Industrial Relations Code 2020 — Dispute Resolution & Rights

Posted on Feb 20, 2026 in Law & Jurisprudence

The Industrial Relations Code, 2020 provides the following dispute resolution mechanisms in brief:

  1. Grievance Redressal Machinery: A system set up in every establishment for resolving individual worker grievances through a structured procedure.
  2. Works Committee: A bipartite body of employer and employee representatives that promotes harmonious relations and resolves day‑to‑day issues.
  3. Conciliation: A process where a conciliation officer mediates between the parties to help them reach a mutually acceptable settlement of disputes.
  4. Arbitration: Parties can refer unresolved disputes to an arbitrator whose decision is binding, if they agree to arbitration.
  5. Labour Court / Tribunal: Disputes that remain unsettled are adjudicated by Labour Courts or Industrial Tribunals, which have the power to pass enforceable awards.
  6. National Industrial Tribunal: For disputes of national importance or affecting multiple establishments, cases can be referred to this higher tribunal.

Dispute Resolution Mechanisms

1. Grievance Redressal Machinery

  • Purpose: To resolve individual worker grievances promptly and efficiently.
  • Structure: Every establishment with 20 or more workers must have a Grievance Redressal Committee.
  • Composition: The committee will include equal representation from workers and management, with a senior management representative as the chairperson.

2. Works Committee

  • Purpose: To promote good relations between workers and employers and resolve issues at the workplace level.
  • Structure: The committee will consist of representatives from both workers and management.
  • Function: Discuss and resolve workplace issues, improve communication, and foster cooperation.

3. Conciliation

  • Purpose: To facilitate a mutually agreeable solution between parties in a dispute.
  • Process: Conciliation officers, appointed by the government, mediate between the parties to help them reach a settlement.
  • Outcome: If successful, the settlement is binding on the parties.

4. Arbitration

  • Purpose: To resolve disputes through a neutral third-party arbitrator.
  • Process: Parties agree to arbitration, and the arbitrator’s decision is binding.
  • Advantages: Faster resolution compared to litigation; expertise of the arbitrator.

5. Labour Courts and Tribunals

  • Purpose: To adjudicate disputes related to industrial relations and provide a legal framework for resolution.
  • Structure: Labour Courts hear individual disputes; Industrial Tribunals hear collective disputes.
  • Function: Hear cases, examine evidence, and pass awards or judgments that are binding on the parties.

6. National Industrial Tribunal

  • Purpose: To handle industrial disputes that affect multiple states or establishments.
  • Jurisdiction: Has authority to adjudicate disputes with implications beyond a single state.
  • Function: Provide a higher level of adjudication for complex or large-scale industrial disputes.

Summary

The Industrial Relations Code, 2020 establishes a comprehensive framework for resolving industrial disputes through various mechanisms. These include grievance redressal, works committees, conciliation, arbitration, labour courts, and national industrial tribunals. Each mechanism serves a specific purpose and aims to promote industrial peace and harmony.

The Industrial Relations Code, 2020 is a legislative enactment in India that consolidates and amends laws related to industrial relations. It aims to promote harmonious industrial relations and improve the conditions of workers.

Key Features of the IR Code

  1. Definition of Industry: Expands the definition of “industry” to include all sectors, including the informal sector.
  2. Trade Unions: Allows multiple trade unions in an establishment and provides for recognition of trade unions.
  3. Grievance Redressal: Mandates a grievance redressal mechanism in establishments with 20 or more workers.
  4. Standing Orders: Requires establishments to prepare standing orders on work, conduct, and conditions of service.
  5. Industrial Disputes: Provides mechanisms for resolving industrial disputes, including conciliation, arbitration, and adjudication.
  6. Fixed-Term Employment: Allows for fixed-term employment, providing workers with social security benefits.
  7. Social Security Funds: Proposes the creation of social security funds for workers in the unorganized sector.

Objectives

  1. Promote Industrial Peace: Foster harmonious relations between workers and employers.
  2. Protect Workers’ Rights: Ensure fair treatment and social security for workers.
  3. Improve Productivity: Enhance productivity and efficiency in industries.
  4. Simplify Procedures: Streamline procedures for industrial relations and dispute resolution.

Impact

  1. Increased Formalization: Encourages formalization of the workforce and industries.
  2. Improved Worker Rights: Enhances worker rights and social security.
  3. Better Industrial Relations: Promotes harmonious industrial relations and reduces disputes.

The Industrial Relations Code, 2020 aims to balance the interests of workers and employers, promoting economic growth and social justice.

