Key Aspects of the IR Code, 2020:
Consolidation: Replaces the Industrial Disputes Act, 1947, Trade Unions Act, 1926, and Industrial Employment (Standing Orders) Act, 1946.
Applicability: Applies to establishments with 100 or more workers (threshold might vary).
Objectives: Balance employer/employee rights, streamline dispute resolution, ease compliance.
Key Changes Under the New Labour Codes (Including IR Code):
Dispute Resolution: Simplified and faster processes for industrial disputes.
Employment: Easier to hire and fire (with provisions for layoffs/retrenchment).
Working Conditions: Clearer rules for fixed-term employment, mandating benefits like gratuity.
Wages: Redefinition of wages, impacting PF/take-home pay (50% basic pay rule).
Settlement: Full & final settlement within 2 working days of exit.
Can our members through more light on above labour code 2020
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1Consolidation: Replaces the Industrial Disputes Act, 1947, Trade Unions Act, 1926, and Industrial Employment (Standing Orders) Act, 1946.
Applicability: Applies to establishments with 100 or more workers (threshold might vary).
Objectives: Balance employer/employee rights, streamline dispute resolution, ease compliance.
Key Changes Under the New Labour Codes (Including IR Code):
Dispute Resolution: Simplified and faster processes for industrial disputes.
Employment: Easier to hire and fire (with provisions for layoffs/retrenchment).
Working Conditions: Clearer rules for fixed-term employment, mandating benefits like gratuity.
Wages: Redefinition of wages, impacting PF/take-home pay (50% basic pay rule).
Settlement: Full & final settlement within 2 working days of exit.
Can our members through more light on above labour code 2020
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The key aspects and changes under the Industrial Relations Code, 2020, as you've listed are accurate. However, there are more intricate details which might be of interest:
Employment Stability and Security: The IR Code places certain restrictions on strikes and lockouts. Workers in any industrial establishment cannot go on strike without a 60-day notice and during the pendency of proceedings before a Tribunal or a National Industrial Tribunal, and sixty days after the conclusion of such proceedings.
Trade Unions: The code has provisions for the recognition of trade unions, and a negotiation council will be formed for negotiating with the employer. It also provides for a two-tier grievance redressal system comprising of a Grievance Redressal Committee and an Industrial Tribunal.
Reskilling Fund: The IR Code introduces a reskilling fund for training retrenched workers, to which an employer will contribute fifteen days wages last drawn by the worker.
Social Security: The IR Code significantly expands the social security net by including gig workers and platform workers.
Working Hours: The IR Code introduces the concept of a four-day work week but caps the daily working hours at 12.
Working Conditions and Safety Provisions: The IR Code also introduces provisions related to comfortable working conditions, safety, health and welfare of employees.
For more detailed information, you can refer to the https://labour.gov.in/sites/default/..._BILL_2020.pdf
From India, Gurugram
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Employment Stability and Security: The IR Code places certain restrictions on strikes and lockouts. Workers in any industrial establishment cannot go on strike without a 60-day notice and during the pendency of proceedings before a Tribunal or a National Industrial Tribunal, and sixty days after the conclusion of such proceedings.
Trade Unions: The code has provisions for the recognition of trade unions, and a negotiation council will be formed for negotiating with the employer. It also provides for a two-tier grievance redressal system comprising of a Grievance Redressal Committee and an Industrial Tribunal.
Reskilling Fund: The IR Code introduces a reskilling fund for training retrenched workers, to which an employer will contribute fifteen days wages last drawn by the worker.
Social Security: The IR Code significantly expands the social security net by including gig workers and platform workers.
Working Hours: The IR Code introduces the concept of a four-day work week but caps the daily working hours at 12.
Working Conditions and Safety Provisions: The IR Code also introduces provisions related to comfortable working conditions, safety, health and welfare of employees.
For more detailed information, you can refer to the https://labour.gov.in/sites/default/..._BILL_2020.pdf
From India, Gurugram
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There is no substantial changes in these new codes. If you take the Industrial Relations Code, it contains provisions similar to Industrial Disputes Act, Standing Orders Act and Trade Unions Act. Even the definition of worker is similar, The only difference is that when the Standing Orders is applicable to establishments employing 50 (100 under the principal Act) workers, the chapter IV relating to Standing Orders is applicable to establishments employing 300 workers. It is true that there is a provision that an enquiry against an employee should 'ordinarily' be completed within 90 days. Still, what happens if the enquiry is not completed within 90 days what happens?
There is some changes in the number of office bearers in a trade union of workers in unorgansied sector but not in organised sector. Again, by unorganised sector is meant any establishment in which less than 10 workers are normally employed. That is an interesting classification also.
Yes, there is a system for recognition of trade unions under IR Code. We did not have a Central Act to recognise trade unions though we have state Acts in Kerala, Maharashtra, MP and Orissa Acts to recognise trade unions.
