Industrial Relations Code Bill 2019 – Assessing Need for Labour Law Reforms

It is often said – labor and employment reforms structure the workplace. These reforms define ‘What regulations employers and employees are responsible for?’.

To neglect such labor reforms and work ahead in the industry is an impractical thought. Like for entrepreneurs, ease of doing business policies of government assures them compliance advantages, in an equal way reform assured for labor brings them security and pledged support from the government.

In India, labor reforms were coded long years back. Many situations came, where the government found these reforms conflicting and posing difficulties in labor management. Even for entities, placing a compliance report for all 44 labor reforms was cumbersome and problematic.

Thus, to make it more rewarding in terms of compliance and implementation, government subsumed all 44 labor reforms to a group of major 4 labor codes –

  • The Code on Wages
  • The Code on Social Security, 2019
  • The Occupational Safety, Health, and Working Conditions Code, 2019
  • The Industrial Relations Code, 2019

In this post, you will get to know all about the Industrial Relations Code Bill, 2019

Legal Background:

  • The bill has received assent from Union Cabinet on 20th November 2019.
  • The bill was introduced in Lok Sabha on 28th November 2019 and still awaits approval from both the houses.

The bill standing alone will subsume 3 labor laws – The Industrial Dispute Act, 1947, The Trade Union Act, 1926 and The Industrial Employment (Standing orders) Act, 1946. 

Quick Summary of the Code

#1 Formation of Committees:  

A working committee is to be formed in an Industrial establishment holding 100 or more workers which will prepare code for better relations between the employer and the employees. A redressal committee shall have to be formed in establishments with 20 employees or more for resolution of disputes.

#2 Registrations of Trade Unions:

Any group of seven members or more can apply for registration as a Trade Union under the code. No trade union in an establishment of workers can register until it holds 10% or 100 workers whichever is less of the total of the entity in it. The code prescribes for an online application for registration of trade union with declarations from members, copy of rule book, resolutions adopted if any and filling of compliance reports to Registrar timely in a prescribed manner. The code also states for rules of membership, legal existence, tribunal and penalties for trade unions.

#3 Standing Orders:  

Standing orders in the Code prescribe for rules and orders guiding the conduct of workmen in an industrial unit. The Code provides powers of Central Government to place model of standing orders for industries and entities governed by the code, which will be based on certain matters related to labor reforms. Subjecting to the classification criteria of Industrial Units, the owners of units have to abide by the standing orders of the Central Government (CG) and place certain standing orders in their units after getting them certified from a certifying officer.

#4 Notice of Change:

Chapter V of the Code prescribes the issue of notice of the change to workers prior to making any changes in their service/work policy. For all matters prescribed in the Third Schedule of the bill, a notice to the person concerned is to be issued.

#5 Disputes & Arbitration:   

The Code in detail provides provisions for arbitrations to disputes with written agreements. On preparation of an arbitrator agreement, it shall have to be submitted to the appropriate government through a conciliation officer. No rule under Arbitrations and Conciliation Act, 1996 shall apply to arbitrations under these sections.

#6 Resolution of Industrial Disputes:  

The Code provides for the appointment of a conciliation officer for mediating in between industrial disputes. The Bill also prescribes for Industrial tribunals to be held by the bench of a Judicial Member and an Administrative Member which further policies for settlement of disputes.

#7 Strikes and Lockouts:  

As prescribed in the bill, this labor code states that no person employed in any industrial establishment shall go on strike without issuing a notice of strike to the employer. No lockout of the industrial unit shall be permitted without the issue of proper notice or specifying the reasons therein.

#8 Layoff, Retrenchment and Closure:

The Code restricts industrial units from terminating service contracts with their employees on terms of shortage of resources, break down of machinery, etc. Employers running industrial units with 100 workers or more shall have to take prior permission of the Central Government or state government before retrenchment, layoff or closure. For a person in default or contravention of any of the provisions, a penal fine of Rs one lakh shall be charged which can even extend to Rs 10 lakh.

#9 Re-skilling fund and Labour Practises: 

The Code commands for setting up of a re-skilling fund by the employer and prohibits all entities registered under the code from doing any unfair labor practices.

#10 Offences and Penalties: In case of contravention of provisions or acts done to deceive or with the intent of some self-benefit against the provisions of the bill, the Code provides all penal actions and punishments.

Refer links:

Being a positive move towards ease in compliance, the Code holds positive reforms for the industry. 

The filing of annual return with ROC is mandatory compliance!

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