/123456789/22040/1/aa202035.pdf
https://dtnbwed.cbwe.gov.in/images/upload/The-Industrial-Relations-Code-2020_GV7I.pdf
https://www.pib.gov.in/FactsheetDetails.aspx?Id=150483®=3&lang=1
https://prsindia.org/billtrack/the-industrial-relations-code-2020
https://vvgnli.gov.in/en/industrial-relations-code-2020
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