The Industrial Relations Code 2020: standing orders, strikes, and the 300-worker threshold

What it replaces

The IR Code subsumes three central statutes that together define the legal architecture of industrial relations in India.

The Trade Unions Act, 1926 governed registration of trade unions, immunity from civil and criminal liability for trade-dispute activity, and the legal personality of the registered union. The 1926 Act had no statutory recognition mechanism — only registration. Recognition of a union as the bargaining agent depended on the 1958 Code of Discipline and on State legislation in a handful of States (Maharashtra Recognition of Trade Unions Act, 1971 being the principal example).

The Industrial Employment (Standing Orders) Act, 1946 required industrial establishments employing 100 or more workers to certify standing orders specifying conditions of employment — categorisation, hours, shifts, leave, attendance, misconduct, and disciplinary procedure. The First Schedule of the 1946 Act listed the matters; the certifying officer adjudicated draft orders against model orders.

The Industrial Disputes Act, 1947 was the foundational statute. It defined "industry" in Section 2(j), "industrial dispute" in Section 2(k), "workman" in Section 2(s), and supplied the architecture of conciliation, voluntary arbitration, Labour Courts, Industrial Tribunals and National Tribunals. Chapter V-A and V-B governed lay-off, retrenchment and closure — with the 100-worker threshold in Section 25K triggering the Government's prior-permission requirement.

The IR Code consolidates these three into a single instrument of fourteen Chapters, 104 sections and three Schedules — the largest of the four labour Codes by numbered sections.

Fixed-term employment

The IR Code's single most consequential drafting choice sits in Section 2(o), which gives statutory recognition to fixed-term employment for the first time in Indian industrial law.

The definition. "Fixed term employment" means engagement of a worker on a written contract for a fixed period. The fixed-term worker is entitled to the same hours of work, wages, allowances and other benefits as a permanent worker doing the same or similar work. Importantly, the fixed-term worker is entitled to gratuity on a pro-rata basis for any period of continuous service — without the five-year qualifying period of the Payment of Gratuity Act, 1972. The Code on Social Security, 2020 Section 53A operationalises the pro-rata calculation.

The reverse-side consequence. Section 2(zh) of the IR Code — defining "retrenchment" — excludes termination of service of a fixed-term worker as a result of the non-renewal of the contract or by efflux of time. The fixed-term contract ends on its terms; no notice, no compensation, no retrenchment process. This is the doctrinal reversal of State Bank of India v. N. Sundara Money (1976) 1 SCC 822, which held that non-renewal of a fixed-term contract amounts to retrenchment.

Practical consequence. The fixed-term contract becomes the preferred project-staffing instrument. Companies that previously hired through contractors or through "temporary" arrangements pay the post-SAIL contract-labour litigation tax; companies that previously hired permanent workers carry the retrenchment-compensation burden. The FTC sits between — offering project-duration certainty for the employer, statutory parity of treatment for the worker, and pro-rata gratuity from day one of completed service.

The caution. Sundara Money remains good law for oral or unwritten fixed-term arrangements and for FTC terminations that pre-date 21 November 2025 commencement. Written FTCs entered into or terminated on or after commencement are governed by Section 2(zh)'s proviso and fall outside the retrenchment-compensation regime.

Worker definition and the supervisory exclusion

Section 2(zr) defines "worker" — replacing the old "workman" in Section 2(s) ID Act 1947 with gender-neutral language. The substantive definition tracks the old: a person employed in any industrial establishment to do skilled, semi-skilled, unskilled, manual, operational, technical, clerical or supervisory work.

Two changes matter. First, sales-promotion employees — previously covered by the standalone Sales Promotion Employees (Conditions of Service) Act, 1976 — are expressly included. Second, the wage threshold for the supervisory exclusion is raised from ₹10,000 to ₹18,000 per month; the appropriate Government may notify a higher figure. A supervisor drawing above ₹18,000 is excluded from the worker definition; one drawing at or below is included.

The doctrinal anchor remains Burmah Shell Co. v. Burmah Shell Management Staff Association (1971) 1 SCC 28 on the managerial / supervisory exclusion test — substance of duties, not formal designation. The Code's wage-threshold change re-calibrates the income-side of the test without disturbing the duty-side analysis.

