The Industrial Relations Code, 2020

1. Introduction: What This Code Governs

If the Code on Wages answers the question "how much must I be paid, and how promptly?", the Industrial Relations Code, 2020 ("the IR Code") answers a different, equally fundamental set of questions: how do workers organise collectively to negotiate with their employer; what rules govern the conditions of employment at a workplace; what happens when an employer wants to retrench, lay off, or close down operations; and, when a dispute nonetheless arises between workers and management, through which forum and procedure is it resolved? For most of independent India's history, these questions were answered by three separate statutes, each enacted in a different political and economic era, and this Part explains how the IR Code brings them together.

The IR Code touches the employment relationship at its most structurally significant moments — not the routine monthly payment of wages, but the formation of a union, the framing of workplace rules, and the sometimes adversarial process of ending an employment relationship at scale through retrenchment or closure. It is, for this reason, the Labour Code that has attracted the most sustained political and academic debate of the four, and this Part tries to explain both its mechanics and the reasons for that debate.

2. Legislative Background and the Three Laws Replaced

The Industrial Relations Code, 2020 received Presidential assent on 28 September 2020, alongside the Code on Social Security and the Occupational Safety, Health and Working Conditions Code, as part of the same legislative push that followed the Code on Wages a year earlier. It contains 104 sections across fourteen chapters, and, like the other Codes, its actual date of enforcement in any given state depends on separate notification and the framing of implementing Rules by the Central Government and each State Government.

3. Structure of the Code: Chapter by Chapter

4. Applicability: The Crucial Definitions

4.1 "Industry" — the single most litigated word in Indian labour law

Whether the IR Code's protections apply to a given workplace at all depends, in the first instance, on whether that workplace is an "industry" within the meaning of Section 2(p). This definition has an extraordinary legal history: the Supreme Court's 1978 seven-judge bench decision in Bangalore Water Supply and Sewerage Board v. A. Rajappa gave the word "industry" an exceptionally wide, functional meaning — essentially, any systematic activity carried on through cooperation between employer and employees for the production or distribution of goods or services, regardless of whether the activity was commercial, charitable, or governmental in character, with only a narrow set of exceptions (sovereign functions, and certain categories later carved out by amendment). This wide definition meant that hospitals, educational institutions, and even some charitable and municipal bodies were, for decades, held to be "industries" for the purposes of industrial dispute law, a result many argued extended protections originally designed for factory and commercial workers into contexts where it sat awkwardly.

The IR Code's Section 2(p) retains a broad definition but introduces specific carve-outs, excluding, among others, institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic service; activities of the appropriate Government relatable to the sovereign functions of the Government, including all activities carried on by departments of the Central Government dealing with defence research, atomic energy and space; and domestic service. Significantly, as explained in the Supreme Court Update newsletters referenced elsewhere on this website, a nine-judge Constitution Bench of the Supreme Court revisited the Bangalore Water Supply framework in 2026, in a reference examining whether the 1978 "Triple Test" (systematic activity, cooperation between employer and employee, and production of goods or services) remains the correct test, particularly for government welfare schemes and bodies performing a mix of sovereign and non-sovereign functions. [This is an evolving area — the current judicial position on "industry" should be verified against the most recent Supreme Court pronouncement before being applied to any specific establishment, government body, or welfare scheme.]

4.2 "Worker" under the IR Code

Section 2(zr) defines "worker" for purposes of this Code in terms substantially continuous with the old "workman" definition under the Industrial Disputes Act, 1947: a person employed in any industry to do manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward, whether the terms are express or implied, and, notably, the Code's definition now also expressly includes working journalists and sales promotion employees, who were previously covered through separate, standalone statutes. As under the old law, persons employed mainly in a managerial or administrative capacity, and supervisory employees drawing wages above a notified ceiling and exercising functions mainly of a managerial nature, are excluded from this protective category, even though they remain "employees" for the different purposes of the Code on Wages.

4.3 "Fixed-term employment" — a genuinely new category

One of the Code's most discussed innovations is the formal, statutory recognition of fixed-term employment under Section 2(o). A fixed-term employee is engaged on the basis of a written contract for a fixed period, and Section 2(o) specifically provides that such an employee is entitled to the same statutory benefits — hours of work, wages, allowances, and other benefits — as are available to a permanent employee doing work of the same or similar nature, on a proportionate basis where the period of employment is shorter. Critically, on expiry of the fixed term, the employee is not entitled to any notice or retrenchment compensation on that account alone (since the engagement was always understood to end on that date), which is the central efficiency the provision offers employers, while the guarantee of proportionate statutory benefits during the term of engagement is the corresponding protection offered to the worker.

5. Chapter II in Detail: Trade Unions (Sections 3–19)

5.1 Registration of trade unions (Sections 3–9)

The Code substantially carries forward the registration framework from the Trade Unions Act, 1926: any seven or more members of a trade union may apply for its registration by subscribing their names to the rules of the union and submitting the application, in the prescribed form, to the Registrar of Trade Unions appointed for the State. The Registrar examines whether the union's name is not identical to an existing registered union's name, whether its rules comply with the matters the Code requires every union's rules to provide for (name, objects, use of funds, admission of members, conditions for benefits, manner of dissolution, and others), and, if satisfied, registers the union, giving it legal personality as a body corporate with the capacity to hold property, enter into contracts, and sue and be sued in its registered name.

5.2 Minimum membership requirement (Section 6)

A notable change from the 1926 Act is the requirement under Section 6 that for a trade union of workers to remain registered, it must have, and continue to have, not less than 10% of the workers or 100 workers, whichever is less, employed in the establishment or industry with which it is connected, subject to a floor of at least seven members in all cases. This is intended to prevent the proliferation of very small, potentially unrepresentative unions that had sometimes complicated collective bargaining under the old regime, though trade unions have raised concern that the threshold could, in some workplaces, make it harder for a new or minority-interest union to register and survive.

