Labour Code on Industrial relations, 2020

In News: Lok Sabha has cleared three labour code Bills viz the Industrial Relations Code Bill, 2020, Code on Social Security Bill, 2020 and Occupational Safety, Health and Working Conditions Code Bill, 2020

Objectives Labour Code on Industrial relations bill, 2020

  • It aims to create greater labour market flexibility to encourage entrepreneurs to engage in labour-intensive sectors and to improve ease of doing business in India.
  • It would consolidate three laws i.e. Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947.

Key Features of Labour Code on Industrial relations, 2020

  • Contract workers: It seeks to allow companies to hire workers on fixed-term contract of any duration. Fixed term employment refers to workers employed for a fixed duration based on a contract signed between the worker and the employer.
  • Reduced Threshold: Companies employing up to 300 workers will not be required to frame rules of conduct for workmen employed in industrial establishments. Presently, it is compulsory for firms employing up to 100 workers.
  • Dispute redressal: It provides for setting up of a two-member tribunal (in place of one member) wherein important cases will be adjudicated jointly and the rest by a single member, resulting in speedier disposal of cases.
  • Regulation for Trade Unions: Introduces a feature of ‘recognition of negotiating union’ under which a trade union will be recognized as sole ‘negotiating union’ if it has the support of 75% or more of the workers on the rolls of an establishment.
  • Statutory benefits: Underlines that fixed-term employees will get all statutory benefits on a par with the regular employees who are doing work of the same or similar nature.
  • Regulates strikes: As per the bill, the workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike. Presently, only workers in public utility services are required to give notices to hold strikes.
  • Re-skilling Fund: Proposes setting up of a “re-skilling fund” for training of retrenched employees. The retrenched employee would be paid 15 days’ wages from the fund within 45 days of retrenchment.


  • The Industrial Relations Code of 2019 has curtailed the right to form unions and accord them powers of representation.
  • It takes away the negotiating rights of trade unions as it would be difficult for any one group to manage 75% support.
  • It will give tremendous amounts of flexibility to the employers in terms of hiring and firing, dismissal for alleged misconduct and retrenchment for economic reasons will be completely possible for all the industrial establishments employing less than 300 workers.
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