Industrial Relations Code 2020

Industrial relations is essentially about how an organisation and its workforce work together, communicate, and resolve disagreements. It covers everything from employment conditions and trade-union relationships to employee grievances, collective bargaining, workplace disputes, strikes and retrenchment.
For a long time, different parts of this relationship were governed by different laws, and they were quite a handful, overlapping with each other, with ambiguities and repetitions on which sections to follow for different circumstances.
The challenge was that HR teams had to track all three separately, even though they were interconnected.
The Industrial Relations Code, 2020 (IRC 2020) is a move by the government to bring several of these laws into a single framework. For HR teams, this is a blessing, as it becomes much easier to meet all compliance requirements for employers.

What is the Industrial Relations Code, 2020?

The Industrial Relations Code, 2020 consolidates three major central labor laws: the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947.
The consolidation aimed to simplify a labor-law framework that had evolved across different periods, often creating overlapping definitions, processes, and compliance requirements for employers.
The scale of this change is significant: the three earlier laws contained 614 sections, while the Industrial Relations Code consolidates them into 140 sections across 14 chapters.

Where Does IRC 2020 Fit Into India’s Labour-Code Reform?

You must know that IRC 2020 is also one of India’s four Labor Codes. The other three are the Code on Wages 2019, the Occupational Safety, Health and Working Conditions Code 2020, and the Code on Social Security 2020. Together, these codes rationalise 29 central labor laws into four broader frameworks.
This distinction matters for HR because the four Codes cover different parts of the employment lifecycle. IRC 2020 is the one to look at when the question involves collective representation, trade unions, standing orders, or industrial disputes.

Timeline

The Code’s journey began in 2020:

The Core Objective of the IRC 2020

• For employers, the Industrial Relations Code makes for simpler and more streamlined compliance.
• For workers and trade unions, it means defined processes around representation, grievances, and industrial disputes.
• And for both sides, the Code aims to create clearer mechanisms for resolving disagreements and maintaining industrial harmony.

For HRs, the IRC touches on some of the situations that can have the biggest impact on an organization and its workforce, from trade-union relationships and employee grievances to strikes, industrial disputes, retrenchment, lay-offs and closure.

Applicability and Coverage

The first question most HR teams are likely to ask is: Does the Industrial Relations Code, 2020 apply to my organization?
Broadly, the Code applies to industrial establishments across India, but not every provision kicks in for every establishment in the same way. Some requirements depend on the size of the workforce, the nature of the establishment, or the type of workers involved.
That means applicability isn’t simply a matter of asking whether your organization is covered by the Code; it goes deeper and is dependent on the workforce and employment setup.
Some of the Code’s requirements are linked to specific workforce thresholds.
For example, standing-order requirements apply to industrial establishments with 300 or more workers. If your organization crosses this threshold, the rules around formally documenting and communicating conditions of employment become particularly relevant.
The Code also provides for Grievance Redressal Committees in establishments employing 20 or more workers. For HR, this is important because a formal mechanism for handling individual employee grievances can help address issues before they develop into larger workplace disputes that cost the organization more than just money.
So, when assessing compliance, workforce size crossing a particular threshold brings additional obligations into play.
The Code also covers registered trade unions, making it relevant wherever collective worker representation and trade-union relationships form part of the organization’s industrial-relations scope.
Whether an establishment falls under the Central or state sphere can affect which government authority, rules and procedures HR needs to refer to for compliance. So before applying a provision, it’s worth checking three things:

• Is the establishment covered?
• Does the workforce meet the relevant threshold?
• Does the nature of the employment relationship or type of worker bring additional provisions into play?
• Does the establishment fall under the Central or state sphere?

Key Provisions of the Industrial Relations Code

The easiest way to understand the Code is to look at the provisions through the situations they deal with:

• Who counts as a worker
• When standing orders are required
• How trade unions are organized
• How grievances are handled
• What employers need to know when workforce restructuring becomes necessary

Worker Definition and Classification

The IRC broadens the definition of “worker” to include roles like working journalists and sales promotion employees. It excludes those in supervisory roles earning more than ₹18,000/month, apprentices under the Apprentices Act, and military/police personnel.

What does this mean for HR?

The job title alone can be misleading, leading one to assume someone is a worker under the Code. Refer to the statutory definition and consider the nature of the role.