Layoff, Retrenchment, and Closure: Characteristics and Provisions

Layoff

  1. Temporary Suspension: Layoff refers to the temporary suspension of work by an employer due to reasons such as shortage of raw materials, power, or other factors beyond the employer’s control.
  2. Compensation: Workers are entitled to compensation during the layoff period, typically 50% of their basic wages and dearness allowance.
  3. Reasons: Layoff can occur due to various reasons, including natural calamities, accidents, or economic downturns.
  4. Procedure: The employer must follow a specific procedure, including providing notice to workers and the relevant authorities.

Retrenchment

  1. Permanent Termination: Retrenchment refers to the termination of a worker’s services by the employer for reasons other than disciplinary action.
  2. Compensatory Benefits: Workers are entitled to receive compensatory benefits, including notice pay, retrenchment compensation, and other benefits as per the law.
  3. Reasons: Retrenchment can occur due to reasons such as closure of a business, reduction in workforce, or economic reasons.
  4. Procedure: The employer must follow a specific procedure, including providing notice to workers and the relevant authorities, and adhering to the principles of last-in-first-out (LIFO).

Closure

  1. Permanent Closure: Closure refers to the permanent shutdown of an establishment or a part thereof, resulting in the termination of employment of workers.
  2. Compensatory Benefits: Workers are entitled to receive compensatory benefits, including notice pay, closure compensation, and other benefits as per the law.
  3. Reasons: Closure can occur due to reasons such as financial difficulties, business losses, or changes in market conditions.
  4. Procedure: The employer must follow a specific procedure, including providing notice to workers and the relevant authorities, and adhering to the provisions of the Industrial Relations Code.

Key Differences

  1. Temporary vs. Permanent: Layoff is temporary, while retrenchment and closure are permanent in nature.
  2. Reasons: The reasons for layoff, retrenchment, and closure differ, with layoff being due to temporary factors and retrenchment and closure being due to more permanent reasons.
  3. Compensatory Benefits: The compensatory benefits for workers differ in each case, with retrenchment and closure typically resulting in more comprehensive benefits.

Understanding the characteristics of layoff, retrenchment, and closure is crucial for both employers and workers to navigate the complexities of industrial relations and ensure compliance with the law.

Q.4 (c) Gender Equality and Women Workers’ Rights

  1. Gender Equality Provisions: The Industrial Relations Code, 2020 emphasizes promoting gender equality in the workplace and prohibits discrimination based on gender in matters of employment, including recruitment, promotions, and conditions of work.
  2. Rights of Women Workers: The Code provides for special provisions to protect women workers, including safety, health, and working conditions. It mandates establishments to address grievances related to sexual harassment and ensure a safe working environment.
  3. Maternity Benefits: While the Code integrates aspects of maternity benefits, specific provisions are detailed under the Social Security Code, ensuring women receive maternity leave and related benefits.
  4. Equal Remuneration: The Code reinforces the principle of equal pay for equal work for both men and women, prohibiting wage discrimination based on gender.
  5. Grievance Redressal: The Code mandates a grievance redressal mechanism that includes addressing gender‑related complaints, ensuring women have access to fair procedures for dispute resolution.
  6. Implementation: Effective implementation of these provisions requires establishments to adopt policies promoting gender equality and protect women’s rights in the workplace.

Q.4 (d) Historical Context and Evolution of Trade Union Laws

Historical Context

  1. Colonial Era: Trade union laws in India have their roots in the colonial era when workers faced exploitation and harsh working conditions. The British government enacted laws primarily to regulate labor but not necessarily to protect workers’ rights.
  2. Early 20th Century: The growth of industries like textiles, jute, and plantations led to the emergence of a large industrial workforce. Workers faced poor working conditions, long hours, and low wages, which necessitated the formation of trade unions to protect their interests.

Evolution of Trade Union Laws

  1. Trade Union Act, 1926: This Act granted trade unions legal recognition and immunity from prosecution for certain acts done in furtherance of trade disputes. It laid the foundation for the growth of the trade union movement in India.
  2. Industrial Disputes Act, 1947: Enacted to ensure industrial peace and harmony, this law provided mechanisms for resolving industrial disputes through conciliation, arbitration, and adjudication.
  3. Industrial Relations Code, 2020: This code consolidates laws related to trade unions, industrial disputes, and employment conditions, aiming to promote harmonious industrial relations and facilitate ease of doing business.

