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Industrial Relations  code 2020

Bill Introduced in Lok Sabha on 23rd July 2019

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Code on Wages

  • Industrial Employment

  • Standing Order Act,  1946                           

  • Industrial Disputes Act,  1947  code 2020                                      

  • TradeUnions Act, 1926                                                                                               

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Industrial Relations  Code 2020

Existing Legislation

New Legislation

Key Changes

  • The definition of worker will be based on the basis of wages being drawn by him and  Worker / Employees with salary up to Rs 18,000 will fall under the category of worker.

  • Fixed Term Employment, The employer can keep Fixed Term Employees (FTE) for specific duration and retrenchment compensation not to be paid. These FTE will be entitled same salary or social security as regular Employee.

  • Employee can an Industrial raise dispute with the employer within the time limit of only 2  years instead of 3 years.

  • Trade union have to give notice of 14 days before going on strike.

  • Establishment with less 300 workmen can lay-off, retrenched, and closed without government approval, earlier this limit was 100 employees.

  • The number of members in the Grievance Redressal Committee has been increased from 6 to 10.

  • The definition of “Appropriate Government” has been modified by including the establishments of  the contractors, thus contractor appropriate government shall be of the establishment where the contract labour has been deployed.

  • The appropriate government shall set up an reskilling fund and the fund shall consist of  contribution by an employer equal to fifteen days wages last drawn by the worker immediately  before the Retrenchment. The fund shall be utilised by crediting fifteen days wages last drawn by  the worker to his account who is retrenched, within forty-five days  of such retrenchment, in such  manner as may be prescribed.

  • Definition of “Employee” has been added in the code and the term 'employee' has been used  invariably with the term worker. viz. 'employee/worker' or  'employee and worker' with a view  to  ensure that  there is no discrimination in the applicability of labour laws to the  employee/worker"employee"

  • Definition of  “Employer” has been completely modified under section 2 (m) and as per the new definition employer means :-

  • Head of the department

  • Occupier of the factory

  • Manager of the factory under clause (f) of sub-section (1) of sec 7 of the Factories Act.

  • The person who, or the authority which has ultimate control over the   affairs of the    establishment and where the said affairs are entrusted to a manager or managing        director,  such manager or managing director;

  • Contractor; and

  • legal representative of a deceased employer;

  • Fixed Term Employment has been incorporated, which is major change introduced in the code

  • The code provides that the fixed term employee will get all statutory benefits like ESI, EPF, bonus, wages, etc at par with regular employees who are doing work of same or similar nature.

  • The termination of the service of a worker as a result of completion of tenure of fixed term employment would not be a retrenchment.

  • The employee would be eligible for gratuity if he renders service under the contract for a period  of one year.

  • The definition of “industry” has been modified and provides that any systematic activity carried on  by cooperation between employer and his workers, whether such workers are employed by such employer  directly or by or through any agency including a contractor. The definition has specifically excluded institutions owned or managed by organizations wholly  or substantially engaged in any  charitable, social  or philanthropic services; sovereign functions;  domestic services.

  • Definition of Industrial Dispute has been modified to include the dispute arising out of the discharge, dismissal, retrenchment or termination of such worker.

  • Metro railway has been included in the definition of railways.

  • Maximum number of members in the Grievance Redressal Committee has been increased from 6 to 10 in an industrial establishment employing 20 or more workers.

  • Negotiating union or negotiating council" been inserted in the definition.

  • The "Trade Union dispute" has been added, which provides dispute relating to Trade     Union arising between two or more Trade Unions or between the members of a Trade Union   interest;

  • Definition of wages has been revised:-

  • the First part includes all salary components express in terms of money are capable of being so expressed like basic salary, all reimbursements, all allowances, all benefits.

  • Second part of the definition provide specific exclusion like:- Bonus payable under any    law,  Conveyance allowance, House rent allowance, Overtime Allowance, House  Accommodation, Supply of light water  medical attendance, other amenities/ service  excluded  by a General or special order of the appropriate  government, Commission,  contribution  to provident fund/pension, Any sum paid to defray special expenses,  Gratuity, Retrenchment Compensation, Remuneration payable under any award or  settlement between the parties.

  • The Third part of the definition provides that the total excluded components should not   exceed 50% of     the total remuneration. The third part of the definition provide limit as    the definition very clearly specifies the list of exclusions so anything which is paid to the  employees other than the exclusion would be covered and within this specific exclusion  the  limit cannot be more than 50%.

  • A new feature of “Recognition of Negotiating Union” has been introduced. The Code provides    for a  negotiation union in an industrial establishment, having registered trade unions, for negotiating with  the employer.

  • If there is only one trade union in an industrial establishment, the employer is required to recognise such trade union as the sole negotiating union of the workers.

  • In case of multiple trade unions, the trade union with support of at least 51% of        workers on  the  muster roll of that establishment will be recognised as the sole        negotiating union by the  employer.

  • The provisions of Standing Orders on Industrial establishments will be applicable       having 300 or more than 300 workers as notified by the appropriate Government.

  • The Code prohibits strikes or lock-outs in any establishment unless a prior notice of 14 days is  provided. Similar provisions existed in the Industrial Disputes Act, 1947 for public utility service (such as, railways and airlines). The Code expands these provisions to apply to all industrial      establishments. This will impact the      ability of workers to strike and employers to lock-out.

  • An industrial disputes can be voluntarily referred to arbitration by the employer as well as the  workers. The    parties to the dispute are required to execute a written agreement referring the dispute  to an arbitrator.

  • The worker may approach the Industrial Tribunal for adjudication of the dispute  related to dismissal, retrenchment or termination within 45 days after the application  for the conciliation of the dispute was made.

  • Employers of industrial establishments such as mines, factories and plantations with  at least 300 workers  are mandatorily required to take prior permission of the central  or state government before lay-off, retrenchment or closure. A fine of INR 1,00,000,  which may extend up to INR 10,00,000, is leviable on any person who contravenes  this provision.

  • In case any worker is suspended by the employer pending investigation or inquiry.  The amount of   subsistence allowance payable at 50% of the wages for the first 90  days of suspension; and at the rate of  75% of such wages for the remaining period of  suspension.

Non-Compliance Consequences Code On Wages,2019

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Note: Data sourcing from CII and Greyt HR - HR Conclave - July 2022

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