Standing Orders

Establishments with 300 or more workers must implement certified standing orders. These need to detail worker classifications, working hours, leave policies, wage structures, grievance protocols, and termination procedures.
But there’s an important caveat for HR to understand. The Code only provides for model standing orders, for employers to use as a basis for their own standing orders.

What does this mean for HR?

HR and employers need to prepare their standing orders in accordance with the applicable requirements and have them certified through the prescribed process.

Trade Unions: Registration and Recognition

Chapter III deals with trade unions, including registration and rights and obligations that come with the registered status. The registration process gives a union formal legal recognition under the framework and establishes the conditions it needs to meet to operate as a registered trade union.
But registration and recognition for collective bargaining aren’t the same thing. The Code clearly lays out guidelines to determine which union represents workers, if there are multiple unions in an organization.
A Sole Negotiating Union requires 51% or more workers. If no union reaches that threshold, a Negotiating Council can be constituted from unions meeting the prescribed membership threshold. A Negotiating Council requires at least 20% of workers’ support.

Bipartite Forums and Worker Representation

The Code throws light on bipartite forums, where employer and worker representatives are brought together to address matters affecting the workplace.
One such mechanism is the Works Committee, applicable to establishments employing 100 or more workers, where the appropriate government requires its constitution. It’s intended to promote measures for maintaining good relations between employers and workers and to address matters of common interest.

Grievance Redressal Committee

If an establishment employs 20 or more workers, it must establish a Grievance Redressal Committee (GRC). The committee should have up to 10 members, equally representing employers and workers, with women members fairly represented. Unresolved issues escalate to conciliation or Industrial Tribunals. Misconduct inquiries must be closed within 90 days of suspension.

What does this mean for HR?

It helps identify and resolve employee concerns early.

Industrial Disputes and Their Resolution

When other measures don’t work, and a workplace issue beyond an individual grievance becomes an industrial dispute, the Code provides a structured process for resolving it. Depending on the nature of the dispute and the stage it reaches, the process can involve conciliation offers, Industrial Tribunals and National Industrial Tribunals.

Strikes and Lockouts

The Industrial Relations Code, 2020 lays down specific notice and procedural requirements for strikes and lockouts, extending the regulatory framework beyond public utility services. More on this in later sections. It also brings mass casual leave within the definition of a strike.

What does this mean for HR?

Industrial action needs to be assessed carefully against the Code’s applicable notice, timing, and procedural requirements rather than treated simply as an operational issue. The specific conditions and timelines governing strikes and lockouts are discussed in the relevant sections below.

Lay-offs, Retrenchment and Closure

It deals with lay-offs, retrenchment and closure, including notice and compensation requirements. For establishments covered by the relevant threshold, prior government permission is also required before certain lay-offs, retrenchments, or closures can be carried out.
For establishments employing 300 or more workers, government approval is required for layoffs, retrenchments, or closures. Retrenchment mandates a 30-day notice or equivalent wages, and compensation of 15 days’ wages per completed year.
The Code also introduces a Worker Re-Skilling Fund, intended to support workers who lose employment as a result of retrenchment.

What does this mean for HR?

The process, approvals, and statutory requirements need to be considered before workforce restructuring decisions need to be implemented.

Fixed-Term Employment

Fixed-term workers must be issued written contracts. These employees are entitled to equal wages, statutory benefits, and gratuity after one year, on par with permanent workers.

What does this mean for HR?

HR teams can hire workers for a fixed period while offering them benefits similar to permanent employees, making workforce planning more flexible.

Contract Labor and Inter-State Workers

The employment model doesn’t necessarily take industrial relations compliance off the table. Organizations need to understand which provisions apply to their workers, contractors and establishments.
Core activities cannot be outsourced via contract labor, except when such work is traditionally performed by contractors or is urgent/temporary. Inter-state migrant workers must be registered via a government portal.

What does this mean for HR?

Helpful for HR and procurement teams where an organization relies on contractors or engages workers who move across state boundaries.

