Exploring the Anti-Labour Bias in the Industrial Relations Code, 2019

Amitabh Abhijit, NLIU, Bhopal

Arushi Bhagotra, NLIU, Bhopal

In India, labour falls underneath the Concurrent List; there are over 100 State and 40 Central laws synchronizing numerous aspects of labour. The Second National Commission on Labour (2002) found existing regulations cumbersome, with archaic provisions and discordant descriptions. The Industrial Relations Code Bill, 2019 (Bill No. 364 of 2019) was tabled in the Lok Sabha by the Minister of Labour and Employment on 28th November 2019. The Industrial Relations Code (IR Code)/Labour Code, is the third bill in a series of four. It aims to streamline the ambit of industrial relations by enabling the nation to not have multiple employment policies for contractual and regular staff. It is a replica of the 2017 IR Code, except for a few consequential departures. The code furnishes for the recognition of trade unions, notice periods for strikes and lockouts, standing orders, and resolution of industrial disputes.

Under the bill, the Central Government reserves the sole right to declare any ‘activity’ that is not covered under the definition of ‘industry’, it is accredited to alter the wages of the people employed under the ‘supervisory capacity’ under Sub-Section (iv) of Section 2(zm). The bill is subjected to excessive executive control and is generating a leeway for discourses and controversies, as discussed below.

Fixed-Term Employment

One of the key aspects of the Code is the shift from permanent workers for firms to hired workers employed on a fixed-term contract of a specified duration. Fixed-term employment pertains to a system wherein a worker can be hired for any duration, three months or six months or even a year in the context of a seasonal business. Such a provision aims to ensure that the workers hired on a fixed-term basis receive benefits on par with those received by regular or permanent workers. Fixed-term employment is a system that has been in operation for about a year across varying industries and upon codification, must be followed by all sectors in the capacity of a full-fledged law.

However, there seems to a downside when one considers the freedom of firms and factories to employ workers on a contractual basis without having to provide them with any benefits upon retrenchment. This makes it extremely easy for businesses to circumvent a law made for the workers’ benefit. Consequently, there is a need to regulate fixed-term jobs in order to ensure that the provision is able to achieve its purpose and provide for workers employed in a seasonal/cyclical business.

Bi-Partite Fora and Dispute Resolution

Under Section 3, a ‘Works Committee’ may be constituted in an organization with 100 workers or more as per the instructions of the appropriate governmental institution. The Committee will help settle disputes between workers and employers, it will comprise of representatives of workers as well as employers with a requirement of equal representational numbers of the workers as well as the employers.

Following Section 4, every establishment with 20 or more workers must constitute a ‘Grievance Committee’ that will deal with the conflicts arising out of the grievance(s) of individual workers relating to non-employment, terms of employment, or conditions of service. The total membership shall not exceed 10 and there has to be equal representation from both parties.

Besides the provisions on referring an Industrial Dispute for ‘voluntary arbitration’ as provided under Section 42 of Chapter VII, the Central/State Governments are empowered to appoint conciliation officers to mediate and promote settlement of disputes, they shall inquire into the matter and hold proceedings to achieve an equitable settlement. In case of failure of conciliation, either of the parties can make an application to the ‘Industrial Tribunal’ which will comprise of a Judicial and an Administrative Member. National Industrial Tribunals may also be constituted by the Central Government to deal with matters of national importance/those impacting establishments situated in more than two States. This will also have two members, one each from the Judicial and Administrative fields. Further, the Government may defer the enforcement of an award on ‘public grounds’. The Central Government is empowered to make an order rejecting/modifying the award in situations wherein the Central/State Government is a party to the impugned award or where said award has been given to a National Tribunal.

This raises a presumption of a conflict of interest since the government CAN modify an award in a dispute to which it is associated. The Industrial Disputes Act had identical provisions that were struck down by the Madras High Court (affirming a 1997 Andhra Pradesh HC decision) where it was held that such powers violate the doctrine of separation of powers as it provides the executive with appellate jurisdiction over the tribunals.

Provisions relating to Trade Unions

Chapter III deals with the law on trade unions wherein three major subcategories are highlighted namely Registration, Recognition, and Negotiation. Primarily, it asserts that trade unions having at least 10% of the total workers’ membership/100 workers, whichever is less, can be registered by seven or more members. Additionally, only 1/3rd of the total office bearers/5 office bearers are allowed to be from outside the industry in which the union operates.

The Code departs from its 2017 variant concerning official recognition of the Code by stating that any registered trade union or a federation of unions could be recognized by the Central/State governments as Central/State Trade Unions respectively. Further, the government holds the authority to audit the donations and receipts received by them.

