Its objective is to simplify the framework for industrial relations, trade unions, dispute resolution, lay-off & retrenchment, and ensure stable and productive workplaces.

1. Objectives of the IR Code

• Promote industrial peace and smooth employer–employee relations.
• Streamline procedures for dispute resolution.
• Modernize rules for trade unions.
• Provide clarity on lay-offs, retrenchment, and closure.
• Introduce fixed-term employment with social security equality.
• Reduce unnecessary litigation and enable faster settlements.

2. Key Definitions

Industry

Very broad — covers all systematic activities involving cooperation between employer and workers, except:

• Charitable institutions
• Sovereign functions
• Domestic services
• Small professional activities with ≤ 10 persons

Worker

Includes:

• Manual, skilled, unskilled, technical, operational workers
• Journalists
• Supervisors earning up to notified wage ceiling (as notified by Government)

3. Trade Unions

Recognition of Negotiating Union

• If there is only one union, it becomes the Negotiating Union.
• If multiple unions exist:

• The union with 51% or more workers as members becomes the Negotiating Union.
• If no union has 51%, the top three unions together form a Negotiating Council based on proportionate representation.

Registration Requirements

• Minimum 7 members required to register a trade union.
• At least 10% of workers or 100 workers (whichever is less) must be members.

Rights & Duties

• Recognized negotiating unions may negotiate on service conditions, wages, leave, grievance redressal, and other employment matters.

4. Standing Orders (Service Rules)

Applicability

• Mandatory for industrial establishments with 300 or more workers.
• Cover terms of employment, suspension, misconduct, leaves, shifts, etc.
• Establishments with fewer than 300 workers may voluntarily adopt standing orders.

Model Standing Orders

• Government will notify Model Standing Orders.
• Employers may adopt them directly without modification.

5. Grievance Redressal Committee (GRC)

• Mandatory for establishments with 20 or more workers.
• Equal representation of employer and workers.
• At least one woman member if female workers are employed.
• Grievances to be resolved within 30 days.

6. Reskilling Fund (New Feature)

A special fund created for retrenched workers. Employer must contribute:

• 15 days’ wages for every retrenched worker. The amount must be transferred to the worker within 45 days.

7. Industrial Dispute Resolution

Conciliation

• First step for disputes relating to wages, service conditions, dismissal, lock-outs, etc.
• Conciliator must attempt settlement within 45 days.

Industrial Tribunal

• Two-member tribunal (Judicial + Administrative).
• Ensures faster dispute adjudication.
• Appeals lie to the National Industrial Tribunal on significant questions.

Voluntary Arbitration

• Employer and workers may mutually opt for arbitration for quicker resolution.

8. Strikes & Lockouts

Prior Notice Requirement

• 14 days’ notice required before any strike.
• Strike cannot commence within 14 days and within 60 days of notice.
• Strikes prohibited during conciliation and for 7 days after its conclusion.
• Employers must similarly give notice before declaring a lockout.

This system aims to prevent sudden strikes and industrial disruptions.

9. Lay-off, Retrenchment & Closure

Threshold

Applicable to industrial establishments employing 300 or more workers.

Lay-off

• Prior government permission required.
• Compensation during bona fide lay-off: 50% of wages.

Retrenchment

• Notice period: 1 month for workers with at least 1 year service.
• Compensation: 15 days’ average wages for every completed year of service.

Closure

• Prior government permission required for establishments with 300+ workers.
• Workers entitled to notice and compensation.

10. Fixed Term Employment (FTE)

• Direct hiring allowed for a fixed contractual period.
• Same wages and benefits as permanent workers doing similar work.
• Eligible for gratuity if contract period is at least 1 year.

11. Misconduct, Disciplinary Action & Dismissal

• Disciplinary action must follow standing orders.
• Domestic inquiry required before imposing major penalties.
• Worker may approach GRC, conciliation, or Tribunal.

12. Role of Government

Central Government

• Railways, mining, oilfields, major ports, and centrally controlled industries.

State Government

• All other industries and establishments.

13. Offences & Penalties

Illegal Strikes / Lockouts

• Penalty up to ?50,000 for workers.
• Penalty up to ?1,00,000 for employers.

Failure to Maintain Records

• Fine up to ?10,000.

Contravention of Standing Orders

• Fine up to ?50,000 with higher penalties for repeat offences.

Compounding of Offences

• Permitted for most offences to reduce litigation.

14. Benefits for Employers

• Higher 300-worker threshold reduces compliance burden.
• Faster dispute resolution mechanisms.
• Predictable strike and lockout procedures.
• Flexibility through fixed-term employment.
• Simplified trade union recognition.

15. Benefits for Employees

• Clear disciplinary and termination procedures.
• Right to collective bargaining.
• Effective grievance redressal through GRC.
• Financial protection through reskilling fund.
• Equal benefits for fixed-term employees.