Trade unions and the negotiating union

Chapter III (Sections 14 to 19) creates the statutory recognition of trade unions that the 1926 Act lacked. Section 14 supplies the operative architecture.

Where a single registered trade union has membership of 51 per cent or more of the workers in an industrial establishment, that union is recognised as the sole negotiating union. The 51-per-cent figure is verified by a method to be prescribed in the Rules — and the verification method (secret ballot, check-off, or membership-roll) is the single most contested item in the Rules drafting cycle. INTUC and BMS prefer membership-roll; CITU and AITUC prefer secret ballot. The Central draft Rules have, in successive versions, oscillated.

Where no single union reaches 51 per cent, a Negotiating Council is constituted with proportional representation of unions having at least 20 per cent membership. The Council collectively functions as the bargaining agent.

Sections 15 to 19 retain the registration, cancellation, rights and financial-discipline architecture of the 1926 Act with modernisation. Section 15 carries forward the registration regime; old registrations are deemed under the Code on commencement.

The ILO supervisory mechanism has flagged the 51-per-cent threshold as raising concerns under Convention 98 (Right to Organise and Collective Bargaining) — the concern being that proportional representation below 20 per cent excludes minority unions entirely. CEACR observations in 2022 and 2024 note this without making findings of violation. The Standing Committee on Labour recommended dropping the 51-per-cent threshold and proceeding by proportional representation only — a recommendation not accepted.

Standing orders and the 300-worker threshold

Chapter IV (Sections 20 to 29) carries the 1946 Standing Orders framework forward with one structural change — the establishment threshold is raised from 100 to 300 workers. Section 28 makes Standing Orders applicable to industrial establishments with 300 or more workers, with the appropriate Government empowered to vary.

The First Schedule of the Code supplies model standing orders that govern in default. Significant departures from the model require certification by the certifying officer — the process tracks the 1946 Act framework. Section 29 governs enforcement and amendment.

For establishments between 100 and 300 workers — a substantial slice of mid-sized Indian industry — Standing Orders cease to be statutorily mandated under the IR Code. Internal HR policy, employment contracts and works-committee mechanisms become the only architecture for the matters that Standing Orders previously specified. Practitioners advising mid-sized employers should consider whether voluntary Standing Orders certification continues to be desirable as a discipline anchor — particularly for misconduct procedure where unambiguous documented rules limit disciplinary-action challenges.

Strikes and the 60-day notice

Section 62 of the IR Code regulates strikes and lock-outs. The substantive change from the ID Act, 1947 is the universalisation of the 60-day prior notice requirement to all industrial establishments — replacing the 14-day notice that the ID Act Section 22 confined to public utility services.

The architecture. A trade union calling a strike must give written notice not less than fourteen days before the proposed date, and the strike must commence within sixty days of the notice. A strike is prohibited during conciliation proceedings and for seven days after their conclusion, during arbitration and for sixty days after the award is published, and during the pendency of an Industrial Tribunal reference. The reverse architecture binds the employer in lock-out.

This is the single biggest restriction on collective action since Emergency-era amendments. The 14-day notice rule for public utility services worked because the bright-line list of public utilities was short — railways, water supply, defence-related manufacturing. The universal 60-day notice reaches every industrial establishment.

The ITUC has filed observations with the ILO Committee on Freedom of Association — Case No. 3404 (India, 2022) — alleging violation of Convention 87 (Freedom of Association). The Committee noted the concerns; no operative direction has issued as of June 2026.

Section 63 retains the illegal-strike / illegal-lock-out classification with reduced criminal-side penalties — fines of ₹1,000 to ₹10,000 or imprisonment up to one month for participants; ₹10,000 to ₹50,000 or imprisonment up to one month for instigators. Civil consequences — deduction of wages, disciplinary action — are preserved.

Lay-off, retrenchment and closure

Chapter X (Sections 77 to 83) carries the Chapter V-B ID Act framework forward with the threshold raised from 100 to 300 workers. Industrial establishments with 300 or more workers require the appropriate Government's prior permission for lay-off (Section 77), retrenchment (Section 78), and closure (Section 83). The compensation regime — 15 days' average pay per completed year of service for retrenchment, 50 per cent wages for lay-off days, the right to a hearing — tracks the old framework.