Major Sections

The Code is organised into 14 chapters, each dealing with a different part of the industrial-relations framework:

Industrial Dispute Resolution Mechanism

Like any other confrontation, not every workplace disagreement needs to end up in court, or even before a Tribunal. The Code creates a step-by-step mechanism for resolving industrial disputes, with the aim of giving employers and workers opportunities to settle matters before they move into formal adjudication.
Here’s how the process broadly works:

Step 1: Try Conciliation First

When a dispute arises, or one is on the horizon, a conciliation officer can step in to help the parties reach a settlement.
Under Section 43, the appropriate government can appoint conciliation officers for a particular area, industry, or group of industries, either permanently or for a specified period. Their role is to investigate the dispute, bring the parties together, and try to help them reach a fair and amicable settlement.
The goal is to resolve the dispute before it needs to go further.
Under Section 53, a conciliation officer must generally submit a report within 45 days of the start of conciliation proceedings. When the dispute relates to a notice of strike or lock-out, the report is due within 14 days. The parties can agree in writing to an extension, subject to the conciliation officer’s approval.

Step 2: Voluntary arbitration is another option

What if both sides would rather have an arbitrator decide the dispute? Section 42 allows the employer and workers to voluntarily bring an existing or anticipated dispute to arbitration, if they agree to do so in writing. The parties can specify the arbitrator or arbitrators in their agreement.
This gives employers and workers an alternative to going through the full adjudication process. If the dispute is referred to arbitration under the Code and the prescribed conditions are met, the resulting award can become binding and enforceable.

Step 3: Take the dispute to an Industrial Tribunal

If conciliation doesn’t resolve the dispute, it may move to an Industrial Tribunal.
Under Section 44, the appropriate government can constitute Industrial Tribunals to adjudicate industrial disputes. A Tribunal consists of a Judicial Member (Legal and judicial expert) and an Administrative Member (Management expert).
The two-member bench handles some of the more significant industrial-relations matters, including disputes concerning:

• Interpretation of standing orders
• Discharge, dismissal, and reinstatement
• Whether a strike or lock-out is legal
• Retrenchment and closure
• Trade union disputes

What About Disputes Involving More Than One State?

This is where the National Tribunal steps in.
Under Section 46, the Central Government can constitute a National Industrial Tribunal where an industrial dispute involves a question of national importance or is likely to affect industrial establishments located in more than one State.

What Happens After the Tribunal Decides?

The Tribunal issues an award, which generally becomes enforceable 30 days after it is communicated to the parties. If the award involves reinstatement and the employer challenges it before a High Court or the Supreme Court, Section 56 provides for payment of wages last drawn during the proceedings, subject to the section’s conditions.
The Code doesn’t provide for a conventional appeal to a higher Tribunal, but awards may be challenged before the High Court or Supreme Court.

Strikes and Lockouts

When a workplace dispute reaches the point of a strike or lockout, things can escalate quickly. Employees may stop work, or an employer may temporarily prevent workers from working. Either way, the impact can go well beyond the immediate dispute and put significant pressure on both sides.
The Industrial Relations Code 2020 doesn’t ban either of them. Instead, it puts clear notice and timing requirements around when workers can strike and when employers can declare a lock-out.

Strikes

A 14-day notice is required before a strike can begin. Unlike the earlier law, the IRC requires notice of a strike across industrial establishments, not just public utility services, giving both sides a chance to resolve disputes before industrial action begins.

What does this mean for HR?

The 14-day window is crucial for HR. It presents an opportunity to bring the parties to the table and attempt conciliation before the dispute ruins operations.

Lockouts

The notice requirement works both ways here. Employers declaring a lockout must give the required notice, and a lockout cannot generally begin within 14 days of giving that notice, and workers cannot suddenly strike.

Can a Strike or Lockout Happen While a Dispute is Being Resolved?

This is where the timing provisions become particularly important.
A strike or lockout cannot generally be commenced:

• During conciliation proceedings before a conciliation officer and for 7 days after those proceedings conclude
• During proceedings before an Industrial Tribunal or National Industrial Tribunal and for 60 days after they conclude
• During certain arbitration proceedings and for 60 days after they conclude
• While a settlement or award covering the relevant matter is in operation

Under Section 63, a strike or lock-out becomes illegal when it is commenced or declared in contravention of the Code’s requirements, including Section 62.
But if a strike or lockout was already legally underway when the dispute was subsequently referred to a Tribunal, National Industrial Tribunal or arbitrator, its continuation doesn’t automatically become illegal merely because the referral was made.
Also, workers who participate in a legal strike aren’t automatically treated as participants in an illegal action merely because the strike disrupts normal operations. The key question is whether the action complies with the Code’s procedural and substantive requirements.

