An Analysis of the Industrial Relations Code Bill 2019

An Analysis of the Industrial Relations Code Bill 2019

Author: Tamanna Gupta, RGNUL


Following events of the last year wherein the government had floated a draft Relations code, recently, the Industrial Relations Code Bill 2019 (Bill No. 364 of 2019) introduced by Minister of State for Labour and Employment SantoshGangawar was approved by the Cabinet, which aims to amalgamate several acts such as The Trade Unions Act (1926), Industrial Employment (Standing Orders) Act 1946 and the Industrial Disputes Act (1947) into one. This event follows the passing of the Code on Wages 2019 by the parliament. The importance of the bill emerges from the fact that it offers flexibility in several provisions, amongst other features.

Which are the acts proposed to be amalgamated under Industrial Relations Code Bill 2019?

The Industrial Relations Code Bill 2019 aims to amalgamate several acts such as The Trade Unions Act (1926), Industrial Employment (Standing Orders) Act 1946 and the Industrial Disputes Act (1947) into one.

Trade Union Act 1926 provided for the establishment of trade unions, which can be defined as an association of workers who congregate for self-preservation and promoting the interests of a collective group.

Industrial Employment (Standing Orders) Act 1946 was formulated primarily to ensure no disparities exist in the terms and conditions of service. It ensures the continuation of harmonious relations between the several factions of an industry.

Industrial Disputes Act 1947 aims to redress disputes between employers and workmen, or amongst workmen or employers themselves. It aims to preserve amicable relations between both parties.

What are the salient features of the bill?

Coverage-The bill has incorporated several changes such as a change in the coverage of the concept of ‘fixed-term employment’, which was earlier limited only to ‘central sphere’ establishments, and now can be applied to industries on a case to case basis.

A threshold of Retrenchment-A proposed change was to be made for the threshold of retrenchment, regarding government permission, wherein government permission for retrenchment was to be capped at 300 employees as opposed to the earlier 100 employees, however, no change was made. The applicability of the bill has also been increased for a pan-India impact. It offers a degree of flexibility in provisions relating to retrenchment.

Fixed Term Employment-The bill offers a framework for the concept of ‘fixed-term employment’, which aims to create stability in the domain of construction and other seasonal work. Under a ‘fixed-term employment’ contract, the middlemen in the form of contractors are removed and the companies can directly hire workers.

Equality of treatment- Workers employed shall be treated equally as compared to regular workers during their tenure. It applies to several fields such as railways, mines, oilfields, etc. Social Security for the workers has been increased, with each worker receiving enhanced compensation in several cases.

Provisions relating to tribunals- The act also provides for the establishment of a two-person tribunal in place of the one person tribunal, for the purposes of speedier disposal of cases.

The penalties-the government can impose penalties in case of default.

Negotiating Union-Introduces the concept of negotiating union, wherein, in cases where more than one Trade Union exists, one can be recognized as a negotiating union.

Skill Training-Training for retrenched employees, for which a special “re-skilling fund” has been established.

Who are the stakeholders who will benefit the most from the act?

Non-Contractual Employees- All non-contractual workers shall enjoy the benefits of the act as under the act, such non-contractual workers have to be employed under a contract regardless of what the duration of employment is. Thus, a non-contractual or seasonal worker shall receive the same benefits which are accorded to workers who are employed under a contract. Other benefits for the workers under this act are enhanced social security coverage, compensation and skill training in case of retrenchment. Also, the non-contractual workers shall be retrenched in the same manner as an employee of the industrial establishment, thus removing the discretion of the employer in case of retrenchment.

Registered Trade Unions-Another faction that derives several benefits from the acts are registered trade unions. With the introduction of the concept of “negotiation union”, the disputes between several trade unions of the same establishment shall cease to exist, as only the negotiating union shall have the right to represent the workers in case of any dispute, rather than any existing trade union. In cases of the existence of several trade unions, a single union has to be chosen for the purposes of negotiation, which reduces the scope of conflict.

Why has the proposed amendment received flak from various factions of society?

Despite such formidable credentials, the bill has been opposed by several factions.

The grounds on which the bill has been opposed are numerous.

Uncertainty- Critics state that uncertainty in provisions relating to retrenchment would lead to the severe exercise of discretion by the management of the company, which can be contrary to the interests of the workers.

Problems in Implementation-The unclear provisions can also lead to problems in the implementation of the provision by the Central and the State government.

Chances of Misuse- It has been rightly stated by Mr. K.R.ShyamSundar, labor economist that several clauses are prone to misuse, and the discretion vested leads to uncertainty, lack of clarity and wrongful implementation which is discriminatory in nature as well as scope for several other lacunae.

Lack of Safeguards- Mr. K.R.ShyamSundar, labor economist also stated that the concept of ‘fixed-term employment’ must be regulated with certain safeguards, lest it is misused by either party to the contract. A policy that aims to please both parties cannot be sustained in the long run.

However, the bill has been heralded by the industry workers and trade unions.

What is the general reaction to this act?

The general reaction to the act has been positive, with several trade unions and employees heralding the actions of the government.

The code if promulgated properly shall result in a harmonious scenario in industry-related establishments, states Aditya Mishra, CEO of a recruiting firm CIEL HR Services. A cascade of such progressive changes in laws governing trade unions and employability is motivating. “It showcases the government’s action to creating an eco-system for growth and job creation,” quips Mrs. RituparnaChakraborty, The Senior Vice-President of the company TeamLease.

However, despite the consensus of opinion of most trade unions, some trade unions feel this code is contrary to the aspirations of the working classes.

Mr. AmarjeetKaur, General Secretary of the All India Trade Union Congress believes that the code aims to suppress and destroy trade unions by removing methods of the process of collective bargaining including imposing restrictions on the right to strike, right to represent collective interests of workers, especially the unorganized sector of workers which constitutes more than 90 percent of the existing workforce. The code encourages and defends fix term employment as against job-security acquired over many decades of struggle.


It is imperative that in order to meet global standards of work ethic and provisions for the protection of several parties in the company, an act in this direction is a welcome step. The benefits which are accorded to the workers are a progressive step, which shall be implemented on a Pan-India basis. Several steps such as the Code on Wages 2019 have been introduced and promulgated for the benefit of the workers, and this bill is a step in the right direction.