Context:
Recently, Parliament passed the Industrial Relations Code (Amendment) Bill, 2026 during the ongoing Budget Session. It is now awaiting Presidential assent to become law.
Background:
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- Prior to 2020, India’s labour law framework was fragmented across numerous statutes governing trade unions, employment conditions, and dispute resolution. To simplify and modernise these laws, the Industrial Relations Code, 2020 was enacted and brought into force as part of a bundle of four labour codes. These codes consolidated multiple older laws, including:
- The Trade Unions Act, 1926
- The Industrial Employment (Standing Orders) Act, 1946
- The Industrial Disputes Act, 1947
- The Trade Unions Act, 1926
- The consolidation aimed to create a unified and updated framework for industrial relations, improve compliance, and facilitate ease of doing business.
- Prior to 2020, India’s labour law framework was fragmented across numerous statutes governing trade unions, employment conditions, and dispute resolution. To simplify and modernise these laws, the Industrial Relations Code, 2020 was enacted and brought into force as part of a bundle of four labour codes. These codes consolidated multiple older laws, including:
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Need for the Amendment:
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- Although the 2020 Code provided for the repeal of the legacy legislations through Section 104’s savings provisions, the government argued that the automatic operation of the repeal could be open to future legal challenges on procedural grounds. The amendment was introduced to explicitly clarify the statutory status of the repeal, removing any scope for ambiguity or unwarranted complications in future judicial interpretation.
- The government’s position emphasised that:
- The repeal of the older statutes had already occurred by operation of law, not by administrative discretion.
- The amendment strengthens legal certainty and stability in industrial relations governance.
- The repeal of the older statutes had already occurred by operation of law, not by administrative discretion.
- Although the 2020 Code provided for the repeal of the legacy legislations through Section 104’s savings provisions, the government argued that the automatic operation of the repeal could be open to future legal challenges on procedural grounds. The amendment was introduced to explicitly clarify the statutory status of the repeal, removing any scope for ambiguity or unwarranted complications in future judicial interpretation.
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Key Provisions of the Industrial Relations Code, 2020:
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- Definitions & Scope – Standardises terms such as “worker,” “wages,” and “strike,” and introduces fixed-term employment with the same statutory benefits as permanent staff.
- Union Recognition & Collective Bargaining – A union with at least 51% worker membership is recognised for negotiation; multiple unions may form a negotiating council.
- Standing Orders – Applicable to establishments with 300 or more workers; covers worker classification, hours, leave, conduct, discipline, and grievance redressal.
- Strikes & Lockouts – Regulated through mandatory notice (14–60 days); strikes include concerted casual leave by 50% or more workers; prohibited during dispute resolution proceedings.
- Lay-off, Retrenchment & Closure – Government approval is required only for establishments with 300 or more workers, easing operations for smaller units.
- Dispute Resolution – Internal works and grievance committees; external resolution through conciliation, arbitration, and industrial tribunals.
- Worker Reskilling Fund – Employers contribute (approximately 15 days’ wages) to support the re-employment of retrenched workers.
- Penalties & Compliance – Fines for illegal strikes or lockouts and procedural violations; compounding of certain offences is permitted.
- Definitions & Scope – Standardises terms such as “worker,” “wages,” and “strike,” and introduces fixed-term employment with the same statutory benefits as permanent staff.
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Conclusion:
The passage of the Industrial Relations Code (Amendment) Bill, 2026 represents a technical yet significant step in India’s labour law reform journey. While the amendment does not introduce substantive changes to workers’ rights, it seeks to strengthen legal clarity within the consolidated industrial relations framework introduced in 2020.
