Salient Features of Industrial Relations Code-2019

The next one code which has now been presented in Lok Sabha on 28.11.2019 subsumes The Industrial Disputes Act 1947, Trade Unions Act 1926 and Industrial Employment (S.O.) Act, 1946. It has 104 sections in all along with three schedules.

The highlights of the I.R. Code are as follows:

1.    The code has been divided into fourteen chapters consisting of 104 sections in all. There are 39 definitions . There is a new definition of Employee. It was not defined earlier in any of the acts which are now proposed to be amalgamated in the present new code. It includes any person except apprentice engaged under Apprentices Act 1961. It includes supervisory, managerial and administrative work done by the person. In the definition of the employer, contractor has been included as employer, which was not earlier in specific terms.

2.    A new definition of fixed term employment has been introduced. It clarifies that the person appointed for a fixed term on written contract will be entitled to equal wages, allowances and benefits available to a permanent worker doing same or similar nature of work. Person appointed on fixed term will also be entitled to all statutory benefits in proportion to his service period even if specific statute does not make him qualify for such benefit. The impact of this will be that if a person is appointed on fixed term for a period of less than five years, he will be entitled to gratuity at the time of expiry of his period in proportion to the period of service even if provisions of Payment of Gratuity Act do not make such person qualified for the gratuity.

3.    The definition of the Industry has been made wide in lines of the SC Judgment in Bangalore water supply case but institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service are excluded. It means that the hospitals, education institutions and other institutions owned or managed by organisations engaged in activities as mentioned above would not be covered under the provisions of the code which is a big shift from the present situation. Presently educational and medical institutions are covered under the Industrial Disputes Act. Now the nature of activities of the institution in question would be immaterial. What would be material is the nature of activities of the organisation which runs or manages such institution even if has commercial or business elements. It also empowers Govt. to specify any other activity which could be excluded from the definition of Industry.

4.    Definition of lay off has been curtailed. Explanation provided to the definition at present in the I.D. Act is removed.

5.    In the definition of retrenchment, exclusion of termination due to continued ill health has now been removed. It means that if a worker is terminated due to continued ill health without complying retrenchment provisions, it would be illegal. Earlier it was not like that. Keeping in mind the new provision, the employer either has to terminate such worker after completing the process of disciplinary proceedings or complying with retrenchment provisions. The word continued ill health has also been defined, which should have been done to remove the ambiguity.

6.    Definition of strike has been expanded. Now it includes also the mass casual leave by 50 % or more workers on a given day.

7.    New definition of trade union dispute has been introduced. It means any dispute relating to trade union between two or more trade unions or between the members of a trade union. Any such dispute will now be resolved/adjudicated by the Industrial tribunal and not by the civil court. Till now such matters fall within the jurisdiction of civil court.

8.    Definition of wages is the same as provided in Code on wages Act 2019. Wages means basic pay, dearness allowance and retaining allowance but does not include allowances as mentioned in clauses from (a) to (k) of (zl) subject to the condition that if allowances are more than 50% of wages , excess of such 50% will be deemed as wages. The net result of this will be that workers will be entitled to all benefits at least on 50 % of remuneration so paid to them.

9.    Workman as defined in I.D. Act has now been renamed as worker. The definition now excludes apprentice as defined. Apprentice has been defined in Sec. 2 (aa). But to the surprise the code bill copy presented in Lok sabha and as available on internet does not contains Sec. 2 (aa). The definition of the worker excludes person employed in a supervisory capacity drawing wage exceeding 15,000/- per month. At present it is Rs. 10,000/

10.  Sec. 4 provides for setting up a grievance redressal committee where twenty or more workers are employed. It differs from earlier provision provided in sec.9-C of I.D. Act. Earlier it was not necessary for the workman to raise its grievance before the committee prior to moving to conciliation officer. Now it has been made necessary. First worker has to file application of dispute before the committee within three years of cause of action of such dispute. The committee will complete its proceedings within 30 days of receipt of the application. If the worker is not satisfied with the decision of the committee or grievance is not resolved within the time of 30 days of receipt of application, worker may move to conciliation within 60 days from the date of the decision of the committee. It means now worker cannot go to the conciliation officer directly. First he has to approach the committee for redressal of his grievance.