The only change in the provisions relating to industrial disputes is that the permission to retrench workmen and close down an establishment is required only for such industrial establishments (factories, mines and plantations) employing 300 workers as against 100 under the ID Act. Another change, though not very significant as far as an employer or a Personnel Manager is concerned is that there will not be Labour Court and the disputes coming under the scope of labour court will now be with Industrial Tribunals. All the other provisions of IR Code are just pasted by copying from ID Act.
I don't find anything which will improve industrial relations and make the process of dispute resolution faster than before.
How can it become easier to hire and fire? True, if you give fixed term appointment to all employees, it will be easy to FIRE but offering FTC employment will be very difficult from the recruitment side because you will not get employable person if you give FTC offers! Therefore, the logic that it is easy to hire and fire is baseless and shameful for HR community as a whole.
I don't think that offering gratuity will attract FTC a better choice for selection. With an FTC appointment, no body will be able to get a job security and respect in the society and he may not even get a loan from any bank!
Coming to the other Codes also we see that there is no much change happened. The repealed Payment of Wages Act also had a provision to pay wages within 7 days of a wage month. Of course, under that Act, an establishment employing 1000 employees were permitted to pay wages within 10 days. But the irony is that no establishment which employs 1000 or more workers would have 10th day as their pay day. This is because such companies would have trade unions and their service conditions would be governed by separate settlements and the chances of paying salary on 10th day would never happen in such situation. The only difference between the Payment of Wages Act and the Chapter IV of the Wage Code is that under the former only employees drawing wages upto Rs 24000 were covered but under the Wages Code it covers every one. Again, suppose if a manager or a person getting salary of one lakh rupees is not paid salary within 7 days, what is the remedy? No remedy is available.
Earlier, we had definition of wages according to circumstance. That is, for calculation of gratuity what is the wages, for payment of overtime what should be considered as wages, or for payment of maternity benefits what will be the wages etc. Now the definition of wages is uniform. Moreover, under the earlier definitions there was some clarity regarding what shall be excluded from total remuneration. Now only some allowances will be excluded and it is excluded subject to a condition. The principle of 50% is the major issue. For example, an employee earning a lot of commission or overtime allowance in the last month of his leaving the organisation will get gratuity more than another person who did not do any overtime or earn any commission in the last month. Similarly, an employee who leaves in the month of his receipt of bonus will get more gratuity than others!! This is because of the weak definition of wages. The definition of wages has been made without application of mind, I would say.
The next point is settlement of unpaid salary within 2 days. What has changed? Nothing. Under the repealed Payment of Wages Act also the same was the situation. But the only difference is that the Payment of Wages Act was applicable to employees drawing salary of not more than Rs 24000 but now that ceiling has been dropped and now it is applicable to all employees. Again, as in the case of salary not paid within 7 days of wage month, if the full and final settlement is not made within 2 days, what is the remedy available?
In short nothing new has come but everything is old only and with this I don't think that India will become investment friendly!!!
From India, Kannur
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There is some changes in the number of office bearers in a trade union of workers in unorgansied sector but not in organised sector. Again, by unorganised sector is meant any establishment in which less than 10 workers are normally employed. That is an interesting classification also.
Yes, there is a system for recognition of trade unions under IR Code. We did not have a Central Act to recognise trade unions though we have state Acts in Kerala, Maharashtra, MP and Orissa Acts to recognise trade unions.
The only change in the provisions relating to industrial disputes is that the permission to retrench workmen and close down an establishment is required only for such industrial establishments (factories, mines and plantations) employing 300 workers as against 100 under the ID Act. Another change, though not very significant as far as an employer or a Personnel Manager is concerned is that there will not be Labour Court and the disputes coming under the scope of labour court will now be with Industrial Tribunals. All the other provisions of IR Code are just pasted by copying from ID Act.
I don't find anything which will improve industrial relations and make the process of dispute resolution faster than before.
How can it become easier to hire and fire? True, if you give fixed term appointment to all employees, it will be easy to FIRE but offering FTC employment will be very difficult from the recruitment side because you will not get employable person if you give FTC offers! Therefore, the logic that it is easy to hire and fire is baseless and shameful for HR community as a whole.
I don't think that offering gratuity will attract FTC a better choice for selection. With an FTC appointment, no body will be able to get a job security and respect in the society and he may not even get a loan from any bank!
Coming to the other Codes also we see that there is no much change happened. The repealed Payment of Wages Act also had a provision to pay wages within 7 days of a wage month. Of course, under that Act, an establishment employing 1000 employees were permitted to pay wages within 10 days. But the irony is that no establishment which employs 1000 or more workers would have 10th day as their pay day. This is because such companies would have trade unions and their service conditions would be governed by separate settlements and the chances of paying salary on 10th day would never happen in such situation. The only difference between the Payment of Wages Act and the Chapter IV of the Wage Code is that under the former only employees drawing wages upto Rs 24000 were covered but under the Wages Code it covers every one. Again, suppose if a manager or a person getting salary of one lakh rupees is not paid salary within 7 days, what is the remedy? No remedy is available.