Lastly, the Code submits that a registered union with a 75% worker membership will be considered the ‘Sole Negotiating Union’ to settle all disputes. Alternatively, when membership conditions are not met, a ‘Negotiating Council’ will be constituted of representatives from trade unions where each member represents 10% of the total workers on the roll. However, the trade unions believe that the role of the government in constituting a negotiating council will eventually lead to considerable dilution of the workers’ power to form an independent body. These conditions have led to comparisons with the infamous colonial era which predates the existence of trade unions at least in the official capacity. This is primarily because of the drastic change in collective bargaining that makes the dynamic between the workers and the owner less liberal especially regarding their wages, job security and retrenchment benefits.

Standing Orders

Chapter IV equips the Central Government with the power to prepare ‘Model Standing Orders’ on matters enlisted in the First Schedule, based on which the industrial organizations have to prepare their standing orders.

Furthermore, the Government argues that the economic and other interests of the country should not be affected by individual whims and fancies, thus, snatching all the powers of the vulnerable folk. The Government has an iron fist and the workers/employers will not be under a position to

Strikes and Lock-outs

The IR Code, under Section 62, allows an employee to go on a strike only on fulfilment of certain requisite conditions. The employee must issue a notice for a strike at least 60 days prior and must go on SUCH strike within two weeks of the date of issuance of the said notice.

Lock-outs are permissible in three instances and can be generally initiated by the employer. The Code now provides for a temporary closure of workplaces for unavoidable reasons as s lock-out. Furthermore, withholding employment continuance and a complete suspension of work would also lead to a lock-out.

However, before strikes and lock-outs, a conciliation proceeding is ought to be held, headed by the conciliation officer. If the said procedure fails and there is an application to an arbitral tribunal by either of the parties, the period of prohibition on strikes or lock-outs will be further extended.

The Code declares strikes and lockouts to be illegal if they are in contravention of Section 62 or an order made under Section 42(7) through which the appropriate authority could prohibit strikes or lock-outs when the arbitration proceedings are ongoing so as to hold off on an extra-judicial reaction to a dispute. Any form of financial aid to such pursuits is also prohibited. Although, even in its pursuit for justice, this provision favors at least one party by giving them disproportionate power over the other.

Prima facie, these provisions considerably increase the influence of the government especially since any award passed by the tribunal can be amended by an executive action. Moreover, the Code applies to all forms of a workplace, unlike the Industrial Disputes Act which only regulated public utility services. Thus, it is safe to assume that conducting strikes/lock-outs will be prone to massive policing by authoritative institutions in all establishments.

Lay-offs and Retrenchment

In the Code’s context, the law on these two subjects is comprehensibly laid down under Chapter IX, which retains the provision of having to seek government authorization bft- efore the retrenchment of workers if an employer has over 100 employees. However, it differs from the Industrial Disputes Act, 1947 by allowing the Central and State governments to alter the said threshold for this provision via a notification.

Additionally, termination regulations also state that industries engaged in mining/plantation sectors would be required to provide an employee with a month’s notice, and 50% of his/her basic wages.

An innovative provision relating to retrenchment is the provision for worker re-skilling fund which shall/shall have to be set up by the suitable government and will comprise of contributions from the employer amounting to 15 days’ worth of last drawn wages of every worker who was terminated and the said fund must be utilized within 45 days of the retrenchment as directed by the Central government.


Currently, India ranks 103 out of 141 countries on the competitiveness of its labour market, commensurate with the World Economic Forum. The Code was drafted keeping in mind the goal of improving the ‘Ease of Doing Business’ in India, which in turn will improve India’s rank.

No individual worth its salt is empowered to decide on the above-discussed matters according to his preferences. The government has reserved the right to revise the provisions of the Code and trade unions as part of the government’s strategy towards massive retention of power.

The Central Government has itself accepted Rs. 18,000/- per month as the ‘minimum wage’ for its employees, as per the recommendations of the Seventh Pay Commission. Hence, altering the number further according to its whims and fancies is arbitrary and thus, a case of Administerial overreach. The pattern formed by the provisions under this Code indicates a stronghold of the government especially with the reduction in the workers’ bargaining power as well as the need to seek authorization before retrenchment. It is discernible that the Code is providing excessive powers to the Executive and therefore needs to be revised to impart some flexibility, cater to the needs of the working class, and uphold the principles of democracy.

Amitabh Abhijit and Arushi Bhagotra are students at National Law Institute University, Bhopal.

Photo Credits: Arun Shankar/AFP

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