The proviso to Section 77 empowers the appropriate Government to raise the 300 threshold further by notification. States that had pre-Code raised thresholds — Rajasthan to 300 in 2014, followed by Madhya Pradesh, Gujarat, Haryana, Uttarakhand, Uttar Pradesh, and Maharashtra under various labour reforms — gain national alignment under the Code. Resistant States — Tamil Nadu, Kerala, West Bengal — face notification pressure on commencement.

For establishments between 100 and 300 workers, the prior-permission requirement disappears under the Code's framework — a substantive easing that took effect on 21 November 2025 commencement and that is the politically most contested item in the Standing Committee on Labour's 233 recommendations. The Standing Committee recommended reverting to 100 — recommendation not accepted.

Neither Section 10 of the CLRA Act nor any other provision in the Act, whether expressly or by necessary implication, provides for automatic absorption of contract labour on issuance of a notification by the appropriate Government under sub-section (1) of Section 10, prohibiting employment of contract labour, in any process, operation or other work in any establishment.

The contract-labour absorption framework — preserved under the OSH Code, 2020 — sits adjacent to the IR Code's industrial-dispute machinery. Workers displaced under a Section 57 OSH Code prohibition (the successor to Section 10 CLRA) take the SAIL-prescribed route — industrial adjudication under the IR Code's Industrial Tribunal rather than constitutional writ for direct absorption.

Worker re-skilling fund

Chapter XII (Sections 85 to 89) creates the Worker Re-skilling Fund — a new institutional vehicle. Section 83 (renumbered in some readings) requires the employer to contribute 15 days' last-drawn wages for every retrenched worker, payable to the Fund within 45 days of retrenchment. The appropriate Government contributes additionally.

The Fund's purpose is to finance re-skilling and re-employment of retrenched workers. The operational rules — Fund custodian, disbursement architecture, worker access mechanism, re-skilling provider accreditation — are to be prescribed and remain undefined. The Fund is the Code's principal innovation on the retrenchment-compensation side; the trade-union assessment has been that the 15-day employer contribution is modest, but the institutional architecture is welcome in principle.

Industrial tribunal architecture

Chapter VII (Sections 44 to 52) replaces the ID Act, 1947 three-tier architecture (Labour Court + Industrial Tribunal + National Tribunal) with a unified Industrial Tribunal. Section 44 prescribes the composition — either a single judicial member or a two-member bench of one judicial and one administrative member, the appropriate Government's choice on the configuration.

The judicial member must be a person who has been or is qualified to be a High Court judge, a District Judge, or has held judicial office in the labour-and-industrial field. The administrative member is an officer of suitable seniority and experience. Section 46 vests the Tribunal with civil-court powers. Section 51 governs the publication and effect of awards.

The two-member composition is a structural change. Practitioners anticipating IR Code commencement should expect the appellate path to alter — High Court Article 226 jurisdiction subsists, but the inter-Tribunal forum architecture is rationalised.

Where the old jurisprudence still binds

With the IR Code's substantive provisions commenced on 21 November 2025, the three subsumed statutes stand repealed; however, their case-law architecture carries over substantively into the Code regime because Code definitions and section-numbering largely mirror the predecessor statutes.

For the "industry" question, Bangalore Water Supply v. A. Rajappa (1978) 2 SCC 213 — the seven-judge Constitution Bench triple test — remains the operative law. Section 2(p) of the IR Code substantively mirrors Section 2(j) of the ID Act, and the BWSSB triple test carries forward. The nine-judge bench reference in State of UP v. Jai Bir Singh (2005) 5 SCC 1 concluded final arguments on 18 March 2026 and judgment was reserved on 19 March 2026; verdict pending as of June 2026, BWSSB holds.

For industrial-dispute scope, Workmen of Dimakuchi Tea Estate v. Management AIR 1958 SC 353 governs the test for what constitutes a collective dispute. D.N. Banerji v. P.R. Mukherjee AIR 1953 SC 58 supplied the early municipal-corporation-as-industry holding that BWSSB later consolidated.

For retrenchment, State Bank of India v. N. Sundara Money (1976) 1 SCC 822 — non-renewal of fixed-term contract as retrenchment — remains good law for non-written or oral fixed-term arrangements and for FTC terminations that pre-date 21 November 2025. For written FTCs under the Code, Section 2(zh)'s proviso displaces Sundara Money.