5.3 Recognition of a Negotiating Union or Negotiating Council (Section 14)

This is one of the Code's genuinely significant new institutions, directly addressing a problem that had long complicated industrial relations in workplaces with multiple competing unions: who, exactly, negotiates with management on behalf of "the workers" when several unions each claim to represent them? Section 14 provides a clear, numbers-based answer. Where there is only one registered trade union in an establishment, and it has at least 51% of the workers on its rolls as members, that union is entitled to be recognised as the sole "Negotiating Union." Where no single union commands 51% support, but several registered unions together represent the workforce, a "Negotiating Council" must be constituted, with representation proportionate to each union's membership, provided each constituent union has the support of not less than 20% of the total workers. This formula replaces what had often been an ad hoc, frequently disputed, and sometimes litigated process of determining union representativeness under the earlier Industrial Disputes Act framework.

5.4 Rights and immunities of registered trade unions (Sections 10–13)

The Code preserves the core protections that made trade unionism legally viable in the first place: immunity from criminal conspiracy liability for agreements made in furtherance of a trade dispute, provided the acts agreed upon would not themselves be an offence if committed by one person; immunity from certain civil suits in respect of acts done in contemplation or furtherance of a trade dispute (for instance, inducing a breach of contract of employment, within defined limits); and the ability to maintain a general fund for its objects, and a separate political fund for specific political purposes, from which no member can be compelled to contribute.

6. Chapter III in Detail: Standing Orders (Sections 28–31)

Standing Orders are, in effect, the written rulebook of a workplace — the formal document that specifies, in clear and certain terms, matters such as classification of workers, manner of intimating working hours, holidays, paydays, and wage rates, shift working, attendance and late-coming rules, conditions and procedure for leave, requirement of notice for termination and the procedure for disciplinary action, and the means of redress for workers against unfair treatment.

6.1 Applicability threshold (Section 28)

Under the earlier Industrial Employment (Standing Orders) Act, 1946, the obligation to prepare and certify Standing Orders applied to every industrial establishment employing 100 or more workers. The IR Code raises this threshold to 300 or more workers, a change that has attracted considerable debate: supporters argue it reduces a significant compliance burden for mid-sized establishments that often found the certification process slow and administratively heavy, while critics argue it removes the formal, legally enforceable rulebook protection for workers in a large number of mid-sized establishments falling between the old and new thresholds, leaving their conditions of employment governed only by the employer's own, less formally scrutinised, service rules.

6.2 Model Standing Orders (Section 29)

To ease compliance, particularly for establishments newly brought within the Standing Orders requirement or for those that do not wish to draft bespoke rules, the Code empowers the Central Government to prepare "Model Standing Orders" covering the matters specified in the Code's First Schedule, which an establishment may adopt directly, with modifications only to the extent necessary to reflect the establishment's own specific circumstances, without needing to go through the full, often lengthy, certification process required for an entirely bespoke set of Standing Orders. This is intended to make compliance meaningfully faster and more accessible, particularly for establishments that have only recently crossed the 300-worker threshold.

6.3 Certification procedure (Section 30)

Where an establishment drafts its own Standing Orders rather than adopting the Model, these must be submitted to the Certifying Officer, who examines whether the draft Standing Orders are fair and reasonable, provides an opportunity for workers (through their trade union or elected representatives) to be heard and to raise objections, and then certifies the Standing Orders, which then become legally binding on both the employer and the workers of that establishment. An appeal against the Certifying Officer's order lies to the appellate authority specified under the Code.

7. Grievance Redressal Committee (Section 4)

Every industrial establishment employing 20 or more workers is required under Section 4 to constitute one or more Grievance Redressal Committees, with equal numbers of members representing the employer and the workers, and, significantly, the Code requires that as far as possible, one-third of the worker members of such a Committee be women, in an establishment employing women workers, in proportion to their overall representation in the workforce. The Committee must complete its proceedings on a grievance referred to it within 30 days, giving workers a fast, internal, first-level forum for raising disputes before they escalate to a formal industrial dispute requiring conciliation or adjudication.

8. Chapters VII–VIII: Dispute Resolution Machinery

8.1 Conciliation Officers (Section 43)

As under the earlier Industrial Disputes Act, the appropriate Government appoints Conciliation Officers whose duty is to mediate and promote settlement of industrial disputes. For most disputes, conciliation is the mandatory first step before a dispute can proceed to formal adjudication: the Conciliation Officer investigates the dispute, holds conciliation proceedings, and, if a settlement is reached, records it in the prescribed form, which then becomes binding on the parties. If conciliation fails, the Conciliation Officer submits a failure report to the appropriate Government, which then decides whether to refer the dispute for adjudication.

8.2 Industrial Tribunal (Sections 44–46)

The IR Code introduces a significant structural change here: it merges what were, under the old Industrial Disputes Act, two separate adjudicating bodies — the Labour Court and the Industrial Tribunal — into a single body called the Industrial Tribunal, to be constituted with two members: one judicial member (a sitting or retired District Judge, or someone qualified to be one) and one administrative member (with specified experience in labour relations, administration, or allied fields). This two-member structure is intended to combine judicial rigour with practical administrative and industry experience in adjudicating disputes, rather than relying on a judicial member alone.

8.3 National Industrial Tribunal (Sections 47–48)

For disputes of national importance, or disputes involving establishments situated in more than one state where the Central Government considers it expedient that the dispute be adjudicated by a National Industrial Tribunal, the Code provides for constitution of such a Tribunal by the Central Government, again with a judicial member and an administrative member.

8.4 Reference of disputes and time-bound disposal

Where conciliation fails, the appropriate Government may refer the dispute to the Industrial Tribunal. The Code places a continuing emphasis, consistent with the broader policy objective of reducing delay in industrial adjudication, on time-bound disposal, with Tribunals directed to make efforts to complete proceedings within an expeditious timeframe, and Section 46 permits adjudication to proceed even during the pendency of proceedings before a higher court in certain circumstances, to prevent indefinite stalling of a reference through collateral litigation.