Socio-Economic Conditions

  1. Exploitation of Workers: Workers faced exploitation, poor working conditions, and low wages, which led to the need for collective bargaining and protection of workers’ rights.
  2. Industrial Growth: The growth of industries and the emergence of a large industrial workforce necessitated the formation of trade unions to address worker grievances and improve working conditions.
  3. Economic Hardship: Workers faced economic hardship due to low wages and lack of social security, which trade unions aimed to address through collective bargaining and negotiations with employers.

Necessity of Trade Unions

  1. Protection of Rights: Trade unions were necessary to protect workers’ rights and ensure fair treatment by employers.
  2. Collective Bargaining: Trade unions provided workers with a platform for collective bargaining to negotiate better wages, working conditions, and benefits.
  3. Social Justice: The formation of trade unions was driven by the need for social justice and equitable treatment of workers in the industrial sector.

Conclusion: The evolution of trade union laws in India reflects the changing socio-economic conditions and the need to balance workers’ rights with industrial growth. Trade unions have played a crucial role in protecting workers’ interests and promoting fair labor practices in India.

Q.4 (e) Unfair Labour Practice: Legal Framework

Definition of Unfair Labour Practice

  1. Unfair Labour Practice (ULP): Refers to actions by employers or trade unions that interfere with the rights of employees or employers, violating the principles of fair labor practices.

Legal Framework

  1. Industrial Relations Code, 2020: Defines and prohibits unfair labor practices by both employers and trade unions, aiming to maintain fair and harmonious industrial relations.
  2. Prohibited Practices: Includes actions such as interference with employee rights to organize, discrimination against employees for participating in trade union activities, and refusal to bargain collectively with the recognized trade union.

Examples of Unfair Labour Practices

  1. Employer Actions: Interference with employee rights to organize, refusal to recognize a trade union, unfair dismissal, and victimization of employees involved in trade union activities.
  2. Trade Union Actions: Coercion, intimidation, or violence against employees who do not participate in strikes or trade union activities, and refusal to bargain collectively with the employer.

Consequences and Enforcement

  1. Penalties: Employers or trade unions found guilty of unfair labor practices may face penalties, including fines and other legal consequences.
  2. Remedies: The Industrial Relations Code provides for remedies such as reinstatement of employees, payment of compensation, and other measures to rectify the unfair labor practice.
  3. Enforcement Mechanisms: Labour Courts and Tribunals adjudicate disputes related to unfair labor practices and provide remedies to affected parties. Recognized trade unions can represent employees in proceedings related to unfair labor practices.

Key Terms and Provisions

  • 1. Workmen (Workers): Labour laws define “workmen” as employees engaged in manual, skilled, or unskilled work, excluding managerial or supervisory roles. Rights include wages, safety, and social security benefits under various codes.
  • 2. Retrenchment: Termination of employment due to redundancy or economic reasons. Requires notice, compensation (15 days’ wages per year of service), and adherence to statutory procedures.
  • 3. Layoff: Temporary suspension of work due to reasons like shortage of material or finance. Workers receive 50% wages for the layoff period and are entitled to reinstatement.
  • 4. Strike: Collective cessation of work by employees to press demands. Public utility services require 14‑day notice; illegal strikes invite penalties.
  • 5. Lockout: Employer’s action to temporarily close the workplace during disputes. Must follow notice requirements and legal procedures to avoid penalties.
  • 6. Closure: Permanent shutdown of an establishment, requiring compensation to workers and government permission if applicable.
  • 7. Payment of Bonus: Statutory bonus paid to eligible employees based on profits. Calculated as a percentage of wages with minimum and maximum limits.
  • 8. Unfair Labour Practice: Actions violating workers’ rights, e.g., interfering with union activities or discriminating against employees. Penalties include fines and remedial actions by labour courts.
  • 9. Minimum Wages & Payment of Wage: Minimum wage ensures workers receive statutory minimum remuneration. Payment of Wage Act regulates timely payment and deductions.
  • 10. Dispute Redressal Mechanism: Procedures like conciliation, arbitration, and adjudication to resolve industrial disputes. Labour courts and tribunals handle grievances and enforce rights.
  • 11. IR Code 2020 – Conciliation, Arbitration, Adjudication: Consolidates industrial relations laws, promoting dispute resolution through conciliation, arbitration, or adjudication. Simplifies procedures for registration of unions and dispute settlement.
  • 12. ILO (Special Gender Equality): ILO promotes gender equality through conventions addressing equal pay, maternity protection, and non‑discrimination.
  • 13. Authorities under IR Code 2020: Includes labour courts, tribunals, and conciliation officers to enforce compliance and resolve disputes.