For closure, Excel Wear v. Union of India AIR 1979 SC 25 — the five-judge Constitution Bench on the Article 19(1)(g) test for prior-permission closure regimes — continues to govern. Workmen of Meenakshi Mills v. Management (1992) 3 SCC 336 supplies the closure-compensation framework.

For contract labour, Steel Authority of India v. National Union Waterfront Workers (2001) 7 SCC 1 — the five-judge Constitution Bench overruling Air India SC's automatic-absorption doctrine — remains the operative law and carries into the OSH Code regime. Air India Statutory Corporation v. United Labour Union (1997) 9 SCC 377 is overruled but its constitutional-vocabulary articulation continues to be cited.

The commencement architecture and what practitioners should track

The IR Code is the first of the four labour Codes to be substantively commenced — by S.O. 5320(E) with effect from 21 November 2025. The Industrial Relations (Central) Rules 2026 followed on 8 May 2026 (G.S.R. 342(E)), supplying the operational infrastructure for tribunal procedure. The Code on Wages 2019, the Occupational Safety, Health and Working Conditions Code 2020 and the Code on Social Security 2020 remain notified-but-not-commenced — leaving a partial-codes regime in which the IR Code's industrial-dispute and trade-union framework is live while wages, OSH and social-security provisions still run on the pre-Code statutes.

Seven items for the practitioner's monitoring list. First, the Negotiating Union verification methodology — secret ballot, check-off, or membership-roll — in the operative Central Rules; the single most contested item. Second, the Worker Re-skilling Fund operationalisation — fund vehicle, contribution flow, worker-access mechanism, re-skilling-provider accreditation. Third, State threshold escalations above the 300-worker layoff/retrenchment threshold under Section 77 proviso; race-to-the-top concern flagged by trade unions. Fourth, the Industrial Tribunal benches — judicial-and-administrative composition and HC retired-judge supply-side capacity. Fifth, the trade union deemed-registration cross-walk from 1926 Act registrations into Section 15 IR Code recognition. Sixth, the interaction with sector-specific State legislation — the Rajasthan Platform-Based Gig Workers Welfare Act, 2023 and the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act 2025 create federal layering that the IR Code's industrial-dispute machinery will need to absorb. Seventh, the commencement of the remaining three Codes — political and legal signal for when the partial-codes regime resolves into a full-codes regime.

Litigation challenges remain pending. AITUC v. Union of India (W.P.(C) 1216 of 2020) and INTUC v. Union of India (W.P.(C) 1230 of 2020) raise broad-based constitutional challenges including the Section 14 51-per-cent threshold and the Section 62 universal strike notice. Madras High Court W.P. No. 4523 of 2024 (CITU) addresses State Rules delays. No provision has been struck down. The ILO CFA Case No. 3404 (India) is pending without operative direction.

Related on Valkya

• SAIL v. National Union Waterfront Workers: the Constitution Bench overrules Air India SC
• Air India Statutory Corp v. United Labour Union: the automatic-absorption doctrine
• Bangalore Water Supply v. A. Rajappa: the seven-judge bench on industry
• Nine-judge bench reference on the definition of "industry"
• The Code on Wages 2019: floor wage, minimum wage, and the unified payment framework

Sources

1. Gazette of India — Industrial Relations Code, 2020 (Act No. 35 of 2020); Gazette dated 29 September 2020.
2. Ministry of Labour and Employment — Draft Industrial Relations (Central) Rules, 2020 (G.S.R. 686(E) dated 29 October 2020); revised draft 11 January 2021.
3. PRS Legislative Research — Industrial Relations Code, 2020 analytical brief and updated 2025 edition.
4. Parliamentary Standing Committee on Labour — 8th Report (Seventeenth Lok Sabha, April 2020), Chair Bhartruhari Mahtab.
5. ILO Committee on Freedom of Association — Case No. 3404 (India, 2022); CEACR Observations on India 2022, 2023 and 2024 under Conventions 87 and 98.
6. PIB Ministry of Labour and Employment — Presidential assent release dated 29 September 2020 and subsequent Rules-notification communications.