11.    In chapter III of trade unions, a new sec. 14 has been introduced. It is about recognition of negotiating union or negotiating council. Where there is only one union in the establishment, employer shall recognise that union as sole negotiating union of the workers. If there is more than one union in the establishment, union having 75% or more of the workers on the muster roll of the establishment shall be declared as sole negotiating union. If no union is having 75% or more workers, then a council would be constituted by the Govt. of each representative having 10% of workers with such union. For example if one union is having 40% of workers, their four representatives will get berth in the council. Any fraction of 10% will not be taken into account. Such constituted negotiating council will be valid for three years.

12.  Chapter IV relating to standing orders has been made applicable to industrial establishment where 100 or more workers are employed. Till standing orders are certified, model standing orders shall be deemed to have been adopted by such establishment. Coverage of this chapter being made applicable on industrial establishment and the term” Industrial Establishment” as defined means carrying activity of industry. The impact of this meaning will be far reaching. Except the activities specifically excluded in the definition of industry, it will be applicable on all industrial activities.

13.  Time limit for completing the disciplinary proceedings against the worker has been introduced through sec.38. This section provides that investigation and Inquiry will have to be completed within 90 days from the date of suspension of worker. Till now it was no where prescribed in any act, though supreme court in the case of Prem Nath Bali vs. Registrar High Court of Delhi 2016 I CLR 321; 2016 (148) FLR 736 has held that Inquiry should be completed within a period of six months and if not possible due to nature of inquiry, should be completed within one year. 

14.    Chapter VII provides mechanism for resolution of industrial disputes. As per sec. 44 now the Industrial tribunal will consist of two members out of whom one shall be judicial member and the other will be administrative member. Sec. 47 says that it will adjudicate the disputes as bench. Till now it has been only one member tribunal. The decision will be by consensus. In case of difference, the point will be referred to the appropriate Govt, on which the Govt. will appoint a judicial member of other tribunal to hear the point himself and shall be decided according to majority of decision.

15.   There is a new provision of limitation of raising industrial dispute before conciliation officer. Sec. 53 provides three years limit for the purpose. The conciliation officer shall send the report of settlement or otherwise to the concerned parties and appropriate Govt. within 45 days or shorter period. However, this period may further be extended with the approval of conciliation officer. After receiving the report from conciliation officer if not settled, the party may make application to tribunal within 90 days from the date of such receipt of the report for adjudication.

16.  Strike provision in new code has some changes and now it becomes difficult for workers/union to go on strike easily. Now they have to give notice of 14 days. At present in I.D. Act, this precondition is only applicable on public utility service industries. Now it is made applicable on all Industrial establishments. The sec.62 of strike is similar to the resent Sec. 22 of ID Act.

17.    A new chapter XI has been introduced which is all about of worker re-skilling fund. The chapter carry one section only which is numbered as 83. According to the provision the employer will be required to deposit an amount equal to fifteen days last drawn wages of every retrenched worker.

18.  Penalties provisions have been made more stringent. An employer employing more than 100 workers if lay off or retrench his workers without obtaining prior permission and complying with the related provisions shall be liable to be fined from 1 lakh to 10 lakh rupees. For repeated offence/violation of these provisions, fine will be from 5 lakh to 20 lakh rupees or with imprisonment up to six months or both. For unfair labour practice the fine is from 10 K to 2 lakh. For second offence it is from 50k to 5 lkah or imprisonment up to 3 months or both.

19.  Sec. 86 defines different penalties for different offences/violations. Failure to submit draft standing orders for certification attracts penalty of 50k to 2 lakh.