9. Chapter VIII in Detail: Strikes and Lock-outs (Sections 62–63)

This is one of the most consequential and debated changes the Code makes, because it fundamentally alters who is covered by the requirement of advance notice before a strike or lock-out.

9.1 The old position: notice required only for public utility services

Under the Industrial Disputes Act, 1947, the requirement of giving the employer (or, in the case of a lock-out, the workers) advance notice before commencing a strike or lock-out — and the prohibition on striking during the pendency of conciliation or adjudication proceedings — applied only to "public utility services", a specifically defined and relatively narrow category including railways, transport services for the carriage of passengers or goods by land, air or water, services connected with the generation or supply of electricity, water, or public conservancy, and any industry specifically notified as a public utility service by the appropriate Government. In an ordinary, non-public-utility industrial establishment, workers could, broadly speaking, go on strike without the formal 14-day notice requirement, provided other general conditions (such as not striking during the pendency of certain proceedings) were met.

9.2 The new position: notice required in every industrial establishment

Section 62 of the IR Code removes this distinction. No person employed in any industrial establishment — not merely a public utility service — may go on strike without giving the employer notice of strike within sixty days before striking, or within fourteen days of giving such notice, or before the expiry of the date of strike specified in the notice, whichever is earlier, and, critically, no worker may strike during the pendency of conciliation proceedings before a Conciliation Officer and seven days after the conclusion of such proceedings, nor during the pendency of proceedings before an Industrial Tribunal or National Industrial Tribunal and sixty days after their conclusion, nor during the pendency of arbitration proceedings and sixty days after their conclusion where a notification has been issued. An identical notice requirement and set of restrictions applies, symmetrically, to an employer proposing a lock-out.

This extension of the notice requirement to all industrial establishments — not just public utilities — has been among the most criticised provisions of the entire Code from the trade union side, which argues it substantially narrows the practical ability of workers in ordinary factories and establishments to resort to a strike as a tool of last-resort pressure in a dispute, by imposing a formal, time-consuming notice and cooling-off procedure that previously applied only to a narrow, specifically defined category of essential services. The government's position is that extending predictability and a cooling-off period to all industrial disputes, not just those affecting public utilities, reduces the disruption of sudden, unannounced strikes to production and to the public, and gives conciliation processes a genuine opportunity to work before economic damage is done on either side.

10. Chapter IX in Detail: Lay-off, Retrenchment and Closure (Sections 65–77)

This chapter governs what happens when an employer needs to reduce its workforce, temporarily or permanently, or close operations altogether — among the most sensitive and closely-watched provisions in all of Indian labour law.

10.1 Definitions: lay-off, retrenchment, and closure

A lay-off is the failure, refusal, or inability of an employer, on account of shortage of coal, power, or raw materials, accumulation of stocks, breakdown of machinery, natural calamity, or other connected reasons, to give employment to a worker whose name is on the establishment's muster roll and who has not been retrenched. A retrenchment is the termination of a worker's service by the employer for any reason whatsoever, other than as a punishment inflicted by way of disciplinary action, but does not include voluntary retirement, retirement on reaching the age of superannuation, termination on non-renewal of a fixed-term contract, or termination on account of continued ill-health. Closure means the permanent closing down of a place of employment or part thereof.

10.2 The threshold for requiring prior government permission (Section 77)

This is the single most discussed number in the entire IR Code. Under the earlier Industrial Disputes Act, Chapter V-B of that Act required an employer in an industrial establishment employing 100 or more workers (on average per working day in the preceding twelve months) to obtain the prior permission of the appropriate Government before effecting a lay-off, retrenchment, or closure. Below this threshold, an employer could lay off, retrench, or close with notice and compensation, but without needing to first seek and obtain government permission. The IR Code's Section 77 raises this threshold to 300 or more workers, while also empowering the appropriate Government to notify a higher threshold for any class of establishment by its own order.

The practical effect is substantial: an establishment employing, for example, 250 workers, which would have needed government permission before retrenching any worker under the old Chapter V-B threshold, can now retrench with notice and compensation alone, without first seeking government permission, so long as it remains below the new 300-worker threshold (or whatever higher threshold the relevant State Government may separately notify). Supporters of this change argue that the permission requirement, in practice, was rarely refused but routinely delayed, creating an incentive for establishments to stay artificially small (just under 100 workers) rather than grow their workforce, and that raising the threshold removes this perverse disincentive to formal-sector job creation. Critics argue that it removes a meaningful check on arbitrary workforce reduction for a very large number of mid-sized Indian establishments, most of which, as a matter of statistical fact, fall between 100 and 300 workers.

10.3 Compensation for lay-off (Section 73)

A laid-off worker (other than a badli or casual worker) whose name is on the muster roll and who has completed one year of continuous service is entitled to compensation equal to 50% of the total of the basic wages and dearness allowance for the period of lay-off, subject to a cap of 45 days in any period of twelve months, beyond which the employer may, in accordance with the Code, either continue to lay off the worker on the same terms, or retrench the worker in accordance with the retrenchment provisions, whichever the employer finds necessary and the law permits.

10.4 Conditions for retrenchment (Section 70)

Where retrenchment is permitted (either because the establishment is below the government-permission threshold, or because permission has been duly obtained), the employer must still satisfy specific conditions: the worker must be given one month's notice in writing (or wages in lieu of notice) indicating the reasons for retrenchment, the worker must be paid retrenchment compensation equivalent to 15 days' average pay for every completed year of continuous service (or any part thereof in excess of six months), and a notice in the prescribed manner must be served on the appropriate Government or authority. The Code also preserves the long-standing "last come, first go" principle (Section 72): in the absence of any agreement to the contrary, the employer must ordinarily retrench the worker who was the last person employed in that category, unless there are reasons, to be recorded, for retrenching any other worker.

10.5 Re-employment of retrenched workers (Section 71)

Where an employer proposes to re-employ any workers, and a retrenched worker of the same category applies for re-employment, the employer must give such retrenched workers an opportunity of re-employment in preference to other persons, a protection intended to give a retrenched worker a meaningful first right of return if the employer's workforce needs pick up again.