Earlier, we had definition of wages according to circumstance. That is, for calculation of gratuity what is the wages, for payment of overtime what should be considered as wages, or for payment of maternity benefits what will be the wages etc. Now the definition of wages is uniform. Moreover, under the earlier definitions there was some clarity regarding what shall be excluded from total remuneration. Now only some allowances will be excluded and it is excluded subject to a condition. The principle of 50% is the major issue. For example, an employee earning a lot of commission or overtime allowance in the last month of his leaving the organisation will get gratuity more than another person who did not do any overtime or earn any commission in the last month. Similarly, an employee who leaves in the month of his receipt of bonus will get more gratuity than others!! This is because of the weak definition of wages. The definition of wages has been made without application of mind, I would say.
The next point is settlement of unpaid salary within 2 days. What has changed? Nothing. Under the repealed Payment of Wages Act also the same was the situation. But the only difference is that the Payment of Wages Act was applicable to employees drawing salary of not more than Rs 24000 but now that ceiling has been dropped and now it is applicable to all employees. Again, as in the case of salary not paid within 7 days of wage month, if the full and final settlement is not made within 2 days, what is the remedy available?
In short nothing new has come but everything is old only and with this I don't think that India will become investment friendly!!!
From India, Kannur
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The Industrial Relations Code, 2020 has indeed been introduced as a consolidated version of three previous acts. While the points you've raised bring into light some concerns relating to the implementation of the code, it's also important to note the intention behind its introduction. The government aims to simplify and consolidate numerous labor laws into a more manageable and understandable format.
Regarding the concern about the Standing Orders, the increase in the threshold is intended to reduce the regulatory burden on smaller establishments. The provision that an inquiry against an employee should 'ordinarily' be completed within 90 days is indeed not very clear. However, the aim is likely to expedite the inquiry process. If it is not completed within 90 days, it would be advisable for the aggrieved party to approach the relevant legal authorities for redressal.
The trade union recognition system under the IR Code is an important development. It should provide a more structured approach to trade union recognition and their operation in the industrial relations sphere.
The change in the provisions relating to industrial disputes is significant as it increases the threshold for requiring permission to retrench workers and close down establishments. This is likely to have an impact on larger establishments. The shift from Labour Court to Industrial Tribunals is intended to streamline the dispute resolution process, although the impact of this change remains to be seen.
The point about hiring and firing under fixed-term contracts is valid. It is indeed a concern that fixed-term contracts might lead to job insecurity. However, it should be noted that fixed-term contracts can also provide flexibility to both employers and employees, particularly in industries where work is project-based or seasonal.
The change in the definition of wages and the principle of 50% is indeed a major shift. It can potentially lead to changes in the calculation of various benefits. It would be advisable for employers to carefully review their wage structure in light of these changes.
Overall, the IR Code, 2020 introduces several changes to the industrial relations landscape. However, as with any new legislation, the impact of these changes will largely depend on how they are implemented in practice. It would be beneficial for employers, employees, and trade unions to stay updated with these changes and seek legal advice where necessary.
From India, Gurugram
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Regarding the concern about the Standing Orders, the increase in the threshold is intended to reduce the regulatory burden on smaller establishments. The provision that an inquiry against an employee should 'ordinarily' be completed within 90 days is indeed not very clear. However, the aim is likely to expedite the inquiry process. If it is not completed within 90 days, it would be advisable for the aggrieved party to approach the relevant legal authorities for redressal.
The trade union recognition system under the IR Code is an important development. It should provide a more structured approach to trade union recognition and their operation in the industrial relations sphere.
The change in the provisions relating to industrial disputes is significant as it increases the threshold for requiring permission to retrench workers and close down establishments. This is likely to have an impact on larger establishments. The shift from Labour Court to Industrial Tribunals is intended to streamline the dispute resolution process, although the impact of this change remains to be seen.
The point about hiring and firing under fixed-term contracts is valid. It is indeed a concern that fixed-term contracts might lead to job insecurity. However, it should be noted that fixed-term contracts can also provide flexibility to both employers and employees, particularly in industries where work is project-based or seasonal.
The change in the definition of wages and the principle of 50% is indeed a major shift. It can potentially lead to changes in the calculation of various benefits. It would be advisable for employers to carefully review their wage structure in light of these changes.
Overall, the IR Code, 2020 introduces several changes to the industrial relations landscape. However, as with any new legislation, the impact of these changes will largely depend on how they are implemented in practice. It would be beneficial for employers, employees, and trade unions to stay updated with these changes and seek legal advice where necessary.
From India, Gurugram
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Industrial Relations Code 2020.pdf
Doraisamy-kumar
Thanks sirCiteHR.AI
(Fact Checked)-Your detailed analysis is largely accurate. However, the IR Code does aim to simplify dispute resolution and provide flexibility in hiring. The impact on industrial relations remains to be seen. (1 Acknowledge point)