Lay-Off, Retrenchment, and Closure

Whether an organization has to temporarily reduce work, let employees go, or shut down an establishment altogether, HR has to balance business realities with the rights of affected workers.

Layoffs

This means an employer is temporarily unable to provide work to a worker for reasons covered by the Code, for example, a shortage of certain resources, a breakdown of machinery, or other specified circumstances. The worker technically is still employed, but is temporarily not given work.
A laid-off worker is entitled to compensation equivalent to 50% of the total of basic wages and dearness allowance for the days they are laid off, subject to the Code’s Section 66.

Retrenchment

Here, the employer is ending a worker’s employment for reasons covered by the Code.
Before retrenching a worker who falls within the applicable provision, the employer generally needs to provide one month’s written notice stating the reasons for retrenchment, or pay wages in lieu of notice.
The worker is also entitled to retrenchment compensation, calculated at 15 days’ average pay for every completed year of continuous service, or any part of a year exceeding six months, subject to the Code.
For certain industrial establishments employing 300 or more workers, prior permission from the appropriate government is required before carrying out lay-offs, retrenchment, or closure, subject to the specific conditions and exceptions under the Code.

What does this mean for HR?

When selecting workers for retrenchment, keep in mind the last in, first out (LIFO) principle.

What is the Worker Re-Skilling Fund?

This is a goodwill initiative brought in by the Code, where for every retrenched worker, the employer is required to contribute an amount equivalent to 15 days’ wages last drawn by the worker, or such other amount as may be specified, to the Fund. The intention is to give a chance for workers to improve their chances of finding employment again.

Closure

Closure is the permanent closing down of the establishment or part of it, and employers eyeing a closure need to follow the prescribed process, including giving the required notice and, where the threshold applies, obtaining government permission. For cases requiring permission, the Code sets out a formal process for making the application and for the government to consider it.

Central and State Rules

Central Government Rules

The Centre governs procedures related to model standing orders, trade union recognition, tribunal constitution, and portal management for migrant workers. It will also outline the Worker Re-Skilling Fund’s administration.

State Implementation

Because labor is a Concurrent List (List III) of the Seventh Schedule to the Constitution, both the Central Government and state governments have roles to play. This is why HR teams can’t simply read the Central rules and assume they have the complete compliance picture for every establishment in India.

What Happened With the Central Rules?

The first draft Industrial Relations (Central Rules), 2020 was supposed to replace the relevant central rules under the earlier Industrial Disputes Act and the Industrial Employment (Standing Orders) Act, among other provisions.
Stakeholders were given 30 days to submit objections and suggestions.
The draft rules also went into practical details like forms, procedures, and implementation requirements. Separate draft rules were also published on the recognition of negotiating unions/negotiating councils and adjudication of trade-union disputes, as well as model standing orders for different sectors.
For establishments falling under the Central Government’s sphere, the Central rules are relevant. State-sphere establishments also need to look at the rules framed by the relevant state government.

What is the Status of State Rules?

As of the Ministry of Labor and Employment’s December 31, 2024 status update, 32 States/UTs had pre-published draft Industrial Relations Code rules. For some states, the rules are in the draft stage, and for others, it is notified.

Source
State rules generally operationalize the Code rather than rewrite its core provisions. The differences can show up in areas such as prescribed forms, authorities, procedures, registers, notices, and other implementation details.
When will the remaining State rules be notified? Unfortunately, there isn’t a reliable single deadline to give. State governments have their own rule-making processes, and therefore the pace varies from one jurisdiction to another.

What does this mean for HR?

If you have employees across several states, you don’t have to have one single compliance checklist. You may have a common IRC framework with state-specific implementation requirements sitting underneath it. HR teams should track notifications state by state.

Forms and Returns Under IRC 2020

Documentation is central to IRC compliance. Establishments with 300+ workers must submit standing orders and get them certified. GRC records, trade union recognition paperwork, and layoff applications must be meticulously maintained.
Other key documentation includes appointment letters, proof of re-skilling fund deposits, health check reports, and compliance logs for strike/lockout notices. Migrant workers need to be registered on the government portal with Aadhaar-based declarations.
The good news is that the Central Rules bring many of these requirements into prescribed formats. They also lean heavily towards digital compliance, so HR teams should be prepared to maintain and submit several records electronically. Here are some of the key forms to know:

Penalties for Non-Compliance

The penalty depends on the nature of the violation.