10.6 Notice for closure and compensation

An employer intending to close down an undertaking must, as with retrenchment, satisfy the government-permission requirement where the establishment meets the 300-worker (or higher notified) threshold, and must in any event give notice and compensation to workers in a manner analogous to the retrenchment provisions, recognising that closure, like retrenchment, terminates the worker's employment and triggers an entitlement to compensation computed on the same 15-days'-wages-per-completed-year formula.

11. Chapter X: The Worker Re-skilling Fund (Section 83)

A genuinely new institution created by the Code, the Worker Re-skilling Fund requires every employer, at the time of retrenching a worker, to contribute to a fund an amount equal to fifteen days' wages, or such other number of days as may be notified, last drawn by the retrenched worker, in addition to paying the retrenchment compensation itself. This Fund is to be utilised for imparting skill training to retrenched workers, to improve their re-employability, and is to be credited to the worker's account within a prescribed time of retrenchment, reflecting a policy recognition that retrenchment compensation alone, while necessary, does not by itself equip a displaced worker to find new employment in a changing economy.

12. Chapter XI: Unfair Labour Practices (Section 84 and Second Schedule)

The Code continues the long-standing concept of "unfair labour practices" — specific categories of conduct by employers, workers, and trade unions that are declared illegal regardless of whether they otherwise comply with contractual or procedural requirements. The Second Schedule to the Code lists these practices in detail, and includes, on the employer's side, practices such as interfering with workers' right to organise or join a trade union, discharging or discriminating against a worker for trade union activities, establishing an employer-sponsored "sham" union to prevent genuine unionisation, refusing to bargain collectively in good faith with a recognised negotiating union or council, and employing workers as "badlis" or casuals for years to deny them the status and benefits of permanent employment where the work is in fact of a permanent nature. On the workers'/union's side, the Schedule similarly prohibits practices such as coercive and physically intimidating picketing, and "go-slow" tactics intended to reduce production without a formal strike. Engaging in an unfair labour practice is a punishable offence under Section 89 of the Code.

13. Offences and Penalties (Sections 86–92)

14. Comparison Table: Key Numerical Thresholds, Old vs New

15. Practical Scenarios

Scenario A: A 250-worker factory wants to retrench 30 workers due to falling orders

Under the old Industrial Disputes Act, this factory, employing more than 100 workers, would have needed to seek and obtain prior permission from the appropriate Government before retrenching even a single worker, under Chapter V-B. Under the IR Code, since the factory employs fewer than 300 workers (assuming the State Government has not separately notified a lower threshold for this class of establishment), it may retrench the 30 workers by giving one month's notice (or wages in lieu), paying retrenchment compensation at 15 days' wages per completed year of service, contributing to the Worker Re-skilling Fund, and following the "last come, first go" principle — all without first needing government permission.

Scenario B: Workers in a non-public-utility garment factory want to strike over a wage dispute

Under the old law, since a garment factory is not typically a notified public utility service, workers could strike without the formal notice requirement, subject only to the general restriction against striking during pending conciliation or adjudication proceedings. Under the IR Code, the same workers must now give the employer written notice of strike at least fourteen days in advance (and not more than sixty days in advance), and must not strike during the pendency of conciliation and for seven days thereafter, bringing this factory's workers under the same procedural discipline previously reserved for railway or power-sector strikes.

Scenario C: A company with three unions, none commanding majority support

Union A has 35% of the workforce as members, Union B has 25%, and Union C has 15% (with the remaining 25% unaffiliated). Since no single union reaches the 51% threshold for sole recognition as the Negotiating Union, and Union A, Union B, and Union C each individually exceed the 20% minimum support threshold, a Negotiating Council must be constituted under Section 14, with each union's representation on the Council weighted in proportion to its membership — giving each a genuine, numbers-based seat at the collective bargaining table rather than leaving the question of "who represents the workers" to informal negotiation or litigation.

16. Frequently Asked Questions

Does the IR Code abolish the right to strike?

No. The right to strike, as a feature of collective bargaining, is not abolished. What has changed is that the formal notice and cooling-off procedure, which previously applied only to public utility services, now applies to strikes and lock-outs in every industrial establishment, meaning a strike called without following this procedure is an "illegal strike" under the Code, exposing participating workers (and, for an illegal lock-out, the employer) to the penalties described in Section 13 of this Part.

If my factory has 150 workers, do I still need government permission to retrench?

Under the Central default threshold of 300 workers, a 150-worker establishment would not need prior government permission under Section 77, and could proceed with notice and compensation alone. However, because the Code allows the appropriate Government to notify a different (including lower) threshold for specific classes of establishment, this must be verified against the current notification applicable in Maharashtra for the specific class of establishment in question before relying on this position.

Is my job protected if I am a fixed-term employee?

A fixed-term employee is entitled to the same wages, hours of work, and statutory benefits (on a proportionate basis where relevant) as a permanent employee performing comparable work, but is not entitled to notice or retrenchment compensation purely by reason of the fixed term coming to its natural end, since that expiry was always a known, agreed feature of the engagement rather than a retrenchment. If the employer ends the employment before the fixed term expires, however, ordinary termination protections, appropriate to the circumstances, would apply.

What is the difference between a Labour Court and the new Industrial Tribunal?

The old Industrial Disputes Act maintained Labour Courts and Industrial Tribunals as two separate bodies, generally with Labour Courts handling matters in the Second Schedule to that Act (such as discharge, dismissal, and standing orders interpretation) and Industrial Tribunals handling matters in the Third Schedule (such as wages, bonus, and retrenchment, often of a more complex character). The IR Code merges these into a single Industrial Tribunal, now constituted with both a judicial and an administrative member, intended to handle the full range of disputes that previously required separate forums.

