New Delhi, Nov 23 The Industrial Relations Code, 2020 strengthens collective bargaining, dispute resolution, and job security through clearer, uniform provisions. The Code empowers workers with uniform definitions while granting employers greater flexibility in operations and ease of doing business. Overall, it aims to foster industrial peace, boosts productivity, and supports a balanced, growth-oriented work environment, according to an official statement issued on Sunday.
To ensure that more workers have access to basic labour rights, the definition of ‘worker’ has been expanded to include sales promotion employees, working journalists, and supervisory employees earning up to Rs 18,000 per month, thereby extending statutory labour protections to a wider segment of the workforce.
National Commission on Labour highlighted a need to rationalise and simplify the exiting labour laws with an aim to protect interests of the workers. Consolidation of three existing laws -- Industrial Disputes Act 1947, Trade Unions Act 1926 And Industrial Employment (Standing Orders) Act 1946 -- into The Industrial Relations Code, 2020 is a step in this direction.
The Industrial Relations Code, 2020 is designed to consolidate & amend the laws regarding trade Unions, retrenchment, industrial disputes and simplifying compliance by providing uniform definitions. The Code seeks to promote industrial harmony by balancing worker protection with business flexibility and facilitating ease of Doing Business.
With the introduction of The Industrial Relations Code, 2020 the number of rules has been reduced from 105 to 51, number of forms from 37 to 18 and number of registers from 3 to zero, thereby reducing the overall compliance burden to spur employment, the statement explains. It provides for access to benefits like healthcare and sick leave.
The code expands the definition of “Industry” to encompass any systematic activity carried on by cooperation between employer and worker, regardless of whether capital is invested or profit is intended, thereby bringing non-profit and low-capital activities within its ambit.
It extends labour rights to employees in non-profit and non-capital-based organisations and expands access to formal dispute resolution through Conciliation Officers and Industrial Tribunals. Collective bargaining rights are now available to more workers
A single, consistent definition of wages has been applicable across all labour codes. The Industrial Relations Code, 2020 provides the 50 per cent ceiling on exclusions to ensure that statutory benefits such as gratuity, retrenchment compensation, and social security contributions are calculated on a fair and substantial portion of actual earnings, preventing employers from artificially splitting wages to reduce obligations. Legally, this aligns with the principle of beneficial construction in social welfare legislation, giving courts a clear statutory basis to protect workers’ entitlements and reducing ambiguity that previously led to disputes.
Trade unions that previously lacked formal recognition now have a clear pathway to legal recognition. A union with 51 per cent membership in an establishment can be categorised as a Negotiating Union with exclusive rights to represent workers in collective bargaining and grievance redressal. In case this threshold is not met, the Negotiating Council shall be constituted, comprising representatives of all trade unions with at least 20 per cent membership, the statement further explained.
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