If there are repeat offences, there will be higher penalties in certain cases, and the penalty for the second offence can be higher than that of the first.

Can Offences Compound?

Yes, under Section 89, certain offences can be compounded, meaning the prescribed amount can be paid to avoid prosecution for that offence, subject to conditions.
The compounding amount can be:

1. 50% of the maximum fine prescribed for the offence, where the offence is punishable with fine only, or
2. 75% of the maximum fine where the offense is punishable with imprisonment or fine, subject to the Code’s conditions.

Serious offences, those for which the law doesn’t permit compounding, must still go through the normal legal process.

Is Imprisonment Possible?

Yes, the Code provides imprisonment for certain serious violations, with sentences ranging from one month to six months, depending on the offence, including illegal strikes, lockouts, and their instigation or financial support.
Compared to the previous laws that maintained three separate penalty frameworks, the Code consolidates them into a single, structured penalty regime with different levels of punishment depending on the seriousness and recurrence of the violation.

Implementation Status and Recent Updates

The Industrial Relations Code has been on the books since 2020, but being passed and fully operationalized aren’t quite the same thing.
State implementation followed a separate track. The Ministry’s December 2024 status report showed that 32 States/UTs had pre-published draft Industrial Relations Code rules.
HRs need to understand that the draft publication and final notification are two different milestones. A state appearing on the draft-rules list does not necessarily mean its final rules are already in force.
For implementation across all states, there is currently no single date given by the Ministry.

90-Day Compliance Roadmap for Employers

A structured approach to help employers move from assessing their current industrial relations to building more sustainable compliance habits.

Phase 1: Foundation and Assessment (Day 1-30)

The first month is about identifying gaps before implementing changes.

1. Assess your current compliance position

• Review existing trade union relationships, recognition arrangements and collective bargaining practices
• Assess historical industrial disputes, grievance procedures and strike/lockout compliance
• Identify gaps in existing industrial relations policies, processes and documentation

2. Review statutory structures and standing orders

• Assess whether the establishment meets applicable thresholds for Works Committees, Grievance Redressal Committees and standing orders
• Review existing standing orders against applicable requirements and model standing orders
• Verify committee composition, representation, meeting records and other compliance documentation

3. Audit workforce arrangements

• Review contract labor arrangements, contractor documentation and allocation of compliance responsibilities
• Check records relating to inter-state migrant workers

Phase 2: Implementation and System Building (Days 31-60)

Once compliance gaps are identified, the focus should shift to building the necessary structures and processes.

1. Establish and strengthen statutory committees

• Constitute or update Works Committees and Grievance Redressal Committees where required
• Define member responsibilities, meeting processes and documentation requirements

2. Update standing orders and employment frameworks

• Draft, revise or adopt standing orders as applicable
• Complete approval or certification requirements and ensure employees can access the relevant information

3. Build grievance and dispute resolution systems

• Establish clear channels for raising, tracking and resolving grievances
• Train HR teams and managers on grievance handling, dispute prevention and escalation procedures

4. Strengthen collective bargaining processes

• Establish communication protocols with union representatives
• Prepare management teams for collective bargaining and maintain systems for tracking agreements and commitments

Phase 3: Monitoring and Continuous Improvement (Day 61-90)

The final phase focuses on ensuring that compliance systems work in practice and can be sustained over time.

1. Strengthen union-management relationships

• Establish regular consultation and communication mechanisms with worker representatives
• Develop early-warning systems to identify and address potential disputes

2. Test and review compliance systems

• Assess the effectiveness of grievance mechanisms, committees and dispute resolution processes
• Review documentation, timelines and adherence to applicable procedures

3. Build ongoing monitoring processes

• Establish periodic reviews for standing orders, collective agreements and industrial relations practices
• Maintain organized records of committees, grievances, union interactions, industrial action notices and other compliance documentation

4. Plan for continuous improvement

• Update training, communication and grievance procedures based on emerging issues and operational experience
• Build industrial relations compliance into regular HR governance