17. Key Takeaways

1. The IR Code consolidates the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947.
2. The definition of "industry" remains broad but introduces specific statutory carve-outs, and continues to be the subject of significant, ongoing judicial interpretation, including a major 2026 nine-judge Supreme Court reference.
3. Fixed-term employment receives formal statutory recognition for the first time, with proportionate statutory benefits but no retrenchment protection on natural expiry of the term.
4. The threshold for the Standing Orders requirement and for prior government permission before lay-off, retrenchment, or closure is raised from 100 to 300 workers, a change with substantial practical consequences for mid-sized Indian establishments.
5. The requirement of advance notice before a strike or lock-out, previously confined to public utility services, now extends to every industrial establishment.
6. A Negotiating Union or Negotiating Council, determined by a clear, numbers-based formula, resolves the historically contentious question of which union speaks for the workers in collective bargaining.
7. A new Worker Re-skilling Fund requires employers to contribute towards retrenched workers' skill training, in addition to ordinary retrenchment compensation.
8. As with the Code on Wages, full state-wise enforcement remains a work in progress, and the current notification status in Maharashtra must be verified before any specific threshold or provision is relied upon.

18. Detailed Comparison with the Three Repealed Acts

18.1 From the Trade Unions Act, 1926 to Chapter II of the Code

The 1926 Act was drafted in the colonial era primarily to give legal protection to the nascent trade union movement, shielding unions and their members from being sued or prosecuted merely for organising collectively — a protection that, at the time, was genuinely revolutionary, since collective organising by workers had previously existed in a legal grey zone, exposed to common-law doctrines of criminal and civil conspiracy that could be, and were, used to suppress early union activity. The 1926 Act's framework of voluntary registration, with the accompanying immunities for registered unions, survives in the Code essentially intact in its core structure, but the Code adds the minimum-membership continuation requirement discussed earlier, and, more significantly, builds an entirely new layer on top of the old registration framework: the Negotiating Union/Negotiating Council mechanism, which the 1926 Act never addressed at all, leaving the question of which union negotiates with management to be worked out informally, or through litigation under the separate Industrial Disputes Act, on a case-by-case basis.

18.2 From the Industrial Employment (Standing Orders) Act, 1946 to Chapter III of the Code

The 1946 Act was passed specifically to address a problem the Second World War's wartime industrial expansion had exposed: workers in rapidly growing factories often had no clear, written statement of the basic terms governing their employment, leading to arbitrary and inconsistent treatment by supervisors and management. Its core innovation — requiring certified, written Standing Orders covering matters such as classification of workers, shift working, leave, and disciplinary procedure — is fully retained in the Code's Chapter III, with the threshold change (100 to 300 workers) and the Model Standing Orders simplification being the two principal modifications. It is worth noting that the matters Standing Orders must cover, listed in the Code's First Schedule, are themselves substantially unchanged from the Schedule to the 1946 Act, meaning the day-to-day substance of what a Standing Order actually says has not shifted nearly as much as the threshold for who must have one.

18.3 From the Industrial Disputes Act, 1947 to Chapters VI–XI of the Code

The 1947 Act was, by a wide margin, the most substantively significant, and most frequently litigated, of the three laws the IR Code replaces, and its provisions on conciliation, adjudication, strikes and lock-outs, and especially its Chapter V-A (lay-off and retrenchment) and Chapter V-B (special provisions for establishments employing 100 or more workers) generated an enormous body of Supreme Court and High Court case law over seven decades — case law on questions such as what counts as "continuous service" for retrenchment compensation purposes, what constitutes a valid domestic enquiry before dismissal for misconduct, and how to distinguish a genuine retrenchment from a punitive termination disguised as one. The IR Code restructures this material into its own Chapters VI through XI, generally preserving the substantive tests this case law developed (such as the requirement of a fair domestic enquiry, and the specific, narrow definition of what does and does not count as retrenchment) while updating the numerical thresholds and consolidating what were previously two separate adjudicating bodies, the Labour Court and the Industrial Tribunal, into the single, two-member Industrial Tribunal described earlier in this Part.

19. The 2026 Nine-Judge Bench and Why It Matters for This Code

As referenced in Section 4.1 of this Part, the meaning of "industry" — the threshold question determining whether the IR Code's protections apply to a workplace at all — was the subject of a landmark nine-judge Constitution Bench decision of the Supreme Court in August 2026, in a reference that had been pending for over two decades, examining whether the 1978 Bangalore Water Supply framework required reconsideration, particularly as applied to government-run welfare schemes, quasi-sovereign bodies, and activities carried out through public-private partnership structures that did not exist, or existed in far simpler form, when the original seven-judge bench decided the question in 1978. The practical significance of this decision for Nashik-area employers and workers is considerable: any establishment whose status as an "industry" is not clearly settled — for instance, certain categories of municipal corporation functions, cooperative society commercial activities, or government-funded skill-development and welfare programmes employing staff on a project basis — should have its position freshly assessed against the 2026 judgment's reasoning, rather than against the older 1978 framework alone, since the Bench's majority opinion proposed refinements to the test that could change the outcome for borderline cases. [Readers should consult the Lex Monk Supreme Court Update newsletter on this judgment, and ideally a qualified advocate, for an assessment of how the refined test applies to any specific establishment.]

20. State-Level Implementation: What to Expect in Maharashtra

As with the Code on Wages, the IR Code's practical operation in Maharashtra depends on the State Government notifying its own Rules, in addition to any Central Rules applicable to central-sphere establishments. Points to monitor specifically for this Code include:

• Whether the Maharashtra Government has notified a threshold for Standing Orders applicability and for the lay-off/retrenchment/closure permission requirement that differs from the Code's own default of 300 workers — the Code expressly permits a State to notify a different number for specific classes of establishment, and Maharashtra's industrial policy priorities may lead it to set a different figure than another state.
• The composition and location of the Industrial Tribunal(s) constituted for Maharashtra, including whether existing Labour Court and Industrial Tribunal premises and personnel in Nashik, Mumbai, Pune, and other major centres have been reconstituted into the Code's merged, two-member Industrial Tribunal structure.
• Any Maharashtra-specific notification on the Model Standing Orders, since states have historically adapted the Central Model Standing Orders with local variations reflecting state-specific industrial practice.
• The designated authority for registering trade unions and for receiving strike/lock-out notices within the state.

21. Criticism, Debate and Open Questions

21.1 The trade union perspective

Central trade union federations have consistently identified three provisions of the IR Code as their principal objections: the extension of the strike-notice requirement to all industrial establishments (discussed in detail in Section 9 of this Part), which they argue substantially weakens the practical leverage of unorganised and semi-organised workers; the tripling of the Standing Orders and lay-off/retrenchment/closure thresholds from 100 to 300 workers, which they argue removes meaningful protection, including the government-permission safeguard against arbitrary mass retrenchment, from a very large share of India's mid-sized industrial workforce; and the minimum-membership requirement for continued trade union registration, which smaller or newly-formed unions have argued could be used, in practice, to deregister unions representing a genuine but numerically modest segment of a large workforce.

21.2 The employer and government perspective

Industry associations and the government's own Statement of Objects and Reasons emphasise that the pre-2020 thresholds, set decades earlier, had not kept pace with either inflation or the scale of the modern Indian industrial establishment, and that the practical effect of the old, lower thresholds was, counter-intuitively, to discourage formal-sector employment growth, since many employers structured their operations — sometimes through artificial splitting of what was functionally a single establishment into multiple smaller units — specifically to remain below the 100-worker threshold and avoid the Chapter V-B permission requirement. Raising the threshold, on this view, removes this perverse incentive and should, over time, encourage larger-scale, more formal employment, even though it concededly narrows a specific procedural protection for workers in the affected size band in the short term.

21.3 Open implementation questions

Beyond the "industry" definition question addressed by the 2026 Supreme Court bench, practical questions that remain live as states notify their rules include: the precise composition and staffing of the merged Industrial Tribunals (since merging two previously separate cadres of adjudicating officers into one two-member structure requires significant administrative restructuring); the treatment of disputes and Standing Orders certifications that were already pending under the old, separate Acts at the moment a state's Rules under the new Code take effect, which each State's Rules are expected to address through transitional/savings clauses; and the practical mechanics of the Negotiating Council formula in workplaces with a very large number of small unions, where the proportional representation calculation can become administratively complex.

22. How a Worker Raises a Grievance or Dispute: Step by Step

1. First, raise the grievance internally, through the Grievance Redressal Committee where the establishment has 20 or more workers, which must complete proceedings within 30 days of the grievance being referred to it.
2. If unresolved internally, or if the dispute is of a wider, collective character (such as a demand affecting an entire category of workers rather than one individual's grievance), the matter may be taken up by the Negotiating Union or Negotiating Council with the employer directly.
3. If direct negotiation fails, either party, or the appropriate Government on its own motion, may refer the matter to the Conciliation Officer appointed for the area or industry.
4. If conciliation fails, the Conciliation Officer sends a failure report to the appropriate Government, which decides whether to refer the dispute for adjudication to the Industrial Tribunal (this decision to refer is itself subject to limited judicial review if the Government's refusal to refer is shown to be arbitrary).
5. Before the Industrial Tribunal, both sides present their case, including documentary and oral evidence, and the Tribunal, composed of a judicial and an administrative member, passes a reasoned award.
6. An award of the Industrial Tribunal can be challenged before the High Court, generally by way of a writ petition, on the limited grounds available for judicial review of a quasi-judicial body's decision, such as want of jurisdiction, violation of natural justice, or a patent error of law.

23. Compliance Checklist for Employers

1. Determine whether your establishment is an "industry" under Section 2(p), taking into account both the statutory exceptions and the latest Supreme Court guidance on the definition's scope.
2. Count your workforce correctly against the 300-worker threshold (or any different threshold separately notified for your class of establishment in Maharashtra) to determine whether Standing Orders certification and the lay-off/retrenchment/closure permission requirement apply to you.
3. If above the threshold, prepare or adopt Standing Orders covering every matter in the First Schedule, either by adapting the Model Standing Orders or by drafting and certifying bespoke Standing Orders.
4. Constitute a Grievance Redressal Committee if you employ 20 or more workers, with proportionate women's representation where applicable, and ensure it is actually functioning within the 30-day disposal timeline, not merely constituted on paper.
5. Identify and formally recognise the Negotiating Union or Negotiating Council where registered unions exist in your establishment, applying the 51%/20% formula correctly.
6. Before any retrenchment, lay-off, or closure, verify whether prior government permission is required based on your current workforce count, and in every case, follow the notice, compensation, "last come first go", and Worker Re-skilling Fund contribution requirements.
7. Before calling or responding to a strike/lock-out, verify compliance with the notice and cooling-off requirements now applicable to all industrial establishments, not just public utilities.
8. Audit your conduct against the Second Schedule's list of unfair labour practices, particularly around long-term use of badli or casual labour for work of a permanent nature, and around any conduct that could be characterised as interfering with workers' right to organise.

24. Interaction with the Other Three Labour Codes

The IR Code's retrenchment compensation formula (15 days' average pay per completed year of service) relies on the Code on Wages' Section 2(y) definition of "wages" for computing that average pay, meaning the 50% cap discussed in Part 1 of this guide directly affects how much a retrenched worker actually receives. Separately, the Code on Social Security, 2020 (Part 3 of this guide) governs the gratuity entitlement that a retrenched or resigning worker may separately claim, which operates alongside, not instead of, the IR Code's retrenchment compensation — the two are distinct entitlements that can both be payable on the same termination event, a point many workers and even some employers find confusing. The Occupational Safety, Health and Working Conditions Code, 2020 (Part 4 of this guide) separately governs working hours, leave, and safety conditions that feed into the "conditions of employment" a Standing Order under this Code must specify, meaning compliance with Standing Orders requires cross-reference to that Code's substantive working-hours and leave provisions as well.

25. Glossary of Key Terms Used in This Part

26. Timeline at a Glance

27. Special Provisions for Particular Categories of Establishments and Workers

27.1 Flexibility for certain new-age and start-up establishments

The Code's drafters were conscious that a significant and growing share of India's workforce is now employed in sectors — technology start-ups, e-commerce logistics, and platform-based services — that did not exist, or existed in negligible form, when the Industrial Disputes Act was framed in 1947. While the Code does not create a wholly separate regime for such establishments, the raised thresholds for Standing Orders and for the lay-off/retrenchment/closure permission requirement are, in significant part, a response to feedback that rapidly scaling and contracting workforces, typical of many new-age businesses, were being forced into a permission-based regime designed with a very different, more stable, factory-floor model of industrial employment in mind.

27.2 Working journalists and sales promotion employees

Before the IR Code, working journalists and sales promotion employees were covered by two entirely separate, standalone statutes — the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955, and the Sales Promotion Employees (Conditions of Service) Act, 1976 — each of which extended the definition of "workman" under the Industrial Disputes Act to these specific categories for certain purposes, while leaving their wage boards and other sector-specific provisions in separate statutes. The IR Code's Section 2(zr) now expressly includes both categories within the single, unified definition of "worker", simplifying what had been an unnecessarily fragmented legal position for journalists and sales staff seeking to invoke industrial dispute protections.

27.3 Apprentices and trainees

Consistent with the position under the Code on Wages, apprentices engaged under the Apprentices Act, 1961 continue to be excluded from the IR Code's protective provisions for "workers", since their relationship with the establishment is treated in law as a training relationship rather than a standard employment relationship, governed instead by the separate apprenticeship framework and its own stipend and training obligations.

28. The Domestic Enquiry Requirement: A Procedural Safeguard Worth Understanding in Detail

Although the phrase "domestic enquiry" does not appear as a single defined term in the IR Code's text in the way "retrenchment" or "lay-off" does, the requirement that an employer conduct a fair and proper domestic enquiry before dismissing a worker for misconduct is one of the most deeply entrenched principles in Indian labour jurisprudence, built up over decades of Supreme Court decisions interpreting the Industrial Disputes Act's standing-orders and unfair-dismissal provisions, and it continues to govern disciplinary dismissals under the Code's updated framework. The core requirements that have emerged from this case law, and that remain good practice (and, in substance, a legal necessity to withstand challenge before the Industrial Tribunal) under the Code, include: a clear, specific charge-sheet detailing the alleged misconduct; a reasonable opportunity for the worker to respond, inspect relevant documents, and lead evidence in their defence; an impartial enquiry officer, who should not be a witness to the alleged misconduct or otherwise personally interested in the outcome; a reasoned finding based on the evidence actually led at the enquiry, not on material gathered informally outside it; and, where dismissal is the proposed punishment, a show-cause notice giving the worker an opportunity to make representations on the quantum of punishment before a final order is passed. An employer who dismisses a worker without following a fair domestic enquiry risks having the dismissal set aside by the Industrial Tribunal even where the underlying misconduct allegation might, on its own facts, have been provable, precisely because the IR Code's dispute-resolution machinery places such heavy emphasis on procedural fairness as a precondition to a valid disciplinary termination.

29. Illustrative Worked Example: Computing Retrenchment Compensation

Suppose a worker, Suresh (illustrative name), has completed 7 years and 8 months of continuous service with an establishment at the time of retrenchment, and his average pay (computed on the Code on Wages' "wages" definition) for the relevant period works out to ₹18,000 per month. Retrenchment compensation under Section 70 is calculated at 15 days' average pay for every completed year of continuous service, with any remaining period of more than six months counted as a full additional year. Here, 7 years and 8 months rounds up to 8 completed years for this purpose (since the extra 8 months exceeds the six-month threshold). Fifteen days' pay at a monthly rate of ₹18,000 works out to ₹9,000 (taking a 30-day month for simplicity: ₹18,000 ÷ 30 × 15 = ₹9,000) per completed year, so Suresh's retrenchment compensation would be 8 × ₹9,000 = ₹72,000, payable in addition to one month's notice pay (or notice itself) and the employer's separate contribution to the Worker Re-skilling Fund (15 days' wages, i.e., ₹9,000, based on the same wage figure, credited to Suresh's account for skill training purposes) — illustrating that the true cost to the employer, and the true benefit to the worker, of a lawful retrenchment under the Code extends well beyond the headline retrenchment-compensation figure alone.

30. A Closing Perspective for Workers, Unions and Employers Alike

The Industrial Relations Code governs the moments in an employment relationship that matter most when things go well and, especially, when they go wrong: the right to organise and bargain collectively, the written rules that govern day-to-day conduct at work, and the procedures that apply when an employer needs to reduce its workforce or when a dispute cannot be resolved informally. For a worker, understanding this Code means understanding precisely when you are entitled to notice, compensation, and government-sanctioned scrutiny of a retrenchment decision, and precisely what procedural notice a strike now requires regardless of whether your workplace is a factory, a shop, or a services establishment. For an employer, it means recognising that the raised thresholds, while easing certain compliance burdens, do not remove the underlying obligation to treat workforce reduction as a serious, procedurally disciplined act, with notice, compensation, and a Re-skilling Fund contribution owed in every case, not merely in those above the government-permission threshold. And for a trade union, it means operating within a newly numbers-driven recognition framework that rewards demonstrated, verifiable membership support over informal claims to represent the workforce. Part 3 of this guide turns next to the Code on Social Security, 2020, which governs the financial safety net — provident fund, gratuity, insurance, and maternity benefits — that applies throughout, and beyond, the employment relationships this Part has described.

31. Quick Reference: Important Section Numbers

This quick-reference table should be read together with the detailed explanation earlier in this Part, since several of these provisions carry important exceptions, procedural safeguards, and cross-references to Rules that a bare section number cannot convey on its own. As with Part 1, readers should treat the specific thresholds, dates, and notification status discussed throughout this Part as subject to ongoing verification against the latest notifications issued by the Central Government and the Government of Maharashtra.

32. The Role of Arbitration Under the IR Code

Alongside conciliation and adjudication, the Code preserves a third, often under-used route to resolving an industrial dispute: voluntary arbitration. Where the employer and the workers (or their recognised Negotiating Union or Negotiating Council) agree, at any time before a dispute has been referred for adjudication, to refer the dispute to arbitration, they may do so by a written agreement, referring the dispute to one or more arbitrators, including, if the parties so choose, the Industrial Tribunal itself acting in an arbitral rather than adjudicatory capacity. An arbitration agreement under the Code must be signed by the parties and forwarded to the appropriate Government and the Conciliation Officer, and, once a valid reference to arbitration is made, the dispute cannot simultaneously be referred for adjudication, preserving arbitration as a genuine, binding alternative route rather than a mere preliminary step. The arbitrator's award, once made, is enforceable in the same manner as an award of the Industrial Tribunal, giving parties who prefer a faster, more informal, and mutually chosen process of dispute resolution a meaningful alternative to the full conciliation-and-adjudication pathway described earlier in this Part.

33. Transitional Provisions: What Happens to Pending Matters

A question that arises naturally whenever a new Code repeals and replaces older legislation is what happens to disputes, registrations, and certifications that were already in progress under the old law at the moment the new Code and its Rules take effect in a given state. The IR Code's savings and repeal provisions generally preserve the validity of trade union registrations, certified Standing Orders, and pending proceedings before Labour Courts, Industrial Tribunals, and Conciliation Officers that existed immediately before the Code's commencement in a given jurisdiction, treating them as continuing under the new framework (with the merged Industrial Tribunal stepping into the shoes of the erstwhile Labour Court or Industrial Tribunal, as the case may be) rather than requiring parties to restart proceedings from scratch. Employers and workers with matters that were pending at the time of transition in their state should specifically confirm, with reference to the applicable State Government notification, exactly how their particular pending matter has been carried forward, since the precise administrative mechanics can vary by state and by the stage the proceeding had reached.

34. Practical Guidance for Trade Unions Navigating the New Framework

• Audit your current membership numbers against the Section 6 minimum-membership-for-continued-registration requirement (10% of the workforce or 100 members, whichever is less, with a floor of 7), and address any shortfall through membership drives well before a registration renewal or challenge could arise.
• Calculate your union's standing under the Section 14 Negotiating Union/Negotiating Council formula relative to other unions in the same establishment, since this determines your formal, legally recognised role (if any) in collective bargaining with the employer.
• Engage proactively with the Grievance Redressal Committee mechanism, since a union with members serving on these Committees can resolve a significant share of individual worker grievances well before they need to escalate to conciliation or adjudication.
• Keep strike notices meticulously compliant with the Section 62 timeline and restrictions, since a strike called in violation of these requirements is an "illegal strike" exposing participating workers, and potentially union office-bearers, to penalty, regardless of how legitimate the underlying grievance may be.
• Consider voluntary arbitration as a genuine, often faster alternative to the full conciliation-and-adjudication pathway, particularly for disputes where both sides are willing to accept a mutually chosen arbitrator's decision as final.

35. Final Note on Using This Guide

Readers who have worked through all thirty-four preceding sections of this Guide should now have a complete, practical picture of how collective organisation, workplace rule-making, and dispute resolution function under Indian law today, and should be equipped to recognise, in their own workplace or practice, which of this Guide's mechanisms is actually in play at any given moment, whether that is a grievance being raised, a union seeking recognition, a Standing Order being certified, or a retrenchment being planned.

This Guide has walked through the Industrial Relations Code, 2020 from its three legislative predecessors, through its central definitions, each of its substantive chapters on trade unions, standing orders, dispute resolution, strikes and lock-outs, and workforce reduction, to its interaction with the other Labour Codes and the practical steps available to workers, unions and employers under the new framework. As with the Code on Wages covered in earlier guide, the thresholds, procedures, and institutional arrangements described here are given their final, operative shape only once the Central Government and the Government of Maharashtra have notified the detailed Rules the Code contemplates, and readers should treat every specific number, date, and procedural step in this Guide as subject to confirmation against the latest notification before being relied upon for an actual dispute, retrenchment, strike, or union registration. Where a matter is significant — a mass retrenchment, a strike notice, or a contested union recognition claim — consulting a qualified advocate before acting is always the safer course, since the consequences of a procedural misstep under this Code, for either side of the employment relationship, can be substantial and not easily reversed once set in motion.

It is also worth remembering, in closing this Guide that the Industrial Relations Code does not exist to favour either side of the employment relationship as a matter of principle. Its conciliation machinery, its Grievance Redressal Committees, its Negotiating Union and Negotiating Council framework, and even its strike and lock-out notice requirements are all, at bottom, mechanisms for channelling what is often a genuinely adversarial relationship into predictable, rule-bound processes, so that disputes are resolved through evidence and negotiation rather than through unregulated economic pressure or arbitrary unilateral action by either an employer or a workforce. Read in that light, the detailed thresholds and procedures this Guide has explained are less a set of bureaucratic hurdles than the specific, current form that principle happens to take in Indian law as of 2026 — a form that, like every part of the Labour Code reform, continues to be shaped by ongoing notification, judicial interpretation, and, no doubt, future amendment, and Code on Social Security, 2020 turns to the financial safety net that applies across and beyond these employment relationships, covering provident fund, gratuity, employee state insurance, maternity benefit, and, for the first time in Indian law, a dedicated framework for gig and platform workers.

Disclaimer: This guide is for general information and educational purposes only. It is not legal advice, and it does not create an advocate-client relationship with Lex Monk or Advocate Chandrakant K. Deshmukh. Every section number, threshold, rate, and notification status discussed across all Parts must be verified against the current official text of the relevant Code, its Rules, and the latest notifications of the Central Government and the Government of Maharashtra before being relied upon for any specific decision, claim, or compliance action. Please consult a qualified advocate for advice on your specific situation.